How federal CIOs can optimize their application portfolios

CIOs in the federal sector were under the gun clean house by June 12, 2012. According to the federal IT Reform Plan, these tech leaders had to demonstrate to the Office of Management and Budget (OMB) that, after careful review of their portfolios, they had remedied or retired underperforming applications.

I recently wrote about the steps CIOs can take to gain control of IT. Today I want to look at one aspect of this – portfolio management. No matter where you are in meeting the OMB’s deadline, there are three steps you can take to optimize your IT portfolio:

Embrace data-driven performance reviews

Use tools to manage your application portfolio, weeding out inefficiencies and duplication

Take a big-picture view that enables you to make decisions on what projects add value to the business

Let’s look at these steps in depth.

Embrace data-driven performance reviews

IT Reform calls for agency CIOs to conduct “TechStat” reviews of their IT investments. These are face-to-face sessions where agency leadership sit down and look at program performance data and come up with a concrete plan of action.

With TechStats, federal CIOs are taking the same data driven approach to IT performance that their counterparts in the commercial space are embracing; however, unlike their commercial counterparts most of their metrics are qualitative not quantitative.

As we’ve been seeing in the private sector, to truly transform IT, you need visibility into all aspects of IT performance. One way to get this is by using a tool such as the HP Executive Scorecard, which was specifically designed for the CIO/CFO, to get quantifiable and qualitative performance metrics. The scorecard functions as a single pane of glass that gives transparency into IT performance and execution, allowing you to see when programs are not performing as expected. Use a performance system to track key performance indicators and set a cycle of continuous improvement.

Manage your application portfolio

Whether you’ve already gone through a TechStat review or are preparing for one, reviewing data is only one part of the process. To meet the aggressive goals of IT Reform, CIOs must also undertake application portfolio management (APM) and transition to new consumption model for IT that is service based.

The OMB has directed federal CIOs to rationalize redundant applications, consolidate data centers and move to cloud-based technologies. Doing this ultimately reduces the cost of IT by eliminating duplication, optimizing infrastructure and reducing the cost of IT services. Agencies need to start by assessing and prioritizing which applications to consolidate and which to modernize. APM software, coupled with asset and service management applications can enable agencies to dynamically discover applications and greatly help with what-if scenario analysis.

Make decisions on what adds value

Lastly, reviewing IT metrics is useful only insofar as you take that information and map it to business goals. Project and portfolio management (PPM) enables CIOs to decide which projects add value to the business and most importantly which ones are not.

When I talk to federal IT leaders, I like to explain how HP went through this very same process as part of its data center consolidation. Using the HP PPM tool, IT managers at HP conducted a strategic exercise to examine the overall application and infrastructure portfolio. The result was that the number of IT projects got cut in half, and over 81 data centers consolidated generating tremendous cost savings. Moreover, the selection of new IT efforts was ruthlessly scrutinized, freeing up resources that enabled HP to reduce the cycle time for new enhancement request to under 90 days.

I realize that for agency CIOs enacting these steps may be more difficult than it is in the private sector, and some of these changes may need to take place in incremental steps. But the overall principles hold true. To optimize their IT portfolios, CIOs must leverage quantitative performance metrics combined with APM and PPM tools, not simply conduct qualitative reviews.