photography by SETH AFFOUMADO
JOSHUA PICKUS is president and chief executive officer of Niku Corp., a Redwood City, Calif., USA-based software company providing IT management and governance solutions.
BY JOSHUA PICKUS
As chief executive officer, I regularly hear requests for “more budget.” I ask my top executives the same question I ask my son when he wants extra cash: “What did you do with what I already gave you?” Of course, the answer from my chief information officer is much more complex than what I get from my 7-year-old, but the explanation is critical because every time I step into a board meeting, I get grilled on exactly the same issue: How much is my company investing in information technology (IT), and what are we gaining? Good IT portfolio management puts me in the best position possible to answer these questions.
Like executives at many of our customer companies, I am confronted constantly with trade-offs in terms of IT spending. While keeping my eye on new applications that improve our productivity and drive new business, I also must ensure our IT infrastructure will support our growth and “keep the lights on.”
Niku's challenges are not uncommon: How can we find more budget to put new applications online faster? How do we balance daily IT operations with growth? Have we aligned our IT spending with our overall strategic direction?
Twelve months ago, I challenged Niku's IT organization to eradicate the blind spots and balance our portfolio by categorizing each initiative into one of three priority areas, or buckets, so that the next time the IT department requested a budget increase, I could tell them the additional budget they wanted was likely already available—if they correctly balanced the buckets.
I defined the following buckets:
- Maintenance: Basic support for ongoing operations, including hardware refresh programs, remote access capabilities for the field and business continuity assurance
- Growth: IT initiatives that support our current growth trajectory
- Transformation: How can IT help take our business to the next level?
With portfolio management, our chief information officer comes to executive staff meetings with hard facts and figures, rather than educated guesses. Together, we have end-to-end visibility of all IT initiatives, whether they are in the “early idea” stage or active development. We are able to drive the four steps in smart portfolio management more effectively:
- Inventory: Get a firm handle on the total assets and activities
- Prioritize: Decide percentage of total resources to be spent on each of the three “buckets”
- Align: Connect the priorities to inventory and analyze different investment and prioritization patterns
- Execute: Translate the plan into action.
This process has been quite enlightening. By prioritizing and aligning desired outcomes against the current picture, we can find additional resources and talent that was underutilized.
For example, once someone's wireless “pet project” was revealed and put into the context of strategic goals, IT was able to eliminate the effort objectively and redirect talent to higher priority programs. As a result, we could get major initiatives moving faster, without any additional expenditures or head count.
Because my IT team practices smart portfolio management, I am armed with the information I need to discuss the reality of strategic initiatives and company direction.
Just as my executive team answers to me, I answer to the board and to shareholders. Because my IT team practices smart portfolio management, I am armed with the information I need to discuss the reality of strategic initiatives and company direction. I'm operating from a true position of knowledge. I can answer the tough questions, give more accurate estimates on return on investment and supply the facts to justify our decisions. PM
JULY 2004 | PM NETWORK