Trends in Project Portfolio
        Management

        Sam Higgins
        Research Director
        February 2008




Co...
Who is Longhaus?

•   Longhaus is a research publisher       •   Strong international and technology
    and advisory comp...
Research Focus
Longhaus 2008 Project & Portfolio Management
                       Study
• Launched January 2008
• Created to provide ins...
Abstract

• Project and portfolio management (PPM) is an emerging
  discipline. Successful PPM unites the organisational
 ...
Agenda

• The need for Project Portfolio Management (PPM)
• Understanding PPM
• PPM adoption in Australia and New Zealand
...
The facts are brutal, but must be faced

• Planning over emphasises “new investment”

• Projects fail to meet their object...
Organisations are using a variety of tools to improve
                       the status quo




8     Commercial-in-confid...
PPM can be seen as the integration between the
                  various approaches
• From the strategic to the operationa...
But remember…Portfolio Management is not just
            Program or Project Management
 • Longhaus defines Portfolio Mana...
Interest and adoption of PPM continues to increase




11    Commercial-in-confidence
Unfortunately existing approaches don’t ensure PPM
                           success




12     Commercial-in-confidence
So what is driving PPM adoption?

 • Top 10 Perceived Benefits of PPM
    1. Effective and objective prioritisation
    2....
But …barriers do exist for implementation of PPM

 • Top 10 Perceived Barriers for adoption of PPM
    1. Skill level of e...
Yet business alignment remains out of reach




15   Commercial-in-confidence
Prioritisation and alignment are not achieved
                    through simple reviews




16   Commercial-in-confidence
Portfolio Management is not just about Projects




17   Commercial-in-confidence
Maybe Project Portfolio is the wrong starting point

                                 • The biggest savings can be
       ...
Project Portfolios don’t only exist in IT




19   Commercial-in-confidence
And so PPM is not just for IT and the CIO

 • Sponsored by the CIO           • Sponsored by the CFO
   when:              ...
PPM cannot be effectively implemented with a
                        spreadsheet
 • PPM requires well managed information
...
Yet firms are still taking the PPM journey alone




22   Commercial-in-confidence
Challenges for the PPM in Australia and New Zealand

 • Organisations see value in PPM, but existing frameworks
   alone a...
Source Material

 • Successful Portfolio Management Unifies ICT Management
   Practices, Longview, September 2006

 • Incr...
Thank you


 Longhaus Head Office                Sam Higgins
 Level 30, AMP Place                 Research Director
 10 Ea...
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Trends in Project Portfolio Management in Australia

