IT Portfolio Management.

The 2004 Professional Development Institute (PDI) exceeded my expectations in providing premier training, starting with course offerings. In particular, the Information Technology (IT) Portfolio Management workshop served as an example of the excellent training provided. The workshop presented a wealth of information pertaining to current and forthcoming policies affecting the ability of the Department of Defense (DoD) to manage its IT investment using the portfolio approach.

First Impression

What was your dilemma when you reviewed this year's workshop brochure and had to make decisions about which ones to take? Given the wealth of offerings, was it indecisiveness about what to choose, or was it anxiety about the accuracy of workshop descriptions and getting what you expected? Whatever your dilemma may have been, if you chose and attended the IT Portfolio Management workshop, you would have found your expectations fulfilled and your anxieties relieved.

I offer kudos to the person who wrote the description, as well as to Ms. Virginia Calhoun, who presented the workshop. The PDI brochure description of this workshop set the stage for what truly to expect. It indicated that IT policies that were developed for both business and warfighting investments would be outlined along with information on implementation options and strategies that interface between mission areas and domains. Performance metrics and lessons learned would be included as well. This was all presented, for the most part in a nontechnical manner.

Ms. Calhoun, a senior analyst in the Office of the Assistant Secretary of Defense (Networks and Information Integration), Office of the Deputy Chief Information Officer, was a wonderful presenter. In her current position, she assists with the successful establishment and implementation of DoD IT management policies. In addition to her analyst work within DoD, she devotes spare time and energies assisting the disabled by providing them with IT access. She had a very amicable spirit and the ability to take something so technical as IT policies and explain it to nontechnical users.

DoD Policy

The demands on IT are high. In addition to fulfilling traditional mission requirements, DoD must respond to numerous laws and regulations--more so than any other federal agency, in the IT world alone, there are the Budget Enforcement Act of 1990, the Clinger-Cohen Act of 1996, and the Government Paperwork Elimination Act of 1998, as well as the resident's Management Agenda and several Office of Management and Budget (OMB) circulars (A-11,123,127, 130). The latter focus on information proficiency, integration, and efficiency to "get more bang for the buck" and ultimately redistribute funds to core war fighter missions instead of costly stovepipe systems.

Currently, DoD is working on an internal policy for portfolio management.

In March 2004, the Deputy Secretary of Defense issued a draft memorandum for review that would establish a Department-wide portfolio management policy that, within 180 days of issuance, will be incorporated into the formal DoD Directives system. The directive, scheduled for release in June 2004, will outline the roles and responsibilities of DoD personnel with respect to portfolio management. Keep an eye out for it, as it will affect all of us.

Portfolio Management

Did you know that DoD's IT budget is more than half of the entire federal government's IT budget? Indeed, the proposed FY 2005 DoD budget is $28.7 billion, as compared to a $50-billion budget for the entire federal government. Figures 1 and 2 give a more detailed breakout of the FY 2005 DoD IT/national security budget for systems. Clearly, this level of major investment dictates the need for portfolio management.

Portfolio approach provides a structure for budget reporting, to include the Capital Asset Plan and Business Case Exhibit (300) and Program Assessment Rating Tool (PART) processes. Guidance around the 300 exhibit establishes policy for planning, budgeting acquisition, and management of federal capital assets and provides instruction on budget justification and reporting requirements for major IT investments. The PART is a performance metric that links performance to budget decisions and provides a basis for making recommendations to improve results.

IT policies have been established to

* Ensure that DoD has the right IT capabilities to perform its mission and conduct effective information operations 

* Eliminate outdated ways of doing business

* Achieve net-centricity goals

A net-centric environment compels a shift to a "many-to-many" exchange of data, thereby enabling many users and applications to leverage the same data. This extends well beyond the previous focus of standardized, predefined point-to-point interfaces. Ms. Calhoun referred to the net-centric environment as "Google on steroids." The objective is visible, available, and usable data when and where needed to improve the speed of the decision process.

The DoD Chief Information Officer (CIO) has four goals for IT management:

* Become a mission partner

* Provide services that satisfy customer information needs

* Reform the information technology management process to increase efficiency and mission contribution

* Ensure that DoD's vital information resources are secure and protected

Portfolio management organizes the process to achieve these goals. One example is the move toward a net-centric environment where the network is populated with all data and where there is a paradigm shift to "post before processing." This allows authorized users and applications access to data without wait time for processing, dissemination, and exploitation.

Portfolio management uses the Capital Planning and Investment Control activities to work toward achieving the CIO's goals. There are four key components: Analysis, Selection, Control, and Evaluation.

* The Analysis activity links the domain goals to the DoD vision, goals, objectives priorities, and capabilities and specifies how these will be achieved and measured. It identifies gaps and opportunities, identifies risks and how those risks will be mitigated, provides for continuous process improvement, and determines strategic direction for domain activities and processes.

* The Selection activity looks at the best mix of IT investments to achieve outcome goals and plans, as well as transition to the "to-be" architecture specified by the DoD domain owner.

* The Control activity ensures that the portfolio and individual projects within the portfolio are acquired in accordance with cost, schedule, performance and risk baselines, and documented technical criteria.

