Technology Portfolio Management
March 8, 2012
Healthcare executives are always looking for ways to reduce overall costs and increase return on investment. It is estimated that 80% of an IT non-payroll budget is spent on maintaining existing system and software infrastructures within the organization. To meet this challenge it is imperative that executives have strategies that enhance their decision making in identifying, selecting, financing, monitoring and maintaining a mix of assets that balance the desired outcomes with alignment of IT to the organization’s goals. Three key strategies are :
Technology Portfolio Management
Lifecycle Management
Contract Management
This blog is about Technology Portfolio Management (TPM). Other blogs address Lifecycle Management and Contract Management. TPM is the identification and assessment of technology assets. These assets include the hardware, software, operating systems, data and projects within the organization. Items frequently forgotten but which should be included are telephones, PDA’s and cell phones, printers, copiers, TV’s, hands-free communication devices and others. The benefits of TPM are many, including:
TPM identifies technology that is underutilized, absent, redundant, obsolete or nearing the end of its life cycle. It assists in determining technology to eliminate, keep, or replace. New technology opportunities may also be identified.
TPM supports IT decision-making as it enhances the ability of management to assess the impact of investments on an organization’s programs, IT infrastructure and finances.
TPM lowers asset maintenance providing newly available time, money and resources for other value added work.
TPM is used to prioritize technology spending and the level of funding each technology receives. This ensures that the costs are aligned with an organization’s values.
There is no single way of doing TPM, but it generally consists of the following steps:
Defining the evaluation criteria important to the organization. For example, return-on-investment, risk or cost avoidance, or revenue enhancement.
Creating a comprehensive technology asset inventory list. The list should identify the asset, a description, value received, risks (financial, strategic, operational, compliance), opportunities, owner, end user, platform (server, mainframe, PC, etc), technical architecture (infrastructure, application or business intelligence), business function (technology driven innovation, focused business improvement, or core business enabler) technical condition, implementation date, contract terms, and operations cost data.
Performing a technology assessment in terms of the evaluation criteria and other business, technical, financial and operational factors.
Developing recommendations regarding technology to eliminate, keep, replace or purchase providing supporting information such as importance of the asset to the organization, level of funding required by the asset technology, risks associated with the asset, cost savings, the asset lifecycle management plan, etc.
The organization’s senior management and other decision makers use the information to determine the size, scope, and composition of the IT investment portfolio and integrate the decisions into the organization’s planning and budgeting policies and processes.
Rolling out a communication plan that develops awareness and buy-in around the portfolio, goals, status and changes.
Establishing a technology acquisition process for the acquisition of hardware and software; Maintenance/Support renewals; business process outsourcing; and agreements with consultants for IT work. All projects/investments should require a feasibility study and investment appraisal to determine the strategic and/or business case for the request.
Creating an IT governance committee for ensuring effective portfolio management. This requires ongoing management and maintenance. Governance committees can focus their assessments on critical project vital signs and establish a method for determining if projects are having a positive or negative impact on the IT portfolio and determining what needs to be done.
The strategies discussed rely more on processes, procedures and low-tech solutions such as a MS-Excel spreadsheet or simple database. Software solutions that automate and consolidate the TPM processes have only been available in the past few years but are catching on. Whether the solution implemented is low-tech or high-tech, both will improve an organization’s decision making by providing visibility into its assets, lifecycle stage and maintenance costs, and the ability to closely manage them. This can lead to cost savings, improved budgeting, risk reduction, and enhanced regulatory compliance.
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