Closing the Gap Between Project Management and Governance
In today’s increasingly competitive marketplace, budgets are tight and resources are limited. Consequently, making decisions about which projects to pursue is vital in supporting an organization’s growth, vision, and value. For this dilemma, there is a powerful cost containment and risk mitigation strategy—a combination of IT governance and portfolio management. This approach is highly relevant for budget issues state agencies and departments currently face. With the proliferation of technology at greater and greater speed, the options that could bring potential benefit are seemingly endless. Gone are the days when a great technological idea was an end in itself. Technology has truly become an enabler across all sizes and types of organizations. The challenge now is to understand which business goals can be enabled by a technology and choose the best projects to accomplish those goals. The best way to ensure and demonstrate value to the organization is to know how these projects are supporting the organization financially and operationally. Implementing sound project management practices along with a governance framework can enable this kind of visibility and control.
Closing the gap between projeCtManageMent and governanCe: R-GInsightA RoAdmAp foR G AininG And demonstRAtinG mAximumVAlue foR Y ouR pRoject inVestmentsIn today’s increasingly competitive nance probably has more to do withmarketplace, budgets are tight and his or her perspective than with anyresources are limited. Consequently, dictionary or professional associationmaking decisions about which proj- definition. Governance talk is on theects to pursue is vital in supporting rise because technology has becomean organization’s growth, vision, and ubiquitous—no longer isolated andvalue. For this dilemma, there is a contained to the IT folks in the base-powerful cost containment and risk ment, but now essential to hold upmitigation strategy—a combination of nearly every business decision and pro-IT governance and portfolio manage- cess. Unfortunately, this doesn’t meanment. This approach is highly relevant that technology has become easier tofor budget issues state agencies and understand. As a matter of fact, thedepartments currently face. With the decisions have become more complex,proliferation of technology at greater requiring greater and greater levels ofand greater speed, the options that expertise to make the right choices.could bring potential benefit are seem-ingly endless. Gone are the days when For both technology and line-of-businessa great technological idea was an end executives, this leads to frustration.in itself. Technology has truly become CIOs want input from line-of-businessan enabler across all sizes and types of executives, and those executives justorganizations. The challenge now is to want things to work. A column in CIOunderstand which business goals can magazine sums the dilemma up nicely:be enabled by a technology and choosethe best projects to accomplish those …IT governance drives CIOs crazy. Rightgoals. The best way to ensure and dem- now at companies across the planet, sup-onstrate value to the organization is to posedly sane executives responsible forknow how these projects are supporting the fate of companies refuse to take partthe organization financially and opera- in such pivotal IT and business decisionstionally. Implementing sound project as architecture choices, standards andmanagement practices along with a infrastructure platforms. And to add in-governance framework can enable this jury to this insult, they lay all the account-kind of visibility and control. ability for the decisions’ success (or more likely, lack of success) on the IT group.Integrating Portfolio Management From (Pastore, 2002)Top to BottomIn recent years, there’s been a lot of To make matters worse, many of thetalk about governance, but very little players involved in these choices simplydiscussion of what that really means. don’t speak the same language. SoAt its most basic level, governance is how can they be expected to effectivelysimply oversight and control—the often weigh the benefits of any given courseoverlooked skill of basic good manage- of action?ment. But of course, that’s not all thereis to it. If it were that simple, it wouldn’t Enter the rising tide of governance pro- Solution used:generate such buzz. cesses, such as project portfolio man- agement and the affiliated disciplinesWhat any individual is trying to achieve of project and program management.when espousing the merits of gover- When employed correctly, a portfolio
management process linked with ro- Taking a Results Mindset Building Bridges to the Executive Teambust project and program management So let’s assume you’ve got the depart- For a governance framework to be suc-rigor can truly be a silver bullet. The ment strategic plan in hand and every- cessful, it can’t be only a bottom-up orproblems is, many of those “suppos- one agrees on the key goals for the a top-down approach. The champion ofedly sane executives” and frantic CIOs next couple of years. You’ve got the the initiative must have visibility andcited above are in such a hurry to get right people at the table. You’re certain influence at all levels of the process,to a solution that the examples of suc- that your project management process be willing to put in the hard work to es-cessful governance processes are too is working and it’s consistent across tablish project management disciplinefew and far between: departments and divisions. You’re if it doesn’t exist, and get agreement home free, right? Not so fast. on corporate strategy if it isn’t already“In the US, the mandate for portfo- there before he or she has a reallio management is clear, the overall Another step where governance can chance of success. The success of anyprocesses and steps to maturity are in fall down is at the point of defining IT governance practice will be dictatedplace, and in most cases the investment project goals. Intuitively, project owners by the level of dedication and com-inventory is well described. Yet few or- usually know what they expect from mitment that executive managementganisations are realising the benefits—in their projects. But how does that reso- makes to the discipline. It will be up toterms of objective, consistent, repeat- nate with the executive team? What those leaders to introduce the conceptable and effective processes for select- do those goals mean for them? A to the organization, help it understanding, managing and evaluating projects— business case process is often part of why it is important, help develop athat even rudimentary management by the evaluation criteria for adding new culture that supports it, and developportfolio can bring.” (Viviers, 2004) projects to a portfolio, and it’s likely a messaging campaign that lets staff you’ll conduct an ROI analysis during members know how IT governanceOne of the major inhibitors to success- that step. But is that enough? ultimately empowers them by removingful adoption of portfolio management, roadblocks and building a more effec-which can certainly provide many of the CIOs now understand that server down- tive and efficient workplace.governance