Assessment of project portfolio management for the Municipality of Groningen

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Assessment of project portfolio management for the

Municipality of Groningen

by

BERT KLEERSNIJDER

University of Groningen - Faculty of Economics and Business Business Administration

September, 2010

Email: bkleersnijder@gmail.com

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ACKNOWLEDGEMENTS

A word of gratitude goes out to all the people that aided me while writing my thesis. With the completion of this thesis, my Business Administration study at the University of Groningen is completed. This thesis obviously would not be here if it was not for the help of the municipality of Groningen. I wrote this thesis at the organization that is not unknown to me, since September 2009, I work as a ‘Beleidsmedewerker Information Management’ at the municipality of Groningen. It was very interesting to do research at my own employer, it brought to me the building blocks of the bridge going from theory to business practice. I could not have imagined a better way to graduate.

This thesis could not be achieved without the help of a wide range of people, the list is long. Nevertheless, I would like to mention a few names. Joep Hoedjes and Arne Bakker, my graduation coaches at the municipality of Groningen. They gave me insight where this research is based on and both were an excellent guide to the I&A area. Corrections to my interim versions were very valuable. Furthermore, Harry Haaksma and Erik van der Laan. Our regular consultations ensured that I stayed focussed and brought the thesis to a higher level. Special thanks to Prof. Dr. E.W Berghout, my thesis supervisor from the university, he was indispensable in this final result. His corrections, guidance and our inspirational conversations sent me in the right direction.

Furthermore, I would like to thank my family for supporting me all the way during this study.

Bert Kleersnijder Groningen

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ABSTRACT

The purpose of this research was to find a method to support governing the Information and Automation (I&A) function, and in particular the part how the planning and prioritization of I&A projects can be best structured. The municipality of Groningen has acted as case organization and the research has led to the development of a governance methodology for I&A, ICT projects, project prioritization and how to apply this governance.

From the literature review it was concluded that for planning and prioritizing the project portfolio management technique could be applied. In the designed prioritization tool the projects can be prioritized. Project portfolio management makes it possible to control and govern on the objectives of the organization.

The core of this research and the public administrative aspect, is the hourglass. The municipal council has a vision and translates this into the ‘College Program’. The ‘College of B&W’ orders the

‘Municipality Secretary’ to implement this program in the organization. The municipality secretary describes the possibilities of the organization, translates the college program into projects in the organization and gives orders on the tactical and operational level in the organization. The

municipality secretary reports to the College of B&W. The layers in the hourglass each play a role in the development of the project portfolio. Using the hourglass, the developed methodologies for control on the I&A function, the ICT project portfolio and the prioritization tool will help to improve the governance in the context of the municipality of Groningen.

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1 INTRODUCTION

1.1 General introduction

Research in the report ‘Lessons learned from ICT projects in government’ describes that government ICT projects are not running as they should (Algemene Rekenkamer, 2007). The United States has even put legislation in place to make financial reporting on public sector projects in the field of information technology mandatory. The Act regulating financial reporting is known as the Clinger-Cohen Act (Berghout, 2002). Government projects do not necessary fail more often then projects in the business sector. However, the government should be more transparent in its business and the failures are more in the public view (Clinger-Cohen Act, 1996).

1.2 Research

At the municipality of Groningen internal business reviews showed that it is important to organize the resources supporting the primary process and the government of the I&A organization. Conclusions from this research were to further organize the government of the I&A function and to develop a method for planning and prioritization of I&A projects (BOIA report, 2008).

The purpose of this research is to propose a method on how to govern the I&A function, and particularly how the section on planning and prioritization of I&A projects can best be shaped. The municipality of Groningen is the organization in this case study. In the context of this organization the methods are developed to govern the I&A function, the ICT projects and how to apply this control. First there is a literature review. Furthermore, interviews were held with the involved employees and documents of the organization itself were consulted. Finally, this thesis research has led to the development of an I&A control method including a project portfolio and prioritization method.

1.3 Outline

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2 RESEARCH METHODOLOGY

2.1 Problem definition

There are many developments at the municipality of Groningen, where the importance of ICT is increasing. The municipality has developed a vision of the I&A function, displaying the ambition to create a sustainable I&A function. An overview of current projects is available. However, this overview is not used to monitor those projects and there is no certainty that all the projects have been mapped. The municipality of Groningen wants to further organize the control on the I&A (Information & Automation) by developing a method to govern the projects in a proper way (BOIA report, 2008). Based on this report the following problem definition has been extracted for this research:

At present there is no control on organizational change with an ICT component. The government of the I&A function is not adequate, there is no planning on projects and projects are not prioritized.

2.2 Research question

From this problem definition, the following research question is defined:

How can control be developed on the information and automation function (I&A) and in particular the section on planning and prioritization of I&A projects can be best designed in the context of the municipality of Groningen.

Then, the following sub-questions are defined:

1. What is control in organizations and why is this necessary? 2. How can projects be controlled?

3. How are projects prioritized?

4. What are the possibilities of control in the municipality of Groningen? 5. Which quality criteria are there for control on I&A?

2.3 Purpose of the research

The purpose of this research is to provide an insight into how the municipality of Groningen should manage organizational changes with an ICT component, then to develop a method to govern those changes in the municipality of Groningen in a proper way. This method should provide a tool for change at all levels, strategic, tactical and operational and the developed method should provide an instrument for managers to control the organization's projects with an ICT component. Managing and guiding these projects should help to control the change in the organization and provide insight to the effective and efficient use of the I&A function (BOIA report, 2008).

2.4 Research methods

The research methods in this thesis are a literature review and research in the municipality of

Groningen. The literature review was conducted through the use of databases of scientific articles. In addition, books and articles of businesses and public organisations were used. Also, the research consists of interviews with employees involved in the I&A function of the organization. Furthermore, the knowledge base of documents from the municipality of Groningen was intensively used.

2.5 Research scope

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2.6 Scientific relevance

This research examines how the municipality of Groningen can govern the I&A function and shape its project portfolio. The aim is to offer generic conclusions which are interesting to all public

organizations. With these methods other municipalities can get insight into the project portfolio of projects with an ICT component and a method for governing the I&A function.

