To effectively prioritize an organization’s collection of work, including operational services and projects to support products and innovation, leading organizations develop standard evaluation criteria to make data-driven decisions. These data-driven decisions help leadership make the right investments and ensure the organization is working on the most impactful work to improve competitive advantage. An organization’s decision makers should build simple and clear data requirements to enhance decision making and to better inform leadership and stakeholders.
Portfolio planning is the alignment of an organization’s corporate strategy to data-driven decisions about capabilities and resources to achieve desired business outcomes. Effective portfolio planning and management capabilities should provide the organization with dashboards, reports, and analytics to inform better decision making.
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Does your organization talk about connecting the execution of work to its strategy? Are you building a roadmap on how to get there and achieve desired goals? To help your organization achieve the strategy and goals, model the business architecture by understanding the organization’s strategy, communicating business outcomes, and aligning these outcomes to the appropriate business capabilities.
Business architecture is illustrating what the business does and how the business operates. Gartner defines business capabilities as “what the business needs to do to achieve the business strategy.” Business architecture uses business capability modeling, to visualize and influence people, processes, and technologies needed to maximize stakeholder value, achieve organizational goals, and execute on the business strategy. This model should map out the future state capabilities needed to support where the business is going over multiple years, as defined by the organization’s strategy.
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Enterprise goals, the portfolio, work, and investment decisions should all be based on measurable business outcomes. Business outcomes generate metrics, the way to measure value. The key is to standardize the way the enterprise measures business value.
Business Value Standards can help guide the right decisions for the portfolio, based on the work that can generate the most value. The standards list in the table provides six primary business value types with the associated examples and metrics.
|Business Value Type
|Generate New Revenue
||Net new sales, improve lead conversion rates or reduce sale cycle time, improve up-sell/cross-sell
||Increase revenue by X currency
||Reduce costs for licensing, managed services, maintenance support contracts costs, retire legacy platform, reduce workforce needs due to automation or reduced skills needed
||Reduce costs by X currency
||Automate or eliminate a process step or task, reduce cycle time or manual hours
||# of hours * estimated hourly cost * quantity
|Improve Service Delivery
||Improve service delivery by reducing cost of performing a service
||Reduce cost per day, per hour, or per service
|Mitigate Business Risk
||Implement new security systems or disaster recovery solutions
||Benchmarked industry risk analysis data with (ROM) risk scenarios
These example metrics help define how to measure the results from prioritization of items within the portfolio. The performance of the portfolio is based on the business value results that are realized by successfully executing on business objectives.
One of the challenges of IT management is to balance the enterprise portfolio with initiatives that deliver on objectives and outcomes with varying timeframes and differing investment categories. Yet this balance is key to run, grow, and transform the business now and over time.
Balancing the enterprise portfolio is important to deliver on initiatives within short (within the fiscal year), medium (1 to 2 years) and long (over 2 years) timeframes. This is part of the advice for a lean startup.
Source: Gartner PPM & IT Governance Summit 2016 – Secrets of Prioritizing IT Demand – Audrey Apfel
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To effectively plan and execute a technology-driven service or product offering, IT and business leaders should start with business architecture. Business architecture is the essential building block for mapping an organization’s business vision of what they want to accomplish. Business architecture is one of the four enterprise architecture domains – including data, applications and technology.
Continue reading “Data and Architecture Simplified, pt. 3: Business Architecture – The Core Diagram”
Does your organization need to reduce costs and improve efficiencies? Start with a process-first approach. Before you dive into what software tool to implement or select a new solution to address a business challenge, understand your existing business processes. What steps does your organization take within the business processes? Are things manual? Can you automate and improve the way you do business?
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Your business needs to better use its data — but what does that mean? Context matters. Data governance, reporting and analytics, business intelligence. When you approach your data architecture, first start with asking the right questions that solve business challenges. What data does the sales team need to increase sales by x %? What data does the engineering team need to work on and innovate products that provide competitive advantage?
Similar questions have inspired companies to disrupt markets. Uber started with asking questions like, how can we optimize drivers at the right locations with the most customer demand? How can we give consumers the ability to call a cab with a click of a button? Tomasz Tunguz highlights similar examples in his book Winning with Data, where he states that “the best data-driven companies operationalize data.” To operationalize data is where companies can use the right data to rapidly change the way they operate.
In order to use the right data, ask the right questions. Gartner states exactly this, “Ask the right questions” in the 2015 article Big Data Analytics Failures and How to Prevent Them. Simply, what problem or toughest business challenge is your company trying to solve with data?
At the foundation and beginning practice of enterprise architecture, dating back to the 70’s with the Zachman Framework, the principle question related to data was “what data is needed to list the things most important to the business?” The framework focuses on the “what”, what is needed, in order to produce the right enterprise, data and technology models for the best use of data.
In order to harness the “Power of Data”, HBR suggests that companies start with the business problem in mind, and then “seek to gain insights from vast amounts of data.” With stating the specific business problem, companies can narrow the search and refine how they are going to find data-driven answers to their most challenging business problems.
With a finite budget, resources, and capacity for change, your enterprise is challenged with how to effectively manage budgets. Prioritization within the enterprise portfolio is key to optimizing the right spend for the right initiatives. Using key prioritization data for the portfolio helps with determining what to focus on.
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To build on investing in the right things, at the right time, the enterprise should prioritize top strategic initiatives within the enterprise portfolio. Using data to inform prioritization decisions is key. Executives and senior leaders want top initiatives to align to strategy, objectives, measurable business outcomes and financial factors (defined in the business case, which was covered in my previous post).
A Prioritization Scorecard calculates priority data that is needed to inform decisions, which are strategic drivers, or key values that align to strategic goals, and detractor information, key values that take away from the project. The data attributes for the key values should be taken directly from the business case. The key outcome is using this scorecard data to generate collective buy-in from senior leadership on top strategic priorities.
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How can you help your department invest in the right things, at the right time? The way you develop your plan can help clarify what your priorities and goals are — and having clear goals is an important part of being able to achieve those goals.
Start with the basics. The foundation is a business case. You want your company’s senior executives, to all levels of employees, to clearly understand what you are trying to achieve with an initiative for a product or service offering.
Continue reading “Enterprise investment management simplified: The business case”