Process 4: Develop and Evaluate IT Service Portfolio

 

When an organization has finalized its IT service strategy, the business and IT must determine which projects and services best support that strategy. The IT service portfolio is the list of those projects and services. Ensuring that the right services and projects are included in the portfolio requires the following components:

  • Proposed projects aligned to IT strategy initiatives
  • A list of projects in the queue, implemented services, and services slated for decommission
  • A prioritization and approval process for new projects
  • A measurement system for determining the value of services in relation to business goals

The IT service portfolio drives the alignment of IT resource consumption, the operating budget, and investment strategies that support the IT service strategy. The portfolio’s primary users are the business and IT leaders responsible for realizing business value from the investment in IT.

Activities: Service Portfolio

The following table lists the activities involved in this process. These activities include:

  • Defining the structure and composition of the IT service portfolio.
  • Measuring the value of IT services in relation to business outcome.
  • Analyzing and approving new project concepts.
  • Publishing a portfolio.

Table 8. Activities and Considerations for Developing and Managing an IT Service Portfolio

Activities

Considerations

Define structure and composition of IT service portfolio

Key questions:

  • How should the service portfolio be structured? How should various categories for IT assets be classified (for example, core differentiator services such as manufacturing or customer knowledge systems; business function systems such as payroll or a benefits portal; or utility services such as a network or server farm)?

Inputs:

  • Existing business plans and financial models
  • Company investment structure or models

Outputs:

  • Definition of the service portfolio structure and substructures
  • Service descriptions (what the service is, what business processes are supported, and dependent service components)
  • Asset categories for classifying IT investments in the context of business services

Best practices:

  • Consider including the following elements in the service portfolio:
    • Service name: Spell out all services (including infrastructure services) in business terms.
    • Business functions supported by the service: Identify the business processes and functions that rely on the service.
    • Service contribution to the organization: Explain in terms of lower costs, competitive advantage, or regulatory support.
    • The business sponsor: A business unit manager who directly supports the IT service through financial commitments.
    • IT business relationship manager: The individual responsible for ensuring communication and alignment between IT and the organization.
    • Roadmap: Information about the next planned upgrade or possible replacement or decommission; upcoming two- to three-year plan.

Measure value of IT service in relation to business outcome

 

Key questions:

  • What constitutes business value, and how will it be measured? What about customer perception and business impact? Can IT measure value the same way the business measures value through models such as return on investment (ROI), net present value (NPV), economic value added (EVA)? (See the Financial Management SMF for more information.)
  • What criteria are needed to support investment decisions (value, costs, or risk tolerance)?

Inputs:

  • Approved enhancements or improvements to IT service strategy, defined in terms of business opportunity or requirements
  • Service maps that link relationships between customers, business processes, applications, and IT infrastructure components

Outputs:

  • Service value statement describing how the IT service supports lower costs, strategic advantage, or regulatory support

Best practices:

  • Be mindful of the way you package the services. Cost models, component packaging, pricing at different service tiers, and bundling options will drive users’ purchasing behavior.

Analyze and approve new project concepts

Key questions:

  • What details of the project are required for this first level of approval?
  • How will the project demonstrate clear connection and support of the defined initiatives in the IT strategy?
  • How will prioritization of projects occur? How will you ensure consistency during the prioritization process?
  • Who should be on the approving advisory board? How can the change advisory board ensure a business focus for this type of approval?  (See Governance, Risk, and Compliance and Change and Configuration SMFs for more information.)

Inputs:

  • Project concept proposals
  • Advisory board with approval authorization
  • Prioritization method and process

Outputs:

  • Approved set of projects with an owner assigned
  • Communication of approved project concepts

Best practices:

  • When project concepts receive approval, it is important to identify a team and start the Deliver Phase of the IT service lifecycle. This begins with the envisioning process. For more information, see the Deliver Overview.
  • Assign an approval body that has budget authority and accountability to ensure results for the business and IT governance. For more information, see the Manage Overview.

Publish portfolio

Key question:

  • How will users view the portfolio? Who needs a view into each project and at what level of detail?

Input:

  • List of approved projects

Output:

  • Published, updated portfolio

Best practices:

  • Make sure each project has the following documented:
    • Point of contact
    • Associated service and/or organization group
    • Description and expected benefit
    • Timeline
    • Resources
    • Risks, assumptions, and possible obstacles
  • Categorize projects in the portfolio using the following designations:
    • IT-initiated strategic investment
    • Business-instantiated strategic investment
    • Compliance or regulatory required project
    • Sustaining or improvement project
    • Reactive project due to technology or business shift

This accelerator is part of a larger series of tools and guidance from Solution Accelerators.

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