Enterprise Portfolio Management insights

This weekend’s brainstorming and reading brought up some interesting insights.  So much so I couldn’t sleep and woke up around 2am with the following visuals in my head.

First of was a refinement? on Govindarajan and Trimble’s concepts about two competing engines within an enterprise in their book Beyond the Idea.  Their proposed model theorizes whay its so hard to get innovations deployed and adopted in existing concerns while startups do not seem to have this internal conflict issue.

Gravity Centers in Enteprise

Second was an idea I’ve been refining over the years; that portfolio selection is not just a single event but a series of filters applied to narrow down the pool to the portfolio member to actively work on.  There are lots of models on sections methods (BCG Matrix) Balanced Scorecard, etc.  What is common to all is a concept of sorting and filtering members into groups, which creates a group of members to actively work on.


Portfolio selection is a filtering process

While these are not likely the final visualizations of the presentation I’ve proposed for an internal conference in February.  The metaphors speak clearly to me; I wonder if they do the same to others?


Modern Enterprise Portfolio Management

Portfolio Management capabilities roadmap (initial) from last night’s brainstorming.  Planning (aspirational) to have Modern Enterprise Portfolio Management materials ready by February for a possible seminar at my home office over a holiday weekend.  The big question(s) will be if any of my colleagues and followers will be: 1) interested in attending a focused seminar, 2) willing to take the trek ~60 miles south of Seattle for a 1 to 2 day seminar.



Enterprise Portfolio Management CMM Roadmap

The nice thing about this research is I can leverage it as source materials for current projects I’m doing at work and for internal technical conferences.

Structure in Threes: Tools Development

Organizational Design Tools Need Completion

Continuing to build out Enterprise Analysis and Design tools this morning along with a workflow to integrate the Modern IT Portfolio Management methodology.  After finishing the Org Design Tool, the next steps will be to finish off the Portfolio Management Tool and then document the workflow for possible automation.

Strategy Analysis

Modern IT Portfolio Management

Digital Nervous System Architecture

It looks like I’m going to build out the original concepts I developed when discussing what and how Active Directory should be with Hans.  I had presented to Hans an idea that Active Directory (SMS Server) could accomplish its mission through usage of federation and abstraction into logical units (see below late 1996 presentation).  Added to that were the concepts I had been working on as a side research project during my employment at IBM the 80’s.  This later became a white paper “The body enterprise” where I through the network could become an enterprise’s digital nervous system.  Unfortunately, Hans and I could not get the funding to pursue going any further than simple IT product management.  However, I continued -though through small pieces of other projects- to research how to build a management and control system.  With my Modern IT Portfolio Management R&D at a foreseeable conclusion I’ll be able to build the CIO Workbench I had envisioned years ago.


The unfortunate aspect to this was both IBM and Microsoft had the opportunity to build this out a decade ago but failed to see the vision was achievable. I guess you can chalk it up to other missed opportunities that companies have for not reaching far enough in the future.  I remember hearing internal chatter by Microsoft management when I departed for DMR Consulting this was a dream decades away, though BillG must not have through so or his Ghostwriter wouldn’t have spent so much time interviewing me to included in his book.

Structure in Threes: Organizational Design

Business Structure verses Organizational Structure

One of the interesting issues that came across my desk today as I was discussing a colleague’s new venture was the taxonomy and ontology of our conversation.  She wanted to cover multiple concepts in the same conversation which is a notable goal regarding economy of one’s time.  However, it became apparent that the terms being used were being overloaded during the conversation.  Example: Discussing the Business Structure and Organizational Structure both terms were used interchangeably.  However, when I hear the words Business Structure I think of the legal form in which the business is established (Corporation, LLC, Partnership, etc.).  When I hear the term Organizational Structure I consider whether it is centralized or distributed; a partitioning along functional, product, customer or geographic lines.  As I continue to develop the Business Design Tool (see below) the question becomes how-to ensure that the dimensions are orthogonal to each other while retaining the interconnectedness of these dimensions.

