The first time I introduce the practice of project portfolio management (PPM) and its benefits to potential clients and IT professionals, often there is confusion regarding the similarities, differences and apparent overlap of PPM activities and those of project management office (PMO).
I am peppered with the questions: “Isn’t that the responsibility of the PMO?” and “How would a PPM practice work with our PMO practices?”
The good news is the answer is not complicated and establishing a PPM practice that works in concert with your PMO activities is straightforward.
In fact, CoBiT (Control Objectives for Information and Related Technology), the industry’s leading IT governance framework, makes a clear distinction that IT portfolio management is a control that helps define the strategic IT plan, while a company’s project management framework is a control that defines the scope and boundaries of managing projects.
Lines in the Sand
The first place to begin is by understanding the fundamental purposes of PPM and a PMO.
The primary objective PPM is to ensure the organization is doing the right things , while the primary objective of a PMO is ensuring the organization is doing things right .
In other words, PPM governs which requests get selected for funding and resources and become active IT projects. The PMO then is responsible for governing all active IT projects, making certain that each project is run using a common project management approach.
Because the focus of PPM centers around justifying the value of an IT project, the best practice in this case is to place decision-making directly in the hands of business leaders. It is common for a strategic IT council, comprised of business leaders and chaired by the CIO, be established explicitly for making funding decisions.
The chief question asked by this council is “Is this a good investment?”
While building and deploying a PPM practice very often begins as an IT initiative, it becomes very apparent that IT is only a steward of the process and not the ultimate owner.
While IT can estimate the cost of pursuing a certain solution or even defining the risk inherent to the project, it is only the business that can estimate the potential business value a project may have.
PPM allows IT projects to be compared in an apples-to-apples fashion as long as disciplined and consistent approaches are followed for performing cost/benefit analysis and return on investment (ROI) calculations. This information is then presented to the strategic IT council for their “go/no-go” decisions.
Once an IT project request is approved its time for the PMO to kick in.
The PMO is often distinguished as a group of it own, comprised of professional IT project managers. Mature PMOs have an established methodology of policies and procedures that guide and manage a project’s activities and resources from initiation through post-implementation and closure.
The PMO provides guidance, tools, and templates that enable a project manager to keep his finger on the pulse of the project, the project team, and the project funds.
Any discipline related to ensuring the smooth execution of a project is owned by the PMO. Typically the PMO includes disciplines for gaining and ensuring stakeholder commitment, defining the scope of the project, initiating major phases of the project, establishing a formal project plan, acquiring resources and defining their responsibilities, minimizing risks associated to the project, establishing a change control system for each project, and measuring project execution performance.
It is important to remember that even once a project is approved and initiated the strategic IT council will remain interested in the successful execution and deployment of the solution. Because of this, a good PPM practice will continue to provide the council with visibility into the specifics of active IT projects.
Because cost estimates and high-level schedules were produced as part of the PPM cost/benefit analysis an ongoing “health check” can be produced for a project during its execution phase. This check up continually refreshes the project’s ROI and allows the council to answer the question, “Is this still a good investment?”.
Sometimes, because of dramatic scope changes or unexpected difficulties getting technologies to work together, a project’s estimated costs can climb sky high. When this occurs, the projected ROI for a project can plummet.
If is gets bad enough, the council can pull the plug before more good money is thrown down the drain of this now, poor investment.
Moreover, after a project is complete and implemented the PPM discipline of Benefits Realization should be performed to measure the actual benefits gained from the solution. This process may take months and even years depending on the size and complexity of the solution and the number of departments affected.
This process provides the information that allows the strategic IT council to answer the question, “Was this the right investment?”.
In short, PPM disciplines are significantly different then PMO disciplines. Ownership of the PPM practice is the possession of business leaders, while the PMO is owned and managed by the project management group within the IT organization.
PPM asks questions that ensure the company is spending money on good IT investments and the PMO ensures that IT projects are run as effectively and efficiently as possible. While I can’t say that one is more important than the other, I can say that both practices are essential to world class IT governance.
Jeff Monteforte is president of Exential, a Cleveland, OH.-based information strategy consulting firm, which specializes in IT governance, information security and business intelligence solutions. He can be reached at [email protected].