Portfolio Management: A New Approach for Managing IT Assets

Raymond A. Paul
US DoD OASD C31
PaulR @ osd.pentanon.mil

1. Mission

divided into three main categories, namely (a)

management and control of assets, (b)
quantitative and qualitative evaluation of
assets and their investment, and (c) distributed
infrastructure analysis. These are the
orthogonal dimensions that capture the
challenges faced.

The emergence of new technology and global

DoD commitments are transforming what was
recently a relatively centralized IT and
decision-making infrastructure.
The new
challenges facing DoD missions and IT
applications require DODs traditional needs
for the IT enterprise to be transformed into a
powerful infrastructure of new-generation
technology.
The new technology must
provide capabilities to collect, process, and
disseminate an uninterrupted flow of secure
information, logistics, and knowledge that will
support dispersed and mobile services to users
anywhere, and at any time. The goal is to
provide such an improved infrastructure. GIG
will allow unfettered collaboration among
DoD services and users with high levels of
agility.

2.1 Goal 1: Value Assessment and IT

Portfolio
Oversight
for
Operational
Effectiveness.
This
requires
the
implementation of new strategies and concepts
to establish and maintain a DoD IT portfolio
that will allow flexible control and optimal
utilization of IT resources by DoD missions
and services.

~~

One important sub-goal is that the Portfolio

must allow users to access real-time dynamic
information about assets stored in the
Portfolio, and the Portfolio must support
system and software reusability to minimize
rework and redundancy.

To successfully realize the GIG infrastructure,

DCIO needs to embark upon a comprehensive
plan to achieve strategic business objectives
through effective exploitation of the DoD IT
Portfolio management and cost effective
acquisition of new technology. The GIG I&A
Directorate will play a central role in
formulating the key strategic and business
objectives for the GIG infrastructure. These
objectives will be consistent with the goals of
JV2010 and CCA compliance requirements.

Another important sub-goal is that assets

maintained in the IT Portfolio must be
supported by an assessment process that can
identify the strengths and weaknesses of each
asset proposed for the Portfolio.
The
assessment process must provide a specific
level of assurance that a proposed asset is
suitable to support a given application. In
addition, the portfolio will include new
projects that are still in the acquisition phase.
The access to information on these new
projects will provide tremendous opportunities
for Portfolio users to expand the scope and
capabilities of their existing and planned
applications.

2. Challenges
Fulfilling the stated mission requires
achieving the following principal objectives,
and addressing the challenges described in
each. The challenges in each goal have been

0-7695-0792-1/00 $10.00 02000 IEEE

79

Another important sub-goal is that the

Portfolio must runs on a reliable and possibly
secure distributed system, and it must be able
to inter-operate with the existing DoD network
and database infrastructures.
Following are the challenges faced in doing
so:

Distributed infrastructure analvsis:

The assets and resources in the portfolio
should be accessible to the developers and
users of existing and new emerging
applications that require information
sharing,
knowledge
creation,
and
collaboration among individuals and
autonomous organizations.
The developers and aplplication users can
dynamically access, share, configure, and
integrate available GIG resources, directly
or indirectly, at any time from anywhere.
The assets should be accessed in a secure
and verifiable manner. In other words,
sensitive information should be retrieved
in a secure manner to eligible users via the
Portfolio.
The Portfolio should be able to collaborate
with existing databases and other local
portfolios so that assets and information
can be exchanged between the Portfolio
and local databases in a secure and
consistent manner.
The portfolio
should
be
highly
decentralized for reliability and optimal
access.

Management & control of assets:

The GIG assets and resources include
hardware,
software,
communication
subsystems, databases, and knowledge
bases.
These assets require different
representation
schemes,
storage
requirements and retrieval strategies.
Information about assets such as
reliability, usability, ability to share,
security, safety, operational effectiveness,
and efficiency should also be readily
available through the Portfolio.
The assets in the portfolio should be
categorized to provide both vertical
(application-based) and horizontal (GIG
architecture-based) views. The vertical
view supports domain-specific reuse, and
the horizontal view supports broad base
application reuse.