Organizational Development Tools

Many of the recent texts define various dimensions such as complexity, market, size, etc.  However, the interconnection is only a Infographic.  Perhaps these interconnections are only a probabilistic connection leading one to only heuristics.  I will make a interesting systems dynamic study at the Center for Understanding Change when I have some spare time.  In the meantime I continue to develop the Org Design and Modern IT Portfolio Management tools which are looking more and more like an enhancement to the Business Analysis System and Environment (B.A.S.E.) application built in 1994 on MS Access V1.

B.A.S.E. at that time performed a variety of management consulting analysis:

This application will eventually become the basis for the semi-automated workflow for several of Intellectual Arbitrage Group’s practices and services


IT Portfolio Management: Asset Classes and Portfolios

Multi-order Interconnections of Assets

Comments from yesterday’s post regarding the difference between IT Assets and Traditional Investment Assets I had a tendency to agree with in the past.  However, since the changes in law and the economy the independence between assets no longer exists as once was believed.  As the most recent financial meltdown the economy is still recovering from demonstrates.  This phenomena of interconnectedness pointed out in Albert-László Barabási’s book “Linked” points to the fact that everything is connected.  The issue becomes how these are connected and the depth of the effects of that connection.  This is the area of systems dynamics which I continue to study at the Center for Understanding Change.  My objective is understand the 1st, 2nd, 3rd, etc. levels of consequence to the ever widening web of connection we live in and how to apply it to ITSM and Enterprise as a whole.

Applying these concepts to IT Portfolio Management the relationships between the traditional assets classes under management became first a hierarchy and second not much to my surprise like the taxonomy originally developed for the conceptual underpinning Has Witt and I discussed for Active Directory. This hierarchy points to ITSM (Services) as the bridge between Enterprise concerns and IT Functional concerns.  It is the IT Services which enable the enterprise capabilities which at the corporate level are the assets.

Accounting for temporal relationships

Below is the initial brainstorming of the hierarchy and its relationship to both enterprise and time.  The time dimension in most portfolio management methodologies is limited to the time value of money typically in the form of NPV.  However, not accounting for the effects of time on the various attributes under consideration for the enterprise is where I see the limits to using time in present portfolio management methodologies.  A White Paper, still under development, “The Optimum Path to an Uncertain Destination” is one approach I’ve found to address this situation and is included in the Modern IT Portfolio Management methodology I’ve been creating.

IT Asset Class Hierarchy

Modern IT Portfolio Management: Investment Profiles

Last night I reviewed of my notes interviewing investment brokers, portfolio managers the past few months and delved deeper into my growing collection of Wiley Finance Series of books.  This morning I scanned through “The Art of Asset Allocation” by David M. Darst searching for the next analogs in financial portfolio management to pair up with IT Portfolio Management.  It occurred to me the metaphors currently in usage in wall street: Bulls, Bears and other animals used to characterize investment behavior is close to but not exactly a match for IT Investment.  In a previous White paper I had researched and written for Microsoft’s Services division on Business Continuity and Disaster Recovery I had started to layout a third dimensional grid-work on the organizational decision behavior and environment.   As I re-read the insight I had working on various aspects of decision science I can see how to apply these learnings plus several other insights to IT Portfolio Investments.

Investor Profiles

The only downside to this approach is that most consulting firms prefer to adhere to the 2×2 matrix.  The logic behind such is they feel more than 2×2 or binary decision values confuses management and executives.  A little insulting to their clients if you think about it.  However, the objective is to communicate quickly to the client not show the complexity and nuance behind the analysis.  As such when I develop a more comprehensive tool, I’ll have to have it yield several simple 2×2 views of the decision for ease of understanding.  I did this with the design of the Cloud and APM Portfolio Tool for Microsoft IT Strategy and Enterprise Architecture services division a few months ago.  The feedback I got from my personal CxO advisory panel were very positive.   Expect to have a wireframe of the tool’s output to match the personas I’ve developed ready by end of next month**.  The it becomes a decision on what technology to build.

