Agenda
 Portfolio Approach to IT Projects
 IT Governance and Leadership
 Case 3-2: Volkswagen of America : Managing IT
Priorities
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A Portfolio Approach to
Managing IT Projects
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A Portfolio Approach to Managing IT Projects
 Three IT Deficiencies
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Failure to assess the implementation risk of a project at the
time it is funded
Failure to consider the aggregate implementation risk of a
portfolio of projects
Failure to recognize that different projects require different
managerial approaches
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Projects Typically Fail
 Over budget
 Average cost overrun: 189%
 Delivered late
 Average schedule overrun: 222%
 Failed to meet expectations
 Average coverage: 61%
 Larger companies are even worse
[Standish Group, 2004]
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Source of Implementation Risk
 Project size
 Experience with the technology
 Requirements volatility
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Effect of Adding Rick Factors
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Risk Metric
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Managing the “Dip” during Project Implementation
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IT Governance, Leadership,
and IT Investment
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IT Governance
IT Requires Executive Oversight
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An apparel manufacturing company’s difficulties in installing supply
chain software cost it an estimated US $200 million
A publicly traded company admitted that a virtual collapse of its
financial reporting system reduced its market value by one-third in a
single day
An operational meltdown after the merger of two transportation
companies was traced to the inability to coordinate their IT systems
Oversight Can Lead to Value Creation
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A major airline’s supply chain transformation improved the forecast
of demand, reduced procurement costs and increased service levels
while costs fell
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A technology products and services company saved US $12 billion
over two years by linking up disparate pieces of its supply chain,
thereby reducing inventory levels
IT Governance Is the Key Issue
 Enterprises
are sacrificing money, productivity and
competitive advantage by not implementing
effective IT governance
 Executives need a better way to:
Direct IT for optimal advantage
 Measure the value provided by IT
 Manage IT-related risks
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Information Systems Audit and Control Association
Inc.

IT Governance Institute Inc.
A Road Map to Good IT Governance
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Accepted globally as a set of tools that ensures IT is working
effectively
Functions as an overarching framework
Provides common language to communicate goals, objectives and
expected results to all stakeholders
COBIT® - based on, and integrates, industry standards and best
practices in:
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Strategic alignment of IT with business goals
Value delivery of services and new projects
Risk management
Resource management
Performance measurement
Harmonizing the Elements of IT Governance
IT
Governance
Resource
Management
IT Governance Institute Inc.
®
COBIT Used by Organizations Worldwide
also used by Allstate, Harley-Davidson,
the Bahrain Civil Service Bureau and many others
IT Leadership
 Two sets of tensions
 Innovation and Control
 IT staff and Business Users
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IT Leadership
 Drivers toward User Dominance
 Pent-up Users Demand
 Need for Staff Flexibility
 Growth in the IT Services industry
 Users’ Desire to Control Their Own Destiny
 Fit with the Organization (i.e., division, function)
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IT Leadership
 Drivers toward User Centralized IT Structure
 Staff Professionalism
 Standard Setting and Ensuring Systems Maintainability
 Envisioning Possibilities and Determining Feasibility
 Corporate Data Management
 Cost Estimation and Analysis
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IT Leadership
 Manage the Tension
 Clear policy to specify the user domain, the IT domain, and
senior management’s role.
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IT Leadership – Who’s Responsibility?
Six IT Decisions your IT People Should Not Make
(Ross and Weill, 2002, HBR)
 How Much we should spend on IT?
 Which business processes should receive our IT dollars?
 Which IT capabilities need to companywide?
 How good do out IT services need to be?
 What privacy and security risks will we accept?
 Whom do we blame if an IT initiative fail?
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