Maximizing Return on IT Investments With Enterprise Portfolio Management: Part 1

Computerworld - In this two-part case study, San Retna, chief portfolio officer at AAA of Northern California, Nevada and Utah, demonstrates how his company applied advanced portfolio management techniques to realize in excess of 80% of expected business benefits from its corporate investments and shows how other companies can replicate this success.
Companies are spending billions of dollars each year on change initiatives designed to improve corporate performance, yet there are few structured practices to manage the overall process and provide timely and accurate feedback on how effective these investments are. U.S. IT spending alone, which accounts for only a fraction of these internal investments, was a whopping $780 billion in 2002, and it's estimated that 68% of IT projects weren't delivered on time or on budget.
While using a simple metric such as the percentage of projects that are on schedule and on budget might seem to be the right way to assess how well a company is managing its portfolio of projects, doing so misses a powerful opportunity. Enterprise portfolio management, a new approach to managing internal corporate investments that's gaining momentum, gives corporations the ability not only to successfully complete a large and growing percentage of projects, but also to more accurately align enterprise projects with corporate goals and values to deliver promised business benefits. This method enables corporations to restructure the way they manage their portfolio of corporate investments. By taking a top-down approach to project management, a corporation can assess performance across its entire portfolio of investments, much as an investment manager does. The approach lets the enterprise assess performance against defined objectives and focus on maximizing overall return, while effectively managing the risks associated with business investments.
At AAA of Northern California, Nevada and Utah, we successfully implemented enterprise portfolio management across scores of programs over a two-year period. We not only significantly improved our program execution; we also gained important insights into the enterprise portfolio management approach. Through this real-world experience, we also developed innovative best practices, approaches and tools for managing the process.
As a company with annual revenue in excess of $2 billion, AAA makes significant investments in corporate infrastructure, IT, culture and values training, facilities and business process management. Prior to forming an enterprise portfolio management office (EPMO), we felt that there was room to improve program performance. We wanted to boost basic metrics such as the amount of deliveries that were on time and within the budget, and the company wanted to better understand the returns from its internal investments. Finally,