V 4 Optimize IT Project Intake Approval and

V 4 Optimize IT Project Intake, Approval, and Prioritization Decide which IT projects to approve and when to start them. Info-Tech Research Group, Inc. is a global leader in providing IT research and advice. Info-Tech’s products and services combine actionable insight and relevant advice with ready-to-use tools and templates that cover the full spectrum of IT concerns. © 1997 -2018 Info-Tech Research Group Inc. Info-Tech Research Group 1

ANALYST PERSPECTIVE Capacity-constrained intake is the only sustainable path forward. For years, the goal of project intake was to select the best projects. It makes sense and most people take it on faith without argument. But if you end up with too many projects, it’s a bad strategy. Don’t be afraid to say NO or NOT YET if you don’t have the capacity to deliver. People might give you a hard time in the near term, but you’re not helping by saying YES to things you can’t deliver. Barry Cousins, Senior Director, PMO Practice Info-Tech Research Group 2

Our understanding of the problem This Research Is is Designed For: This Research Will Help You: üPMO Directors who have trouble with project üAlign project intake and prioritization with throughput üCIOs who want to improve IT’s responsiveness to changing needs of the business üCIOs who want to maximize the overall business value of IT’s project portfolio resource capacity and strategic objectives üBalance proactive and reactive demand üReduce portfolio waste on low-value projects üManage project delivery expectations and satisfaction of business stakeholders üGet optimized project intake processes off the ground with low-cost, high-impact tools and templates This Research Will Also Assist: This Research Will Help Them: You: üC-suite executives and steering committee üEnsure that high-impact projects are approved members who want to ensure IT’s successful delivery of projects with high business impact üProject sponsors and product owners who seek visibility and transparency towards proposed projects and delivered in a timely manner üGain clarity and visibility in IT’s project approval process üImprove your understanding of IT’s capacity to set more realistic expectations on what gets done Info-Tech Research Group 3

Executive summary Situation • As a portfolio manager, you do not have the authority to decline or defer • new projects – but you also lack the capacity to realistically say yes to more project work. Stakeholders have unrealistic expectations of what IT can deliver. Too many projects are approved, and it may be unclear why their project is delayed or in a state of suspended animation. Complication • The cycle of competition is making it increasingly difficult to follow a • longer-term strategy during project intake, making it unproductive to approve projects for any horizon longer than one to two years. As project portfolios become more aligned to “transformative” projects, resourcing for smaller, department-level projects becomes increasingly opaque. 1. Approve only the right projects… Counterbalance stakeholder needs with strategic objectives of the business and that of IT, in order to maintain the value of your project portfolio at a high level. 2. …that you have capacity to deliver. Resource capacity-informed project approval process enables you to avoid biting off more than you can chew and, over time, build a track record of fulfilling promises to deliver on projects. Resolution • Establish an effective scorecard to create transparency into IT’s capacity and processes. This will help set realistic • • • expectations for stakeholders, eliminate “squeaky wheel” prioritization, and give primacy to the highest value requests. Build a centralized process that funnels requests into a single intake channel to eliminate confusion and doubt for stakeholders and staff while also reducing off-the-grid initiatives. Clearly define a series of project approval steps, and communicate requirements for passing them. Developing practices that incorporate the constraint of resource capacity to cap the amount of project approvals to that which is realistic will help improve throughput of projects through the portfolio. Info-Tech Research Group 4

Most organizations are good at approving projects, but bad at starting them – and even worse at finishing them Establishing project intake discipline should be a top priority from a long-term strategy and near-term tactical perspective. Most organizations approve more projects than they can finish. In fact, many approve more than they can even start, leading to an ever-growing backlog where project ideas – often good ones – are never heard from again. The appetite to approve more runs directly counter to the shortage of resources that plagues most IT departments. This tension of wanting more from less suggests that IT departments need to be more disciplined in choosing what to take on. Info-Tech’s data shows that most IT organizations struggle with their project backlog. “There is a minimal list of pending projects” 90% 40% 34% 20% “Last year we delivered the number of projects we anticipated at the start of the year” 40% 35% 85% 30% 21% 10% 31% 30% 24% 13% 10% 7% 3% Agree Strongly agree 0% 2% 0% Strongly disagree Disagree Ambivalent Agree Strongly agree N=397 organizations, Info-Tech Research Group PPM Current State Scorecard, 2017 Info-Tech Research Group 5