2.7 Data collection

For developing the literature review, the structure of Arviansyah is being used. This literature is searched in the proper sources. Literature is an important source to get a better picture of the subjects in this research. The University of Groningen has a number of good library facilities in which the student has full access. These sources are primarily supplying the literature mentioned in this research. Also used is literature from the municipality of Groningen itself. In addition, the very well-known internet search engine ‘Google’ is used. Much literature emerged in this quest. A search strategy is needed to achieve the most appropriate literature, and the less relevant literature to be left out. There are several possible sources for this research, books, scientific articles and scientific journals. The most appropriate literature for a study in the field of ICT & Business is found in the ‘Business Source Premier’ (BSP) and ‘Econlit’ (EL).

Figure 1- Literature sources, Arviansyah, 2008.

2.8 Explanation of the process

The purpose of this search strategy is to find the right literature, based upon academic articles. The databases 'Business Premier Resource' and 'EconLit’ are appropriate and are being used via the EBSCO website.

The query is as follows; ‘decision making’ and ‘project’ together with ‘information technology’ and ‘information systems’. Based on these criteria scientific papers are found on the subject of decision making on projects, information technology and information systems. The site also allows EBSCO to use filters. In this query, the settings used as follows, 'scholarly (peer reviewed) journals,' 'publication type: academic journal' and 'pdf full text'. The search results limited to reviewed articles from

scientific sources and the articles are only displayed when a full article in PDF was available. The summaries of these articles were examined for usability.

The search engine Google was also used to search for articles, in this engine also the same keywords were used. Google gave interesting results which have been used, although not all scientific articles. These articles are from the EBSCO website. Also search queries on specific authors were used to find a specific book.

The knowledge base of documents from the municipality of Groningen was also consulted. This knowledge base contains final reports (final versions of policy documents, management decisions, group decisions). Although not of scientific nature, this information is very useful for examining the research being done in the organization. This source, was often consulted when writing this document. The search strategy shows this as the ‘Knowledge Base Municipality of Groningen’ source.

Books

Google

Periodicals

Business Source Premier EBSCO

ScienceDirect

Other

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EBSCO host Research Databases

Keywords

Information technology Information systems Decision making AND Project EconLit (EL) Limiters set

Scholary peer reviewed journals, publication type: academic journals, .pdf fulltext

Results: 130

Abstracts reviewed on relevance, removal of duplicates Articles included: 28 BRP & EconLit: 39 ScienceDirect: 51 Google Book search results

Figure 2 – Literature search strategy (Arviansyah, 2008).

Science Direct Knowledge Base Municipality of Groningen results Books included: 17

Knowledge base articles included: 17

Total: 62 Business Source

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2.9 Conclusion

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3 LITERATURE REVIEW

3.1 Introduction

In order to correctly answer the sub questions and the research question a literature research is

performed. Before outlining why we need organizations as a means of governance, first, the emerge of organizations and the various forms of an organization need to be investigated. Furthermore, various methods of governance and how to control and prioritize the I&A projects of an organization are described. Finally, the criteria for governance on the I&A function is given.

3.2 Organizations

3.2.1 The emerge of organizations

Organizations are means people use to coordinate actions in order to achieve their goals. An organization often creates added value, this is the way an organization emerges, in response to new needs of people and to satisfying those needs (Jones, 2007). According to Jones, the effectiveness of an organization is shown by the extent to which the organization is able to find scarce resources, the speed with which an organization is able to respond to new opportunities, the innovative capacity (the time required for taking a decision) and the extent to which the organization is able to achieve its goals. Setting up an entire organization has benefits, employees can specialize, resources and

commodities in this world are better used, the organization is able to pick up on incentives and act on those incentives, power can be exercised and the alignment cost can be reduced. The environment of an organization consists of a set of forces that affect the way an organization works and acquires its resources. Specific powers are customers and distributors, generic forces are of an economic,

technological, political, demographic and social nature. According to Jones, the following functions in an organization have been defined, these are the support functions, purchasing, sales and marketing. Furthermore, the production function exists to enable the organization to produce efficiently so that more value is created. Furthermore, the production functions. This function consists of production operations, production control and quality control. The maintenance functions for the organization are to perform tasks, human resources, engineering and planning. Also, there is the adjustment function, to apply change, such as research & development and marketing. Finally, Jones mentions the

management position. This function is to coordinate activities within and around departments, acquisition, investment and control on resources and to provide the organization the opportunity to improve added value (Jones, 2007; Daft, 2004).

3.2.2 Contingency approach

The differentiation of an organization can be vertical, this means the distribution of power and authority, the horizontal differentiation indicates that organizational roles are divided around the different departments according to their functions. In a centralized organization the decision making power and responsibility lies with managers high in the organization. The organization is more focused on achieving organizational goals. One disadvantage of centralization is that the organization is slow and responds poorly to change in the external environment. In a decentralization there is at all levels sufficient ability to take decisions. The advantage is that rapid response to a changing

environment is possible. One disadvantage is that it is difficult to coordinate the entire organization. The contingency approach is applied to organizations, which implies that for each one specific organizational design must be consistent with the environment, technology and people in the

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3.2.3 Political primate of a municipality

The area of municipalities is in full swing and development, the speed of the change is higher then ten years ago (Kerkhoff, 1999). New developments in social, political, technological and economic matters continue to follow each other. The issues of the today’s municipality are no longer adhering to local boundaries. On several fronts there is interaction with other governments and private parties. Also, changing coalitions and groups of citizens still rely on other aspects of government, when in fact it increasingly difficult to point out what the municipality exactly is and more where it begins and ends and what the municipality is allowed and what not. Politically it is a major effort to anticipate on all these changes. The concerns with organizational change are not a one-time affair but a constant. The issues facing municipalities are complex. The intrinsic complexity of the policies requires a careful specialist preparation (content and process) and a clear consideration of alternatives. Between the driver/politician and the specialist tension emerges between the contribution that each one should act on the contents of the policy. The question is whether this policy has the desired input and can provide the necessary guidance to make (Hiemstra, 2003; Kapteyn, 2001). Democracy plays a role, through social involvement and publicity, the importance of involving citizens in the policy and the formal right to participate in this is growing and growing. The discussion and decision-making of important social developments are outside the traditional political arena. However, in a democratic constitutional state is exercising social power hand in hand with accountability, whatever where it takes place (Kerkhoff, 1999).

