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Why 'Value Dials' is a game-changing concept in portfolio management

Learn how disciplined portfolio management helps organizations select and deliver the right projects to fulfill their strategic goals.

In my previous two TechRepublic posts, I analyzed the relationship between projects, programs, and portfolios, and tried to identify the success factors for each element. (Read parts one and two in this series: Incorporate the achievement pyramid in your project decisions and Four elements of measuring program success.) Portfolio management is a unique discipline because, while it's very clearly understood and codified in the financial arena where it originated, in the project world there are still many interpretations and approaches to applying portfolio thinking to project management.

I was lucky enough to spend five years at Intel as a team leader in Intel's Project Management Practice. Intel is an organization that takes project, program, and portfolio management and governance seriously. From the development of the next generation of semi-conductors to the design and building of new fabrication plants across the world, the majority of Intel's strategic work is performed as projects, and the appropriate selection, governance, staffing, control, and monitoring of these projects is key to the organization's success. I'm sharing some of the key success factors I observed during my time at Intel. These ideas are not proprietary — in fact, Intel has published extensively on its Business Value methodology (PDF).

Intel's IT portfolio is subject to rigorous business value review. Before projects are selected for inclusion in the portfolio and throughout their lifecycle from implementation to retirement, Intel applies metrics that strive to objectively measure benefits delivered, including:

  • A set of "ground rules" that describe the approach to portfolio governance and project measurement that all Intel entities will apply;
  • An overall portfolio measurement method to ensure that, not only are individual projects evaluated, but the portfolio as a whole is assessed for compliance with expected returns on investment;
  • Financial measurements, referred to within Intel as "Value Dials," that measure granular elements of savings or other strategic objectives;
  • An Impact evaluation focused on hitting customer-generated benefits (the "voice of the customer" element); and
  • An audit process managed by Intel Finance as an impartial auditor.

Apart from the obvious benefit of getting value for money expended on IT, Intel was driven to adopt this rigorous approach in response to more subtle factors —  specifically, the desire to change the mindsets of the IT department and the customer community that IT is a value center rather than a cost center. Intel was wise enough to recognize that the traditional metrics such as uptime and service call response time —while useful for driving operational and process improvement — didn't respond to the customer's biggest question, "How do I ensure that IT is a competitive differentiator and a value-add?"

Read more about the "Value Dials" concept.

About

Rick Freedman is the author of three books on IT consulting, including "The IT Consultant." Rick is an independent consultant and trainer, working, through his company Consulting Strategies Inc., to help agile teams and organizations understand agile...

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