First, using the 80/20 principle, think about which projects are critical, must-haves, and core to your mission (about 20% of the whole array), and set aside those that are discretionary or not vital. During this exercise, projects that should be eliminated altogether should be obvious. (Be ruthless.) Of the mission-critical projects, decide which should proceed and which should be deferred based on urgency and capacity. Considerations during your deliberations should include:

• The organization’s ability to undertake the project:
  • Do you have enough funding and staff?
  • Is there a learning curve?
  • What will on-boarding require?
• Data derived from the success or failure of other projects
• Timing and competition with other critical projects, especially for key SMEs and Management attention and cycles
• How projects may be interrelated and dependent on each other
• New technology and business process changes

Second, having decided which projects should proceed, it is time to collaborate with the entire range of managers, from line managers to senior managers, to prioritize them. Each will contribute something to the debate, and it is better to debate now than waste valuable resources (time, money, and people) later. Line managers will have first-hand knowledge of processes and capacity; middle management will have a better view of the interplay and inter-relationships between departments and activities, and top management will possess the long view that encompasses the overall organization direction and strategy. And obviously, inviting greater participation overall means greater cooperation and commitment.

Third, once your projects have been prioritized, it is time to figure out who will be doing what. Streamlining your projects down to the vital few has the added benefit of not stretching the capacity you have, but concentrating it where it is needed most. Here I would offer a special caution: it is very important that you are realistic about day-to-day operations and the support resources necessary to Keep The Lights On. Too often organizations under-estimate this aspect and/or think of KTLO resources as discretionary. They are not. Borrowing resources from KTLO operations results in “robbing Peter to pay Paul,” and effectively lowers service levels and stresses organizational capacity. Perhaps even more harmful, it underscores the notion that KTLO work is of less importance or less glamorous, damaging morale and trust.

Peter F. Drucker wrote, Management is doing things right; Leadership is doing the right things. Getting your portfolio into shape by winnowing out projects of questionable value and tabling those that can wait will go a long way to making the choice clear.

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.

The same can be said about an IT organization’s approach to cost optimization. After years of one-off tactical cost cutting, many businesses are facing the challenge of ongoing and continuous cost optimization. For many, this is no longer the exception but the new reality.

The usual approach to cutting costs is the purely tactical. Problem is, when the clear cost culprits have been identified and reduced or eliminated, future optimization initiatives can become more arbitrary and problematic. Even the low-hanging fruit that appears to be an obvious candidate for reduction to some may not be to others—like your business clients.

In a recent Gartner survey, CIO’s were asked, “What are the main barriers preventing organizations from achieving continuous optimization of IT costs?” Sixty-five percent of the respondents indicated that it was a matter of mindset—that is, creating the environment necessary for all resources to work together, move in the same direction, and agree on the same strategy.

We agree. TransAccel believes there’s a better approach to determining cost optimization decisions—one based on four “Guiding-Principles.” The benefits of using this method include a more consistent alignment with the company’s strategic drivers, a consensus among business leaders, a long-term framework for ongoing cost optimization initiatives, and a correct way to maintain what is most important to the organization.

The Four Principles are:

1. Transparency – IT and business leaders need to explicitly agree on what IT provides the business, and what the business needs from IT. Often, basic cost optimization practices lack quantitative data to define consumption, drivers, and inhibitors for IT and business services. Transparency provides different viewpoints of IT spending, allowing for better consensus and agreement regarding opportunities for optimization and prioritization.
2. Flexibility – Maintaining a prudent balance between both internal and external resources allows an organization to remove or add resources as the business climate changes. Sourcing IT on a variable basis is a good strategy for continual optimization.
3. Simplification – Running IT systems on standardized platforms leads to consistent business processes and well-defined IT services, which reduce costs. In highly complex environments, IT unit costs can be as much as 25% higher.
4. Discipline – In order to maintain constant focus and vigilance on cost optimization initiatives, an accountable and proactive owner should be delegated (normally the CIO), who will utilize dashboards and metrics to measure success rather than wait for cost targets to be handed down from top management. Additionally, establishing an optimization team that includes leaders from outside IT to help weigh business outcomes and constraints is another option worth considering.

In later blogs, we will explore some of these important principles in more detail. However, the four above are critical if a continuous and effective cost optimization environment is going to exist.

The goal is to manage IT as a business, and to leave all the laughs to Groucho Marx.

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