Enterprise architecture and portfolio management are closely linked activities. EA drives IT investment management (including the IT portfolio select, control, and evaluate phases) by conducting technical reviews of proposed new IT projects, products, and standards, and IT investment management provides important information updates to the EA (baseline, target, and transition plan).
In Architecture and Governance Magazine, Issue 3 Volume 2, Nuttall and Houghton provide an overall framework that goes “Beyond Portfolio Management to Comprehensive Application Governance.”
The framework includes three main areas and one supporting process area, as follows:
Application and License Management (tactical)—“It manages the demand side and user requests, the contract and compliance aspects of determining the number of licenses that are contractually allowed, along with the projects that bring new products into the portfolio while retiring older products that have been removed. In many ITIL organizations, a help desk/service desk would handle the demand for applications, while the license management aspects are often assigned to the procurement and/or configuration management functions.”
- Application Portfolio Management (strategic)—“determines the appropriate mix of applications in the portfolio. It s highly dependent on the strategic business drivers for the corporation and includes: portfolio strategy development, optimization, and planning.” Portfolio strategy development determines the drivers and priority of those. Portfolio optimization determines the right mix of applications to support those goals. And portfolio planning determines the risks and constraints in implementing the portfolio, such as architecture, infrastructure, and resource constraints.
- Financial Management—“budget and forecasting, account management, and allocations management;” these enable the planning of what money is available for the portfolio and what money is spent for applications.
- Supporting Processes—other process areas that impact portfolio management include: “knowledge management, communications management, management reporting, architecture strategy, risk management, operational delivery, and support management.”
“One thing is certain, though, as technology continues to drive productivity, comprehension of application governance will become an even more essential step for companies wishing to manage their risks and costs while continuing to gain strategic value from their portfolios.”
I think this model is very helpful in decomposing the traditional definition of governance from the strategic functions of portfolio selection, control, and evaluation to the additional tactical, strategic, and financial aspects involved in managing it. Particularly, I believe it is useful to separate out the business demand (licenses, new systems and technologies) from the portfolio development and optimization (“the right mix” to satisfy user needs). Additionally, the breakout of financial management from the portfolio development is important in making the distinction between the roles of the Investment Review Board/Enterprise Architecture Board and the financial or resources group that actually budget and accounts for the funding aspect of IT spend.
Nuttall and Houghton do not go into any depth with the supporting processes, so these are presented as high level touch points or supporting processes without any particular explanation of how they support portfolio management and governance.
One critical item, the authors did not include, but should have included is the Systems Development Life Cycle, which take the IT portfolio and governs it from planning through analysis, design, development, testing, deployment, operations and maintenance, and ultimately to disposition. The success of moving systems projects through the SDLC will impact the make-up of future portfolio decisions.