Ppm wp-10 critical


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10 Critical Steps
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Portfolio Management

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Ppm wp-10 critical

  1. 1. 10 CritiCal StepSfor SucceSSful Project WhitePaperPortfolio ManageMentRight now, across all sectors of the economy, projects fail to meet basic design or businessorganizations are grappling with diminished growth objectives. This is usually due to cost overrunsrates, tighter budgets, and intense pressure to and overestimation of project benefits—basicmanage their investment dollars more effectively. program management issues. In order to effec-In this atmosphere of increasing regulatory require- tively implement Project Portfolio Management,ments and corporate accountability, organizations an organization needs to come to grips withstruggle to make the best decisions at the right its basic program management infrastructure,time every day. However, this can be daunting. instilling discipline into the organization andBest practice organizations are implementing forcing the control of program costs, resourcesProject Portfolio Management to make better and and scope.more informed decisions on a recurring basis. B uilDs c onsensusProject Portfolio Management provides a dynamicdecision-making process for assessing value, Besides introducing program management dis-prioritizing projects, and allocating resources to cipline across the enterprise, Project Portfoliomeet key organizational objectives across the Management helps build consensus in an orga-enterprise. The end result is the ability to select nization. In many organizations, decision-mak-the best mix of projects that maximizes returns ing is not an easy task for senior management.and minimizes risks for your organization. The management team usually lacks the data, tools and processes needed to facilitate theW hy P roject Por tfolio M anageMent ? discussion and resolution of difficult decisions.The benefits of Project Portfolio Management A standardized and strategic process will helpare becoming more apparent in this age of individuals throughout the organization under-smart investment and strategic decision-mak- stand how and why certain decisions are beinging. “Portfolio Management elevates information made—and will also ferret out “pet projects”technology discussion to business terms. In the that do not contribute to the organization’send, there are business projects and very few, strategic objectives.if any, IT projects.” according to Doug Lynn ofMETA Group. Project Portfolio Management instills a DDs to the B ottoM l ineprogram management discipline into your organi- The days of un-scrutinized, liberal corporatezation while helping build consensus for difficult and government spending are over. Today’sdecisions. However, the greatest value of thisprocess is improving your bottom line through theelimination of draining projects that do not contrib-ute to the health of your enterprise. “Portfolio Management elevates information technologyi nstills P rograM M anageMentD isciPline discussion to business terms. In the end, there are businessOrganizations have been losing money on failedprojects for years. According to Firoz Dosani, VP projects and very few, if any, ITof Mercer Management, “When the true costs are projects.”added up, as many as 80% of technology projects Doug Lynn, META Groupactually cost more money than they return.” Inaddition, Gartner Group reports that over 60% of IT Solution used:
  2. 2. environment of accountability and governancewill not allow continued IT spending with few pros-pects of measurable benefit or return. Project The application of Project Portfolio Management can bePortfolio Management techniques save money byensuring those projects that get funded also get daunting –but not impossible. There are ten critical successresults. Gartner Group reports that organizationsutilizing a strategic project prioritization process factors that will help your organization derive the most valuewill more effectively address business needs andreduce failed projects by 25% in 2003, thereby from this strategic management process.improving the bottom line. A survey by CIOMagazine discovered that companies achievingProject Portfolio Management excellence wereexperiencing a 19% higher revenue growth rate needs to understand how decisions impact for ongoing operational decisions. Dougthan those having an informal approach to man- the enterprise. The data collected during Lynn attests that Portfolio Management isaging multiple projects across the organization. the Project Portfolio Management process proving to be “the most compelling IT valueIn short, effective Project Portfolio Management enables senior management to be more communication tool.” Clear communicationyields results. effective because they are able to make of strategic objectives helps define the fact-based decisions. Data-driven decisions expected outcomes and answers. What willc ritical s uccess factors empower senior management with their strategy drive you to do? What changes doThe application of Project Portfolio Management stakeholders – governance boards or share- you want within your organization? Answerscan be daunting—but not impossible. Ten critical holders. If decisions are not made accord- to these questions will drive new initiativessuccess factors will help your organization derive ing to data, they are vulnerable to questions that align with the strategy.the most value from this strategic management and review by outsiders. However, seniorprocess. These factors all contribute to the effec- management need not be a slave to the 3. s trategically aligneD investMent selectiontive selection, control