The MDCM Board for Optimum IT Projects Portfolio Selection - Essay Example

?Recommendation report to the MDCM Board for Optimum IT projects portfolio selection Introduction: The MDCM IT portfolio management team has been assigned the task of studying and recommending the optimum IT projects portfolio for due consideration by the MDCM board. The Team has studied and through due diligence and thorough management exercises like Balanced Score cards and Brainstorming, arrived at its set of recommendations for the same. A Balanced scorecard can be derived from the strategic IT objectives of a firm (Kaplan and Norton 5). The team discussed the strategic goals of the company as part of the exercise and derived the strategic IT objectives from the same. Strategic IT objectives as derived from the Strategic goals of MDCM: 1. To create an integrated MDCM IT based network to achieve cost effectiveness and process efficiency. (SO1) 2. To increase use of the internet as a means of networking and communications for customers and suppliers.(SO2) 3. To focus upon IT consolidation by creating a single, centralized view of MDCM’s overall IT assets and capabilities and to develop a sophisticated IT capability which would speed up the information flow. (SO3) Methodology of the study: The team discussed the strategic goals of MDCM and arrived upon the strategic IT objectives. Further, the team studied the IT objectives and with due diligence exercises, arrived at the proposed IT projects to fulfill the strategic IT objectives. The projects have been coded for study and presentation purposes as P1 through P12. However, the MDCM board being the final decision making body, the team arrived at scorecards and a proposed portfolio for the board to consider for deciding the optimum portfolio. Also, the team has discussed the dependencies among the various projects for effective implementation of the same. Criteria for making scorecard weightages: Based on due diligence and feedback from the corporate functional heads, the criteria for assigning weightages to the Likelihood of success or risk Vs the Value to the Business were determined as follows: Likelihood of success (L) criteria, coded as L1 through L6: L1: Technical standards: 10% L2: Skills, capability and training: 10% L3: Scope and complexity: 25% L4: Business alignment : 22% L5: Risk : 21% L6: Management capability: 12% Value to the business (V) criteria coded as V1 through V6: V1 : Financial return: 30% V2: Customer and consumer focus: 20% V3: Supply chain business benefits: 15% V4: Technology efficiency: 15% V5: Knowledge advantage: 10% V6: Work/life balance: 10% The Corporate heads and the ITPM team were asked to rate the each of the projects on a scale of 1 to 10 as to the Likelihood of success of each project and its value to the organization based on the strategic IT objectives as discussed above. For example, the ‘L’ scores for project P1 on X axis that is Likelihood of success factors are tabulated as follows: P1 Criteria 'L' Score weight Max Score relative value absolute value L1 6 10% 10 60.00% 6.00% L2 4 10% 10 40.00% 4.00% L3 5 25% 10 50.00% 12.50% L4 7 22% 10 70.00% 15.40% L5 8 21% 10 80.00% 16.80% L6 7 12% 10 70.00% 8.40%         Total Value 63.10% Where, ‘L’ represents: The Likelihood of success of the given project ‘Score’ is the mean rating given by the ITPM team for the given IT project on the respective ‘L’ factor. ‘Weight’ is the weightage assigned to the respective ‘L’ factor ‘Max Score’ is the Maximum rating that can be given to a project for the respective ‘L’ factor. ‘Relative value’ is the relative rating of the project on the given ‘L’ factor. ‘Absolute Value’ is the weighted rating of the project on the given ‘L’ factor. Total Value is the total weighted rating of the project on all the ‘L’ factors. Similarly, the ‘V’ scores for project P1 were as follows: P1 Criteria 'V' Score weight Max Score relative value absolute value V1 7 30% 10 70.00% 21.00% V2 8 20% 10 80.00% 16.00% V3 6 15% 10 60.00% 9.00% V4 6 15% 10 60.00% 9.00% V5 5 10% 10 50.00% 5.00% V6 7 10% 10 70.00% 7.00%         Total Value 67.00% Where, ‘V’ represents: The value of the given IT project for the business or the company ‘Score’ is the mean rating given by the ITPM team for the given IT project on the respective ‘V’ factor. ‘Weight’ is the weightage assigned to the respective ‘V’ factor. Max Score is the Maximum rating that can be given to a project for the respective ‘V’ factor. Relative value is the relative rating of the project on the given ‘V’ factor. Absolute Value is the weighted rating of the project on the given ‘V’ factor. Total Value is the total weighted rating of the project on all the ‘L’ factors. The rest of the tables for above results are included in the appendix section of the recommendation report. Results and discussion: List of projects, links to the Strategic IT goals and Evaluation by the CIO and ITPM Unify Methodology and Technical Standards (P1) The Salient features of the project are reduction of project cycles through knowledge sharing and elimination of varying standards across the company. Examples: Development, Adoption and Training of IT professionals on the new common IT standards in terms of Technological protocols. This can be achieved through incorporating common report generator applications and MIS systems. Evaluation of the project by ITPM team: The ITPM team evaluates the project as having relatively high costs/risks compared to the small and efficient competitors who are already using the unifying technologies and common standards, though it is going to be of immense value, once it is adopted. Total ‘L’ score by the team: 63.10% Total ‘V’ Score by the team: 67% Consolidate Data Centers and Networks (P2) The most important project recommended under this head is creation of a companywide VPN, which will in turn enable smooth implementation of unification of IT applications like financial, operational and communication technologies across the company. The VPN shall be managed through a major telecommunications company. The projects and initiatives under this head are supposed to save under the company an estimated $1.1 million, by virtue of reduction and consolidation of the data centers. This is in alignment with the cost cutting measures of the company. Even in terms of reliability, the new project or system scores over the earlier practices. The new project will help gain financial leverage and customer focus, and to some extent on the supply chain efficiencies. However, on the down side, the project is supposed to tie down all the networking staff for a period of six months, besides the network interruptions it entails. The ITPM team evaluates it as being highly rewarding, but cautions about the possible bottlenecks in terms of temporary staffing and networking problems. The ‘L’ score by the team for this project is: 68.20%, whereas the ‘V’ score is 71%. Outsource non strategic IT services (P3) The outsourcing of services like help desk support, both Technical and product based is being proposed as part of this initiative. Also, the hardware maintenance support for the internal IT systems is also proposed. The ITPM team sees this project as a means to make sizeable savings within a period of twelve months. The ITPM Team ‘L’ score is 52.40% whereas the ‘V’ score is 60%. Standardize Server Hardware and Platforms (P4) The project to standardize the server and hardware platforms like windows and UNIX systems is proposed as means to cut IT maintenance costs. Common platforms would help reduce the costs involved in maintaining the vendor systems and services in a cost effective manner. However, the exercise requires due diligence regarding the best systems that support the vendor operations of the company. Although the new project will reduce the complexity of vendor services and support efforts, the Technical standards it will enforce will require the company to divert focus on protocols and regimes and their maintenance. The ITPM team ‘L’ score for this project is 45.70%, whereas the ‘V’ score is 57.50 %. Implement Enterprise Resource Planning (P5) The proposed project of Enterprise Resource Planning although promises to transform the production and vendor management capabilities of the company to a desirable level, however, the bottlenecks and the costs involved make it a less attractive proposition for the company to adopt at this time. The high cost of the ERP consultants and the high degree of complexity and implementation expertise required makes it time consuming to implement. The ITPM team estimates that it will take $30 million and another twelve months to implement. The ITPM team ‘L’ score for the project is 36.60%, whereas the ‘V’ score for the project is 60%. Create Employee Intranet Portal (P6) The recommendation under the above project is to create a web tool to support the Human resource administration functions of the company. The need for such a system comes from the international growth of the company. The proposed project is not very expensive in terms of both time and money costs and is relatively easy to implement. The proposed project which is focus on cutting HRM costs worldwide for the company, is not seen as something of huge value to the company, however, considerable cost cutting is entailed and thus is recommended for a favorable look. The ITPM team ‘L’ score for this project is 78%, whereas the ‘V’ score for the same is 41%. Mange the supply chain (P7) The initiatives under this project are meant to connect better to the reduced number yet increasingly important key suppliers. The Supply chain communications could be improved by the IT applications that manage the ordering and supplier relations smoothly and efficiently. The project is dependent on the ERP and this dependency makes it less attractive to the ITPM team. However, thus far the system was outsourced to the software vendor i2. Ideally though own software system to manage supply chain seems desirable as it will be less expensive and if aligned to the ERP system, then will be more cost and time efficient. However, the independent implementation of the project shall take nine to twelve months for the company. The ITPM team ‘L’ score for this project is 53.90%, whereas the ‘V’ score for the same is 62.50%. Streamline design systems (P8) The company has advocated the best CAD systems for its design engineers. The above project aims to implement the use of the customized CAD software as this will help further reduce costs and implementation bottlenecks. However, the complexity involved had kept the company so far from going for the said option. Traditionally though, the company had been purchasing off the shelf CAD software like AutoCAD, CADAM and Catia. An economical option would be to use an outright purchased system as compared to custom software, incase the costs and complexity of development are too high. The CADAM and Catia software could be used for purpose. The ITPM team ‘L’ score for the above project is 55.4%, whereas the ‘V’ score for the same is 55 %. Improve collaboration systems (P9) Knowledge management and collaboration software systems like emails, discussion boards need to be streamlined to serve as an effective means of information flow within and outside the company