A municipality has a Council. This council appoints the mayor, aldermen and hereby the college of B&W (College). The College is responsible for the daily management and implementation of the decisions taken by the council. In the Municipality Law it is stated that the municipality has a board with two bodies (College and Council), each with their own role and responsibility. The separated roles of college and council is called 'dualism'. This means that the roles and responsibilities of the council and the College of B&W are defined and delimited. The council has the highest representation of the people and the last word, it represents the citizens of the city, formulates policies and sets broad goals. The council checks if the College has achieved the goals and if the policy is met. The separated roles of council and college does not mean that they are opposed. Both serve, each with their own responsibility, the importance of the municipality and citizens. After the elections, and the appointing of the council and aldermen, the college gets from the council a policy for the new term after the election, the college program. This is a kind of governmental agreement (Municipal Law, 2010; Central Government Website; 2010).

3.2.4 Government policies

Government policies press a stamp on all facets of society. When governments first tackle social problems, this leads to new policies. Even when governments withdraw, not only policies ended, although often return policy, for example to ensure adequate market or the accessibility of public services to society. Policy is defined as efforts to achieve certain ends by certain means and fixed choices (Hoogerwerf & Herweijer, 2008). Public Administration professor Klein describes policies as a conscious and systematic action, using appropriate means, with a clearly defined political goal, that is created step by step. The sociologists Van Lammers and Van Doorn describe policy as a plan of action, combination of means and ends. Political scientist Kuypers defines it as a system of elected policy elements, each of which relates to one or more other as an end to an agent or as a means to an end. Policy is an act according to some authors, others say a plan or a plan and act. Policy has two faces, it is not just a set of objectives, resources and time choices (Hoogerwerf & Herweijer 2008). It is also an answer to a problem. It is an attempt to create a problem in a certain way, through

purposeful thought and action, to resolve, reduce or prevent (Hoogerwerf & Herweijer, 2008; Kapteyn, 2001).

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the policy process undergo the influence of natural and social environment, and the environment is also influenced through the policy (Hoogerwerf & Herweijer, 2008).

3.3 Control

3.3.1 Functions of control

The system theory definition of control is 'any form of specific influence'. Direct oriented influence is translated as ‘aimed at achieving goals' by Linker. Control may be that when an organization, starting from the given standards (the signal), determines the necessary interference with the system to allow the export to the expected outcome will be met. It starts from an ideal situation, which means that the person that controls the system arranges it based on the standard (the goals to be achieved). This means that someone who controls the system organizes and arranges the targets does this as good as possible (Linker, 2006). Deming introduced the ‘Plan-Do-Check-Act’ cycle. Deming had the idea on control that things were thought out and planned (Plan). Those things then started (Do), that there is control if the execution went according to plan (Check) and that on the basis of that it is modified or a successful operation is assured (Act). Organizations can make plans and then those plans are carried out, however things happen continuously in the area of organizations to which they must adapt. A human being is partly controlled and partly controls itself, some things have influenced and other things happen to us. For an organization largely these same principles are applied. There's more to it than the measurements and adjust them in time, a lot of complexity in an organization can not be premature notified (Linker, 2006; Jones, 2007; Daft, 2004).

3.3.2 Control of organizations

Organizations are controlled to achieve the desired goals. Before that, the right goals are set. Control can only be effective if people know when goals have been achieved and the destination is clear, a clue how these goals are achieved (the route is set), could monitor whether the goals be achieved (it is visible or it is on track) and may intervene if this is not the case (to steer back on course). There are three elements to be added. First complicating factors or risks can make achieving the goals more difficult (the troubles on the road), secondly it is important that an adequate organization, including staffing, to have a focused motivated and competent crew and an appropriate vehicle and thirdly, there is good leadership in the organization, so they know how to drive the vehicle is how it should be maintained (Linker, 2006). There are two elements of control by are highly relevant, namely expectations and pressure (Linker, 2006).

3.3.3 Control by the government

In the minimal version a society needs a government to maintain social order. When authorities deliberately want to change elements of social order, for example to combat discrimination, there has been deliberate action based on decisions of democratically elected officials and community

representatives. There are a number of alternatives to government regulation, social self, meaning that groups (businesses, interest groups, churches) without government intervention transmit values, solving problems or seizing opportunities using resources such as money, expertise, support for large parts of the population, contacts and networks. Another alternative is to control interaction between government and society, where goals of government and civil society parallel and they can

complement each other (Linker, 2006). The government can make resources available, issue general rules and private organizations in civil society (including housing) and then organize practice and implementation. Finally, the market mechanism as an alternative to government regulation, this mechanism provides sufficient competition to consumers/citizens the freedom to decide whether and to what extent their goods and services at different price and quality levels to consume. Linker furthermore mentions that government regulation is justified by the uncontrolled exercise of power and to avoid major market failures. The government should also intervene when the market fails (Linker, 2006).

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also expected. The power of governments to restrict and to verify compliance with established laws where one needs to uphold. Legality may lead to the necessary care to ensure that everyone is treated according to the same laws and regulations which may cause inefficiencies. Citizens also expect integrity of the government. Of governments can be expected that they do not abuse their power. This means that politicians, administrators and officials are not corrupt and comply with standards and values. Then there is efficiency and effectiveness; governments have social issues in an effective and efficient way to approach, in other words, a government must perform, deliver results and achieve desired effects and prefer to have the lowest possible social costs (Linker, 2006).

In tension within the government often dominates risk aversion. A private organization has fewer of these tensions, they can focus primarily on effective and efficient production of goods and services. Of course it is true that companies comply with laws, rules and norms and values, also apply to the competition. However, rules for the market are different from the government (Linker, 2006).

3.4 Control of projects

Research of Jeffery & Leliveld showed that 41% of their organizations surveyed have no overview of their spending on ICT, 46% of the organizations do not have their applications and infrastructure properly identified, 47% of organizations do not have a central overview of ICT projects, 57% had no criteria for these projects together to weigh and that 41% of the organization did not calculate the periodic return on investment (ROI) for each project (Jeffery & Leliveld, 2004). They also wish to consider that there are actually four levels of management of ICT. They are classified as follows: 1. Ad Hoc. There is no central management of ICT. The organization decides upon its findings. 2. Defined. The organization is aware, how and where ICT is used. Information about projects is included in a central database. There are methods available to evaluate and prioritize investment proposals.

3. Managed. There is control on the I&A function and there are well-defined procedures for ICT implementations and projects to assess their usability. There are hereby financial and non financial methods used. Alignment of the goals of the organization with the use of ICT is regularly reviewed. 4. Synchronized. There is alignment between the needs of the organization and deployment of ICT. ICT deployment is in line with the goals of the organization. The cost and use of ICT are discussed. There is a weighting applied to the project portfolio (Jeffery & Leliveld, 2004).

