Enterprise and Portfolio Governance Critical to Ensure IT is Strategically Supporting Your Agency
Posted by Richard A. Spires, CIO, DHS
The third in a series of posts in which the DHS CIO outlines his beliefs and real-world implementation practices that deliver successful IT programs.
In my first and second posts on the challenge of delivering successful IT programs, I introduced the topic of tiered governance and the need to have effective governance at the enterprise, portfolio, and program level. To complete the discussion, let’s discuss enterprise and portfolio governance.
At the core, the objective of enterprise governance is simple: to have key executives across the enterprise determine the optimal allocation of capabilities and resources across programs to best support the achievement of mission outcomes. Enterprise governance feeds information to the budget process, but I think of it as distinct. In mature organizations, it regularly brings together the senior- most leadership to both help decide which new capabilities best support the mission and prioritize them for development and fielding. Thus enterprise governance is integral to the planning cycle before the launch of a new program (or upgrade of an existing system), providing clear direction and stated outcomes in support of a program’s execution. Mature enterprise governance is focused on all capabilities to produce mission outcomes, and, as such, enterprise governance is not specific to just IT programs.
In smaller organizations it is possible to execute enterprise governance with one governance body that represents top leadership. But in larger and more complex organizations, it becomes daunting for the top leadership to deal with all programs and program allocation decisions.
Portfolio governance is essential to provide the scale needed to deal with decisions in large organizations. We decompose the problem into what we call “portfolios,” or logical partitions that can support various elements of an organization’s strategy and mission outcomes. Portfolios may be defined based on the organizational structure of an agency, but in many instances, the portfolios represent functional groupings that can drive improvements to mission effectiveness. The approach to defining a set of portfolios for an organization is unique to that organization’s structure and mission.
As an example, at the Department of Homeland Security (DHS) we have more than 200,000 employees organized into eight large operating Components (e.g., U.S. Coast Guard, FEMA, TSA, etc.) along with 14 other smaller Components. A number of these Components support similar functions, such as incident response handling (FEMA and the Coast Guard), or the screening of individuals (TSA, CBP, CIS, ICE, and the Coast Guard). To maximize mission effectiveness that integrates Components, we are working to implement 13 functionally-oriented portfolios, to include mission support functions (e.g., securing, screening, and incident response) and business functions (e.g., finance, human resources). As I mentioned, the approach to defining a set of portfolios for an organization is unique to that organization’s structure and mission. In the case of DHS it is important that portfolios are defined functionally to drive needed cross-Component integration. In a different agency, the portfolios might align well to an existing organizational structure.
The model I have seen work most effectively is to create a Portfolio Governance Board for each portfolio. Just like for enterprise governance, a portfolio board must have the key executives participate. As an example, the membership of a financial portfolio board would typically be chaired by the CFO as the business executive owner and include an IT executive as a member, along with other executives from closely integrated user communities such as security, procurement, and asset management. Other members of the board may include executives from operating and planning organizations.
So what do these boards do and how can they get it done? Each board looks over a planning horizon (I recommend five years for organizations in which IT is a strategic enabler) and defines a set of measurable stretch objectives that would result in significant improved mission effectiveness. The measurable objectives could include items such as reduction in response or service times, customer satisfaction survey scores, cost efficiencies, etc. To achieve those objectives, the portfolio governance board must then establish capabilities that are required to meet such objectives. For instance, in a human resource portfolio, the capability may be to have automated end-to-end tracking of all steps in the hiring process, with the objective to reduce the average time to hire by 50%. Once the objectives and capabilities are set, the hard part is defining a goal end state that will meet those objectives for that portfolio. This goal end state could include business process changes, IT system changes, along with appropriate other program changes. To do this work, I recommend the portfolio board be supported by a couple of subject matter experts (e.g., finance experts who support the finance governance board) along with the Enterprise Architecture (EA) organization. These specialists, along with EA, provide significant analysis support in defining and analyzing alternatives, along with providing knowledge of the current state. Once a goal state is defined, the board sets a transition strategy that defines the step-by-step process to go from the current, or “as-is,” state to the goal, or “desired,” state. This is the nexus back to program execution, in that capabilities are defined and allocated to be implemented by programs as part of the transition strategy. If done properly, this transition strategy also serves as the underpinning by which a portfolio governance board can present a cogent budget request that shows how the investments in programs support achieving the goal state.
Having implemented such enterprise and portfolio governance in the private sector, the IRS, and now pushing hard to mature it at DHS, I will state that this is hard work and takes persistence. I have found that it takes about three years for a portfolio governance approach to mature so you have a solid set of business objectives and measures, you have a defined goal end state, and you have a solid enterprise transition strategy. This approach cannot be treated as a budget exercise, in which you gather people once a year to do analysis. The boards and support organizations must persist, with boards meeting at least every quarter, and typically more often during the first two years upon the standup of a portfolio. Even when mature, every year the capabilities and end state needs to be reassessed based on changing priorities and realities, pushing the planning cycle one year out, reassessing your current state and readjusting your transition plan. The payoff from this work, however, can be tremendous. It has given me great pride to be associated with organizations that have solid strategies and transition plans - even in times of significant turbulence, the leadership has analysis by which to assess its options and adjust, while still able to keep its long-term objectives in mind.
Here are a couple of pieces of advice in ending this post. It is critical to have an enterprise or set of portfolio governance boards with the right members. The involvement of key executive stakeholders to work in partnership is key to success. Just relying on subject matter experts or EA to drive and mature a solid planning process usually results in good analysis that is never implemented. When starting an enterprise or portfolio analysis, the complexity can be overwhelming. Don’t try to dive deep in all areas, but focus on a few that are obvious areas for improvement. Showing progress is critical, and keep in mind the three-year view to mature a portfolio.
NEXT…
I will move to program and project management disciplines, starting with the most important aspect for a program’s execution success, the people you have in your integrated program team.