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  • 22/05/09Copyright 2006 Longhaus Pty Ltd - All Rights Reserved<number>22/05/09Copyright 2006 Longhaus Pty Ltd - All Rights Reserved<number>
  • Today we will be focusing on IT Management Practices – and specifically PPM (highlight appears)
  • With over 100 completed surveys the results will be statistically representative of the Australian and New Zealand Enterprise Market.22/05/09Copyright 2006 Longhaus Pty Ltd - All Rights Reserved<number>
  • 22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved<number>
  • 22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved<number>22/05/09Copyright 2006 Encode Services Pty Ltd - All Rights Reserved<number>
  • Planning over emphasises “new investment”Less than 30% of the typical ICT budgetProjects fail to meet their objectivesUp to 2 in 3 projects are challengedFirms focus on annual measurement90% assess performance only once per annumFinancial measures dominate8 out of 10 organisations rely solely on finance metricsRegulation is increasingIn 2008 local CIOs will be faced with e-discovery, data disclosure and counter terrorism legislation
  • COBIT includes the Val IT Framework.22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved<number>22/05/09Copyright 2006 Encode Services Pty Ltd - All Rights Reserved<number>
  • 22/05/09Copyright 2006 Encode Services Pty Ltd - All Rights Reserved<number>
  • PPM is governance at the earliest stages of the investment cycle.
  • In 2006 Longhaus found that 31% were in the process of adopting, so piloting PPM and only 24% of Australian Enterprises were interested in PPM.In terms of timeframe 50% of organisations interested in PPM expect to do so in the next 12 to 24 months. This is not far behind the early adopters of which only one third claim to have had a PPM approach in place for more than 1 year.22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved<number>
  • Existing approaches such as Six Sigma, PRINCE and ITIL don’t always integrate and so the process of unification is made more difficult. There is no one standard PPM method to rule them all. As a result the opportunity to create a managed and optimised process is virtually non-existent. But the fact that organisations are not mature does not prevent them seeking the benefits of PPM.22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved<number>
  • Often the business case for PPM is built on quantitative improvements in resource utilisation in the short term to gain traction to address the quantitative benefits of more “effective” prioritisation and alignment.Interestingly outside of the top ten were:Better communication around projectsReducing decision and delivery risks Improved cost tracking and charge back Reducing project delivery costs Automation of decision support and approvals Compliance with Acts or Regulations42% of organisation have realised the expected benefits from PPM with the balance claiming it is still too early to tell.22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved<number>
  • Inability to get training was the least likely to impede organisations in adopting PPM.As a process and measurement oriented approach that attempts to make the subjective objective and the qualitative quantitative, PPM often suffers due to cultural barriers. Both at the staff level in terms of the direct beneift their participation will yield (i.e. Will it make my life easier?) and for Executives in terms of accountability (i.e. I’m paid to make the hard decisions using my extensive experience!).22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved<number>
  • 22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved<number>
  • 22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved<number>
  • 22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved<number>
  • 20% to 45% reduction in project costsThrough:Elimination of redundant and rogue projects Corrective action on “in trouble” projectsSelection of projects with the strongest paybacksGreater window for forward planning10% to 30% reduction in application maintenance costsThrough:Increased application knowledge to extend useful lifeFaster scoping and execution of changeMore intelligent decisions in relation to upgrade, retire, replace, rewrite20% to 30% reduction in infrastructure operational costsThroughEliminate redundant software licensesStreamline asset inventory through consolidation and rationalisationOptimize operations staffing levels22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved<number>
  • 22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved<number>22/05/09Copyright 2006 Encode Services Pty Ltd - All Rights Reserved<number>
  • Portfolio management concepts are applicable to a wide range of domains, so remember that sponsors may be hiding in strange places22/05/09Copyright 2006 Encode Services Pty Ltd - All Rights Reserved<number>
  • Data fragmentation and islands of information is the enemy of PPM!
  • 22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved<number>
  • 22/05/09Copyright 2006 Longhaus Pty Ltd - All Rights Reserved<number>
  • 22/05/09Copyright 2008 Longhaus Pty Ltd - All Rights Reserved<number>22/05/09Copyright 2006 Longhaus Pty Ltd - All Rights Reserved<number>
  • Trends in Project Portfolio Management in Australia

