Monday, July 6, 2009

Portfolio Management

The products and services that an organization offers to its customers have a life span encompassing conception, development, introduction, growth, maturity, decline and termination as shown in the figure below.

It is up to the business to analyze the market conditions and customer needs and determine when a product or service should be introduced and what the functionality and specifications of the product or service should be. Business, also determines when the product or service has run its course and should be retired from the active pipeline. IT, too should view its connection to the business as a set of services that it provides to its customer (the business).

IT at a fundamental level is a set of services utilized by the business, typically applications and infrastructure provided by either internal IT departments or external service providers. Organizations are now less focused on IT infrastructure and applications than on coupling the infrastructure and applications internally to automate end-to-end business services and to manage them the business services efficiently. The challenge here is the successful matchup of business needs with IT infrastructure. Service Portfolio Management is the process that at the strategic level ensures that IT provides the business with what the business needs presently and will need in the future. The steps involved in achieving this Service Portfolio Management are:

  • Define: what IT services exist and what would be needed in the future

  • Analyze: based on company’s goals and objectives as well as finances available

  • Approve: formal decision of stakeholders on what course to take

  • Charter: officially begin the action that has been decided on whether, to create a new service, refresh an existing service or to retire an obsolete service

The point here is that it is not just the business services that are being defined, analyzed, approved and chartered but the relevant IT services that are needed to make the business services work. Companies must now think in terms of IT as a set of services to the business and not just a group of applications and infrastructure. The apps and infrastructure make up the IT service which then supports the business service. The business service makes the sale which brings in the cash.

Therefore, it is important that IT services are planned for simultaneously as business services being planned and implemented with appropriate communication between business and IT. For example, in the Steel Pipe company example in a previous post, the business portfolio would consist of steel pipe 2 feet long, 4 feet long and six feet long. However, the IT services would include email services, laptop and desktop services, networking and internet services, CRM services and programming services of the heavy machines utilized in manufacturing the pipes. If the company was attempting as part of its business to add a new range of steel products to its business portfolio, the IT department of this company should understand what modifications it would need to make to the IT services being offered to the business. If this new business required IT to now develop its own applications as opposed to purchasing off the shelf applications, IT services would have to add Application development and testing to its “menu” of services. This would logistically entail hiring staff and purchasing desktops and servers and operating systems etc. However, looking at IT as a service to the business, we now have a new service that needs to be setup by IT. Clearly, the earlier IT sets about setting this new service up the better for the organization.

Very often IT is not involved in the analysis of how the services it offers to the business should be modified until far too late. It is a sign of high organizational maturity when the alignment between business and IT occurs at the strategic planning stage and not later on in the game. This then leads to a smoother delivery of the required services with fewer defects and less chaos and inefficiency as things have been planned early on and not at the last minute. Less problems, better service and higher employee morale are the result. All of this makes Portfolio Management a necessary process for any IT organization.

1 comment:

  1. CRM is a way of using technology to do just that. The idea of CRM is that it helps businesses use technology and human resources to gain insight into the behavior of customers and the value of those customers. Thanks for your posts.CRM Services