As IT functions are increasingly expected to ‘deliver more with less’, portfolio management tools and techniques are required to reconcile corporate strategy and scarce IT resources, and facilitate better decision-making across the enterprise. Importantly, portfolio management can help address two of the key challenges facing CIOs in 2009 and beyond – reducing IT costs and demonstrating the value IT delivers to the business.
Since Henry L. Gantt developed the Gantt chart in 1917, corporate project management activities have been supported by a variety of tools and techniques. Most recently, with organisations subject to an increasing variety of corporate pressures and constraints, the portfolio-based management of projects has become a corporate necessity. It is driven by increased business demand for technology investment, growing complexity of business and IT operations, and the need to provide governance-dictated transparency.
The corporate adoption of Project Portfolio Management (PPM) delivers a framework of policies, processes, and enabling technology that can help organisations to prioritise and manage the utilisation of scarce corporate resources against organisational need. It is an essential element of IT Governance that can help to minimise risk and maximise ROI, and assist an organisation in selecting the right blend and balance of investment. PPM can also help boost corporate productivity by formalising workflows and improving collaboration across the enterprise.
When introducing portfolio management, an organisation must realise that it is no different from any other corporate change project, with associated risks that need to be closely managed. These include the failure to gain business buy-in (from the board through to users), a lack of understanding of the business objectives for portfolio management (across the enterprise), the procurement of a PPM tool that doesn’t meet business needs, and not considering the bigger picture – potentially creating a clumsy add-on to existing business processes and a ‘garbage in, garbage out’ scenario. The failure to address these risks will ultimately result in poor corporate adoption and the inability to deliver against change projects’ stated benefits.
An organisation can maximise its chances of success by following five PPM best practices: building the right portfolio management foundations, realising the importance of PPM tool selection, thinking beyond the technology and processes to address people factors, closely managing PPM-specific change risks, and applying sufficient focus to analytics given that PPM is not just about improving project control and delivery.
Build Strong PPM Foundations
In building the right foundations for the introduction of portfolio management, an organisation must understand its own business drivers for portfolio management. Which business issues and pain points will it address? It is only then that IT is able to start to sell the benefits of PPM to the business, across all stakeholders; not only ensuring that there is a consensus as to the need for PPM but also ensuring that there is a common understanding as to why it is needed and what it will deliver. Butler Group cannot overstate the criticality of senior management and board-level buy-in and that without this any corporate PPM initiative will probably fail.
In doing this, an IT organisation must identify real business benefits that resonate amongst key stakeholders. This will include the definition and quantification of both the quantitative and qualitative benefits to be realised from the deployment of PPM tools and techniques. It also needs to introduce a robust benefits realisation tracking framework so that success can be reported against critical success factors and key performance indicators (including increased ROI), importantly ensuring that both financial and strategic value can be demonstrated.
In addition to looking forward to the new PPM-enabled state, an IT function also needs to take a step back to look at what its organisation is already doing in the project management arena. Without this an organisation will effectively be trying to implement PPM in isolation, without the necessary level of business alignment and without the opportunity to ensure that PPM is introduced on top of a consistently used, fit-for-purpose project management methodology. Badly managed projects will still be badly managed projects with PPM, the difference being that the level of project mismanagement will be far more evident to the business.
Whilst PPM will help to resolve project mismanagement in the medium-to-longer term, there is the very real risk that poor project management will negate the stated benefits of the PPM initiative, particularly when considering the old adage of ‘garbage in, garbage out’.
Select the Right PPM Tool and Vendor
As with the introduction of most new technologies, an organisation must ensure that the business is driving the technology and not the other way round. In Butler Group’s opinion, the successful introduction of PPM is dependant on the selection of the right software tool, with the tool needing to integrate with the rest of the business from both an organisational and technical perspective. A tool with the ability to offer scalability and flexibility (it must be able to grow as both the business and its PPM activities grow) and should not require a disproportionate level of customisation (and the complexity this brings).
