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Over the past two years, we've read regularly about geographically distributed business and the effects of living in a world where information, commercial endeavors, and cultural exchanges are enabled and, in some cases, created by information and communications technologies. The "geography is dead" concept has been presented convincingly by Thomas Friedman in his bestseller, The World is Flat: A brief history of the twenty-first Century1. Friedman's point is that IT has paved the way to global business opportunities that any company, large or small, can exploit. Hence, today's technology has leveled, or flattened, the playing field for competitive business.
To compete effectively and efficiently in this flat world, companies need to get the most out of their IT investments. IT is no longer just another department, but rather a key instrument for business growth and survival, whose capabilities can dramatically affect the entire enterprise.
Given the complexity and the ever-growing importance of IT, more businesses are recognizing the value of a mature IT project portfolio management strategy. In support of this growing interest, the marketplace offers a plethora of best practices, articles, and books on IT portfolio management. Much of this writing is geared towards general discussions regarding IT PPM and convincing IT executives of the value of having a PPM strategy in place. However, based on my experience in discussing PPM with my customers, I find that a lot of people do not really understand what PPM is all about.
This article provides a high-level overview of IT Portfolio Management and takes a general look at the PPM vendor market. This is followed by some guidelines on how to proceed to have a better chance of successful PPM implementation and get most out of the solution.
Project portfolio management (PPM): Beyond the hype
Before we go any further, I would like to provide a very high level overview of PPM in laymen's terms.
Anyone researching PPM on the Web will see fancy phrases like "IT to business alignment," "IT optimization," "IT governance," "compliance" and so on as value propositions for portfolio management. If you have been to any recent conferences on IT portfolio management, you may have been mystified by hearing how PPM can benefit organizations practicing "Knowledge Process Outsourcing (KPO)" and "Business Process Outsourcing (BPO)," To make a long story short, these different technical and fancy ways of explaining this topic has only added to the confusion.
In effect, Enterprise Project-portfolio Management (referred to in this article simply as PPM) is all about aligning people, resources, and projects with business goals. PPM begins with effective project selection and prioritization, with the ultimate goal of sustaining a steady stream of returned value to the company. By carefully controlling the investment of business capital -- people resources, knowledge, and so on -- in carefully selected projects, PPM allows organizations to put their business strategy into operation.
I will take a stab at explaining PPM in conversational, colloquial terms. My hope is that you will be better able to engage in an elevator pitch about PPM after reading this article.
The heightened visibility of IT over the past decade is the result of IT's associated accountability to businesses -- for ensuring, for example, the integrity of financial and other business data, and to support mission critical processes in high risk businesses such as the life sciences, aerospace, and national security, to name a few. IT's new accountability comes with the territory of being a core part of the business. Business managers are constantly pushing IT to generate more revenue by creating new products, services, systems, and processes, while reducing the costs of compliance.
Here are some core requirement areas where IT must meet new accountability goals.
Accuracy. IT must support more precise forecasting and delivery of end results.
Flexibility. IT spending, resources, priorities must align quickly and efficiently to the changing needs of the business.
Compliance. IT must support processes that comply with regulatory requirements such as Sarbanes Oxley, the Patriot Act, or CFR (Code of Federal Regulations) Title 21.
Business-driven initiative. IT investments must demonstrate business value creation.
Business leadership. IT data must support managers as they decide on which internal line of businesses projects to fund.
To meet these requirements effectively and efficiently, IT organizations have to build internal processes to achieve measurable results. PPM activities, in my definition, consist of the following core competencies.
- The ability to choose the right projects for project portfolios that will contribute most to the business.
- The ability to manage the projects, portfolios, resources, etc. that provide aggregate business level results on time and within budget.
- The commitment to continuously improving internal processes to deliver better results.
- The ability to show that IT spending is linked to and justified by measurable results.
To produce optimum business and technical results, a PPM solution will involve a wide range of stakeholders -- from the IT the practitioner to the business manager. On the ROI side, PPM can produce a broad based range of value contributions, at different levels within an IT organization, some of which are shown in Figure 1.
Figure 1: A PPM solution can provide the benefits described in the text at right for each tier of the organization, as shown in the pyramid.
To define PPM in laymen's terms, one can say that PPM is an IT governance tool that helps IT projects create more value better, faster, cheaper while remaining aligned with business strategies and goals.