and evaluation of projects data. The data may indicate that goals areunder a Portfolio Management doctrine. not properly aligned or balanced. Wherever Whereas the communication of strategic the data point, it is still up to senior man- objectives builds an operating framework,1. s enior M anageMent c oMMitMent & agement to analyze and interpret according the alignment of investment selection puts c onsensus to their knowledge of the company and the framework to use. Every decision in the Senior management’s commitment to the industry. This is the true value of senior organization needs to be measured against Project Portfolio Management process is management’s participation in the Project the stated strategy. Alignment will occur paramount to success. Because the Project Portfolio Management process. naturally as new initiatives are evaluated Portfolio Management process introduces a within the strategic context. For example, strategic decision-making approach, it must 2. c oMMunication of s trategic if an organization standardizes on Sybase, o Bjectives start at the top in order to extend through- an informed manager will not approve the out the organization. Leaders must under- Communication is at the heart of success- purchase of non-Sybase applications. Or, stand the entire process and commit to ful Project Portfolio Management. Strategic overtime will be closely scrutinized in an decision-making based upon that process. objectives must be defined and communi- organization trying to streamline costs. In As this decision-making process is pushed cated so that everyone across the organiza- effect, strategy determines investments and down to the lower levels of an organization, tion understands the corporate goals and actions across the organization. Strategy- it begins to change the culture and impact decision-making process. Understanding friendly projects will gain easy approval the way of doing business. Without senior the strategy at all levels of the organization and those that are not aligned will receive management commitment and consensus, is essential because even simple and seem- increased scrutiny—either of the project the process will not work. Actions, such ingly non-strategic decisions are affected. or (in rare cases where the project is espe- as data collection, that contribute to the For example, the decision to purchase an cially compelling) of the strategy. success of Project Portfolio Management Oracle-based database competes with the will not be enacted if not required by senior organizational strategy to standardize on 4. i nstitutionalizeD investMent Manage - Ment Process management. Sybase. Or, the implementation of an over- time-heavy work week competes with the Organizational cultures determine who Another critical argument for senior man- organizational strategy to streamline costs. makes decisions and how they make them. agement‘s commitment is their over-arching However, this informal authority channel is knowledge of the organization—where it is Managers at all levels of the organization not always easily understood or navigated going and how it works. This group of people need to use strategic objectives as a guide within an enterprise. An institutionalized
  3. 3. investment process calls for the formation ciple provides visibility into the health of changes, investments need to be re-priori- of a management review board whose pri- ongoing projects and the potential impact tized. A review board allows the organization mary purpose is to streamline the strategic of planned projects—and ensures that all to institute change as external and internal decision-making process. Better IT invest- projects are evaluated in the same man- factors change. ment decisions begin with a good model. ner. Without this enterprise-wide visibility, managers are hindered in their ability to 9. e ffective Bal ance of investMents Strong leaders who delegate decisions to make necessary decisions. For example, a Once the Project Portfolio Management their staff or other parties force the organi- healthy project may need to be shut down process has been established, senior man- zation to operate on its own. An institution- or delayed because it is utilizing resources agement must ensure that the organization alized management process is a sophisti- that are required for a more strategic project has an effective balance of investments. cated way in which an organization learns that affects organizational viability. The key Projects should no longer be assessed and refines itself through constant evalua- concept is the requirement that all projects according to their bottom-line financial tion of strategic investments. be monitored. Milestones and costs need to impact. Each project needs to be evaluated be consistently reviewed and controlled to according to its health, cost and strategic5. g overnance fraMe Work aligneD ensure the organization is getting value out contribution to the organization over the With enterPrise Decision - Making of its investments. short and long term. The ability to determine The investment process evolves into a the appropriate balance is specific to each governance framework whereby all strate- 7. c onsistent risk & PerforMance organization and is made by the review Me asureMent gic decisions throughout the organization board. A technology start-up has different are made in the same manner. Each level Building upon the implementation of an inte- requirements than an established retail within the organization will have its own grated program/project management dis- clothing manufacturer. A start-up will need threshold that limits its authority (such as cipline, an organization needs to measure more projects that demonstrate short term budget