    1. 1. Trends in Project Portfolio Management Sam Higgins Research Director February 2008 Copyright © 2008 Longhaus Pty Ltd
    2. 2. Who is Longhaus? • Longhaus is a research publisher • Strong international and technology and advisory company with a research experience specialty in technology • Leading industry voice in press and • We publish business reports and media broadsheets advise executives and management across Australia's government, business, and consumer sectors on • Queensland founded and the application and direction of headquartered technology • Our directional research reports are utilised by both SME and major organisations across the world • Through our AAA (Access All Areas) advisory service we answer big business questions that most often pertain to customer, product or services markets – strong focus on government 2 Commercial-in-confidence
    3. 3. Research Focus
    4. 4. Longhaus 2008 Project & Portfolio Management Study • Launched January 2008 • Created to provide insights into the local PPM practices • Includes both business and technology professionals • Organisations from across Australia and New Zealand • Large organisations (200+ employees) • Mix of private and public sector (50-50) • Participants can register with CA for the final report 4 Commercial-in-confidence
    5. 5. Abstract • Project and portfolio management (PPM) is an emerging discipline. Successful PPM unites the organisational elements, processes, and the flow of information between existing management disciplines. The session will look at the preliminary results from an Australian and New Zealand wide survey on PPM, covering adoption, perception, support and services. 5 Commercial-in-confidence
    6. 6. Agenda • The need for Project Portfolio Management (PPM) • Understanding PPM • PPM adoption in Australia and New Zealand • Implementation of PPM • Challenges facing PPM • Questions 6 Commercial-in-confidence
    7. 7. The facts are brutal, but must be faced • Planning over emphasises “new investment” • Projects fail to meet their objectives • Firms focus on annual measurement • Financial measures dominate • Regulation is increasing 7 Commercial-in-confidence
    8. 8. Organisations are using a variety of tools to improve the status quo 8 Commercial-in-confidence
    9. 9. PPM can be seen as the integration between the various approaches • From the strategic to the operational level Planning through Enterprise Architecture Governance processes •Determine the type of workapproaches such as Strategic •Assess the impact on the firm & resources COBIT •Assess the impact on the portfolio Are we doing the right work? •Approve the investment •Manage the production of results Tactical •Govern the activity PPM PPM •Control and manage tasks Project management Is the work being done right? such as PRINCE2 or PACE •Determine the process used to generate outputs Operational •Defines standards and procedures •Ensures control at the task and team level Is the work getting done? Service management and capabilities such as the ITIL and SFIA 9 Commercial-in-confidence
    10. 10. But remember…Portfolio Management is not just Program or Project Management • Longhaus defines Portfolio Management as: The process of identifying, prioritising, authorising, directing and controlling projects, programs and other related services using quantitative analysis to achieve business goals and objectives while balancing risk and reward. 10 Commercial-in-confidence
    11. 11. Interest and adoption of PPM continues to increase 11 Commercial-in-confidence
    12. 12. Unfortunately existing approaches don’t ensure PPM success 12 Commercial-in-confidence
    13. 13. So what is driving PPM adoption? • Top 10 Perceived Benefits of PPM 1. Effective and objective prioritisation 2. Better alignment of projects to outcomes 3. Increase executive reporting and visibility 4. Supporting business growth plans 5. Improved alignment of resources 6. Transparency of project progression and approvals 7. Accurate budgeting and forecasting 8. Maximising resource utilisation 9. Forecasting resource demand 10. Accurate inventory of projects 13 Commercial-in-confidence
    14. 14. But …barriers do exist for implementation of PPM • Top 10 Perceived Barriers for adoption of PPM 1. Skill level of existing staff 2. Maturity of the organisation 3. Not considered mission critical 4. Entry of data into multiple systems 5. Access to budget for implementation 6. Lack of executive support or sponsorship 7. End user resistance to change 8. Absence of documented internal processes 9. Difficulty in building a business case 10. Vendor incompatibility or legacy environment 14 Commercial-in-confidence
    15. 15. Yet business alignment remains out of reach 15 Commercial-in-confidence
    16. 16. Prioritisation and alignment are not achieved through simple reviews 16 Commercial-in-confidence
    17. 17. Portfolio Management is not just about Projects 17 Commercial-in-confidence
    18. 18. Maybe Project Portfolio is the wrong starting point • The biggest savings can be found in optimising existing assets • Begin with Asset Portfolios! – ITIL driven CMDBs make an ideal data source • 42% of organisations realised benefits from PPM 18 Commercial-in-confidence
    19. 19. Project Portfolios don’t only exist in IT 19 Commercial-in-confidence
    20. 20. And so PPM is not just for IT and the CIO • Sponsored by the CIO • Sponsored by the CFO when: when: – Project management in – Activity base costing is place in place – Centralised IT services – Decentralised or outsourced IT services 20 Commercial-in-confidence
    21. 21. PPM cannot be effectively implemented with a spreadsheet • PPM requires well managed information • Software support is crucial to successful PPM • Key features include: – Flexible value criteria beyond just dollar value – Risk assessment capability – Workflow to support the PPM processes – Integration from high level data to project level detail – Shared repository for planned versus actual data – Headless implementation for portal / dashboard integration • Partner with experienced organisations – In absence of an industry standard method software + services combinations are important 21 Commercial-in-confidence
    22. 22. Yet firms are still taking the PPM journey alone 22 Commercial-in-confidence
    23. 23. Challenges for the PPM in Australia and New Zealand • Organisations see value in PPM, but existing frameworks alone are not enough • Effectively addressing the people (cultural) barriers for adoption • Addressing the largest cost areas by including Assets not just Projects • Development of a consistent PPM method • Breaking the perception that PPM is only about better IT management 23 Commercial-in-confidence
    24. 24. Source Material • Successful Portfolio Management Unifies ICT Management Practices, Longview, September 2006 • Increasing Digital Regulation will drive ICT spending In already saturated market, Longview, December 2007 • Project and Portfolio Management Longhaus 2008 Survey, Interim Results, CA, February 2008 24 Commercial-in-confidence
    25. 25. Thank you Longhaus Head Office Sam Higgins Level 30, AMP Place Research Director 10 Eagle Street sam.higgins@longhaus.com Brisbane QLD 4000 +61 412 621 014 Longhaus Research Centre 7/269 Abbotsford Road Bowen Hills QLD 4006 p: +61 7 3868 4796 f: +61 7 3303 8445 inquiry@longhaus.com 25 Commercial-in-confidence

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