Unlike more traditional business technologies, a new PPM tool is probably not supporting a raft of existing business processes. One could argue that this is good from a ‘greenfield’ perspective; however, the creation of corporate PPM from scratch (even if via a benchmarking exercise) may add unnecessary complexity to a PPM-driven change project. Alternatively, an organisation needs to look at the procurement of a PPM tool as more than just obtaining the required software, and also assess the value the vendor can bring.
Hence, the creation of a solution/vendor shortlist should not only include requirements relating to portfolio management functionality and standard criteria such as inter-process integration, interoperability with existing IT and management software, technical requirements, supplier background, implementation parameters, and support and maintenance arrangements. They should also reflect the fact that potential PPM vendors can deliver much more than just the technology, and assess vendor knowledge, services, and experience (such delivery methodologies and the provision of best practice frameworks and processes) that can be leveraged in the creation of the required corporate PPM ecosystem.
Address People Factors
As with the introduction of many new technologies and processes, addressing people-related factors is crucial to success – technology and processes don’t usually fail by themselves. Employees are one of the key stakeholders that need to buy-in to the corporate PPM initiative and must be involved, and communicated to, throughout the life of the change project. They need to understand why both they and the organisation need to use portfolio management and how it fits into the bigger picture of IT and Corporate Governance. Importantly, PPM needs to be integrated into, and not viewed as an add-on to, existing working practices and procedures. The PPM change project must address people issues through a focus on usability, such as the delivery of in-process training, and realise that if a PPM tool is too difficult to use, or requires people to radically alter the way in which they work, then PPM will ultimately fail.
Closely Manage PPM-specific Change Risks
Big bang approaches are often inappropriate for PPM deployments; alternatively an organisation must ensure that their choice of vendor and tool will deliver the right speed of change. Vendors must balance organisational needs with benefits realisation, avoiding common implementation pitfalls, and resulting in a business-integrated solution. To help minimise the risks associated with an implementation of a PPM change project, Butler Group recommends that an organisation starts with a Proof of Concept (POC) or takes a phased delivery approach, and uses a low-risk environment to understand all the people, process, and technology changes required to achieve a successful PPM deployment.
An organisation should also consider using SaaS delivery, at least to begin with, to shorten the time-to-value and minimise cost, risk, and change effort. Having said this, whilst demonstrating a speedy ROI is critical (particularly in the current business climate), it is vital that an organisation manages the speed of change, based on its level of maturity and ability to handle change, remembering that it is the business’ change not the vendors. Importantly, an organisation should start small and build on its successes; where necessary this will help to continue to sell the benefits up through the enterprise.
Focus on Analytics
Whilst better control over, and visibility into, project expenditure is a much needed corporate facility, PPM is not just about improving project management and delivery – information exploitation is also key. A PPM tool’s analytics functionality is vital to an organisation wishing to realise the full business benefits of portfolio management. A procuring organisation must therefore ensure that potential PPM tools have the depth and breadth of analytics to meet all its business needs, across a wide spectrum of business users.
User requirements will not only vary by corporate role, but also be based on personal information interpretation styles. A suitable PPM tool should provide facilities that ensure that all types of user can, and want to access the dashboards, reports, and scenario/what if analyses they need to make effective business decisions. The analytics should also be readily available outside of the PPM tool given that not all potential recipients will have access to the technology, particularly third parties. Additionally, where some users, such as senior business people, may only require access to the information layer of the PPM ecosystem, a best of breed PPM tool will offer access to dynamic analytics outside of the core PPM technology, providing users with real-time access to project- and portfolio-related information from within alternative clients such as Microsoft applications.
In summary, for an organisation to maximise the probability, and level, of portfolio management success, it should ensure that it prepares well, can readily demonstrate benefit delivery, actively involves its people, selects the right PPM tool and vendor, starts small and builds on its successes, and ultimately manages at its own pace.
Republished from http://www.butlergroup.com