The concept of fiduciary duty demonstrates the need for better discipline in choosing what projects to take on Unless someone is accountable for making the right investment of resource capacity for the right projects, project intake discipline cannot be established effectively. What is fiduciary duty? Officers and directors owe their corporation the duty of acting in the corporation’s best interests over their own. They may delegate the responsibility of implementing the actions, but accountability can't be delegated; that is, they have the authority to make choices and are ultimately answerable for them. No question is more important to the organization’s bottom line. Projects directly impact the bottom line because they require investment of resource time and money for the purposes of realizing benefits. The scarcity of resources requires that choices be made by those who have the right authority. Who approves your projects? Historically, the answer would have been the executive layer of the organization. However, in the 1990 s management largely abdicated its obligation to control resources and expenditures via “employee empowerment. ” Controls on approvals became less rigid, and accountability for choosing what to do (and not do) shifted onto the shoulders of the individual worker. This creates a current paradigm where no one is accountable for the malinvestment… …of resources that comes from approving too many projects. Instead, it’s up to individual workers to sink or swim as they attempt to reconcile, day after day, seemingly infinite organizational demand with their finite supply of working hours. Info-Tech Research Group 6

Ad hoc project selection schemes do not work Without active management, reconciling the imbalance between demand with available work hours is a struggle that results largely in one of these two scenarios: “Squeaky wheel”: Projects with the most vocal stakeholders behind them are worked on first. IT is seen to favor certain lines of business, leading to disenfranchisement of other stakeholders. Everything becomes the highest priority, which reinforces IT’s image as a firefighter, rather than a business value contributor High-value projects without vocal support never get resourced; opportunities are missed. “First in, first out”: Projects are approved and executed in the order they are requested. Urgent or important projects for the business languish in the project backlog; opportunities are missed. Low-value projects dominate the project portfolio. Stakeholders leave IT out of the loop and resort to “underground economy” for getting their needs addressed. 80% of organizations feel that their portfolios are dominated by low-value initiatives that do not deliver value to the business. (Source: Cooper) Info-Tech Research Group 7

Approve the right projects that you have capacity to deliver by actively managing the intake of projects ed Project intake is a key process of project portfolio management (PPM). The Project Management Institute (PMI) describes PPM as: Interrelated organizational processes by which an organization evaluates, selects, prioritizes, and allocates its limited internal resources to best accomplish organizational strategies consistent with its vision, mission, and values. Project Intake (PMI, Standard for Portfolio Management, 3 rd ed. ) Organizations practicing PPM recognize available resource capacity as a constraint and aim to select projects – and commit the said capacity – to projects that: 1 Best satisfy the stakeholder needs that constantly change with the market 92% vs 74% 2 Str e ate gic e ct e j o o Pr tfoli r Po Ob jec tiv es Triple Constraint Model of the Project Portfolio Best align to the strategic objectives and contribute the most to business 92% of high-performing organizations in PPM report that projects are well aligned to strategic initiatives vs. 74% of low performers. – PMI, 2015 k Sta ld ho e r. N Resource Capacity Project intake, approval, and prioritization (collectively “project intake”) reconciles the appetite for new projects with available resource capacity and strategic goals. 82% vs 55% 3 Have sufficient resource capacity available to best ensure consistent project throughput 82% of high-performing organizations in PPM report that resources are effectively reallocated across projects vs. 55% of low performers. – PMI, 2015 Info-Tech Research Group 8