benefits sought around the time and call center response simplyboardroom table, is a lack of integra- aren’t good enough metrics on their As the decision making process istion with other processes. The aspira- own. The old “count anything you can” pushed down to the lower levels of antions of these executives in terms of strategy simply won’t work anymore. organization it begins to change thebenefits often outstrip their manage- It’s more and more critical for owners culture and impact the way of doingment infrastructures. of IT, portfolio management, and pro- business. Without executive manage- gram and project management to be ment commitment and consensus theProject portfolio management adds fully versed in the language executives process will not work. Once employeessignificant value to decision making by speak. But this goes beyond jargon or realize the executive management sup-tying project goals to the organization’s buzzwords. The essential language of ports the new process, they will realizestrategy framework. This step can be top executives is results. It is critical its importance and follow it.a stumbling block, but isn’t the most to determine what results your ex-common area where organizations fall ecutives will be judged upon and only Why Should They Care?down. Assuming executive buy-in is in communicate about activities that Ask any executive if they’re in favor ofplace and the organization’s strategy impact those results. If you can’t find a good project portfolio governance, andis well defined, that part is a piece of way to tie your initiatives to results, it’s you’re most likely to get an enthusi-cake. The difficult part is the link the time to evaluate whether they’re worth astic “of course!” When you get intoportfolio manager must forge between spending your time on at all, let alone actually making the investment inthat portfolio perspective and the proj- briefing the executive team on them! terms of time and money, however, theect or program level information that answers get a little tougher. Good gov-may or may not be in a state to bring Building a step into your project initia- ernance is hard to oppose, but easilyinto the discussion. tion process that determines what killed by lack of decision to implement results will impact the organization at or lack of appropriate investment.While most organizations have pock- the highest level and getting executiveets of disciplined project and program buy-in on those results will smooth It is essential, therefore, to make amanagement, it’s common to find many activities further down the line. solid case for the value of creating athose practices applied sporadically This goes deeper than just “strategic full governance process that spans theacross organizational stovepipes—or plan” goals. How are your executives distance between good project man-not being employed at all in some compensated? What measures are agement and good corporate strategy.areas. Without this critical data about they rewarded for? Is there a way that IT analysts have made an excellentthe scope, health, and progress of your initiatives will impact those? If so, case for implementing portfolio man-initiatives, portfolio management can you’re nearly guaranteed to get their agement—the glue holding the gover-only go so far. attention and participation in the gover- nance structure together. According nance process. to Gartner, Inc.’s field research among more than 200 commercial firms in
various enterprises, there is a connec- Conclusiontion between IT investment planning Good governance creates connectionsand the relative profit performance of a between all levels of the organiza-company (Light, Rosser, and Hayward, tion—the company’s strategy, driven by2005), while industry analyst Al Pas- senior executives; the project portfoliosori finds that: serving line-of-business executives; and the project and program manag-“…CIOs who have already implemented ers working to get results from specificone or more full cycles of [portfolio initiatives on a day-to-day basis. Butmanagement] have significantly im- governance is only as good as its levelproved their organizations’ return on IT of support.investment, with some enterprises ableto reduce costs 30%+, while improv- To ensure that your efforts at creat-ing effectiveness with enterprise wide ing the right governance structure areasset deployment and management. valued and have an impact on theLine-of-business (LOB) executives state organization, you have to bring all ofthey now have information never seen your skills to bear by putting the rightpreviously, greatly enhancing their process in place, getting the rightunderstanding of IT investment impacts people engaged, and marketing it to alland improving decision quality.” (Pas- stakeholders. Only by employing all ofsori, 2004) these tactics will you be able to show the kind of bottom-line improvementsThe combination of cost savings and in terms of profits and results that willbetter profit performance should move make your organization successful.executives toward action. ReferencesSeveral Robbins-Gioia research studies A Guide to The Project Managementhave also uncovered the benefits of Body of Knowledge [electronic versionportfolio management to organizations’ 1.3], (2000) Newtown Square, PA:performance. In a 2004 survey, execu- The Project Management Institute.tives reported that 80 percent of those Ciliberti, Rachel. (2005) Using Projectorganizations that were either profit- Portfolio Management to Improveable or very profitable have a process Business Value. Posted on http://in place to align projects and initiatives www-106.ibm.com/developerworks/to strategy. And in another 2004 study rational/library/apr05/ciliberti/index.among project and program manage- html April 27, 2005.ment professionals, Robbins-Gioia Light, Matt, Bill Rosser, and Simon Hay-found that those organizations with ward. (2005) Realizing the Benefitsestablished governance processes, of Project and Portfolio Management.practices, and accountability activities Gartner Group Research Note. Janu-show the least redundancy in projects ary 4, 2005.and initiatives (something that cer- Passori, Al. (2004) Project Manage-tainly drives higher profit). In fact, of ment Essentials: IT’s About Gover-those organizations with less than 10 nance. Meta Group Research Note.percent redundancy in projects and June 2, 2004.initiatives, nearly 75 percent indicate Pastore, Richard. (2002) Governancean established commitment to gov- Blues. CIO. February 15, 2002.ernance practices, processes, and Solomon, Melissa. (2002) Projectaccountability activities. Portfolio Management: Quickstudy. Computerworld. March 18, 2002.Lack of redundancy in projects and Turner, Mark. (2005) The Future of theinitiatives, along with a focus on IT Organization. Computerweekly.com.results, will ensure that the initiatives February 18, 2005.undertaken are those that have the Viviers, Paul. (2004) Requirements formost benefit for the organization as successful enterprise portfolio man-a whole, and will drive better results agement. ITWeb. October 7, 2004.at the highest level. This is the casethat must be made to executives andwill improve the level of support fromsenior executives.