Quantitative & qualitative evaluation of

assets and their investments:
0

Another challenge is to continuously

update the information on operational
effectiveness of a Portfcdio asset because it
can change dynamically due to possible
environmental changes, unanticipated
damages, and users feedback.

A major challenge is to develop a

meaningful and comprehensive set of
quantitative and qualitative metrics and
assurance measures (both passive and
dynamic) to report the operational
effectiveness of each asset in the IT
Portfolio. The objective is to report
timely, precise, and accurate information
about the operational effectiveness of
assets in the IT Portfolio to the users of
world-wide
DoD applications and
missions.

2.2 Goal 2: Cost-effective IT Investment,

Engineering Analysis. and Acquisition. This
requires the implementation of acquisition
reforms that will adopt thle best commercial
practices to ensure ,cost-effective IT
investment.
An important sub-goal is to allow PMs to
monitor, track and evaluate project progress
remotely and early in the dlevelopment phase.
The evaluation can be done by assurance

80

between data being collected and the

information that is needed for the
assessment. The challenge is to extract
meaningful informationknowledge from
this data, which bridges this semantic gap.

measures as well as metrics, and these

measurements may provide early warning of
potential risks in projects under development.
This process will allow timely corrective
actions to be taken to mitigate risks, re-plan,
and re-evaluate projects under development.

Ouantitative & qualitative evaluation of

assets and their investments:

Another important sub-goal is to allow PMs to

evaluate projects via various scientific and
objective evaluation techniques such as
analytical models, simulations, probabilistic
models, and metrics, as early as possible in the
development phase. The evaluation may
include engineering analysis of the GIG
infrastructure, technology impact analysis,
IT investment analysis, and value-added
analysis. These analytical techniques should
measure several key assessment parameters
that are associated with the users
satisfaction and are reflected in the IT
Portfolio.

It is important for PMs to be able to

empirically and scientifically assess and
predict the overall performance of
different IT components. One way to
achieve this is to use various modeling
techniques, including analytical and
simulation techniques, to evaluate the
system objectively.
The modeling techniques should be able to
evaluate properties such as fault-tolerance,
reliability,
interoperability,
dynamic
reconfiguration, security vulnerability, and
susceptibility to external threats, security,
and growth.
The PMs should be able to evaluate these
properties remotely and early in the
development cycle to ensure careful
monitoring of the project progress.

Following are the challenges faced in doing

so:

Management & control of assets:

Formulation of rules to assist PMs in
inferring the status of projects using
different sets of data such as test
completion
rate
and
requirement
completion ratios. These rules should
(preferably) be based on quantitative,
measurable metrics.
The rules must be developed empirically
based on previous DoD projects, taking
into account the variations introduced by
new system and software development and
evaluation
technologies,
such
as
component-based software development
and assurance-based testing.
Currently, data are available but it is
difficult to make an informed and accurate
assessment of the status of projects based
on the data provided. The principal reason
for this is the semantic gap that exists

Distributed infrastructure analvsis:

The PMs should be able to assess the
status of projects remotely, possibly
through a secure private network or a VPN
(virtual private network) session running
on the Internet.
The PMs should be able to access both the
raw data and processed information
(possibly through a decision support
system) to accurately evaluate the status of
projects and suggest corrective actions if
needed.
The data should be collected, either
manually or automatically, and placed in
the Portfolio via the network. These data
are often process data, both for IT asset
acquisition and their investmenthsage,

81

whereas the measures in the first goal are

mostly product data.