on a global level. The project shall involve a lot of internal resources in terms of IT expertise and design competencies. The ITPM ‘L’ score for this project is 69.30%, whereas, the ‘V’ score for the same is 52.50%. Begin CRM/Data warehouse (P10) The company needs to implement the CRM modules at a global level taking a cue from its French subsidiary which has already successfully implemented the same. The French subsidiary is already reaping the benefits of the CRM applications and has increased its customer share. The company would do well to create a data warehouse for the same and implement the CRM based on that and reap the marketing benefits that follow. However, the project will be a mammoth exercise and will take nine to twelve months to implement. Besides, the cost of implementation shall be to the tune of $15 million. The payback or return on investment may take more than three years to come by. Since the complexity of the system requires Training and orientation on CRM systems across the organization. The ITPM team ‘L’ score for the above project is 28.30%, whereas the ‘V’ score for the same is 71%. Implement e-procurement system (P11) As observed earlier, the company gained significantly by aggregating the purchases, which helped maximize savings. The purchases could be further streamlined and be made more cost effective by implementing an e procurement software system. This helps increase the rate of flow information and expedites the procurement process further. The great level of consolidation of internal purchasing through e procurement shall also ensure further cost savings for the company. The ITPM team ‘L’ score for the project is 63.60% and the ‘V’ score for the same is 62.50%. Customer Self Service Portal (P12) The heads of departments feel that the Marketing team they have is very competent, however it is unable to deliver results due to being engaged in petty and routine nature of customer service transactions and is unable to focus on their core functions. This means a loss in productivity for the marketing team and as such incurs loss to business as well. The above project proposes to minimize this factor by development of self service software, wherein the routine nature of queries and problems could be solved by the customers themselves. The IT team of the company is quite capable and can develop and implement the project in next six months. However, on the downside, the disparate data centers and outdated network systems make it difficult to implement. This ITPM team feels this project depends on the Project P2 that is the consolidation of Data centers and networks. The ITPM team ‘L’ score for this project is 55.30%, whereas the ‘V’ score for the same is 52%. Relationship between the Projects and Strategic IT goals The strategic IT objectives are summarized and coded as under: SO1=systems and process Integration SO2=Internet communication SO3=IT Consolidation The linkage between the strategic IT objectives and the IT projects are as under: Projects P1, P3, P5, P7, P8, P10 and P11 are linked to SO1 Projects P6, P9, P10 and P12 are linked to SO2 Projects P2, P4, and P10 are linked to SO3 Evaluation of IT projects as discussed above based on score card and the Portfolio application Model The IT projects as mentioned above were evaluated on score cards and the results are summarized as under: Tabulation of final score card: Project code X axis Likelihood of success (‘L’score) Y axis Value to the business(‘V’ score) P1 63.10 % 67.00% P2 68.20 % 71.00% P3 52.40% 60.00% P4 45.70% 57.70% P5 36.60% 60.00% P6 78.00% 41.00% P7 53.90% 62.50% P8 55.40% 55.00% P9 69.30% 52.50% P10 28.30% 71.00% P11 63.60% 62.50% P12 55.30% 52.00% Figure 1 IT Portfolio Application matrix based on scorecard evaluation The figure 1 above is a representation of IT application portfolio matrix for the Projects P1 to P12 as recommended for MDCM. It can be seen that the most of the projects lie in Upper right corner. The projects in the upper right corner are P2, P3, P4, P7, P8, P11 and P9 and have high value to the business and ability to succeed. These projects should be funded selectively. None of the Projects are in the lower left corner of the matrix. Thus none of the proposed projects have low value and high risk and can be funded. Projects P5 and P10 are in the upper left of the matrix and have high value to the company but are difficult to execute. These projects may be drivers for the long-term competitive advantage of the firm, but there is a high risk associated with them. A risk management plan can greatly improve the ability to succeed score. In order to reduce the risk for a large project, the project may be broken into components or phases that each have a high ability to succeed. Project P6 falls in the lower right corner of the matrix and has low perceived value but a high ability to succeed. IT executives may choose to selectively fund projects this project because they can be easy wins for the IT team. This project may yield high visibility to the IT team with little effort. Approximate sequence for executing the initiatives (dependencies) Project P1 can be independently perused. However, Projects P2 through P12 can not be perused without P1. Projects P5 through P8 and P10 can not be implemented without first implementing project P4 Project P7 is dependent on P5 and can not be implemented without the latter. Project P12 is dependent on Project P2 and can not be implemented without the latter. References Robert S. Kaplan and David P. Norton. Strategy maps: converting intangible assets into tangible outcomes. Harvard Business Press, 2004. Print. Read More