Program Management: Linking Business Strategy to Product and ...
Program Management: Linking Business Strategy to Product and IT
Russ Martinelli – Intel Corporation (firstname.lastname@example.org)
Jim Waddell – Tektronix, Inc. (email@example.com)
Program management is not a new concept or latest management fad. In fact, it’s been utilized
for decades to develop products and infrastructure in the high technology, aerospace and
automotive industries. In these industries, program and project management are two components
of an effective product or infrastructure development system, with program management
responsible for the business surrounding the system and project management responsible for the
planning and execution of the system output.
Even though program management is a widely used and accepted approach to managing
complex product development and infrastructure efforts, its definition, methods and tools are not
widely understood. This paper is intended to demystify the program management business
model by defining program management, describing its link to business strategy, clarifying the
difference between program and project management, and describing how program management
is implemented in two well known high technology product development companies, Intel
Corporation and Tektronix, Inc.
Why the need for program management?
Many organizations that take a purely project management approach to developing products and
infrastructure find themselves struggling with the following problems:
• A chasm usually exists between business objectives and project management activities.
Therefore projects may be “on target” with respect to time, cost and quality but fail to
achieve the business results anticipated such as increased market share or increased
• Most efforts do not consist of a single project to achieve desired results, rather multiple
projects with activities and deliverables that are tightly linked. The intricate
interdependencies and common business objectives are many times left unmanaged.
• Resources seldom report directly to the person managing the development effort. Instead,
they usually report directly to functional managers and are “loaned” to the project
manager in a matrix manner. Many project managers are not adept in the leadership
skills required to influence a team that does not directly report to them, nor have the
breadth, depth or experience to successfully manage across a wide array of functional
disciplines required to bring a new products to market.
By contrast, companies such as Santa Clara, California-based Intel and Beaverton, Oregon-based
Tektronix have instituted a program management business model to resolve the problems
described above. Both companies utilize program management to link business strategy to
project output, to integrate the efforts of multiple project teams to achieve a common set of
business goals, and to structure highly matrixed organizations into cross-functional program core
teams to establish the synergy needed to effectively link multiple project teams.
Program Management Defined
Program management is defined as the coordinated management of interdependent projects over
a finite period of time in order to achieve a set of business goals. It is a business model whereby
companies provide the means by which new products or infrastructures are conceived, developed
and brought to market in order to generate a major share of their profit.
Program management has the following characteristics:
• A program is strategic in nature. Program management ensures the program is closely
aligned to and directly supports the achievement of a business’ strategic objectives.
• Program management provides a focal point for ownership and accountability for
successfully delivering the intended business results for the organization.
• A program has both business and technical focus. Program management ensures the
program is successful in both aspects.
• Each interdependent project within the program has a set of objectives. Program
management ensures the project objectives contribute to the achievement of the business
goals of the program.
• A program is normally cross-functional and matrix organized. Program management is
the glue that coalesces the matrix to ensure the functions perform as a cohesive team.
Organizationally, program management provides the opportunity to manage effort across
the traditional line structure contributing to faster decision making and improved
• A program is led by a program manager who is responsible for the characteristics above.
Program Management versus Project Management
Program and project management are related but distinct disciplines. It is important for everyone
within the organization to fully understand the distinctions between the two, as well as the
differing roles and responsibilities of program and project managers. In general, the greatest
difference between program and project management is that program management focuses on
achieving business results to create a competitive advantage while project management focuses
on planning and executing the work required to deliver the end product. In the program
management model, the program manager manages across the multiple functional projects,
while the project manager manages within a single functional project.
Other distinctions between program and project management are shown in Table 1.
Program Management Project Management
Strategically focused Tactically focused
Business and technical in nature Technical in nature
Aligned to strategic objectives of business Aligned to goals of the program
Assures the work effort remains feasible from a Assures the work effort generates desired
business standpoint deliverables on time, within budget and at
required performance levels
Change managed from both a business and Change managed from a technical perspective
Risk spread across the projects and concerned Risk contained within a single project and
with probability of business and technical concerned with probability of technical
Cross-functional at all times May be partially cross-functional
Broad range of management and business skills Project management and technical skills required
and experience required
Table 1: Program Management vs. Project Management
Linking Program Management to Business Strategy
Program management is a proven business model used by many organizations to achieve their
business objectives, and is designed to be used strategically by business management. Although
all projects and programs deliver the tactical and operational deliverables, the real power of
program management is the ability to link similarly aligned projects into programs that are tied
to the business strategy of the organization.
Figure 1 illustrates the link between program management and business strategy. During the
strategic planning process, organizations create a set of strategic objectives to gain competitive
advantage and achieve business growth. Strategic objectives are the results an organization
wants to achieve within a specified strategic horizon. Programs are then developed to create the
means to achieve the objectives. For each program, a program strategy is developed to define
how the program will contribute to the achievement of the strategic objective, and serves as the
guiding vision to align the resulting project work. The program strategy guides the behavior
required to achieve the business results.
Program Management Program Strategy
Figure 1: Linking Program Management to Strategy
To extend the model further, program management links interdependent projects that possess a
common set of objectives to achieve the program goals and strategy, and aligns them for overall
management and coordination.