**I like the advice I got from Alan Cooper a few years back; “Design from the outside in”.  The common sense of it seems apparent, however, so few companies and developers do such.  Today all the rage is teaching developers and consultants to use personas.  Unfortunately, the lessons typically stop at using them as sales tools to justify what has already been built rather than design tools to ensure operation and aesthetics match with the enduser’s needs and desires.

Modern IT Portfolio Management: Why the need for a business model?

This morning I started R&D for on developing business models for the Modern IT Portfolio Management Practice.  Why Business Models for the practice one would ask?  A answer is simpler and more complex than one would think.  Over the past several decades I’ve continually been throw or volunteered to drive IT Economic methods in various corporations; DMR, IBM and Microsoft the ones picking up the tab for such work.  Each iteration of developing these methodologies has brought with it greater mathematical sophistication.

IT Economics History


In the 1980s while working on Investment Strategies for Information Systems (ISIS) at IBM, the state of the art practice for IT Economics and Finance was a simple stack ranking of projects based upon a simple ROI calculation [ROI = (Gain from investment – cost of investment) / cost of investment].  As electronic spreadsheets were just on the edge of acceptance much of this calculation was either done programmatically or on tabular paper by consultants and/or someone reporting to the Vice Presidents of Finance.  The work of Marylyn Parker and Robert Benson miles away in the IBM Systems Center Lab in Los Angles was still in process.  Despite the groundbreaking work on decision theory for IT Investment Management this group developed [Balanced Scorecard before Balanced Scorecard], it never gain acceptance within IBM as a practice.  There are many reasons for this; the strongest for such was this was research and journal article materials.  At that time IBM was structured to deliver hardware or software products; it would be a decade before IBM would seriously invest in IT Professional Services as a line of business.

Microsoft Round One

Years later just after departing DMR Consulting I agreed to assist my former employer, Microsoft. The issues of Total Cost of Ownership (TCO) were having an impact of sales to large corporations and a means to breakout of the desktop was needed.  At the urging and recommendation of the former CIO to I was asked to assist in development and training of field staff on a fast and light Economic Justification methodology; thus Rapid Economic Justification (REJ) was born.  The approach formalized calculating cost and benefits, and added spreadsheets to automate the process cutting down cycle time from what was several weeks or months to a potential week of activity.  It was moderately successful as a secondary practice.   Giuseppe Mascarella, the project manager and lead, and I would commiserate about this often.  Why was this more successful? Clearly there is a need for this practice.  Financial Consulting firms are brought in for similar activities in other domains all the time. Something must be missing but what?

Microsoft Round Two

After completing reengineering assignments for IBM corporation and a small boutique consulting firm I returned to Microsoft specifically to develop IP for the IT Strategy and Architecture practice within Microsoft Services.  Microsoft had matured a bit.  The had reestablished the concept using economic justification and brought in a few of former IBMers and other consultants in the IT economics field to created a rebranded IT economics practice. Value Realization Framework (VRF).  The methodology had improved, now using concepts that Parker and Benson had pioneered.  However, field and customer acceptance has still been a problem.  Just prior to departing from Microsoft this time, I had started to have discussions with the lead architect on the project.  Having had decades of working this issue he was interested in my insights on what needed to be changed or augmented.   We had started to brainstorm a plan to address the situation when Microsoft has announced the new corporate strategy: Devices and Services:  Read into that Microsoft has updated its business lines and branding to mean Hardware &, Software products and IT Services (i.e., hosting of software applications).  This placed the emerging practice back to a potential REJ status, a nice to have but not really of importance expect when needed to make a sale.

