Shifting portfolio metrics toward strategic value

Are you running a team based on legacy metrics? Are you accountable for running a portfolio? Are you using dated or antiquated numbers to drive strategic value? I'm going to provide some insights to help you step out of that rut.

Are you running a team based on legacy metrics? Are you accountable for running a portfolio? Are you using dated or antiquated numbers to drive strategic value? I’m going to provide some insights to help you step out of that rut.

Hi, I’m Peter Nichol, Data Science CIO.

One of the biggest challenges we experience as we’re trying to optimize our portfolio is to lock down what executives really care about. What metrics do leaders want? What metrics are needed but not be directly asked for today? I’m here to share my insights on this topic.

Throw out your old metrics

What do leaders not care about? The cost, the time, and the effort. They are not concerned with the effort that it takes to run an initiative. The reason is that those metrics no longer provide strategic benefits that link to strategic value. As a result, a shift in portfolio metrics is occurring.

Leaders don’t want old metrics. They demand more insightful metrics. Leaders require metrics focused on new areas. Here are the questions that executives, who focus on value, are asking:

  • How do I maximize strategic intent?
  • Where is our culture headed?
  • What measures can we use to evaluate organizational awareness of our transformation initiatives?
  • How do we balance risk within the portfolio?

As companies pivot away from stale metrics, they are turning toward the triple bottom line. This approach concentrates energy around people, purpose, and the planet. These concepts are top of mind as executives look for innovative methods to operationalize new models into their business models.

We observe this new trend emerging with a lot of large corporations. Ben and Jerry’s is probably one of the most prominent, but you see this with Cascade Engineering, and we even see this trend taking hold within Patagonia Works. Each of these companies focuses on measures that are broader than bottom-line financial gains. They’re no longer focused on the time it takes to complete a project or the total cost. This pattern of interest has created a new shift in how value is measured.

We are shifting towards value management and value optimization.

Measure what matters

What does this mean for portfolio executives championing large transformative initiatives? First, we too, need to shift. We must change how we frame existing problems and look to new measures as we evaluate future opportunities and evaluate past portfolio performance.

Stop measuring your total active number of projects. Stop counting how many projects were completed this quarter. No one cares.

Start by measuring what’s important. Here are a few ideas to start down this value measure path.

  • Measure the strategic impact.
  • Measure how team norms enable the departmental vision.
  • Measure where strategic partnerships are accelerating your capabilities.
  • Measure how initiatives tie to strategic intent.

Useful but dated portfolio metrics

These metrics add value. However, these metrics focus primarily on legacy concepts.

  • Average cost per contractor category
  • Average $ spent by an employee
  • % of operation budget change (quarter-over-quarter)
  • $ change of operational budget (quarter-over-quarter)
  • % spend on new IT projects vs. carry over projects
  • % of contractors dedicated to non-project work
  • $ spent on contractors working on non-project work
  • % budget dedicated to strategic priorities
  • % of managers over total staff
  • Ratio of managers to staff
  • Average months of contractor engagements
  • Average costs per change control
  • # number of change controls by period
  • % of spend against strategic investments
  • $ spent on strategic investments
  • $ spent per employee against total department budget
  • Average feature to cycle time
  • # of releases per month
  • # of defects per release
  • # of priority shifts monthly
  • Average velocity for the team
  • % of stories planned vs. accepted
  • % of automated tests executed per release
  • # hours of backlog work estimated
  • # of PI objectives satisfied
  • $ of average initiative funded
  • % of capital invested

Modern portfolio metrics

These modern metrics help executes capture, quantify and communicate business value.

  • % of initiatives with 95% confidence for the delivery
  • % of initiatives aligned with strategic objectives
  • # of applications not covered by 3rd party providers
  • # and duration of unplanned outages
  • Average age of open issues or defects
  • Average hours worked weekly by the team
  • % of project management time spent per initiative
  • $ of cumulative value generated over last 30 days
  • % of effort spent on run activities
  • % of assigned vs. unassigned roles by initiative
  • # of resources working overtime (more than 3 weeks in succession)
  • Ratio of contractors to employees
  • Ratio of headcount to total spend
  • Ratio of CapEx to OpEx investments
  • % shift from CapEx to OpEx over the last quarter
  • % of contractor turnover
  • Average initiatives completion time
  • Average contractor cost
  • Average value realized by initiative
  • # of active initiatives
  • % hours by strategic priority
  • $ of cost avoided from efficiency improvements
  • # of initiatives where IT is playing a leadership role
  • # of experimental initiatives in-flight, exploring emerging tech
  • Total cost of ownership by business application
  • Ratio of running the business
  • Ratio of growing the business
  • Ratio of transforming the business
  • Average business partner satisfaction score
  • % of projects properly resourced at project start
  • % of terminated projects
  • % filled roles in the future-state target operating model
  • % solutions supported by existing architecture, technology, and components

Strategic decision-making metrics

Take the windows of opportunity that previously have gone untapped and understand how tactical goals can drive operational gains. This is where you’ll experience value maximization.

