Upload
frank-vogelezang
View
89
Download
1
Embed Size (px)
DESCRIPTION
How do you compare the Münchner Dom with the Allianz Arena? That is a key question when you want to control projects in a portfolio.
Citation preview
Local Touch ‒ Global Reach.
Where the numbers really count
Frank Vogelezang, Sogeti Nederland B.V.International Workshop on Software Measurement – November 19, 2008
Portfolio €ontrol
Local Touch ‒ Global Reach.
About portfolios
Project portfolio• Investment decisions
Application portfolio• Budget decisions• Replacement decisions
It’s all about (inancial) €ontrol
€ontrol€ontrol€ontrol
Local Touch ‒ Global Reach.
About Portfolio €ontrol
Portfolio €ontrol is the use of metrics
about relevant portfolio aspects
to support and justify
management decisions
about the portfolio
€ontrol€ontrol€ontrol
Local Touch ‒ Global Reach.
Which projects will be funded and which projects will be canceled?
Project Portfolio €ontrol
Local Touch ‒ Global Reach.
Quick portfolio decision
You are managing a project portfolio of severalhundred projects. You have to decide about:
Project cost: 10 M€ Duration: 3 years Expected profit: 30 M€
AGREE DISAGREE MORE INFO
Local Touch ‒ Global Reach.
$anity €heckC
osts
(in
million
s o
f €u
ros)
Duration (in months)
www.cs.vu.nl
200 projects750 M€
Local Touch ‒ Global Reach.
MaxNPV-MinNPVRDiff= Mean NPV
NPVPI= CAPEX
Project Value vs Project Risk
Proj NPV
A 2,000,000
B 1,600,000
C 1,600,000
D 1,000,000
E 900,000
Proj NPV CAPEX PI
A 2,000,000 2,200,000 0.91
B 1,600,000 5,000,000 0.32
C 1,600,000 900,000 1.78
D 1,000,000 2,000,000 0.50
E 900,000 500,000 1.80
Proj MeanNPV CAPEX PI Min NPV Max NPV RDiff
A 2,000,000 2,200,000 0.91 1,500,000 2,500,000 0.50
B 1,600,000 5,000,000 0.32 200,000 3,000,000 1.75
C 1,600,000 900,000 1.78 1,100,000 2,100,000 0.63
D 1,000,000 2,000,000 0.50 950,000 1,050,000 0.10
E 900,000 500,000 1.80 0 1,800,000 2.00
Local Touch ‒ Global Reach.
Project Value vs Project Risk
0.00 0.50 1.00 1.50 2.000.00
0.50
1.00
1.50
2.00
2.50
Relative Difference NPV (Risk)
Pro
fita
bilit
y I
nd
ex
E
Abandon
Add flexibilityInvest
Postpone
C
A
DB
Local Touch ‒ Global Reach.
Which applications are healthy and which applications need management attention
Application Portfolio €ontrol
€€ontrolontrol€€ontrolontrol€€ontrolontrol€€ontrolontrol€€ontrolontrol€€ontrolontrol
Local Touch ‒ Global Reach.
Functional size as base metric
With the functional size different aspects
of applications in a portfolio can becompared as a compound metric
≠
Local Touch ‒ Global Reach.
Application Portfolio Mgmt
Possible relevant portfolio aspects:• Service Level• Application Complexity • Application Age• Application Size• Number of applications• Architecture fit
• . . . . . . . . . . . . . . . . . . . .
Local Touch ‒ Global Reach.
The agreed service level has anoften underestimated impact:
Electronic banking Service level : 24/7 1,000 function points
Management reporting Service level : 2 working days 9,000 function points
Service level
Local Touch ‒ Global Reach.
Service level – the costs
Electronic banking Weekly capacity 168 hr Average cost level 125 €/hr 1,000 function points 21 €/FP
Management reporting Weekly capacity 20 hr Average cost level 95 €/hr 9,000 function points 0.21 €/FP
Local Touch ‒ Global Reach.
How to decide what budget is needed for which applications
Application Portfolio €ontrol
Local Touch ‒ Global Reach.
Do I get enough budget?
Most used way of budgetting:• Take last year’s budget• Correct for inflation (in good times)• Reduce it (in bad times)
There is a better way . . .
Local Touch ‒ Global Reach.
Activity Based Costing
0
500
1.000
1.500
2.000
2.500
3.000
Applications
Co
st (
EU
R/F
P).
Maintenance budget can be based on portfolio characteristics by means of Activity Based Costing
Implementation
End-of-life
Local Touch ‒ Global Reach.
Measurable budget
Investments in the portfolio can be mademeasurable
Implementation workflow package• Implementation is a one-off peak• Costs per fp decrease when more
functionality will be implemented
End-of-life applications• Invest in migrating functionality• Savings on yearly license fees
Local Touch ‒ Global Reach.
Impact for the organisation
No mea$ure, no €ontrol
Application or project size• Make fairly precise size estimates• Document these estimates
€osts• Good design of time registration• Out-of-pocket via Control or project office
Local Touch ‒ Global Reach.
Portfolio €ontrol
By making the portfoliomeasurable you will get more gripfor your (internal) control
By expressing measurable aspectsin financial terms investments in theportfolio can be “sold” much easierto the budget holder
Local Touch ‒ Global Reach.
metrieken.sogeti.nl
metrieken.sogeti.nl
Local Touch ‒ Global Reach.