Government IT: How Your Portfolio Management Needs to Change

Government agencies and others in the public sector still aren’t as good at IT portfolio management as they should be. Their approach often leads to to waste, mismanagement, and needless duplication.

For example, some agencies run multiple copies of the same applications, while others fund projects that fail to support any stated strategic objectives. The response to all this waste and muddled spending should be an effort to improve communication and collaboration between government IT teams and and their non-technical colleagues.

To do this, government IT teams should start by using terms that their colleagues can understand. The idea of “business capabilities” provides a common terminology through which organizations can create the right software and services that everyone needs to get their jobs done. This results in much better alignment between the agency mission and spending on all IT investments – the “IT portfolio” –  and promotes cross-functional collaboration across an organization.

Time for a Change in Portfolio Management

But it’s not just the need to make a substandard process more efficient. Many agencies in the US and beyond, are now trying to provide more and more government services digitally and IT portfolios are becoming more complex – in line with what’s already happening in the business world.

The focus on “digital citizen engagement” and digital services means that government IT teams are just as interested in “big data,” “analytics,” and providing services through mobile channels as their corporate counterparts. And, again, just like in business, all these new priorities have increased the number of decision-makers that IT must deal with. Managing the IT portfolio now involves colleagues from throughout a big government agency.

As a result of all these pressures to improve management of the IT portfolio, agencies at all levels of government are changing the way that  IT is asked to support the rest of the organization. And organizations that are most successful at navigating this challenge are embracing the new operating model for IT.

How Business Capabilities Can Help

The first step in the move to this new operating model is to establish an organization’s business capabilities. These are the most important activities that an agency as a whole needs to carry out to implement its strategy (see chart 1). Once IT understands what business capabilities its staff are responsible for, they can then work out how to work with colleagues and provide the flexible, business focused IT team that organizations need.

Chart 1: From strategy to IT projects  Source: CEB analysis

Having an agreed-upon list of business capabilities provides a common language for IT and business partners to discuss the demand for different activities, services, and projects. For example, at a meeting to talk about a new IT investment, instead of discussing paying for a new system or application, the use of business capabilities focuses the funding decision on the business outcome (such as to sign up more people to a particular citizen service). Managers across the agency can then make investment decisions for about agency services that support the agency’s mission. Through this approach, IT and the business will gain visibility across different parts of the agency and be able to make informed trade-offs.

The most successful business capabilities have three characteristics.

  1. Business language: Business capabilities should contain the same language that business partners use to talk about the organization as a whole.
  2. Outcome defined: They should be defined by business outcomes and activities, not systems or processes.
  3. Co-created: IT must work together with agency business partners to identify and develop business capabilities so as to ensure they are relevant and adopted across the whole organization.

Three Steps to Take

There are three steps to building a business capability model. First, IT must select business partners who are knowledgeable about the agency and who can ensure that any given capability under discussion is aligned to mission objectives. Next, IT needs to help these business partners identify what the actual key capabilities are through a series of open-ended questions. Finally, IT should aggregate the responses in terms that are familiar to most agency functions and then use them to build a business capability model.

Through a business capability model, public sector IT teams can develop an IT portfolio that supports the move toward digital government, reduces waste, and improves efficiency.


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