An IT Portfolio Fit for The Economic Down-turn

Take advantage of the current economic climate to construct a more valuable and less risky IT project portfolio

As the pressure is on to stay profitable in a period with economic down-turn many companies decide to stop or postpone major IT programs and projects without short term tangible benefits. While the result of doing so it immediate cost relief a broader look at the project portfolio can yield surprising results.

The good thing about the down-turn situation is that it will expose projects which have already been questionable for a long time, like that 3 year service oriented architecture (SOA) project, that 2 year data warehouse project or that 4 year global production system where the first 2 years is already spent on design. The CEO will see these projects on the corporate "big ticket" list and start asking challenging questions about the cash flow, benefit profile and risk about the projects. 

Whereas in the past, these projects have been protected by the label "strategic infrastructure investments" there is suddenly a momentum for reconstructing these projects and others with them into a high impact portfolio fulfilling 5 criteria:

1) Each project must be valuable. Projects must independently deliver accumulated benefits greater than the cost, so infrastructure projects should be broken into parts and bundled with other projects, e.g., dividing a data warehouse project into 5 sub-projects and integrating these into deliverables for more tangible projects such as ERP.

2) Value must be delivered step-wise. Each project must be value milestone at least every six months.

3) Business must have the organizational change capacity. There is no reason to insist on the existence of a large IT project if the business is not ready to receive it since, e.g., the focus is on organizational restructuring.

4) IT must have the delivery capabilities. If the IT organization or external provider has failed with a global IT project once then the chance is it could happen again unless corrective measures are taken, such as realigning leadership, governance, methodologies.

Restructuring a project portfolio typically takes 3 to 6 weeks depending on the scope and available transparency. 

About the authors: This article was written by a team of consultants from Oleto Associates, a strategy consulting firm based in Denmark. For more information please visit www.oleto.com.

December 2009