My team is somewhat unique within Microsoft IT in that we are a fairly senior team whose work spans all of the lines of business we support. We are accountable for helping our organization navigate the investment planning process and actively manage the IT portfolio. To this task, we bring a diverse range of expertise including Six Sigma, business architecture, portfolio management, and project management, among others.
We’ve developed a planning framework that we use to understand how business value is defined and how we subsequently realize it. This framework allows us to thread our planning expertise together in an end-to-end view and provide a vehicle for educating our clients about planning.
Business Value Definition
The first phases of planning are used to define what provides business value. These activities are represented in the semi-circle on the right starting with Strategy Development, Architecture Planning, and Demand Management.
Strategy Development is the activity of defining where the business would like to be in a 3-5 year time frame, what are the key outcomes that it is trying to achieve in that timeframe, the major change initiatives that will get them there, and the relative priority of those initiatives.
Architecture Planning is an activity of translating the strategy into business capabilities that will enable the strategy. These capabilities then must be understood in terms of their future state and compared to their current state implementation. The deltas between the current and future state and the prioritization of capabilities form the foundation of a strategic roadmap for realizing the strategy.
Demand Management is the activity of receiving and managing demand for an investment portfolio. This demand will constitute both strategic demand coming from the architecture planning work as well as tactical demands that serve near-term business interests. Managing this demands also involves performing some level of triage so as to focus only on those items that have some realistic expectation of delivering business value and normalizing the demands so that they can be easily compared. This is likely the activity in which business cases are created with ROI and other types of investment calculations to assist with portfolio optimization.
Business Value Realization
The last phases of planning are used to help realize the business value that has been defined and are represented by the activities that appear in the semi-circle on the left.
Portfolio Optimization is the activity of applying constraints – minimally funding but also other defined investment criteria – in order to determine the best portfolio of investments.
Portfolio Management is the activity of actively managing the portfolio to ensure that investment programs are on track to deliver the value that has been committed. Changes in priorities, funding, program delivery schedules , and other factors can disrupt the investment plan and may necessitate making changes to the investment plan.
The existing portfolio and its execution against business value, in turn, inform strategy development in a continuous cycle. I should note, however, that strategy is also informed by demand and other factors so the representation in the framework is a simplified understanding of planning and not meant to represent a linear process.
I will spend most of my time on this blog addressing the first two activities, partially because they represent my primary function at Microsoft, but also because I think this is the area that is most immature from a discipline perspective and less well-understood. There are other sources that are better informed than me on the downstream activities of demand management, portfolio optimization, and portfolio management so I will likely only address them in terms of their integration with strategy development and architecture planning.
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