Portfolio management is according to Maizlitz a tool in times of growth and recession to discipline improvements in dealing with the use of ICT (Maizlitz, 2005). It is interesting for an organization if it finds that too much money does not go to the strategy contributing projects, no reluctance to invest is limited, there are too many projects are present, if incomplete criteria for the selection of ICT is used, and if there is no adequate control of ICT (Maizlitz, 2005). In addition, research of Maizlitz shows that when 84% of organizations do not use business cases or only apply little criteria on ICT investment, creating a portfolio is relevant (Maizlitz, 2005).

Pennypacker describes this the 'Project Portfolio Management Maturity Model'. This model consists of five different levels that indicates for the organization how far the field of portfolio management is deployed;

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standard processes and characterizes itself as a mix of summary information and detailed information. Senior management supports the implementation of portfolio management in the organization, but is not involved.

Level 3: Organizational Standards and Institutionalized Process. At this level, the project portfolio management processes within the organization are present and standard. Almost all projects within the organization follow these processes. Senior management supports these processes and has made them formally through make the documents for everyone in the organization available. Furthermore, senior management is regularly involved in major decisions about project portfolio management. Finally, the project portfolio management processes show close involvement with the organization's strategy and business value.

Level 4: Managed Process. If this level is reached by the organization, the project portfolios are managed. This through a careful consideration of the performance of the portfolio in the past and the future. Goals and standards are defined and regularly updated by senior management to performance and the balance of the portfolio is measured and maintained. Project portfolio information is integrated with other information flows within the organization and is part of business decisions. Senior

management is clearly aware of its role in relation to portfolio management and carries out this role carefully.

Level 5: Optimizing Process. At this highest level is the project portfolio management activities are managed. Lessons are learned and regularly reviewed to improve project portfolio processes, standards and documentation. The senior management of the organization is not only focused on effectively managing project portfolios, but also continuous improvement. The data generated during the process is collected and not only used to gain insight about the performance of projects and project portfolios, but also to improve management decisions (Pennypacker, 2005).

3.4.1 Definitions of project portfolio

From the literature, several portfolio management and project descriptions can be defined. Portfolio management comprises all structured processes for evaluating projects in a portfolio along different dimensions. This primarily concerns the composition of the portfolio, the total number of projects (Simon et al, 2010). ICT portfolio management deals with the combination of people, work processes and technology that is used for achieving a balance between investments and assets by making an inventory of all projects in a detailed way. This is used for supporting the decision-making process (Maizlish, 2005).

Cooper defines portfolio management as a dynamic decision-making process in which an organization continuously evaluates projects, selects and prioritizes. Projects could be accelerated or stopped by dividing the available resources (time, money). The process is characterized by uncertain and

constantly changing information, multiple goals, strategic considerations and sensitivities and different decision makers (Cooper et al, 1999).

Organizations are becoming more involved in projects, it is hard to imagine that no organization performs something without project activity (Amaral et al, 2009). But what is a project exactly? According to (Gevers & Zijlstra, 2001) a project is a series of (related) activities and tasks that - A concrete defined end result

- A clearly defined beginning and end

- It must be realized within the prescribed restrictive conditions - With a client or customer, who has committed to the final result.

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An ICT project can involve the introduction of an information system or replacing hardware in the ICT architecture. There are also projects from the business in which ICT plays a role. ICT is almost always present in a business process. When an organization implements projects there is always an ICT component. In this research an ICT project is defined by example replacing the hardware or introducing a new system and for business projects (for example an extension of the website, the ability to digitally process complaints from civilians). Many organizations fail to allocate investments to strategic goals. The decision-making in many organizations is a political sparring based on intuition. An overview of all investments as a portfolio of opportunities for many organizations is an illusion. A method as project portfolio management is the integrated control of the project portfolio at risk, strategy and finance. Project management is about the efficiency of the implementation of a project on time and within budget delivery of the agreed quality. When this method is lacking in the organization, the control on projects in an organization is more difficult, this is also the case with the municipality of Groningen. Projects are not on time and within budget, moreover, there is no control on issues such as risk, strategy and the financial state of the projects (Kerkhoff, 1999; BOIA report, 2008).

According to McFarlan, there are three important dimensions in a project that may affect risk of the project. First the size of the project. The more money it costs, the more risk there is for the

organization. Second, the experience with the technology. When the organization is inexperience in the technology what the project is implementing, this is more risky. And third, if the project structure is high, it can occur that in the beginning of a project, many activities are carried out, that possibly have to be modified later in the project. There is a risk that these activities have been for nothing (McFarlan, 1981).

3.4.2 Advantages of project portfolio management from the literature

ICT projects often promise large cost reductions and/or quality improvements. Still no more than half of all ICT projects live up to expectations. Research shows that 50% of spending of an organization is on the ICT department (Grossman, 2003). Realizing the potential benefits is not so simple. This is partly due to the management of ICT projects, however, it often goes wrong before the project started. ICT projects are initiated to meet the business need, so they contribute to organizational strategy (Bonham, 2004). With a visible ICT portfolio organizations can immediately see which projects are implemented and the status of them. A project portfolio item is indispensable for rapid economic fluctuations in the market to react. Research has shown that 20-30% of projects fail to meet the expectations of the client. When the projects that are unable to remain within budget and planning are also counted the percentage would even be higher. Wrong project management is also a factor in why projects turn out differently than planned. An organization can not completely rely on good project management as a prerequisite for the success of a project (Bonham, 2004). Good project leadership plays a role, training, education and knowledge to ensure adequate project leaders are essential for a healthy project portfolio. The selection of a project portfolio will be made by a periodic selection from proposals and have already started projects, which meet the strategic requirements of the organization and not have exceeded the resources or have other setbacks. Before the ICT project proposals are analyzed, the PPM team first rates them individually on ability and expectancy. A thorough analysis to determine whether indeed the expectation of the client can be met. This can be done by a specially set up 'audit team' that according to established criteria will review the business cases. If indeed the expectations of the project can be met, the project is put on the list. Subsequently, during a mid-project audit (for example six months later) again is examined whether the project still meets the requirements of the client requirements, these products can be changed in the meantime. Thus re-examined the feasibility and expectations of the project portfolio and in that way, the portfolio remains healthy. Berenschot describes a good project portfolio, when all projects are aiming to achieve strategic objectives of the organization. This means that the organization has no resources (time and money) wasted on 'wrong' projects and that a balanced project portfolio was realized based on data and targets rather than just intuition and personal opinions. There is a reason the saying 'if it is not measured then it is not managed'. Every organization has implicitly or explicitly a project portfolio. Properly

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policy paper or nice beautiful PowerPoint presentations. However, where the money is allocated, is where the actual strategy of an organization is (Berenschot, 2001).