For example, Intel Corporation defined a strategic objective to develop and brand a line of
microprocessors specifically targeted toward the server and workstation market. A program was
established, and a program strategy was created to define and develop the new microprocessor
architecture, manufacture the microprocessor, and create a marketing campaign to launch the
microprocessor in the second quarter of the target year. Projects were established to develop the
architecture, circuitry, software, and the data infrastructure, verify and validate the design,
integrate the elements, develop the manufacturing processes, and create the marketing campaign.
Program management was utilized to coordinate the activities, interdependencies, and
deliverables of the projects which resulted in the development of the initial Xeon TM
Program Management and the Organization
Projects and programs have been managed in a wide spectrum of organizational structures with
varying degrees of success and efficiency in the past. These structures have ranged from the
purely functional organization at one extreme to the purely project-oriented structure at the other
extreme. It has been observed that the program management model works at its optimal level
in a compromise between these two extremes. This structure is a matrix organization as shown
in Figure 2 that enables the program to operate efficiently within the long-term and permanent
structure of the required functional organizations of the business.
Program Engineering Marketing Manufacturing Finance Validation
Director Functional Mgr. Functional Mgr Functional Mgr Functional Mgr. Functional Mgr.
Program Engineering Marketing Manufacturing Finance Validation
Manager Project Mgr Project Mgr Project Mgr Project Mgr Project Mgr
and Team and Team and Team and Team and Team
Cross-functional Program Team
igure 2: The Matrix Structure
In the matrix organization, the functional managers supply the project managers and project team
who possess the functional expertise for the program. The project managers and project teams
indirectly report to the program manager of the program and are responsible for delivery of the
project deliverables. The matrix organization structure enables the following:
• Functional resources, expertise and training are maintained by the functional managers for the
long-term viability of the firm.
• Programs have access to the entire available labor pool within an organization
• Program managers and their functional team representatives are responsible for delivery against
the program and project objectives.
• Roles and responsibilities are clearly defined within the organization.
The Program Team
Program management meets the traditional management attribute of getting things done through
people. Therefore, a key element to successful implementation of the program management
model is the program team structure. In order to be successful, the team must coordinate its
activities and interdependent deliverables, effectively communicate what is being accomplished,
and collectively make decisions that support the program objectives. The full program team
consists of two entities as illustrated in Figure 3: The Program Core Team and the Extended
Figure 3: Full Program Team Structure
It has been demonstrated that cross-functional teams can create higher performance, lower cost
and higher quality products in a shorter amount of cycle time than other organizational
approaches to product development. The Program Core Team (PCT) is the cross-functional
leadership and decision-making body of the program which is responsible for ensuring that the
program objectives and customer satisfaction are achieved.
The PCT consists of the program manager, the functional project managers, and other critical
support representatives such as quality assurance. The two inner concentric circles in Figure 4
illustrate a typical PCT structure for product development programs. The particular functions
and support organizations which make up the PCT vary by company and organization and are
dependent upon the elements and scope of the product or infrastructure under development. The
size of the PCT is situational, but typical PCT size varies between four to twelve members,
including the program manager. PCT membership may vary as a program progresses through
the development life cycle.
When developing an Intel dual-microprocessor server product, the program manager established
the program core team upon approval of the product concept and business case. The structure of
the core team depended upon the sub-systems of the server, including a motherboard, a memory
board, an enclosure, a power source and multiple levels of software. Membership on the
program core team consisted of the program manager, the project managers for each of the sub-
systems as well as representatives from key support organizations. Figure 4 shows the program
core team for the dual-microprocessor server product development effort.
Figure 4: Intel Server Development Program Core Team
Roles and Responsibilities
There are a few key roles and corresponding set of responsibilities that must be well understood
within an organization for the program management model to operate successfully. These roles
and responsibilities are even more critical when applied to the product development environment
due to the market and revenue potential at stake.
Senior management is responsible for establishing and maintaining the processes and procedures
by which programs and projects are managed within their organization. Senior management
owns the product portfolio and approves products to be initiated into a product development
program. They select and empower the program manager to form a team and organize the
program. Senior management also sets the key objectives and constraints for the program and
provides the necessary leadership and guidance on issues and barriers outside the control of the
program team. Senior management or their delegates approve all key milestones signifying
phase transition during the product development program.
The program manager must establish the program core team and work with the team to define its
structure, scope and communicate the program objectives. The program manager is accountable
for the financial, business and other deliverables for the program and is responsible for
developing and maintaining an integrated plan and schedule with the team. The execution of the
program, including any necessary trade-offs and other decisions, is managed by the program
manager in order to remain within the constraints imposed by senior management. The team
must identify the key risks to the program and develop and implement appropriate mitigation
plans for resolving these risks. The program manager makes recommendations to senior
management for the closure of the program and release of the team resources upon achievement
of the program objectives and deliverables.