Info-Tech’s data demonstrates that optimizing project intake can also improve business leaders’ satisfaction of IT 43% CEOs today perceive IT to be poorly aligned to business’ strategic goals: The key to improving business satisfaction with IT is to deliver on projects that help the business achieve its strategic goals: 43% of CEOs believe that business goals are going unsupported by IT. Source: Info-Tech’s CEO-CIO Alignment Survey (N=124) 60% of CEOs believe that improvement is required around IT’s understanding of CEOs believe that business goals of business goals. are going unsupported by IT. Source: Info-Tech’s CEO-CIO Alignment Survey (N=124) 30% Business leaders today are generally dissatisfied with IT: 30% of business stakeholders are supporters of their IT departments. Source: Info-Tech’s CIO Business Vision Survey (N=21, 367) Optimized project intake not only improves the project portfolio’s alignment to business goals, but provides the most effective way to improve relationships with IT’s key stakeholders. Benchmark your own current state with overall & industry-specific data using Info-Tech’s Diagnostic Program. Info-Tech Research Group 9

However, establishing organizational discipline for project intake, approval, and prioritization is difficult Capacity awareness Many moving parts Lack of authority Many IT departments struggle to realistically estimate available project capacity in a credible way. Stakeholders question the validity of your endeavor to install capacity-constrained intake process, and mistake it for unwillingness to cooperate instead. Project intake, approval, and prioritization involve the coordination of various departments. Therefore, they require a great deal of buy-in and compliance from multiple stakeholders and senior executives. Many PMOs and IT departments simply lack the ability to decline or defer new projects. Unclear definition of value Defining the project value is difficult because there are so many different and conflicting ways that are all valid in their own right. However, without it, it's impossible to fairly compare among projects to select what's "best. " Establishing intake discipline requires a great degree of cooperation and conformity among stakeholders that can be cultivated through strong processes. Info-Tech Research Group 10

Info-Tech’s intake, approval, and prioritization methodology systemically fits the project portfolio to its triple constraint Info-Tech’s Methodology Project Intake Project Approval Project Prioritization Project requests are submitted, received, triaged, and scoped in preparation for approval and prioritization. Business cases are developed, evaluated, and selected (or declined) for investment, based on estimated value and feasibility. Work is scheduled to begin, based on relative value, urgency, and availability of resources. 2 3 Projects 1 Stakeholder Needs Strategic Objectives Resource Capacity Project Portfolio Triple Constraint Info-Tech Research Group 11

Info-Tech’s methodology for optimizing project intake delivers extraordinary value, fast In the first step of the blueprint, you will prototype a set of scorecard criteria for determining project value. Our methodology is designed to tackle your hardest challenge first to deliver the highest-value part of the deliverable. Since the overarching goal of optimizing project intake, approval, and prioritization process is to maximize throughput of the best projects, one must define how “the best projects” are determined. In nearly all instances…a key challenge for the PPM team is reaching agreement over how projects should rank. – Merkhofer A Project Value Scorecard will help you: ü Evolve the discussions on project and portfolio value beyond a theoretical concept ü Enable apples-to-apples comparisons amongst many different kinds of projects The Project Value Scorecard Development Tool is designed to help you develop the project valuation scheme iteratively. Download the pre-filled tool with content that represents a common case, and then, customize it with your data. Info-Tech Research Group 12

This blueprint provides a clear path to maximizing your chance of success in optimizing project intake Info-Tech’s practical, tactical research is accompanied by a suite of tools and templates to accelerate your process optimization efforts. Organizational change and stakeholder management are critical elements of optimizing project intake, approval, and prioritization processes because they require a great degree of cooperation and conformity among stakeholders, and the list of key stakeholders are long and far-reaching. Set Realistic Goals for Optimizing Project Intake, Approval, and Prioritization This blueprint will provide a clear path to not only optimize the processes themselves, but also for the optimization effort itself. This research is organized into three phases, each requiring a few weeks of work at your team’s own pace – or all in one week, through a workshop facilitated by Info-Tech analysts. Build Optimized Project Intake, Approval, and Prioritization Processes Integrate the Newly Optimized Processes into Practice Tools and Templates: • Project Value Scorecard Development Tool (. xlsx) • PPM Assessment Report (Info-Tech Diagnostics) • Standard Operating Procedure Template (. docx) • • • Process Pilot Plan Template (. docx) • Impact Assessment and Communication Planning Tool (. xlsx) Project Request Forms (. docx) Project Classification Matrix (. xlsx) Benefits Commitment Form (. xlsx) Proposed Project Technology Assessment Tool (. xlsx) • Business Case Templates (. docx) • Intake and Prioritization Tool (. xlsx) Info-Tech Research Group 13

