Prioritize the Portfolio

Managing Your Portfolios › How to Rationalize a Portfolio of Investments › Prioritize the Portfolio

Prioritize the Portfolio

As part of the initial portfolio creation process, as the portfolio manager, you can set up some basic criteria or ranking rules. The ranking rules dictate the order in which the investments appear on the Waterlines view.

Note: The following example assumes that corporate goals for investments have already been defined in the product.

Example: Initial Portfolio Planning

Raj uses the investments list from Lauren and creates a portfolio in CA Clarity PPM. To collect information and display it in a meaningful way, he completes the following tasks:

Adds the list of investments in the portfolio in alphabetical order.
Works with the staff to determine the cost for each investment and enters this information in the portfolio.
Compiles the number of internal resources for the investments in FTE units and enters this information.

The following table shows the portfolio investments and other details:

Investment	Duration (Months)	Cost	Resources
Administrative Expense System	3	250,000	5
Back-Office Financial System	9	750,000	15
Cloud Based Order Intake	3	100,000	3
Database Upgrades- Oracle	3	200,000	6
Enterprise Time and Attendance	5	450,000	12
Federated Security	2	300,000	5
GUI Redesign- Supplier Internet System	4	50,000	1
HR System Upgrade	6	300,000	12
Interface to Material Supplier	9	700,000	30
JIT (Just in Time) System Upgrade	5	100,000	6

In the meantime, Lauren works with the board to determine the discretionary IT budget. Lauren comes back with the following inputs which Raj incorporates into the portfolio:

The board potentially agrees to $2,500,000 for funding. Raj enters this information in the portfolio properties.
Each of the initiatives is aligned with a corporate goal. Raj links the investments with the predefined goals in the investment properties.
The CFO wants to see estimated capital and expense projection for each investment. Raj enters the expense information for the investments in the financial summaries.
The CFO wants to see what the expected benefits for each project. Raj enters the benefit information for the investments in the financial summaries.
Raj syncs the portfolio with the investment information in CA Clarity PPM to capture the latest investment data.

The following table shows the portfolio investments with the latest details:

Investment	Duration (Months)	Goals	Cost	Benefit	Capital Cost	Operating Cost	Resources
Administrative Expense System	3	Improve Office Efficiencies	250,000	20,000	200,000	50,000	5
Back Office Financial System	9	Improve Office Efficiencies	750,000	1,000,000	675,000	75,000	15
Cloud Based Order Intake	3	Increase Sales	100,000	750,000		100,000	3
Database Upgrades- Oracle	3	Better Align Technologies	200,000	100,000		200,000	6
Enterprise Time and Attendance	5	Improve Office Efficiencies	450,000	700,000	400,000	50,000	12
Federated Security	2	Better Align Technologies	300,000	3,000,000	275,000	25,000	5
GUI Redesign- Supplier Internet System	4	Better Align Technologies	50,000	60,000		50,000	1
HR System Upgrade	6	Reduce Costs	300,000	100,000	275,000	25,000	12
Interface to Material Supplier	9	Reduce Costs	700,000	2,500,000	600,000	100,000	30
JIT (Just in Time) System Upgrade	5	Improve Office Efficiencies	100,000	2,000,000	25,000	75,000	6

Evaluate the Portfolio

The portfolio manager constantly evaluates the portfolio investments to keep them aligned with the portfolio goals and within constraints. You can evaluate your portfolio investments on a periodic basis (for example, monthly or quarterly during the planning meetings). If your business needs change suddenly, you can also evaluate your investments on an ad-hoc basis. For example, if your business goals change due to new market conditions. You can reevaluate your portfolio to ensure the investments align with the new strategic direction. You can cancel investments that have a relatively low business alignment (for example, extended completion dates).

Example: IT Budget Portfolio: Plan 1

Lauren reviews the IT Budget portfolio that Raj prepared and provides the following feedback:

The board has approved funding for $2,600,000.
The investments must be sorted by goals, with the Reduce Cost goal being first.

Raj incorporates the feedback into the portfolio by creating a separate plan for the portfolio (Plan1). The plan is a copy of the portfolio that Raj can change to accommodate what Lauren is asking him to do. Raj brings up the plan Waterline view and drags the investments that are associated with the Reduce Cost goal to the top of the list.

The following table shows the Plan 1 version of the IT Budget portfolio:

Investment	Duration (Months)	Goals	Cost	Benefit	Capital Cost	Operating Cost	Resources	Cost Accumulator
HR System Upgrade	6	Reduce Costs	300,000	100,000	275,000	25,000	12	300,000
Interface to Material Supplier	9	Reduce Costs	700,000	2,500,000	600,000	100,000	30	1,000,000
Cloud Based Order Intake	3	Increase Sales	100,00	750,000		100,000	3	1,100,000
Administrative Expense System	3	Improve Office Efficiencies	250,000	20,000	200,000	50,000	5	1,350,000
Back Office Financial System	9	Improve Office Efficiencies	750,000	1,000,000	675,000	75,000	15	2,100,000
Enterprise Time and Attendance	5	Improve Office Efficiencies	450,000	700,000	400,000	50,000	12	2,550,000
JIT (Just in Time) System Upgrade	5	Improve Office Efficiencies	100,000	2,000,000	25,000	75,000	6	2,650,000
Database Upgrades- Oracle	3	Better Align Technologies	200,000	100,000		200,000	6	2,850,000
Federated Security	2	Better Align Technologies	300,000	3,000,000	275,000	25,000	5	3,150,000
GUI Redesign- Supplier Internet System	4	Better Align Technologies	50,000	60,000		50,000	1	3,200,000

Lauren reviews the Plan 1 waterline view with Raj. She comments that the investments must be prioritized by Better Aligned Technologies as a top priority goal. Raj drags the investments with the Better Aligned Technologies goal to the top of the Waterline view. Plan 1 waterline view now looks like the following table:

Investment	Duration (Months)	Goals	Cost	Benefit	Capital Cost	Operating Cost	Resources	Cost Accumulator
Database Upgrades- Oracle	3	Better Align Technologies	200,000	100,000.00		200,000	6	200,000
Federated Security	2	Better Align Technologies	300,000	3,000,000	275,000	25,000	5	500,000
GUI Redesign- Supplier Internet System	4	Better Align Technologies	50,000	60,000		50,000	1	550,000
Administrative Expense System	3	Improve Office Efficiencies	250,000	20,000	200,000	50,000	5	800,000
Back Office Financial System	9	Improve Office Efficiencies	750,000	1,000,000	675,000	75,000	15	1,550,000
Enterprise Time and Attendance	5	Improve Office Efficiencies	450,000	700,000	400,000	50,000	12	2,000,000
JIT (Just in Time) System Upgrade	5	Improve Office Efficiencies	100,000	2,000,000	25,000	75,000	6	2,100,000
Cloud Based Order Intake	3	Increase Sales	100,000	750,000		100,000	3	2,200,000
HR System Upgrade	6	Reduce Costs	300,000	100,000	275,000	25,000	12	2,500,000
Interface to Material Supplier	9	Reduce Costs	700,000	2,500,000	600,000	100,000	30	3,200,000