When organizations work with project portfolios, this gives figures on the performance of the acquired portfolio as a whole. Figures like for example the number and type of these projects, how funds are used, the variation in the service of relevant ICT services and the costs of ICT provision are provided. There is also information about the percentage of successful projects, the number of ongoing projects and how many hours have been estimated from various ICT disciplines. This can be used as control information for the I&A office or ICT governance function (Kaplan, 2005).

3.4.3 Different types of portfolios

The financial portfolio theory applies economic models and concepts for quantitative weighing of ICT returns versus ICT risk (Berghout, 2002). Markowitz invented the ‘Modern Portfolio Theory’. This was originally developed for selecting an optimal portfolio (Berghout, 2002; Verhoef, 2002). How an equity investor can best manage a portfolio was the subject of the article by Markowitz. He stated that the portfolio manager should diversify not only investment but also developed according to the strategy of the investor (Bonham, 2004). When the theories of Markowitz in fifties and sixties became more accepted, one saw the possibility of starting a project portfolio (Bonham, 2004).

ICT Portfolios provide oversight and make assessment possible of the ideas and concepts in research and development, the number of projects in development, maintenance and their alignment with the strategy and the amount of resources. It also provides a list of why ICT investment is made and which criteria is used in the approving the investment (Maizlitz, 2005).

Performing portfolio management, can catch up the waste from the use of ICT (Kaplan, 2005). When portfolios are used the organization decides often less about facts and informal consent to an

investment of a project. If this project portfolio proceeds to a strategy unit in the organization, the ICT planning is streamlined with the overall strategy of the organization. This provides the organization real time visibility into the status of ICT projects (Kaplan, 2005).

3.4.4 Commissioning

Professionalism of commissions is increasingly seen as an important contribution to the success of projects (Molen, 2009). How can one say when a project is successful? Gradually, thinking about projects changed. A decade ago it was thought that it was enough for a project when it was

contributing to business results when it was completed within the agreed time and money. When this was achieved a project was successful. This was also on what the training and methodologies in project management were based. Namely the assumption that at the beginning of a project it was known what exactly was the end of the project. Interim changes were exceptions and had to be avoided. Sending time and money could largely be left to a project, the quality of the project manager was the guarantee to success (Molen, 2009). In recent years in the increasingly dynamic world exceptions become the rule. Change seems the only constant. It appears that even when specifications are drawn up carefully, it is normal that during the duration of the project aspects change. Performing project management has become 'shooting at moving targets'. Success is not met when a project is achieved when a project is delivered according to plan any more. Molen appoints this in 'PRINCE2 for commissioners’ that in the current thinking is about using the project's objectives in favour of the organization. In other words, are the costs acceptable against the intended benefits (such as higher efficiency, comply with legislation, increased security) achieved in the business case? When the traditional factors such as time, money, scope and quality change during the duration of a project, is this an important thing. PRINCE2 project management sees the business case as the main governing instrument (Molen, 2009).

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manager. Molen suggests that the commissioner is ultimately responsible for the success of the project. It is a task of the board of the organization to carry this out to commissioners (business managers) and to address them to this. The commissioner will speak to the project manager (and his project members) from his responsibility for directing business goals. The project manager will also change its role, this is more demanding than before. To ensure the responsibility of the commissioner is next to the liability of the delivery performance (delivery according to agreement) more

transparency (ensuring that the commissioner easily understands the project) and flexibility (the commissioner can effectively govern the project). To advise the commissioner in this, knowledge of the business case is needed. The higher demands on the commissioners and project managers are made in dynamic environment, all from their responsibility in a trust to work together for their common goal (Molen, 2009).

According to Molen, the importance of good commissioning is created by the increased complexity of the project environment and the need for tighter control on the results. The importance of the project itself has also grown; organizations had adapt increasingly and rapidly to environmental changes. Even some types of organizations should take this as a critical success factors to survive in a changing environment. An open discussion can emerge when commissioners see projects as a separate target group. A common view is that commissioners should understand more of the project and therefore should receive an overview of the project method used. However, this would repel commissioners (Molen, 2009).

For many commissioners, the responsibility for one or more projects comes in addition to their basic duties, that in many organizations over the years already became heavier. Often commissioners have a lack of time and they feel an inadequate grip on the project. An efficient and effective way of control on these projects is at its place (Molen, 2009).

3.4.5 Pitfalls of project portfolio management from the literature

Wrong management of the project portfolio is often due to a number of common mistakes. Investment decisions are as good intentions: at the beginning of the year there is much talk, but during the year the good intentions are forgotten. It is also difficult (if not impossible) to qualify the impact of an

investment and what counts is; too many measurement systems, too little time. An important decision of the organization is to find out what investment and outcome measurement systems impacts on the performance of the organization (Berenschot, 2001).

A well-designed project portfolio consists of prioritization based on strategy, finance and risk. A balanced project portfolio consists of a mix of these three elements. The implementation of software project portfolio management rarely brings the desired result. The power of technology is often overestimated. Everything revolves around the predictions (promise vs. performance). The ability to compare predictions with actual performance is fundamental to successful project portfolio

management. Furthermore, a project portfolio is a tunnel and no funnel, if any proposed project is ultimately funded it is not a priority discipline, but a bureaucratic exercise that adds little value (Bonham, 2004; Glaser, 2006).

3.5 Prioritization of projects

Project portfolio management is defined as maximization of business objectives, balance in

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Bonham further states that a ‘Project Management Office’ (PMO) audit team should have an input on the prioritization of the portfolio. After a periodic review on these projects, the project will have to be reviewed again if they are in line with the organization, technology and control of consistency of other projects. This turns out the final score higher or lower of the project and for the management it

provides better insight to see how the projects relate to each other. The management of the

organization can with the help of the compound prioritized portfolio better understand the health of the portfolio and whether it is in line with organizational strategy and can know what projects they give financially green light.