Info-Tech’s approach to PPM is informed by industry best practices and rooted in practical insider research Info-Tech uses PMI and ISACA frameworks for areas of this research. PMI’s Standard for Portfolio Management, 3 rd ed. is the leading industry framework, proving project portfolio management best practices and process guidelines. COBIT 5 is the leading framework for the governance and management of enterprise IT. In addition to industry-leading frameworks, our best-practice approach is enhanced by the insights and guidance from our analysts, industry experts, and our clients. 33, 000+ 1, 000+ Our peer network of over 33, 000 happy clients proves the effectiveness of our research. Our team conducts 1, 000+ hours of primary and secondary research to ensure that our approach is enhanced by best practices. Info-Tech Research Group 14

Deliver measurable project intake success for your organization with this blueprint Measure the value of your effort to track your success quantitatively and demonstrate the proposed benefits, as you aim to do so with other projects through improved PPM. Optimized project intake, approval, and prioritization processes lead to a high PPM maturity, which will improve the successful delivery and throughput of your projects, resource utilization, business alignment, and stakeholder satisfaction. Measure your success through the following metrics: ü Reduced turnaround time between project requests and initial scoping ü Number of project proposals with articulated benefits $44, 700 In the past 12 months, Info-Tech clients have reported an average measured value of $44, 700 from undertaking a guided implementation of this research. High PPM maturity yields measurable benefits 100% 81% 77% 80% 60% 70% 44% 35% 40% 26% 20% 0% ü Reduction in “offthe-grid” projects Management for Financial Strategy Organizational individual performance implementation agility projects High maturity Low maturity (Source: BCG/PMI) ü Team satisfaction and workplace engagement ü PPM stakeholder satisfaction score from business stakeholders: see Info-Tech’s PPM Customer Satisfaction Diagnostics Add your own organization-specific goals, success criteria, and metrics by following the steps in the blueprint. Info-Tech Research Group 15

Case Study: Financial Services PMO prepares annual planning process with Project Value Scorecard Development Tool CASE STUDY Industry Source Financial Services Info-Tech Client Challenge PMO plays a diverse set of roles, including project management for enterprise projects (i. e. PMI’s “Directive” PMO), standards management for department-level projects (i. e. PMI’s “Supportive” PMO), process governance of strategic projects (i. e. PMI’s “Controlling” PMO), and facilitation / planning / reporting for the corporate business strategy efforts (i. e. Enterprise PMO). The Project Value Scorecard provided early value with multiple options for prioritized rankings. To facilitate the annual planning process, the PMO needed to develop a more data-driven and objective project intake process that implicitly aligned with the corporate strategy. Solution Info-Tech’s Project Value Scorecard tool was incorporated into the strategic planning process. Results The scorecard provided a simple way to list the competing strategic initiatives, objectively score them, and re-sort the results on demand as the leadership chooses to switch between ranking by overall score, project value, ability to execute, strategic alignment, operational alignment, and feasibility. Info-Tech Research Group 16

Use these icons to help direct you as you navigate this research Use these icons to help guide you through each step of the blueprint and direct you to content related to the recommended activities. This icon denotes a slide where a supporting Info-Tech tool or template will help you perform the activity or step associated with the slide. Refer to the supporting tool or template to get the best results and proceed to the next step of the project. This icon denotes a slide with an associated activity. The activity can be performed either as part of your project or with the support of Info-Tech team members, who will come onsite to facilitate a workshop for your organization. Info-Tech Research Group 17

Info-Tech offers various levels of support to best suit your needs DIY Toolkit “Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful. ” Guided Implementation Workshop Consulting “Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track. ” “We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place. ” “Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project. ” Diagnostics and consistent frameworks used throughout all four options Info-Tech Research Group 18

