July 9, 2013 | InBrief

Demand and portfolio management managing supply & demand

Demand and portfolio management managing supply & demand

For many years now, IT executives have struggled with the business’ assertions that “IT does not understand them,” “IT is focused on the wrong activities,” “IT is taking too long to provide solutions,” and/or “IT is always saying no.”  Conversely, IT executives often find themselves in a situation where they cannot say “no,” and say “yes” without understanding the implications of doing so, or are having to be the “bad guys” and say “no” because the business will not set priorities.  In our experience, these challenges are two sides of the same coin and a resolution can be found in an organization’s ability to effectively manage increasing business needs and limited resource availability.  Put another way, these organizations are struggling with effectively managing their business demand with limited resource supply.

One objective of Portfolio Management should be to balance limited resource availability with the ever increasing demand for those resources.  However, Portfolio Management should not stop there.  Portfolio Management should also ensure that these limited resources are allocated to the initiatives that bring the most value to the organization as whole.  In order to effectively do this, a partnership must exist between the business and IT; where the business takes accountability for prioritizing initiatives across all lines of business and both groups provide resource availability information in order to understand the organization’s capacity for taking on initiatives.  There are 3 key areas that need to be addressed in order for this partnership to work.

First, a cross-functional team should be established to prioritize all initiatives against one another. 

This “prioritization committee” should have a member from IT as well as members from the business that can represent all of the business units.  When selecting members for the prioritization committee, choose people that are able think big picture or corporate-wide rather than ones that can only focus on their own business unit’s needs.  One approach to ensure a boarder mindset exists, is to assign each prioritization committee member more than one business unit to represent.

Second, a methodology should be developed to prioritize all initiatives against one another.

This should include all business as well as IT initiatives.  At West Monroe, we have successfully used a “prioritization matrix” to measure the impact each initiative has on the organization across 4 – 6 different criteria.  If the right criteria are chosen and every initiative is scored against those criteria by the cross-functional prioritization committee, the most important initiatives to the organization as a whole will become apparent.  A helpful tip is to ensure that not only the solutions being implemented are prioritized, but the initiatives to evaluate, select, or determine a solution are also prioritized.  All too often we see organizations investing significant effort in selecting solutions for business or IT needs that do not provide significant organizational value and should either be deferred or stopped altogether.

Third, once the solution evaluation/selection or solution implementation initiative has been prioritized and if the initiative scores high enough to warrant moving forward, resource availability needs to be analyzed. 

In order to accomplish this, it is important that employees historically track their time and forecast future anticipated time expenditures.  The time tracking categories used for historical and forecasted time tracking should match the list of initiatives from the prioritization matrix.  Additionally, there should be categories for administrative, operational, or “keep the lights on” (KLO) activities.  It is important that you clearly define what is considered KLO efforts as anything that is not KLO should be submitted to the prioritization committee for prioritization.  This is important as it eliminates the subjective definition of what a project is and enables more granular insight and (ultimately) control over where resources are spending their time.  Once resource availability is understood, the prioritization committee can assign resources and a start date to the initiative or develop resource remediation options for situations where resource constraints exist.  Examples of remediation options could include changing the start date of the new initiative, putting another initiative on hold to start the new one, or bringing in additional resources in order to fulfill resource demands.  Once the options are collaboratively identified by the prioritization committee, the options should be escalated to an executive steering committee (made up of business executives) to decide on a remediation approach.

Effective Portfolio Management practices places accountability for the prioritization of initiatives and the remediation of resource constraints (including the allocation of additional funding if necessary) on the business.  For IT’s part, they must provide accurate resource availability and forecasting information and efficiently manage KLO activities.  If accomplished, the management of business demand and resource supply to meet the goals and objectives of the organization can be attained.  When the business and IT can partner to manage this balance between supply and demand, a more nimble, efficient, and effective organization to meet the ever changing business needs is created to drive maximum business value.

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