The functional manager is responsible for the hiring, training and professional development of
the functional personnel. He/she is also responsible for the maintenance of the skills,
capabilities, best practices and tools to sustain the long-term functional expertise. The functional
manager makes the resource and work commitments for functional activities in support of the
program and assigns a qualified functional project manager to represent the function on the
program. The functional manager must notify and negotiate with the program manager if
reallocation of any previously committed resources becomes necessary.
The functional project manager serves on the team as the expert of the function he/she represents
and manages the individual contributors within the function. Execution of the functional
requirements and policies is the responsibility of the functional project manager. He/she drives
the integration of the functional plan and work commitments for the program and manages the
completion and closure of the functional deliverables. The functional project manager is also the
key conduit for communication on the program between the program team and the functional
organization he/she represents.
Management Oversight of Multiple Programs
Senior management plays a key role in the review and monitoring of all program activities
underway within their organization. There are several processes that have been developed and
used to enable senior management to do this effectively.
Portfolio Management: Whether in a product development, continual improvement or
infrastructure environment, management generally will be responsible to develop and maintain a
portfolio of current and future programs to be managed by the organization. For product
development, this will normally take the form of managing the product road map and the
corresponding portfolio. It is recommended that senior management lead this process for
evaluation, prioritization and selection of the product or infrastructure ideas to be approved.
Additionally, effort must be undertaken to balance and align the available resources and dollars
to the competing program opportunities.
At Tektronix, Inc., program priorities are assigned by management based upon the assessment of
each of the following:
• Fit to the strategic objectives
• Risk versus potential return
• Meeting future customer needs
• Balance of the product portfolio for the appropriate mix of new products, enhancements
and timing for the launch of new major products
Life Cycle Management: Senior management is responsible for identifying and maintaining the
process steps by which programs are to be initiated, implemented and completed within their
respective organization. The program manager and team must be very familiar with the
methodology for managing their program. At the bare minimum, programs will have formal
approved start and completion milestones. In the case of new product development, the process
steps are well defined and institutionalized. This has become the case due to the complexity,
cost and revenue potential involved.
Most companies involved in product development have adopted some form of the phase/gate
process for managing the life cycle of the product development activity. Phases and gates are
defined as follows:
• Phases: Phases represent the major steps of the product development life cycle which include
such activities as feasibility of the product, planning, design, ramp up in manufacturing and
• Gates: Gates or transition milestones represent control points by which the team and
management determine if sufficient progress has been achieved within a phase in order to
transition to the next phase. Generally, a comprehensive set of criteria have been established as a
baseline for assessing whether these criteria have sufficiently been achieved to enable the phase
change to be approved.
Program Management Office (PMO): Many organizations have benefited by establishing what
the industry has described as a Program Management Office (PMO). The PMO is a centralized
program operations and support control point. Its primary purpose is to effectively manage
several programs that are simultaneously underway in an organization. Simultaneous programs
put a major strain on the ability of an organization to successfully manage and coordinate scarce
resources, consistently track program progress, ensure that deliverables are completed correctly
and on time, and that senior management is receiving the appropriate information they need to
run the business.
The PMO provides direction, coordination and monitoring for programs and their teams. The
high-technology sector represents an example of real-time use of PMOs for managing new
product development programs. In some cases, high-tech organizations have expanded the use
of the PMO to cover worldwide operations.
For example, Tektronix, Inc. has implemented a worldwide PMO that is designed to integrate the
coordination and control of all of its global product development activities and provide senior
management with frequent “Dashboard”-style reporting of program progress. The PMO
infrastructure and activities have significantly improved communication worldwide and
contributed to the company’s responsiveness for resolving key program barriers and issues.
Additionally, the PMO has helped Tektronix maintain consistent process implementation and
practice across all programs and well-defined roles and responsibilities for both management and
program team members.
Benefits of Program Management
The use of program management to develop products and infrastructure offers many benefits for
an organization. The key benefits are as follows:
• Direct linkage of product and infrastructure development efforts to the strategies and
objectives of the business.
• Improved communication and decision making for executive management.
• Similar or related projects possessing common objectives are linked into a coordinated
and synergistic whole.
• Improved resource management and utilization across multiple projects, sites, and
• Effective risk management across multiple and inter-related projects and programs.
• More effective management of change and control of product “scope creep".
• Consistency in managing programs and projects and reporting of progress.
• Systematized processes for developing new products by linking all of the elements for
managing successful product development.
• Cross-functional coordination and control contributing to improved time-to-market, cost,
and quality for new products.
• Enables an effective project-oriented organization to reside concurrently and successfully
within the framework of the traditional functional organization structure.
• Provides executive management the tools and capabilities for control and visibility of
multiple programs occurring within the organization simultaneously.
Program management is defined as the coordinated management of interdependent projects over
a finite period of time to achieve a set of business goals. A program is strategic in nature, has
both a business and technical focus, is typically managed in a cross-functional matrix structure,
and is led by a program manager. The program manager manages across the functional projects,
whereas the project manager manages within a single function or domain.
Program management serves as an enabler for achieving business strategies because it provides a
systematic approach to organize, plan, implement and complete complex product development
endeavors within a company. The power of the program management model is the ability to link
similarly aligned projects that are tied to the business strategy of a firm.