UK: Portfolio Management for e-Government

Last Updated: 7 August 2003
Article by Ivan Hall

"The fundamental question in today’s turbulent business environment is how does an enterprise select the right business and technology investments, and then turn those investments into tangible results."

Michael Poehner, Chief Executive Officer,
Fujitsu Consulting
[an extract from "The Information Paradox"1]

The possibilities are infinite but it’s winners that Government needs now. How do Government organisations ensure they are picking the winners? And once picked, how do they ensure they stay the course?

Background

The benefits from e-Government are significant both in terms of improved service delivery and improved performance. Picking e-Government programmes that will turn out to be winners, however, is more of a lottery. There is competition between projects, investment resources are scarce and anticipated benefits are sometimes less than tangible. Added to this, Government’s track record of delivering significant IT-related projects makes for poor reading. Some commentators consider there are high profile projects that should never have got to the starting gate.

So how can Government organisations align their investments with their e-Government strategies? How do they differentiate between alternative (and apparently worthy) e-Government projects? And how do they build a balanced portfolio, a justifiable e-Government Delivery Programme, that maximises benefits for customers, staff and other stakeholders?

Portfolio Management can help address all these issues, this article describes how.

The e-Government story so far

Government always recognised that the drive towards e-Government would encounter some significant risks. In response to these risks, most Government organisations have established e-Government strategies that align their aims and objectives with their formative change plans.

These strategies and plans have certainly clarified e-Government thinking. However, they have also brought a myriad of competing possibilities for change, often with technology as the common enabler. The resulting problem is that there are now more ideas for potential investments than capability and resources to execute them. This means that priorities have to be determined and choices made. But how do you do that when:

  • Change is contextual. Simply repeating the good practice of others does not guarantee the same level of benefits will be attained
  • Circumstances change too. Benefits that are expected from an investment today may not be there tomorrow. You can’t assume that benefits are "locked in"
  • Human factors can be major inhibitors. People have a limited capacity for change and significant investment is needed to attain (and maintain) their commitment
  • Prioritising investments on pure political considerations can be bad news. There’s no room for pet projects or an environment where "decibels produce decisions"!
  • Investments for a short-term financial return are often ineffective. But a longer-term financial return (invest to save for example) can provide much-needed focus
  • There is a blurring of boundaries between Government sectors. This can, however, provide opportunities to "push the envelope" and to pool resources, capabilities and infrastructure.

Fundamental change is afoot

Building on existing strategies and learning experiences, the task currently facing Government organisations is to establish a robust e-Government Delivery Programme (eGDP) that delivers on their e-strategy commitments; is adequately resourced; and demonstrates a justifiable return on investment. A credible eGDP will not only demonstrate the relationships between drivers, enablers and beneficial outcomes at a programme/project level, but will also track interdependencies between programmes.

Building and gaining commitment to such an eGDP can, however, be challenging. So far, most Government organisations have focused their strategic developments on the electronic provision of information. This has proved relatively straightforward, as developments have tended to be stand-alone and have used existing capabilities and proven technologies. The trail between drivers and outcomes has also been relatively easy to follow.

It’s the next phase of the programme that will be much more demanding. If benefits are to be optimised and risks contained, fundamental changes - business, organisational and technological – will be essential. What’s needed now is:

  • A mindset of business transformation directed to the needs of customers, staff and other stakeholders
  • A focus on e-enabling higher volume services and maximising take up
  • The use of common building blocks that provide cost effective support and reuse
  • A commitment to risk management rather than avoidance
  • Genuine collaboration between Government and partners in the public, commercial and voluntary sectors.

According to Forester Research, 86% of Chief Information Officers (CIOs) have experienced reductions in their IT budgets. And prioritisation tops their list of concerns.

At Meta Group, Industry analysts estimate that effective portfolio management of investment programmes can reduce costs by 30-40%.

The Big Issues

The right mindset, focus and commitment are all key e-Government enablers. Inevitably there are blockers and some hard choices down the line; for example, how do you:

  • Do more with less – investment choices that make the budget go further?
  • Compare and contrast programmes that deliver "apples" and "pears" - each with a similar perceived value?
  • Create symbiotic partnerships between organisations that have differing objectives, capabilities and priorities?
  • Reconcile tensions between minimising risks and maximising Return on Investment (RoI)?
  • Persuade senior managers to redistribute budgets across "silos" for the common good?
  • Coordinate related projects into "programme hybrids" that better address the priority needs of stakeholders?
  • Articulate robust business cases to internal and external investors and to programme "monitors" such as OGC?

