First, inventory ALL projects and activities that require any kind of IT resources, making sure to include non-obvious ones like SMEs and user training time. According to Gartner, 60% of IT’s budget is spent on operational, “keep the light on” activities, so it is important that these are included to ensure correct allocation of project resources. Projects that pull resources from core operations can create business risk.

Second, decide who will comprise a governance committee, i.e., who will make decisions concerning the portfolio. This should be a mix of IT and business leaders with the authority to make decisions for the organization. The governance committee will determine which projects should continue, which should be delayed, and which should be terminated. These decisions will be made based on determining which projects have the potential to create the most value for the company. Each project in the portfolio should align with business goals and be ranked on the strength of its business case outlining benefits, costs and risk. Keep this simple, but also be on the lookout for project interdependencies. You certainly don’t want a critical project bungled because it relied on deliverables from another project that was killed or delayed.

The importance of strong governance in the portfolio process cannot be overstated. Projects that are nice but not essential drain away resources that could be used more productively. Focus on cutting unnecessary demand and don’t start new projects until you know for certain that existing projects can be completed and meet expected deliverables. This won’t be easy. Every project is “owned” by someone who thinks it is the most important project in the portfolio, so it is essential to let the business case data drive the decision, and not emotions or politics. We can all relate. This time of year I can see myself riding around on a John Deere with 4-wheel steering, a zero turn radius, and a 48-inch mowing deck. Grass cutting would be so much easier (okay, and a little fun). But, with financial resources being what they are, I can’t make the case for its purchase because it will not really provide any material benefit. It’s just a “nice to have.” So, back to my 21” push mower. Sorry, John Deere dealer.

Half the year is gone. As you look at how you will finish out the year and also prepare for next year’s portfolio of projects, the summer months are a great time to review your project portfolio and get the pruning shears out. Since 80% of the benefit usually comes from 20% of the projects, in portfolio management, less is always more.

1. Understand and communicate the business case for your project.
   This starts with understanding the business strategy and business drivers that prompted your project in the first place. If you don’t understand what the business is trying to accomplish, you have very little chance of your project hitting the mark.Once the business strategy and drivers are clear, identify very specifically—and quantitatively where possible—exactly how your project will provide benefit relative to the business drivers and business strategy.
   • Work with key people in the business area to develop and review the business case to ensure that it is sound and strong.

   Creating a solid, strong business case is the most important factor in not only getting the project approved, but also in ensuring that the project team clearly understands what is to be accomplished, why, and how it will help the business.

2. Identify resourcing needs by role.
   Resources, especially people, are always in high demand, and you need to be very clear about the resources that your project will require (people, facilities, equipment, etc.). Clearly identify your resource needs by being specific. Assuming that your request for two technical analysts you will get you what you actually need might be a mistake. Having the right skills, expertise and individuals detailed on a project can greatly improve the probability of project success.
3. Identify project interdependencies.
   As a good project manager, I expect that you will have identified dependencies within your project as part of your project schedule. With the complex business environment that exists today, you also need to identify dependencies that are outside of your project to make sure that external factors do not inhibit your project’s ability to succeed. For example, if your project requires customer master data to be available—and that is a key deliverable from a different project—you have to identify that interdependency and evaluate the risk to your project if that deliverable does not occur as planned. This allows both projects to understand the dependency and provides greater visibility and increased opportunity to manage and mitigate the risk. The Project Management Office (PMO) will know your project is likely to be well managed when they see the project interdependencies identified.

Additionally, all projects will require identification of project costs, timetables, risks, etc., as is normally requested by governance committees. The above points are not extensive, but are meant to help you differentiate your project from other projects being evaluated.

If you go to the governance committee with these items ready for review, you will not only put yourself in the best position for project approval, but you may also become the model for how other projects should be packaged for governance review.

– See more at: http://www.transaccelgroup.com/blog/2011/10/17/mark-that-project-approved/#sthash.miOosk0N.dpuf

Unfortunately, October is also a time of enormous pressure, as both IT and the Business push hard to achieve MBO deliverables before the end of the year. Too often, the competing time constraints of completing existing projects while planning new ones causes Business to default on the planning side, leaving IT to design new projects on its own. This lack of input from Business leads to “silo” thinking: “We know what they [the Business] really want or need.”

Now, in a perfect world, Business would remain engaged with the IT Account Manager—the one who not only has the best vantage point from which to understand and articulate Business’s needs, but is also well-equipped to offer ideas and solutions to address those needs holistically (end-to-end) rather than piecemeal. But, if Business opts out and IT can’t get it back to the table, or IT believes it actually can do the planning on its own, the next step needs to be the creation of a business case, or multiple business cases, depending on the number of initiatives IT believes are necessary for the coming year. In this situation, the account management teams should lead the business case process.

What Your Business Case(s) Should Focus On:

• Quantitative business benefits: ROI that can be tracked, and the forecasted payback over the next 12 or 18 months
• Risk assessment: what is probability of success when the following variables are considered: processes needed, organizational and infrastructure requirements, bandwith capacity, timing, information and skills necessary, competing business initiatives or conflicts, etc.
• Funding: Project costs (both operating expenses and capital expenditures) for all phases of the project; these costs should also include transition and post go-live support.
• Business alignment: clear alignment with business drivers, strategies, and objectives, taking into consideration the impact of the timing of each implementation event.
• Total cost of ownership (TCO): over lifecycle of project (ideally, this includes ALL costs associated on both the IT and the Business sides).
• Sponsorship: The name of the person or organization with “skin in the game,” who will help obtain project funding or resources, advocate for the project, etc. In short, someone who has a vested interest in the successful outcome of the project.

