Building an effective and efficient IT project portfolio management (PPM) practice in your company is difficult, but not impossible.
To maximize your chances of success you need to keep in mind a couple essential facts: first, you must realize that managing the organizational change is more important and more difficult than building the process; and, second, the PPM process is not an IT process, but a corporate process that has provides huge benefits for the IT department.
This being said, you can begin to understand that when asked, “Is PPM an art or a science?” I answer “Yes.” No one will argue that there are fundamental tasks and operational best practices that must be present in the PPM process. Likewise, the industry scarred veterans of PPM will also tell you that there is a never ending priority to managing personalities, expectations and communications when it comes to business leaders.
Avoiding Potholes
While this year-long series of articles has been focused on the “what and how to” of building a PPM practice in your company, sometimes it is just as valuable to know what not to do when establishing a PPM practice.
Here are six things you should avoid doing:
Leaving “certain” projects out of the IT portfolio. One of the most critical tenets of PPM is gaining the trust of business leaders by ensuring the actions and decisions of IT are transparent.
If IT-only projects, for instance infrastructure upgrades, are not captured and displayed in the IT project portfolio it raises questions: “What are the other IT resources working on?” “What is the all that non-discretionary money being spent on?” Trust will never be earned as long as questions about IT like this exist.
Not adjusting the IT organization to support the PPM function. Form follows function. PPM is a new discipline that requires skill sets beyond traditional IT skills. It also requires a dedicated interface between the IT organization and the business divisions.
Many times, a company will establish an IT alignment team led by IT relationship managers as a result of deploying a PPM practice. For maximized alignment, companies need to define roles and responsibilities for each member of the organization’s alignment team. This is especially important in larger organizations, because it makes it easier to assign ownership, responsibility, and most importantly, accountability.
Excluding finance. According to a CIO Magazine survey, 89% of companies are flying blind, with virtually no metrics in place except for finance.
If the financial measurements attached to an IT project are to be accepted throughout the company, then an authoritative representative from the finance department needs to support the method, as well as the ROI calculation. There is no better approach for getting the finance group to support the ROI of a proposed IT project than to work closely with the financial organization in determining a project’s ROI potential.
Letting the process be judge and jury. Even the best of business processes becomes a hindrance when it squeezes out common sense.
There are too many interdependencies between projects and the intangible benefits attached to each IT project are very difficult to quantify. Any process or formulaic approach to evaluating projects will miss some good projects and allow some stinkers.
Good portfolio management means good IT governance, which requires regular IT governance committee meetings.
The business value of IT projects is not just the concern of the CIO. To understand the true economic and qualitative value a project offers and the risks associated with it, business unit leaders must drive the prioritization of IT projects in the portfolio.
Establishing business leaders as portfolio managers ensures business-IT alignment and positions the CIO as a voting facilitator of the committee, not the sole decision maker. Instead of the CIO determining when and where to spend budgeted IT funds it is more practical to let the business leaders figure it out.
Starting with software. Some people look to PPM software as the “silver bullet” to solve all their IT-financial governance issues, but starting your PPM efforts by picking a software package will most likely exasperate the problem than help solve it.
I started this article by stating one of the two most significant issues in establishing portfolio management is managing the organizational impact of such a process. Introducing PPM to an organization through a software package also introduces a process that was not designed with your company’s culture, personalities, politics, and organizational structure in mind. The end result is more organizational change that needs to be managed, not less.
There are very good project management systems, asset management packages, budgeting systems, resource management systems and portfolio management systems, but none of them tie it all together.
Comparing apples to oranges. Business leaders will not be able approve, deny or prioritize a pipeline of projects if they cannot understand how one project compares to another. A portfolio management research survey revealed that 84% of companies either do not do business cases for any of their IT projects or do them only on select, key projects.
Organizations need to determine how IT costs and business value will be measured, managed, and monitored. A strong business case will be required to secure funding for new IT projects identified as a large, growth investment. Approval of a major systems project requires the development of a complete business case analysis (BCA) that identifies a project’s cost, business impact, return on investment, and risk.
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].