The aforementioned PMO is about the information on projects in an organization. Main target is to control and monitor the projects. A PMO team can help an organization to get a grip on the portfolio so that it’s set its objectives more efficiently and can achieve them at lower cost. PMO is not about managing projects, but about the why, which and how of doing projects. PMO should be seen as a layer on the projects before, but can also operate in an internal project. The PMO can generate management information that can help management to decide on the projects (Bonham, 2004). There are several ways to prioritize projects. Mathematical formulas can be used to maximize portfolio to an optimal portfolio to develop income-generating (Wen & Shih, 2006; Bardhan et al, 2004; Kim et al, 2009). In practice, this method is not often applied in prioritizing projects. Reasons are because the prioritization can not be applied to projects where the long term benefits of ICT investment in the beginning can not be identified, when there are not enough financial details of the project be present and the earnings of the ICT project are not quantifiable (Wen & Shih, 2006). Methods with a multi-criteria approach assess quantitative and qualitative consequences

of an investment project (Renkema & Berghout, 2005). Scoring methods are seen as multi-criteria approach that can help managers evaluate ICT investments based on the objectives of the organization (Wen & Shih, 2006). In this scoring method, projects are compared and assessed on values, then the total scores is listed (Wen & Shih, 2006; Kim et al, 2009). Scoring methods are particularly interesting because it offers a way to also include the non-financial criteria in the value adding (Wen & Shih, 2006). Ghasemzadeh and also use the scoring method in their project portfolio technique. The total weighted score is the final score of the project and then placed in the overall list (Ghasemzadeh & Archer, 2000).

Effective prioritization of project portfolio consists of good project proposals, an ICT strategy that can support this way of decision making towards projects, well designed processes and comparison techniques of project proposals and the ability to make mid-term change in the scope of the project (Glaser, 2006).

Glaser calls the PID the beginning of the project prioritization process, the proposal must meet to a number of requirements before they are read, then the project proposals can be assessed. The

prioritization technique gives the organization its important points on which should be scored for the proposal to bring into the project portfolio, each proposal receives a score for each area that the organization has been established. A scale of 5 (significant contribution) to 1 (minimal or no

contribution) is used. Then the scores added up and the projects with the highest scores are included in the portfolio (Glaser, 2006).

3.6 Business cases

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Business cases are a commonly used tool in the profit and non profit sectors. Research by Speckbacher and Bannister and indicates that current business case models for the non profit are less useful, the specific characteristics of a non-profit organization are not characterized (Berghout et al, 2006; Speckbacher, 2003; Bannister, 2001).

In their article 'The business case for (IT) investment evaluation in non profit Organizations' a business case model is developed for non profit organizations. The model is based on five components:

strategy, technology, stakeholder cooperation, finances and risks. The strategy is the most important element of the model. It is important that the business objectives set by the organization and new projects should be consistent with these business objectives. It is possible that the business objectives and strategy are not known to commissioners and users, and furthermore it is possible that the

corporate strategy changes in the time that the ICT investment/implementation occurs (Berghout et al, 2006). Stakeholder collaboration is also an important factor when a business case is made, it is important to analyse whether the project requires cooperation from stakeholders and contributes to the interests of these stakeholders. The financial analysis in this model must be kept as simple as possible, there are six load factors furnished; structural cash flow (expenses), project cash flow, labour

productivity changes, reduction program costs, Net Present Value (NPV) and the payback the project (Berghout et al, 2006). The 'technology' dimension creates public value creation. It is therefore important that there should be coordination between the technology proposed any adjustments to the project and the already existing ICT architecture policy and ICT planning. Risks of the project will be visible when the aforementioned aspects of the non profit model are investigated.

ICT projects result in systems that today are closely interconnected with the processes and products of the organization. It is therefore essential that early in an ICT project, a balance is made on the business implications of the proposed investment and that they are translated into costs, benefits and attendant risks. Therefore combinations of financial and non-financial methods are currently the most suitable (Berghout, 2002).

3.7 ICT Governance

Governance is a broad concept, the literal translation of governance is 'steering'. ICT Governance is a term covering all control aspects of ICT. Steering ICT projects is one of them. The organization Gartner with MIT (Massachusetts Institute of Technology) conducted research on ICT governance. They used the following definition: ‘Specifying the decision rights and accountability framework to encourage desirable behaviour in the use of ICT' (Weill & Ross, 2004). The IT Governance Institute (ITGI) provides the following definition of IT Governance; 'IT Governance is the responsibility of the board of directors and executive management. It is an integral part of enterprise governance and consists of the leadership and organizational structures and processes that ensure that the

organization's IT sustains and extends the organization's strategies and objectives' (IT Governance Institute, 2005). An organization will take action according to Weill in IT governance when the general management of the organization feels that too little or no IT investment is made, the application of IT is often a barrier when a new strategy to be introduced, the method of decision is contradictory and slow in IT and IT governance is useful when general management and IT management can not specify who decides on specific IT issues (Weil et al, 2004).

The extent to which an organization has an eye for behavioural elements of political decision making depends on the perceptions that he organization has of decision making. Daft distinguishes between two different images, the political model and the rational model (Daft, 1986). In practice, both models are a factor in exactly how the decision turns out (Berghout & Renkema, 2005). By creating a

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facilities (Maes, 2003). ICT intervenes indirectly in the business by the information generated. The quality of dealing with information filters the impact of ICT in a positive or negative way and is a key control variable (Maes, 2003).

Figure 3 – The business-ICT relation (Henderson & Venkatraman, 1993).

Information Management issues are therefore related to strategy (focus), structure (organizing) and operations (provide). In this 9-level model this vertical highlighted. Information management also relates to processes and the supporting technology (internal and external) to communicate and inform the general business processes that are horizontally indicated in this model (Maes, 2003).

The IT Governance Institute provides the COBIT framework (Control Objectives for Information and related Technologies). COBIT consists of 34 control Objectives that are developed in more than 300 goals. These goals include four domains: 'Plan and Organize' includes the decision-making, 'Acquire and Implement' includes the identification, development, acquirement and implement IT solutions in the business, and life-cycle management of applications and IT infrastructure: 'Deliver and support' in delivering IT services and thus comprises roughly the ITIL processes, 'Monitor and Evaluate' includes monitoring quality and compliance (Website: www.itgi.org, 2010). COBIT provides both financial and non-financial processes (O'Donnell & Rechtman, 2005).