We know the metrics that don’t work. I’ll offer three examples of metrics that do work.

  • % of initiatives in the run phase
  • % of extra-large initiatives
  • % of new intakes over the period (month, quarter, or annually)

First is the percentage of projects that are in the run phase. This means these projects are just keeping the lights. They are genuinely operational, and this highlights which initiatives are not moving your business forward.

Second is the percentage of projects, products, or extra-large interactions; whatever that means for your business. Depending on the size of your organization, extra-large could mean over $100MM or over $1MM if you’re in a medium-sized company. However, if you’re a smaller organization, maybe extra-large is any work effect over $50k. The focus on the percentage of extra-large projects helps us understand how strategically aligned our initiatives are to achieving our future capabilities. It also helps define how we’re anticipating to solve our operational challenges to support more strategic organizational change initiatives.

Third is the percentage of the new intake. This metric is defined as requests received over last quarter’s requests as a percentage. These metrics provide a good measure of how effectively the organization is meeting new organizational demands for further work. In addition, this measure evaluates how our growth is matched to capacity. In short, it answers the question of do we need to ramp up to meet new organizational demands or not.

Hopefully, you have gained additional perspectives and insights on how to measure your portfolio more effectively. Encourage legacy leaders to let go of old metrics that don’t drive strategic conversations. Be a leader for your organization and identify new metrics to drive world-class portfolio value realization.

If you found this video helpful, that’s great! Check out my books, Think Lead Disrupt and Leading with Value. They just came out early in 2021 and are available on Amazon and at for author signed copies!

Hi, I’m Peter Nichol, Data Science CIO. Have a great day!

SOURCEData Science CIO
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Peter is a technology executive with 19 years of experience, dedicated to driving innovation, digital transformation, leadership, and data in business. He helps organizations connect strategy to execution to maximize company performance. He has been recognized for Digital Innovation by CIO 100, MIT Sloan, Computerworld, and the Project Management Institute. As Managing Director at OROCA Innovations, Peter leads the CXO advisory services practice, driving digital strategies. Peter was honored as an MIT Sloan CIO Leadership Award Finalist in 2015 and is a regular contributor to on innovation. Peter has led businesses through complex changes, including the adoption of data-first approaches for portfolio management, lean six sigma for operational excellence, departmental transformations, process improvements, maximizing team performance, designing new IT operating models, digitizing platforms, leading large-scale mission-critical technology deployments, product management, agile methodologies, and building high-performance teams. As Chief Information Officer, Peter was responsible for Connecticut’s Health Insurance Exchange’s (HIX) industry-leading digital platform transforming consumerism and retail oriented services for the health insurance industry. Peter championed the Connecticut marketplace digital implementation with a transformational cloud-based SaaS platform and mobile application recognized as a 2014 PMI Project of the Year Award finalist, CIO 100, and awards for best digital services, API, and platform. He also received a lifetime achievement award for leadership and digital transformation, honored as a 2016 Computerworld Premier 100 IT Leader. Peter is the author of Learning Intelligence: Expand Thinking. Absorb Alternative. Unlock Possibilities (2017), which Marshall Goldsmith, author of the New York Times No. 1 bestseller Triggers, calls "a must-read for any leader wanting to compete in the innovation-powered landscape of today." Peter also authored The Power of Blockchain for Healthcare: How Blockchain Will Ignite The Future of Healthcare (2017), the first book to explore the vast opportunities for blockchain to transform the patient experience. Peter has a B.S. in C.I.S from Bentley University and an MBA from Quinnipiac University, where he graduated Summa Cum Laude. He earned his PMP® in 2001 and is a certified Six Sigma Master Black Belt, Masters in Business Relationship Management (MBRM) and Certified Scrum Master. As a Commercial Rated Aviation Pilot and Master Scuba Diver, Peter understands first hand, how to anticipate change and lead boldly.