The answer to these questions lies with a robust methodology that clearly defines, differentiates and prioritises optional programmes and that establishes a balanced portfolio of investments.

These are the essences of Portfolio Management.

Portfolio Management – What is it again?

Portfolio Management is a proactive approach that helps organisations to make better investment choices. It helps to prioritise and select programmes and projects for inclusion in a portfolio of high(er) value investments.

Some case studies from the USA …

A large telecommunications company has used Portfolio Management to enable almost 30% of its $70m portfolio to be "taken off the table" and made available for higher value investments.

The US Federal Government’s Office of Management and Budget (OMB) is using Portfolio Management to manage its top 24 e-Government initiatives.

The Inland Revenue Service (IRS) has used Portfolio Management to prioritise its current portfolio after recent budget cuts.

In a UK e-Government context, the portfolio will be the eGDP, a justifiable programme of technology-enabled change.

But how do I make it work for me?

The key to successful implementation is a holistic approach that covers all key aspects of the enterprise. Portfolio Management for e-Government is like any other fundamental change initiative, it must address the different facets of the organisation, including the business strategy, people, culture and tools:

Business strategy

Existing e-Government strategies will provide the baseline for decision-making and help establish the appropriate balance and shape of the portfolio, including the time horizon on benefits – short, medium or long-term returns. They should also articulate the organisation’s propensity for managed "risk taking".

People

Portfolio Management requires no change in organisational structures only the clarification of certain roles and responsibilities. Two key enablers are an Investment Board, a forum of senior executives, to make the ultimate investment decisions; and a Support Operation that facilitates the creation of consistent and comparable business cases. Many Government organisations have these already although maybe under other titles.

Culture

For most organisations, the implementation of Portfolio Management constitutes a significant cultural change, a mindset where benefits realisation is uppermost in all investment decisions.

A New Way of Thinking

Tools

In the past, Portfolio Management has been carried out using custom-developed spreadsheets. However, these tend to have long development lead-times, high maintenance overheads and a reliance on experts. They are also relatively unsophisticated in their data analysis capabilities.

Nowadays there are specialist software tools that offer "industrial strength" Portfolio Management solutions. Such tools fall into two main types - those that are extensions of project management tools and others that take a more top-down approach with a perspective of executive decision making.

The latter is considered a more effective approach for e-Government, particularly, as it:

  • Delivers much-needed flexibility to meet the more dynamic e-Government environment
  • Provides powerful visualisations that enable communication with and commitment from stakeholders.

Portfolio Management - What are the outputs?

Typical outputs from one of the more effective Portfolio Management tools2 are below. These consist of a Benefits Roadmap and a Sample Portfolio.

Benefits Roadmap

A Benefits Roadmap can show at a glance how the individual components of an eGDP fit together. It will contain a combination of initiatives, assumptions and contributions and how these link together to provide beneficial outcomes.

Benefits Roadmap

The key benefits of such a roadmap are that:

  • It translates a web of expressed requirements into a relatively simple picture that can be used to facilitate consensus with partners and funders
  • It can be flexed to meet alternative views and changing circumstances
  • It can be articulated at a whole (eGDP) programme, sub-programme or individual project level.

Sample Portfolio

Once relevant roadmaps have been completed, the tools can be used to help determine choices between alternative e-Government investments and/or enable the more effective allocation of resources.

The process involves an iterative Benefits/Risks Assessment of proposed investments based on four themes and underpinning questions

  • Alignment - Are we doing the right things?
  • Integration - Are we doing them the right way?
  • Efficiency - Are we getting them done well?
  • Realisation - Are we getting the benefits?

Based on the answer to these four "Are’s3", the eGDP can be expressed on one or more graphical representations to determine which combination of programmes/projects provide the required balance of value and risk. Actions can then be taken as appropriate, including those difficult decisions where there is a need to stop or redirect previously approved investments.

A Winning Formula

The vast majority of managers of eGDPs will be faced with the dilemma of too many choices, too few resources and too many instances of intangible benefits. Portfolio Management can’t make choices for executives, nor can it conjure up additional money or staff with the capacity to make change happen.

Portfolio Management does provide an effective governance approach and a robust toolset to enable the assessment, justification and communication of the most difficult investment decisions. For Government, effective Portfolio Management is a powerful tool that can help executives to focus on eGDP investments that deliver the greatest value and to make better-informed choices on where investments are to be made.

1 "The Information Paradox" written by John Thorp and Fujitsu Consulting’s Centre for Strategic Leadership, McGraw-Hill Ryerson

2 For example, the Enterprise Value Management toolset from Fujitsu Consulting

3 Each of the "Are's" are shown as a segment with a square and are colour coded

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

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