Business Strategy Organization structure and processes IT strategy IT-infrastructure and processes External domain Internal domain Business IT Strategy Uitvoering (verrichten) Structure (architect) Business Information/ Communication Technology

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IT governance focuses on the supplies of transparency in the control of internal and external audit procedures of IT (IT Governance Institute, 2004). The IT Governance Institute understands on IT Control the policies, procedures, operations and organizational structures designed to provide assurance that organizational objectives are achieved and undesirable outcomes be avoided, detected and corrected (IT Governance Institute, 2004; Berghout & Fairchild, 2005).

The Balanced Scorecard is also a method for driving (ICT) organizations. The method is designed as an extension of a financial approach and distinguishes a financial, customer, internal and innovation and learning perspective (Berghout & Renkema, 2005). It is a technique for strategic management and achieving long-term goals within organizations. It is mainly used as an evaluation tool for managers who have complex objectives. The term is balanced by the fact that several factors were weighted differently (Kaplan & Norton, 1992).

3.8 Quality control of the I&A

Proper guidance on I&A would be a translation of strategy into the project portfolio (Berenschot, 2001). Projects and programs must be tailored to the priorities of an organization. All this requires a smooth relationship between organization and ICT. In order to get a proper control I&A the

commitment of top-line management should be high and the assurance of the business continuity. Overall, a good I&A controls according to Berenschot that the organization is able to take

responsibility for prioritizing and control on ICT. Then it is possible for the organization to translate policy, strategy and ambitions into change projects. Policy, strategy and ambitions are the ingredients for this translation. Projects arising from policies made, a strategy drawn up and born ambitions. When an organization is able to establish projects based on strategic objectives an effective I&A function is created (Berenschot, 2001).

3.9 Establishment of an I&A function

Research by Berenschot shows that an appropriate design of the I&A function should have the following criteria; at the strategic level (vision and policy) this consists that I&A management and the AMT (General Management Team) should have a shared vision for the positioning of I&A and should be based on the I&A policy, which should be derived from the I&A vision. This I&A policy would have to make decisions about data management, technical infrastructure (ICT), organizations (management and control, structural consulting division, etc.) in relation to the municipal work and resources. In addition, a strong commitment to governance and management at I&A, in relation to the citizens and the municipal organization is required. The great mutual influence of I&A services to citizens and internal work processes requires middle management to continuously and actively think about the content and development of information and automation. I&A is not only a facilitating responsibility for an organization (Berenschot, 2001).

Criteria at the tactical level (organization and control) are also mentioned. A concrete I&A policy that provides clear frameworks for the implementation of I&A activities within the services must be present. This consists of the following; a clear division of roles and responsibilities, clear guidance and control structure, a clearly I&A consultative structure and project organization structure, an efficient and clear financial control and a organization-wide uniform data management, which include features on the use of basic administration, and standardization of data use. There is also centralized ICT service management required, this centralization of capacity leads to increased effectiveness and efficiency through the synergistic effects with respect to knowledge and skills that then arise, it will be visible in the form of a good level of support during holidays, courses and illness of employees, more flexibility by controlling changes of a point lower costs through economies of scale (purchasing, maintenance, management) and effective management of standards, a much standardized and streamlined management of ICT and their processes and procedures including the development of corporate-wide standards. For application management of generic applications, this should be performed at central level and application management for specific applications by application

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Berenschot writes in its analysis, that there is also criteria for the operational level (implementation). There is enough quality infrastructure and applications, both now and in the future, there is availability of adequate functions and formation. The degree of professionalism is crucial for the I&A function, there is a good quality of support for users. For the management of ICT an implemented quality system is used. Capacity for management, advice and projects is anchored. The telecommunications function is an integral part of ICT. There are adequate training and training facilities for users, managers and administrators. Finally, the quality of the security is good and there is a good test infrastructure and test management present (Berenschot, 2001).

3.10 Conclusion

In this chapter, research has been carried out to find enough information about the control function for the I&A function. The literature has given insight on the use of control in organizations, what control exactly is and why this is necessary, how projects can be controlled, prioritized and what the

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4 MUNICIPALITY OF GRONINGEN

4.1 Organization

The government is not a company that delivers products to customers. Civilians visit the municipality with questions, requests, complaints and objections. The municipality provides, permits, facilities, rules, grants, certificates, identity papers and processes tax reports. The government, the municipal government, creates summarized rights and obligations for citizens, giving them information and guidance and is in communication with them in preparing and implementing decisions. The

government is not a competitive business, but in fact a monopolist. In the Municipality law it states that ‘College and Council are engaged in organizing the household of the municipality. It sets the rules and carries them out'. In this context the municipality answered questions and requests, and responds to complaints and objections. That does not mean that the government acts towards the citizens as a bureaucratic juggernaut or can afford an old-fashioned way to speak to citizens and considering them as it's humble. Civilians are in different shapes and sizes; they live in different contexts and

experiences. These lifestyles lead to different shapes and positions from which questions, requests, complaints and objections are made (Vision Public Services, 2006).

4.2 Business

The municipality is not a business, but technically many processes work in a similar way as in businesses. The municipality of Groningen has about 3,000 employees. It consists of eight

departments entitled: ‘Dienst Informatie & Administratie’ (DIA), Sociale Zaken en Werkgelegenheid (SoZaWe), Milieudienst (MD), ‘Onderwijs, Cultuur, Sport, Welzijn’ (OCSW), Bestuursdienst (BSD), Hulpverleningsdienst (HVD), ‘Ruimtelijke Ordening/Economische Zaken’ (RO/EZ) and the ‘Sociale werkplaats’ (DSW). The entire unit is called group called ‘corporate’ or ‘concern’. The service DIA works in the field of civil, municipal and legal issues. Besides these public functions the DIA

facilitates the municipality in terms of human and organizational issues, payroll and legal issues, ICT, purchasing, procurement and treasury. The department DSW assists people with a distance to

employment to suitable work. The ‘Control Department’ (BSD) is with approximately one hundred employees the smallest department in the municipality of Groningen. The department works in advising, sets policies for personnel, finance and legal matters for the concern and provides spokespersons and secretaries for college and council (B&W).