Choosing the right software for PPM processes
It is no secret that in order to have a successful PPM implementation a company needs to understand its business and technical needs. It also needs to follow best practices or strong process guidelines which include success criteria, performance benchmarks, and other related metrics. Once all these needs and guidelines are determined, software will play an integral role in the implementation of the PPM solution.
Managing an IT portfolio manually is doable, but may be unrealistic for organizations that need the ability to manage multiple projects, programs, assets and resources, produce different reports, forecast time, track financials, etc. to manage an IT portfolio manually. In order to do things cheaper, faster, and more efficiently, there is need for automation. Good PPM software brings automation to the table.
Often, companies fail to properly evaluate PPM solutions that will help them automate their IT portfolio management strategy. In order to successfully maximize the benefits of IT portfolio management, an organization must know how to evaluate the PPM software vendor market.
Companies may try to buy software for portfolio management with little understanding of their own technical, functional, or business needs. Obtaining the right tool or toolsets for a PPM solution is quite different from obtaining a standard IT development tool, such as those designed for model-driven development, configuration management, or testing. Just as each of these areas of the software development lifecycle are automated by tools that address specific user needs, a PPM solution must satisfy other specific needs concerning resource management and project management, as well as indirect needs pertaining directly to the company's bottom line. Examples of such indirect needs include creating a mechanism for aligning IT with multiple lines of businesses (LOB) and their strategic goals, and creating metrics to understand true business value for proposed and funded projects.
Companies who have grown accustomed to fairly straightforward procurement of IT development tools may find themselves suddenly in unknown territory. The transition has been rough for many executives, but there are ways to approach this transition that can reduce the risk involved. For instance, it is very important for both the customer and PPM vendor to understand the significance of different roles within the organization and how they interact with each other with respect to the software solution. I will provide a framework that will help executives have a better idea of what to expect from a potential PPM vendor so they can prepare themselves better for a successful PPM implementation.
There is a lot of buzz in the industry regarding the PPM space. Companies are constantly bombarded with new information, analysts reports etc. on who the best vendors are and why. The PPM market is constantly changing with new vendors, big IT shops acquiring smaller players, and PPM tools that are being enhanced all the time. Once we dig deeper beyond the hype, we see that PPM vendors are actually divided into two distinct categories:
PPM Specialists. These were the early entrants, or pioneers in this market, whose sole focus is portfolio management solutions. Some of the PPM solutions offer advanced features with capabilities to track project and portfolios to different degrees. The value proposition for these companies is simply their expertise in this domain -- it's their only focus. Due to increasing competition, some of these niche players are being constantly acquired by bigger solution providers.
Enterprise Solution Providers. Bigger IT shops that have substantial presence in the development tools market are becoming increasingly interested in tapping the PPM space. Typically these companies will acquire one of the niche PPM vendors and make it part of their tools business. The value proposition from these larger vendors is a one-stop shopping experience for customers looking for support for their IT software development. Because this is a growing market, it is reasonable to guess that, with time, we will see clear traceability between development tools and traditional PPM tools without having to go through much customization. For example, in the future we might expect a standardized look and feel between traditional development tools and PPM tools. My guess is that we will see a shell approach from vendors who will provide a variety of tools in a buffet style, where the customer has the ability to pick and choose the tools they need or to simply acquire the whole package.
Services from a PPM tool vendor
A PPM tool is not like a standalone development tool. It usually requires a degree of customization, and it must be installed and set up in a way that meets your needs. You should know what you want out of tool technically and functionally, and you must clearly understand how the software solution will fit with and support your business processes. Since PPM involves all or most teams in the organization, there will be considerable communication, collaboration, and -- as is often the case -- compromise during the deployment of this software.
It is extremely important to work with a vendor who has the range of expertise, maturity, time, willingness and manpower needed to provide the right support.
Are you ready for a PPM implementation?
Before you decide to choose a vendor and implement a particular PPM solution, you need to conduct a readiness assessment to discover the overall current state of maturity about PPM in your IT and business organization. This is where you need to be true to yourself as an organization and answer some major questions. It is best to tackle these questions before attempting to assess PPM implementation services offerings:
Executive buy-in. Am I going to get executive support to follow at portfolio management process? Will I get adequate funding, people and time to implement this?
Project and process management. Do I have any project and portfolio management processes today? How often do we document them and how accurate are those? Will this tool fit in to my existing project management infrastructure? How do I tie my strategic objective to project deliverables?
Performance benchmarks. Have we established realistic, measurable performance criterion that we expect out of our new tool?
Organization structure. How flexible is my IT and business staff, can they change their existing processes?