3. Methodology
We now outline a methodology for achieving
the goals described above, which must address
all the challenges faced. The methodology is
based on the following key ideas:
0

The two goals are inter-related and

complement each other. Specifically, the
IT Portfolio is one of the main
components used to implement the IT
investment, engineering analysis and
acquisition process.
Qualitative and quantitative measurements
will be used in both projects, i.e., IT
Portfolio, and IT investment, engineering
analysis and acquisition. This it to ensure
that we can have some assurance of
quality for the assets in the Portfolio as
well as for the new investments and
acquisitions.
The
qualitative
and
quantitative
measurements will evaluate both the
system and process aspects.
An investment portfolio model, similar to
a portfolio model in financial asset
management, will be used to value
information technology (IT) resources,
and their investments. The investment
portfolio
model
is essentially a
quantitative model to (a) evaluate the
various investments (of practically any
resource) one has made, (b) rank the
progress of various investment decisions,
and thereby pick winners and losers, (c)
decide optimal allocations of resources to
various activities/projects, and (d) make
decisions about resource reallocation
based on progress of activities. For each of
these tasks (and their various sub-tasks)
there are well-known techniques in the
financial literature (called portfolio
theory) that can be applied. To apply the
portfolio investment model to IT resources

in the DoD, we need to do at least the

following tasks: (a) develop a (object)
model of various IT resources, (b) model
various constraints that exist, (c) model
various allocation priorities that must be
respected, and objectiive functions that
must be optimized, (d) identify the various
projects that require IT asset allocation,
and (e) use asset allocation techniques.
A web-based infrastructure, together with
the existing DoD datalbases and network
infrastructure, will be the main platform to
implement the two goals.

The overall process of achieving the goals will

be
1 . Understand the requirements and needs of
both projects, including formalizing the
DoD requirements, analyzing operational
profiles, understanding the existing
processes or guidelines to implement
similar projects, and examining the
existing
network
and
database
infrastructure.
2. Investigate and develop various qualitative
and quantitative measurement techniques
for evaluating products with respect to
reliability, safety, security, fault-tolerance,
and dynamic reconfiguration.
3. Investigate and develop techniques to
collect and process various real-time
qualitative and quantitative measurement
data remotely.
4. Investigate and develop network and
database techniques with respect to
storing, retrieving ancl processing large
number of dynamic and complex data in
real time.
5. Develop a web-based project monitoring
process for PM to track the progress of
various projects remo1:ely. This requires
data collection from previous DoD
projects as well as model development and
validation.
6. Develop and investigate various modeling
and/or simulation techniques to evaluate

82

proposed methodology to achieving this will

provide a number of benefits, outlined below.

systems. One key issue is that these

techniques should allow remote access and
real-time evaluation. Another key issue to
evaluate the system from end-to-end and
distributed computing points of views.
End-to-end evaluation is an essential and
final evaluation of the system, and most of
new acquisitions are likely to involve
distributed computing on networks.
7. Investigate and develop techniques for
classifying assets and promoting system
and software reusability. An important
issue to integrate a diversity of
components possibly built by different
groups for different computing platform
and in programming languages, to form an
integrated application.
8. Design and prototype a web-based
portfolio management system using the
existing
Internet
and
database
infrastructure to determine the feasibility
as well as getting user feedback. The
system should support remote project
monitoring as well as storing dynamic
information about assets stored. This task
can be further decomposed into several
sub-tasks and the entire process may
include numerous iterations with end
users.

The portfolio is expected to provide an

effective information support structure to
all the DoD missions and services.
The portfolio will play an unprecedented
role to support DoD missions requiring
GIG infrastructure by providing timely
information about (a) the availability and
accessibility of resources, (b) system
redundancies
to
safeguard
against
unanticipated surprises, and (c) potential
vulnerability of system components.
The acquisition of IT technology that best
suits the DoD needs with minimal cost but
with maximum and remote monitoring,
throughout the entire development
process.
Asset acquisitiodinvestment decisions
will be done on a more quantitative basis.
The "cost" and "value" of an asset
acquisitiodinvestment, as
well
as
"opportunity-cost" will get quantified.
This will provide opportunities for making
"optimal"
or
"satisfying"
acquisition/investment decisions.
Drastic reduction of personnel needed to
supervise and monitor the vast number of
projects that DoD will be running.

4. Benefits

Overall, the acquisition of IT assets and their

investment will be done in a quantifiable and
cost-effective manner.

Availability of a consistent GIG IT Portfolio

will achieve several goals of JV2010. The

83