The ‘Medical Assistance’ department (HVD) works as a department of the municipality of Groningen, and all municipalities in the province of Groningen. The fire department and the Municipal Health Service (GGD) are part of the HVD. Also the ‘Ambulance and fire brigade Control Room’ are part of the HVD. The ‘Environment’ department (MD) is responsible for the collection of garbage, bulky waste and virtually all types of industrial waste. It keeps the city clean, develops environmental policy in the broadest sense, promoting sustainable environmental projects, grants and oversees

environmental and permits events. The work is divided into several sections (Sanitation, Environment and Resources) and autonomous departments (Market research and environmental monitoring and the Central Workshop). The OCSW department is active in many areas; culture, sports, recreation, education, youth, welfare, care and minorities. The department of OCSW creates policies in all these areas and implements this policy partly by itself. OCSW manages a total of 240 items: the city theatre, the Municipal Music School, ‘ordinary' schools of public education, sports centres, social and cultural accommodation (for example community centers), recreation areas and swimming pools. The

department RO/EZ develops spatial plans and projects. It also regulates the design, construction and decoration of the city. Also, the maintenance of public space is the concern of this department. The department is also a source for information for entrepreneurs and supplier of the necessary permits and exemptions in the fields of construction, land use, green, traffic, advertising and parking. The

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care (home care, home adaptations, meals at home) to assist in debt (Groningen Credit Bank). The municipality council has its own support department 'Griffie'. An important task of this

department is to prepare meetings of the council and the reporting of these meetings. Also it maintains the council documents for the flow to and from council members. It prepares court hearings and provides the council with necessary information from the College. Finally, the court clerk coordinates the administrative support required by the council. The Griffie is directly under the council that the registry staff also appoints and dismisses. It is independent of the municipal organization, but works as well with them. Also, the Griffie is facilitated by the municipal organization.

4.3 Political organization

The Central Government does not carry out all the tasks. The Dutch government comprises three levels of government. Besides the government are the 12 provinces and (in September 2010) 431 municipalities. The Netherlands is a decentralized unitary state. The provinces are to ensure implementation of state policy in regional plans. The municipalities ensure the quality of the

immediate environment of the citizens. The provinces and municipalities are also referred to as 'local governments'. The municipalities are the basic cells of democracy, they are of all governments the closest to the citizen. The municipality is autonomous, meaning that it is competent for the local economy at its discretion to regulate and control. On the other hand, the municipality is obligated to co-operate to assist the implementation of the 'higher' rules by the Central government, once a task at a higher law is regulated, municipalities are required to implement them.

The municipality has the City Council. This council appoints the mayor, aldermen and hereby the college of B&W (College). The College is responsible for the daily management and implementation of the decisions taken by the council.

The Municipality Law it is stated that the municipality has a board with two bodies (College and Council), each with their own role and responsibility. As mentioned in the literature review, the separated roles of college and council is called 'dualism'. This means that the roles and responsibilities of the council and the College of B&W are defined and delimited. The council has the highest

representation of the people and the last word, it represents the citizens of the city, formulates policies and sets broad goals. The council checks if the College has achieved the goals and if the policy is met. The separated roles of council and college does not mean that they are opposed. Both serve, each with their own responsibility, the importance of the municipality and citizens. After the elections, and the appointing of the council and aldermen, the college gets from the council members a policy for the new term after the election, the college program. This is a kind of governmental agreement (Municipal Law; Central Government Website, 2010).

The College establishes the rules on the municipal organization. Traditionally, the Municipal Secretary is the highest official in the organization. In the eighties the sector model was established. Policy preparation and implementation areas were integrated. The heads and directors of the departments are responsible for their products and services sector. They are accountable to the College. The

municipality of Groningen also uses this sector model. The collection of directors within the organization is named 'AMT' which stands for 'General Management Team'. Together with the Municipal Secretary the AMT ensures coordination in the organization. The Municipal Secretary has the same rights as other members of the AMT, but in practical terms he has a higher esteem. It can be called 'primus inter pares'.

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the organization at the political level is displayed in the figure. The college program flows here as a red line through it.

Figure 5 – Control within the municipality with in red the college program (Interview sessions Municipality of Groningen, 2009)

As the highest organ of the municipality, the majority of the council (the council members of the coalition parties) write the college program. The Municipal Secretary and the AMT have the task to translate the programme in actions at all levels of the organizational chain. This will continue well into the departments so that employees know what to do and what it contributes to achieving the goals of the organization, as expressed in the college program. The red wire in the hourglass is the college program and thus what the council decides and what the municipality will implement in the coming years, these projects must be shown on the project portfolio.

4.4 Conclusion

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5 I&A FUNCTION MUNICIPALITY OF GRONINGEN

5.1 Introduction

To enhance readability in this document, it might be good to explain the two commonly used notions of ‘I&A' and 'ICT ' at this point. With I&A is meant information and automation, 'ICT' (Information and Communication Technology) and 'IT' means the technical support information. The automation aspect of 'ICT' and the technology aspect in 'IT' and 'A' from I&A are interchangeable in this document.

The AMT of the municipality of Groningen has signalised a growing discrepancy between the current level of the I&A function and the level that is required to meet the demands of the management vision and follow external developments. Studies showed that the organization was in risk and was not able to respond to future changes. These findings in 2000 and 2001 led to an overall examination by Berenschot of the I&A function of the municipality of Groningen (Berenschot, 2001). Until 2004, each department had its own ICT department, according to the opinions of the Berenschot report in 2004 this has led to the formation of the CIO (Central ICT Organization) (In 2010 the new name ‘ACG’ was created (Automation Centre Groningen). In 2006 the BOIA research was started (BOIA report, 2008).

In this report on the I&A function it was determined that the focus and resource commitment of the I&A function focuses on the specific department developments and is limited in corporate

development. The main reason for the proposed changes are the many developments that face the municipality of Groningen. The role of ICT in this has increased in the past few years, in number and complexity (Uitvoeringsplan BOIA, 2010) (In Dutch). Conclusion of the BOIA report was mainly that there should be more guidance and control on the I&A related activities of the municipality. The report further indicates that improved control is achieved primarily by ensuring the greatest possible transparency of resource commitment and the results of I&A. Then management and control can make responsible choices and overseeing the consequences of those choices (BOIA report, 2008;

Uitvoeringsplan BOIA, 2010) (In Dutch).

Within the municipality of Groningen the 'Concern I&A' (CIA) or ‘Concern Information

Assessment of project portfolio management for the Municipality of Groningen