Once you have thoroughly assessed the viability of the project, your business case is ready to be presented to the Business. If both IT and the Business are in agreement, the commitment then is to investing in the funding, people, and amount of time necessary to undertake the project.

During the business case assessment process, be sure someone on the account side works with the service delivery partners to develop an overall review of the current operations. This will help you understand what capacity is available (people, technology, funding), or conversely, what capacity is already committed and unavailable.

This capacity review really shines a light on the 60-80% of the “operational support” work that comprises the bottom segment of your typical IT Portfolio Pyramid—work some refer to as “keeping the lights on.” At most companies, operational support is a made up of three things:

1. Service Level Agreements: Services and capabilities are aligned to fulfillment of SLAs, i.e., mutually defined agreements between IT and Business. Costs associated with each transaction and response/resolution times are tracked and monitored. These agreements are critical for the IT Account Director or IT Relationship Manager to represent the total cost of service to their Business partner. In a chargeback world, fees for these services are crucial to those IT departments operating solely as cost centers, providing, as they do, the funding for new projects. This is the only operational support activity in which you should invest.
2. Phase 2 & 3 Hiding Place: This is project work or “stuff” that didn’t really get done after the implementation of phase 1, can’t operate as a stand-alone, and thus is very hard to justify on its own merits. Ergo, it is categorized as operational support.
3. Unnecessary demand stuff: This is the “stuff” that should have been decommissioned years ago, but no one has the resources (funding/man-hours) to invest in getting rid of it and tossing it out of the environment. (Picture that box of moldy college textbooks you’ve been lugging around for years.)This “waste” is what I refer to as the “slow death of IT,” and it is my number one place to begin to restore capacity. In ridding IT of this old baggage, you will create the capacity that IT desperately needs for delivering on current Business needs. I have studied this dilemma for years, and many companies have tried to address it by taxing new projects or building it into the (TCO), but, like “training,” getting rid of it never seems to be the necessity it is, and it always seems to get cut.

Every dollar spent needs to be viewed as an investment. “Keeping the lights on” consumes a majority of IT’s budget, and yet, undergoes the least amount of scrutiny during planning. Why? Because:

1. It’s hard. If you haven’t done a good job of writing cogent SLAs with your Business partners or been diligent about tracking costs, unraveling the mess will take time and effort.
2. No one gets a bonus or a promotion for cleaning up someone else’s mess.
3. IT leadership has not done a good job of educating their Business partners on TCO.
4. IT Account Managers would much rather be working on the new blockbuster than talking about maintenance on last year’s project.

Many smarter than I thought that with Shared Services the CFOs would get more involved, and unnecessary demand costs would be reeled-in. Surprisingly, I have seen only a few CFOs willing to invest in “consolidation and rationalization,” even during these tough economic times.

Back to planning:
By mid or end of October, you will need an aggregate view of your total next year’s plan that should include:

• Innovation projects (short, 4-6 week sprints to learn and de-risk future larger projects
• New projects (i.e., Business and IT)
• Phase 2+ functionality improvement projects
• Service investments (otherwise referred to as “Keep the lights on” investments)

To ensure success, new projects need to have an estimated funding of +/- 20%; Phase 2 should come in at +/-10%; and service costs need to be aligned to the service agreements and appropriate funding model. All projects should have clear business cases.

November is all about prioritization based on guidance from Executive and Finance. The better you plan in October, the more successful you will be when the new guidance comes—and, yes, it will come.

Putting your investments into a portfolio tool is something we can help you with, and will allow you to manage your investments and make the right tradeoff decisions.

Most maturity level 1 and 2 companies still optimize by divisional silo, but there are new processes, tools and governances that can help you and your company to make cross functional tradeoffs and ensure you are returning the most value for your IT investment…surely something your CEO and CFO would want to know.

Enjoy October. The hard decisions are coming, and those of you who are prepared will enjoy Thanksgiving much better.

In an effort to make planning less overwhelming, every month I am going to provide in this space a guide for the upcoming month. This guide will include a checklist and a set of questions that every IT leader should contemplate to be successful in 2012.

The first step to IT planning is aligning the IT calendar to the corporate calendar. If you are like most of our clients, the corporate financial calendar is based on the yearly calendar. This makes September the most critical time of the year in terms of planning for the following year’s success. Therefore, from a corporate calendar perspective (January through December), the first month in an annual planning calendar should be September.

September has begun, and, with the Labor Day holiday, we’re all probably behind schedule already. It’s time to get back to work—there is little time to be wasted. Here is where I recommend you begin:

September Theme: Alignment

To do:

Determine what 2011 projects are slipping
Ascertain what needs to happen to complete 2011 projects
Focus resources on completing those projects
Arrange for face-to-face meetings with divisional leadership. The objective is to hear and engage with each business unit regarding its objectives for 2012.
Immediately following these meetings, the IT business groups should meet and prepare a recommended plan for 2012 that includes objectives, strategies, programs, projects and estimated resource requirements.
To stimulate thinking and discussion:

What improvements / adjustments are needed to sustain your future business model and objectives?
Where are you with current operational improvement initiatives? How much more do you need to invest in these initiatives to achieve the desired outcome?
What events might affect the course of your transition?
How do you ensure alignment across all division, unit, and support functions?
What does this mean for your external partners and suppliers?
How can you utilize your extended ecosystem to its fullest?
I welcome your questions and feedback on this guide. We can all benefit from hearing about other’s issues and ideas. Happy planning!