* The Evaluation activity measures the actual contributions of the portfolio to the Enterprise, Domains, and DoD Components, and supports decisions on any adjustments to the mix of portfolio projects.

Application of the Capital Planning and to the Joint Capability Integration and Development System should result in handling information only once and in immediate posting of information upon receipt for shared user access. The handling of information would be done in a more collaborative, integrated manner, thus reducing redundancy and increasing awareness with all users involved.

We can apply these same activities to the Planning, Programming, Budgeting and Execution (PPBE) process and get slightly different results based on the data input. In the PPBE process--with its numerous stovepipe systems--one would evaluate the current systems and their uses as they relate to the DoD strategic plan (not just the military service or Defense agency plan), then determine if a new system is needed. If not, then one would consider whether a modification to the existing system is feasible in meeting DoD requirements. One also would need to consider whether a system is duplicative and can thus be terminated, with funds redirected to a core mission area.

As briefly mentioned previously, using a net-centric environment in the principal DoD decision support systems accomplishes the CIO's goals and objectives for IT management.

Benefits of IT Portfolio Management

There are numerous benefits in using portfolio management within the DoD. Ultimately, such use facilitates business transformation within the Department. Although DoD is a federal agency, when business practices are integrated with our systems, it creates a paradigm shift from bureaucracy to net-centricity--a streamlining of DoD processes. The IT portfolio management process will help facilitate the cascading of scorecard goals and measures managed within the Department and at the OMB. Both IT and non-IT investments will compete for funding while maintaining the core mission.

Despite the many benefits, there are some challenges--such as the alignment of IT investments to DoD strategic goals and performance measures. The visibility into DoD's IT budget and the elimination of duplicative solutions should produce a synchronization of programs that work together to deliver a capability across the Department. Overcoming the preference for Service-specific requirements and capabilities, as opposed to a more optimal DoD-wide approach that integrates many requirements into a few systems, is one of the DoD CIO's greatest challenges.

What Are We Doing?

IT portfolio management still is in its developmental stage. As mentioned previously, policy and implementation strategies will be distributed with the release of the new DoD directive expected by the end of June 2004. IT performance goals and planning guidance also are being established and implemented. The implementation of net-centricity and a common set of Net-Centric Enterprise Services has been initiated that reside on DoD's Global Information Grid (GIG Network).

The DoD portfolio domains are at different stages of the development, with the Business Mission Area being the one most fully defined. The DoD Business Management Modernization Program (BMMP) and IT Portfolio Management are included in this domain, and definitions and governance already have been established. Within the warfighting Mission Area, work still is underway to establish portfolio definitions and governance. At this time, the Intelligence Domain is the least defined domain, but a management initiative is in the works that will set some short-term deadlines to get all domains up to speed. Once issued, this guidance will be posted on the DoD CIO's Web site as well as disseminated to each DoD Component CIO.

This report highlights a few of the points presented in the workshop to introduce attendees to IT portfolio management. The "take away" from the workshop is that the Information Age transformation has begun in the DoD. The Department is moving toward operating in a net-centric environment with interoperable systems.

If you are unfamiliar with the term net-centric or any of the other terms mentioned in this article, you already are behind the power curve. But you don't have to stay there. As part of your situational awareness and professional development reviews, visit the DoD CIO's Web site at http://www.dod.mil/nii/. You also can visit the BMMP site at http://www. dod.mil/comptroller/bmmp/pages/.

Virginia Calhoun, Senior Analyst

Office of the Assistant Secretary of Defense (Networks and Information

Integration)

Office of the Deputy Chief Information Officer

Figure 1. Fiscal Year 2005 DoD Information Technology/National
Security Systems Budget (Appropriation)

Appropriation FY2005 ($M)

O&M           11,909.9
Procurement    4,526.5
MILPERS        1,461.4
DWCF           5,864.3
MILCON            18.7

Note: Table made from pie chart.

Figure 2. Fiscal Year 2005 DoD Information Technology/National
Security Systems Budget (Global Information Grid)

Global Information Grid Category
FY2005 ($M)

FAA             12,814.32
  Business        5,030.2
  Warfighting     7,784.1
RTA               1,075.4
IAA               2,073.2
S/I              12,754.7

Note: Table made from pie chart.

References

Virginia Calhoun, "IT Portfolio Management," PDI Brief (June 3, 2004).

John P. Stenbit, "DAD Net-Centric Data Strategy" (May 2003).

http ://www.pentagon.gov/execsec/ adr1999, "Information Technology Management Goals."

http://www.doncio.navy.mil/, DON IM/IT Strategic Plan FY 2004-2005

Sandra Wright is a budget analyst in the Budget Coordination Branch of Program and Resources Department, Headquarters Marine Corps. Sandra's professional background includes over 17 years of financial management experience. Her ASMC contributions include serving as a member of the Washington Chapter Executive Board as service vice president and assistant secretary. Other contribution include Chapter Awards board member, Community Service volunteer, 2003 Registration chairperson for the mini-PDI, and 2002-2003 chapter representative at the National Mid-Year Council meeting. She holds a master's degree in public administration from Troy State University and a bachelor's of business administration from the University of the District of Columbia. She is married to Felipe Wright, and they have three daughters, Marcia, Christina, and Shardonnay.