As IT grapples with the “doing more with less”, recessionary markets are causing companies to slash budgets even further. Unfortunately, cost-cutting intensifies rifts between IT and corporate since reduced budgets mean IT lacks resources to support strategic business initiatives. Now more than ever, companies need to be smart about technology investments – knowing when and where to invest – not only to increase productivity but to gain competitive advantage. That’s where Portfolio Based Resourcing can help.
Portfolio Based Resourcing uses Portfolio and Project Management practices to intelligently develop headcount plans – based upon annual strategic initiatives and operational activities – and align proper financial and labor resources. Portfolio Based Resourcing provides:
- Focus on executing priority projects that can be completed efficiently, with limited resources;
- Rational budget allocation based on the likelihood of project success and completeness;
- Communication of IT’s value;
- Trust and partnership between IT and the overall business.
All project-related and operational planning information is collected in a “portfolio” that is matched against strategic objectives and then sorted and prioritized. This aerial view of projects helps management effectively allocate resources, monitor competing priorities and change course if required. Outputs include better awareness of core company requirements and more effective cost-reduction decisions.
There are different ways to adopt Portfolio Based Resourcing practices. Some organizations apply them at a corporate level, targeting entire enterprise needs. Others apply practices just for IT to better manage core processes.
Even just applied at the IT level, this concept is incredibly impactful. How? A large entertainment company I have worked with discovered 80% of their operational development budget was going to new enhancements, despite a directive from the CIO to focus solely on “keep the lights on” activities. This was due to lack of insight into work done by outsourcing partners, as everything from maintenance to enhancements was viewed simply as a request. When the CIO was confronted with the larger than expected partner invoices, he had no choice but to make cuts throughout. He only stopped after one outsourcing partners suggested cutting enhancement requests first. The suggestion made sense but he didn’t have good visibility into the priorities of these initiatives.
The CIO worked with Acquity Group to put into place Portfolio Based Resourcing practices that increased visibility into each business unit’s requests, request priorities, and justification. In addition, he put strong demand managers in place to prevent unneeded enhancements. These efforts eliminated the “it’s outsourced, it’s cheap, so let’s just do it” mentality and reduced enhancement costs by 60%.
Whether economic conditions are positive or negative, IT must run as a business keeping corporate goals in mind. It’s time for organizations to embrace Portfolio Based Resourcing to control investments and guarantee they are delivering meaningful value.