Project management has grown beyond the confines of simplistic canned applications into a discipline that is in large part process, combined with common sense and inspiration. The process of Project and Portfolio Management (PPM) derives from the practices common to project management, as expressed in applications and tools developed to help project managers collaborate with project team’s cross-enterprise.Project and Portfolio Management solutions trump pure project planning applications by providing broad visibility into a corporation’s investments in human and material resources.
Using PPM, project managers can determine how best to invest an organization’s capital in projects that provide the best return on investment, increasing the efficiency of the corporation’s resources. Working on the right projects at the right time is critical to sustain a competitive advantage, yet many organizations struggle with allocating limited resources and assets wisely.Project portfolio management (PPM) approach helps you select and manage an optimal portfolio of projects - one that maximizes your organization's responsiveness, revenues, and adaptability while keeping the projects aligned with your strategic business goals and objectives. This process helps structure your PPM practices to provide your organization with a consistent way to select, prioritize, and manage projects that deliver maximum business value.
It is important to assess your current project portfolio management processes and in collaboration with project manager, identifies the appropriate level of PPM discipline for your organization. Then apply best-in-class Project Portfolio Management Maturity Model to determine your current PPM capability and identify process gaps between your organization’s current state and desired future state. Provide the roadmap for improvements and work to develop the implementation plan. Results from the assessment are used to define an approach to improve your organization's ongoing portfolio management practices.The development and delivery of the recommended approach and improvement plan, including a cost/benefit analysis for taking the next steps in optimizing your PPM practices that yields better alignment with your business objectives. PPM processes helps to enable you to select the best project portfolio aligned to your strategic plan.
Forecasting and optimizing the use of available resources is an integral part of PPM. Monitoring project and portfolio performance ensures investment decisions remain the best choices in your changing world. Portfolios are continually evaluated.Prioritization is an iterative process and your portfolio must be reprioritized as business conditions, resources, and budgets change.
A strong portfolio management program can turn all that around and do the following: * Maximize value of IT investments while minimizing the risk * Improve communication and alignment between IS and business leaders * Encourage business leaders to think "team," not "me," and to take responsibility for projects * Allow planners to schedule resources more efficiently * Reduce the number of redundant projects and make it easier to kill projects Implementing PPM means more pennies in your piggy bank.Dennis S. Callahan, executive vice president and CIO of Guardian Insurance, and Rick Omartian, CFO of Guardian’s IT group and chief of staff, claim that portfolio management has reduced their companies’ overall IT applications expenditures by 20 percent and that, within that spending reduction, maintenance costs have gone from 30 percent to 18 percent. Eric Austvold, a research director at AMR Research, says companies doing portfolio management report saving 2 percent to 5 percent annually in their IT budgets.
There’s no single right way to do IT portfolio management.Vendors, consulting companies and academics offer many models, and often companies develop their own methodologies. Off-the-shelf software is available from a variety of vendors. But there are plenty of hurdles to doing it well.
There are, however, best practices and key logical steps that can be gleaned from organizations such as Brigham Young University (BYU), DHL Americas and Eli Lilly, which have integrated portfolio management into the fabric of IT management. The key steps in creating and managing your IT investment portfolio: Gather: Do a Project InventoryPortfolio management begins with gathering a detailed inventory of all the projects in your company, ideally in a single database, including name, length, estimated cost, business objective, ROI and business benefits. In addition to project plan information, add weekly updates on how much time they spend working on projects. Creating a project portfolio inventory can be painstaking but is well worth the effort. For many companies, it may be their first holistic view of the entire IT portfolio and any redundancies.A good inventory is the foundation for developing the projects that best meet strategic objectives.
Evaluate: Identify Projects That Match Strategic Objectives The next steps involve establishing a portfolio process. The heads of business units, in conjunction with the senior IT leaders in each of those units, compile a list of projects during the annual planning cycle and support them with good business cases that show estimated costs, ROI, business benefit and risk assessment. The leadership team vets those projects and sifts out the ones with questionable business value.Next, a senior-level IT steering committee made up of business unit heads, IT leaders and perhaps other senior executives meets to review the project proposals; a good governance structure is central to making this work. "Portfolio management without governance is an empty concept," says Howard A.
Rubin, executive vice president at Meta Group. Conversely, putting portfolio management in place can force companies with weak governance structures to improve them. One of the core criteria for which projects get funded is how closely a project meets a company’s strategic objectives for the upcoming year.At clinical diagnostics company Dade Behring, an executive leadership team, which includes the CEO, creates five strategic initiatives, such as CRM or organizational excellence. The IT governance council, made up of business leaders and senior IT leaders, then evaluates projects based on how well they map against those initiatives.
A good evaluation process can help companies detect overlapping project proposals up front, cut off projects with poor business cases earlier, and strengthen alignment between IS and business execs.Prioritize: Score and Categorize Your Projects After evaluating projects, most companies will still have more than they can actually fund. The beauty of portfolio management is that ultimately, the prioritization process will allow you to fund the projects that most closely align with your company’s strategic objectives. The payoffs that come from a thorough evaluation and prioritization process is the primary reason portfolio management is so effective. First, communication between IS and business leaders improves.
And portfolio management gives business leaders a valuable, newfound skill, the ability to understand how IT initiatives impact their companies. Second, business leaders think "team," not "me," and take responsibility for projects. One tried-and-true method for how a business leader got money for his unit’s projects was to scream louder than everyone else. Portfolio management throws that practice out the corner office window; decisions are made based on the best interests of the company.
Third, portfolio management gives business leaders responsibility for IT projects. Finally, everybody knows where the dollars are flowing and why, which is especially important to CEOs and CFOs who are increasingly demanding that technology investments deliver value and support strategic objectives. Review: Actively Manage Your Portfolio A top-notch evaluation and prioritization process is emasculated rather quickly if the portfolio is not actively managed following approval of the project list.Doing that involves monitoring projects at frequent intervals, at least quarterly. Monitoring project portfolios regularly also means projects that have run off the rails can be killed more easily.
In addition, project portfolio management is conducted by taking inventory of every project in the enterprise. All applications should be evaluated for alignment with: * strategic goals * risk * value * health Using software that enforces this process ensures its consistency.Factors to evaluate include the link to the company's vision, the extent to which the business depends on the application which (which, of course, incorporates risk), functional coverage, ease of use, and cost to implement and retain versus the benefits gained. It is also beneficial to gauge the project's age, its relevance to the business, and ease of implementation.
Project managers will be facing big challenges in the months to come. Using better project management portfolio investments decisions during difficult economic times can help them overcome those challenges, and deliver their projects on time and with a high level of quality.