Credibility of source. Are my sources (departments, divisions, etc.) going to provide me the right inputs to go into the PPM infrastructure? Do we have accurate count of resources, assets, etc.?
PPM staff. Will I have internal or external PPM experts that can manage the whole process of PPM evolution in the organization: i.e. select a PPM vendor, establish success criteria, and take alternative actions if PPM implementation does not go as planned, monitor vendor artifacts and processes.
Technology. Are my business counterparts technical enough to use the software to its utmost capacity? Do I have the required network, hardware, software, etc. to implement the technological base needed for implementing this solution?
Your answers to these questions will create a solid foundation for seeking and selecting an appropriate vendor who can craft the right services for your specific engagement.
Eight steps to a successful PPM solution implementation
If your answers to the PPM readiness assessment all suggest that you should proceed with a PPM solution, I recommend the following steps toward a successful implementation.
1) Groundwork. As described in the previous section, it is important to do an assessment of your existing environment (systems, processes, etc.) before deploying any PPM tool. The assessment helps the vendor understand the client needs in detail. This is where you will learn where you are and where you can go realistically. Expect the vendor to provide some best practices recommendation and business justification for you to get executive buy in. Next, you will decide which recommendation to pursue. The vendor should provide you a roadmap that outlines time to deploy the tool for your organization, deployment activities, deliverables, training, and resources needed from you to successfully deploy the tool in your environment.
2) Deployment planning. Your team should work with the vendor to define the vision, scope, roles, resources, and communications plan for your team. If the roles are not defined correctly, it is very difficult to get the utmost result from the software. This is where the deployment schedule is established, milestones are agreed upon and progress review criterions are set in place.
3) Environment specification document. Have your IT specialists work closely with a technical specialist from the vendor team to determine where to install which software component within the tool. Make the vendor generate an Environment Specification report.
4) Usage model. A member of the vendor team should work with you to define how each identified role on your team (executive, PM, programmer, etc.) should use the tool. Work closely to design the processes and metrics in order to create a usage model design document. The design document created here becomes the foundation of the configuration activities.
5) Installation and configuration. The vendor should install the PPM tool according to the Environment Specification document and configure it according to the Usage Model documents. Make sure you interact with the pilot version of the configured tool to ensure needs met. This is where the adjustments should be made before a full deployment takes place.
6) Rollout. The vendor should supply training materials during rollout. Use the vendor for some hands-on training and mentoring to ramp up quickly.
7) Tool administration. The vendor should work closely with your system administrator, database administrator to define a roadmap for tools administration and maintenance procedure, roles and responsibilities. This roadmap should be captured in an Administration and Maintenance Plan. There should also be another meeting between your management and the vendor to discuss results of deployment, lessons learned, gaps remaining, and future direction.
8) Followup. The vendor should follow up with your end users after about a month or so of tools usage to get feedback on performance. This is also an opportunity to get questions answered that were not asked before.
Many companies today look to an IT portfolio management strategy to optimize the relevance and ROI from their IT investments. However, once companies implement a project portfolio management (PPM) solution, they often find that their user experience is less than optimal, feeling that they are not getting the results and business benefits that seemed promised by the solution. I believe that the approach to a PPM solution outlined in this article offers a common-sense way to assess PPM needs, and implement a system that will help companies get the most out of their PPM investment.
Bryan Maizlish and Robert Handler, IT Portfolio Management: Step-By-Step Unlocking The Business Value of Technology, First Edition, Wiley, 2005
IBM Corporation, "IBM Rational Portfolio Manager Solution Sheet" Available at: ftp://ftp.software.ibm.com/software/rational/web/datasheets/G507-0991-00.pdf
1 See Maria Halovcanic's book review of Thomas Friedman, The World Is Flat: A Brief History of the Twenty-first Century, at http://www-128.ibm.com/developerworks/rational/library/oct05/reader/halovanic.html
2 See Brian Sommer, "Stop Aligning, Take Risks!" in Optimize Magazine, December 2005, at http://www.optimizemag.com/article/showArticle.jhtml;jsessionid=HX4ED1KITBCNUQSNDBESKHA?articleId=174402500
Anirban Dutta, PMP is responsible for working with IBM Global Services and Rational software to influence joint wins and services delivery. He has many years of IT experience ranging from software engineering, project and portfolio management, to solution sales. To read his other published articles, please visit http://dutta-thoughts.spaces.live.com/Lists/cns!E2A70918C17BDCD1!132/. He can be reached at adutta@us.ibm.com
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