Intellectual Arbitrage Group

During the past few decades I have been researching, gathering lessons learned, brainstorming and coming up with insights from these initiatives under the brand Intellectual Arbitrage Group.  One might say this is my continual entrepreneurial venture. IAG has been a vehicle for me to collaborate with many of the great thought leaders in this and related domains.  The one clear insight I’ve come up with has been that the reason most of these initiatives continue to fail at crossing the chasm is that the intent and mission of IT Economics has always been secondary in the minds of the sponsors.  That is to say IT Economics is not a line of business practice but a marketing tactic for the line of business.  As such the business model is flawed from the outset and thus creates a chain of decisions which will naturally lead to limiting its acceptance and adoption by the field.  This becomes the mission for Intellectual Arbitrage Group (IAG) and the Structure in Threes book development this blog chronicles.  This morning’s activities are continuing to research and brainstorm using the business model canvas that Alexander Osterwalder has assembled along with the MIT 24 step approach to entrepreneurship that Bill Aulet has outlined has documented in his book.

Moderm IT Portfolio Management Workshop

Reaching the end of putting together first of several Modern IT Portfolio Workshops.  Will bench check next week 🙂 .  Have a fairly good assessment of major competitive Frameworks from Microsoft, IBM, etc.  As expected each these looks at Portfolio Management as a Zero Sum Gain stack ranking algorithm in isolation.  However, that was the goal behind developing those methodologies so “they could grab the low hanging fruit”.  Next week’s research and development efforts are to further develop COBIT 5’s “Enterprise Governance of IT” concepts and create the alignment workshop materials.  This weekend I’ll get back to diagraming the overall master process, document the interfaces between the processes, artifacts, and outcomes.  I’m using a similar structure to the Strategy and Market Planning process documentation I used before to create that practice.  The major difference this time will I’ll most likely use SharePoint and/or MS Access as the implementation vehicle.  Had considered Azure over the past several years, however, my resources are limited and since separating from Microsoft recently I don’t have the funding / resources to build there.  I’ve a friend who left Microsoft years ago who has his own company and platform that may be a potential, but it looks to be a learning curve I’ll have to go through on my own to use it.

Modern IT Portfolio Management Methodology

I’ve divided Modern IT Portfolio Management into four major activity groups.  Each group has methods associated with it as well as linkage to corporate functions.  This will enable the process to be integrated into how a corporation really works rather than a blistered on event to the IT budget allocation process as so many of these Portfolio Management methodologies are used for. An example the Prioritization Group takes into account Corporate Values, Goals and Priorities, Enterprise Business Continuity, Disaster Recovery, and Risk Management.  This differs from standard approaches in that instead of evaluating “new technology” investments, tis method evaluates the entire portfolio.  The goal is evaluation of ALL investments as these relate to the Enterprise’s mission and determine one of three several actions: Divest, Hold/Maintain, or Invest –its back to the roots of Markowitz’s original treatise on Portfolio Management.  Additionally, where this methodology is differentiating from the rest of the market is the items managed in the portfolio.  The asset classes (Markowitz) go beyond the simple Software and Hardware (physical assets) into abstract assets that could be considered derivatives and other complex investment vehicles.

The downtime away from supporting the Microsoft Communities has been trying,  I really liked helping the field: It was great to hear back from those on the front lines; “thanks that really helped” or “take a look what I achieved with the materials you pointed me to” or “my customer is really is really pleased with the results I got using your approach”.  Getting feedback like that is addictive it makes you want to help more.  However, after a month away I’m at peace with myself and focused on this and others lines of Enterprise Design R&D.  I’ll still take on a few people to mentor each year, but not to the scale I was building unless I determine to start my own consulting firm.  I had considered that several years ago, thinking joining another startup firm to help it develop would allow me the same experience and freedom.  However, the direction the partners were taking verses the stated goal were decidedly different.  Still in touch with those partners and despite some challenges the company is doing fine in its new reconstituted form which I’m happy about.  I wanted to see them succeed, as I want to see other small businesses do.  There is something really cool about a small business.  I think I may be the personalization aspect to it.