Optimize Project Intake, Approval, and Prioritization – project overview 1. Set Realistic Goals for Optimizing Process 1. 1 Define the criteria with which to determine project value. 2. 1 Streamline intake to manage stakeholder expectations. 1. 2 Envision your target state for your optimized project intake, approval, and prioritization process. 2. 2 Set up steps of project approval to maximize strategic alignment while right-sizing the required effort. 2. 3 Prioritize projects to maximize the value of the project portfolio within the constraint of resource capacity. Best-Practice Toolkit Introduce Project Value Scorecard Development Tool and pilot Info. Tech’s example scorecard on your own backlog. Map current project intake, approval, and prioritization process and key stakeholders. Guided Implementations Onsite Workshop 2. Build New Optimized Processes Set realistic goals for process optimization. Improve the management of stakeholder expectations with an optimized intake process. Improve the alignment of the project portfolio to strategic objectives with an optimized approval process. Enable resource capacity-constrained greenlighting of projects with an optimized prioritization process. 3. Integrate the New Processes into Practice 3. 1 Pilot your intake, approval, and prioritization process to refine it before rollout. 3. 2 Analyze the impact of organizational change through the eyes of PPM stakeholders to gain their buy-in. Create a process pilot strategy with supportive stakeholders. Conduct a change impact analysis for your PPM stakeholders to create an effective communication strategy. Roll out the new process and measure success. Module 1: Refocus on Project Value to Set Realistic Goals for Optimizing Project Intake, Approval, and Prioritization Process Module 2: Examine, Optimize, and Document the New Project Intake, Approval, and Prioritization Process Module 3: Pilot, Plan, and Communicate the New Process and Its Required Organizational Changes Phase 1 Outcome: • Draft project valuation criteria • Examination of current process • Definition of process success criteria Phase 2 Outcome: • Documentation of new project intake, approval, and prioritization process • Tools and templates to aid the process Phase 3 Outcome: • Process pilot plan • Organizational change communication plan Info-Tech Research Group 19

Workshop overview Deliverables Activities Contact your account representative or email Workshops@Info. Tech. com for more information. Workshop Day 1 Workshop Day 2 Workshop Day 3 Workshop Day 4 Workshop Day 5 Benefits of optimizing project intake and project value definition Set realistic goals for process optimization Optimize project intake and approval processes Optimize project prioritization process & plan for a process pilot Analyze stakeholder impact and create communication strategy 4. 1 Conduct focused retrospective for project prioritization 4. 2 Estimate available resource capacity 4. 3 Pilot Project Intake and Prioritization Tool with your project backlog 4. 4 Compose SOP for prioritization 4. 5 Document the new prioritization workflow 4. 6 Discuss process pilot 5. 1 Analyze stakeholder impact and responses to impending organization change 5. 2 Create message canvas for at-risk change impacts and stakeholders 5. 3 Set course of action for communicating change 1. Estimated resource capacity for projects 2. Customized Project Intake and Prioritization Tool 3. Customized prioritization SOP 4. Flowchart for the new prioritization workflow 5. Process pilot plan 1. Completed Intake and Prioritization Impact Analysis Tool 2. Communication strategy and plan 1. 1 Complete and review PPM Current State Scorecard Assessment 1. 2 Define project value for the organization 1. 3 Engage key PPM stakeholders to iterate on the scorecard prototype 1. PPM Current State Scorecard 2. Project Value Scorecard prototype 2. 1 Map current intake, approval, and prioritization workflow 2. 2 Enumerate and prioritize process stakeholders 2. 3 Determine the current and target capability levels 2. 4 Define the process success criteria and KPIs 3. 1 Conduct focused retrospectives for project intake and approval 3. 2 Define project levels 3. 3 Optimize project intake processes 3. 4 Optimize project approval processes 3. 5 Compose SOP for intake and approval 3. 6 Document the new intake and approval workflow 1. Current intake, approval, and prioritization workflow 2. Stakeholder register 3. Intake process success criteria 1. Project request form 2. Project level classification matrix 3. Proposed project deliverables toolkit 4. Customized intake and approval SOP 5. Flowchart for the new intake and approval workflow Info-Tech Research Group 20