Creating a new Practice/Service: Modern IT Portfolio Management

This morning I started investigating how to structure and document the approach I’ve been developing the past several years on effective and efficient management of IT Resources.  This suggests I create a new Consulting Practice and associated services that comprise that practice.  As I researched how to document the approach and practice I was surprised to find that the majority of the consulting literature that describes designing a practice is more concerned with the management of the practice as a business than the delivery of the approach to the client.  This seemed rather odd till I considered that this area was developed by the management consulting which is more concerned with the management of activities than the execution of actual activities themselves. [a little harsh judgment but if you do the math you’ll find little documentation about this domain compared with management theory and approaches]

That said, this morning I stared at a blank white board and considered using process models as  base.  I had used those to define strategy and marketing processes before which were very similar in how they are performed.  That settled the next item for me to address was getting several terms defined to ensure consistency as I develop both the practice and the book.  With that goal in mind here are the first few terms in my taxonomy with a first draft of definitions to go along with them:


Practice – a set of services assembled to provide a specific benefit or benefits for a client.  The services are delivered through the performance of a specific set of activities as defined by the practice’s methodology.

Service – a ordered set of activities that provide defined benefit for the client. Services are delivered through the performance of a specific set of ordered activities (methodology) that provide artifacts and the desired results for the client.

Methodology – an ordered set of procedures, actions, artifacts (work products and deliverables) that when performed create a predictable and repeatable result that is beneficial to the client.

Artifact –  A physical representation of information or decisions used or made during the performance of an activity. Examples include work products that are used as inputs to an activity, procedures guides, assessment tools, and or deliverables such a status reports, final reports or directives that relate decisions or activities that others will act upon.

Workshop  – Workshops are the primary means to perform the methodology and deliver the service to a client.  A workshop consists of a series of activities, each with an input, exercise, output, and checkpoint.  The input will consist of at least a guidance slide deck and possibly other work products requests for support of the exercise.  These work products may be either client documents to reference or templates the client has been asked to complete prior to the workshop.  During the workshop participants will be asked to perform one to several exercises.  These exercises are designed to transform data into meaningful information, actionable insights or decisions to be later acted upon.

ExercisesExercises are structured tasks the participants are asked to perform that manipulate the data and information.  The objective of these exercises is to transform the data into decisions that support the enterprise’s goals and objectives.  How to perform these exercises is defined in the guidance deck or methodology guide, work instructions for supporting templates and/or user’s guide for tools if used within the exercise.

Structure in Threes: Risk Management as a component of Portfolio Management

Continuing to research risk management as a component of the Modern IT Portfolio Management methodology this morning.  Starting to investigate unexpected loss and uncertainty aspects.  Will be rereading Shoemaker’s “Profiting from Uncertainty”.  Looks like the financial risk management risk research I’ve been doing, is confirming the Real Options application research to portfolios I had previously developed two years ago.  The key element that most of the PMP risk management activities track are around identifying and managing known risk (expected loss).  Typically, this is not the area that causes the most problem unless the risk management plan is just pencil whipped (i.e., just a form competition exercise).

Ensuring that both expected, unexpected, and cascading or interconnected risks are addressed as more than just a side activity is a cultural aspect I’ll need to add to the adoption section of the book.  I expect similar aspects of adoption management I used before for Strategy and Market Planning process deployment will be used here.  I’ll relook at Kotter’s, DAGMAR, and ADKAR models for change next month when I detail out the adoption management methods and chapters.

In the meantime I’ll go back to researching risk today.  On today’s agenda is investigating process failure risk components and cascading risk and failures.  The later, cascading failures, should be more application than primary research, as standard engineering practices such as FMECA, RCA, and FEM have network analysis frameworks that I’ve adapted before with great results..  Right now I really miss all my White Boards.  I’m looking into a paint that turns walls into white boards –it would be great if I could get touch displays the size of walls.  I’d really build a think tank 🙂