approval, resource commitments, the risk and performance of projects across return whereas an established company is and the ability to impact other business the enterprise. As a project progresses and more likely able to tolerate more high risk, units within the organization). A common more money is invested, an organization long term investments. governance framework ensures that deci- learns more about its overall risk. As risk sions are made the same way up and down changes, the project’s potential return may The data from Project Portfolio Management the organization and that there is an appro- change. Throughout the project life cycle, can determine how investments should be priate mix of people making decisions. For risks should be mitigated and avoided. If, made throughout the enterprise. Are there example, the marketing department makes for example, a high risk project remains enough short term, low risk projects that decisions regarding marketing activities; high risk, and its probability of return is not promote organizational viability? Are there the Comptroller makes decisions regarding compelling, the project may need to be can- long-term, high risk projects that foster orga- daily financial management; and, Human celled. This data needs to be constantly fed nizational innovation? Are projects spread Resources makes decisions for how to back into the evaluation process to ensure across the organization? It is important administer employee benefits. the project continues to fall within strate- for senior management to balance today’s gic guidelines. The goal is to monitor and needs against the future requirements. A governance framework naturally follows mitigate risks in order to validate continued from the implementation of an institution- financial and resource investment. alized investment management process. Whereas the investment management pro- 8. P ortfolio re vie Ws to suPPort cess is formally created and organized, the investMent Priorit y re alignMent All organizations can benefit governance framework will evolve within the A formal review board needs to be estab- existing operating culture. lished to review all enterprise projects—IT from the adoption of basic and non-IT, strategic and non-strategic. This6. i ntegrateD PrograM /Project Manage - review board should be composed of senior program/project management Ment DisciPline leaders and strategic line managers who All organizations can benefit from the adop- meet on a regular basis to evaluate major discipline to constantly tion of basic program/project management investments and their strategic role in the discipline to constantly evaluate project ongoing success of the organization. The evaluate project health, such health, such as cost and schedule. However, role of this group is to re-align projects as as cost and schedule. the implementation of an integrated disci- priorities change. These boards are the real- pline takes the basic project management ization of a governance framework. As the skills one step further. This operating prin- environment (technology, market, culture)
  4. 4. 10. s trategic focus – transforMing strategy into oPerational excellence Portfolio Management. In fact, there are probably veryHeadquarters few organizations that have the ability to adhere to all ten11 Canal Center Plaza The business impact of Portfolio Management is factors. But this does not mean that the process will fail.Alexandria, VA 22314 measurable. “Good Project Portfolio Management Project Portfolio Management can still be achieved as longt: 800.663.7138f: 703.684.5189 process discipline will ensure repeatable, quality as senior management commits to the process. decision-making” according to Lynn. Effective Project Portfolio Management needs to be a living process Portfolio Management is the key to an integrated manage-Anniston, AL608 Noble Street within an organization. This process requires the ment process. It serves as a “holistic effort that includesAnniston, AL 36201 formal and informal culture to be committed to orga- tools, techniques, and discipline to improve IT/business256.235.2827 nizational goals and objectives. This commitment will investment decisions,” according to Lynn. When imple-Charlotte breed a strategic focus within daily operations. The mented correctly, Project Portfolio Management infuses301 South College Street culmination of Project Portfolio Management is the strategy in the organization, focuses resources on theSuite 3710Charlotte, NC 28202 ability to infuse strategy into all investment decisions most important projects, and ensures that the right things704.714.6200 across the enterprise. get done.Dayton value of c ritical s uccess factors1360 Technology CourtSuite 200 Does your organization have to implement all ten of theseBeavercreek, OH 45430 factors? No, but the more success factors that your orga-937.426.8081 nization adopts, the more value your organization will reapDetroit from Project26555 Evergreen RoadSuite 1115Southfield, MI 48076248.359.7800Sacramento400 Capitol MallSuite 900 S e l e c te d P a s t &Sacramento, CA 95814 c ur r e nt c li e nt s916.449.3967 CommerCial Civil aGenCieS State and loCalWarner Robins, GA aol administrative office of Government1100 Park DriveWarner Robbins, GA 31088 american red cross the u.S. courts new York city Police478.329.0009 at&t Department of agriculture State of california avaya Department of commerce State of Maryland aXa financial Department of Homeland Security State of MichiganOttawa Bank of america customs & Border Protection180 Elgin Street colonial Bank federal emergency inte rnationalSuite 900 Daimlerchrysler Management agency agriculture canadaOttawa, Ontario Delphi Secure Border initiative British Ministry of DefenceCanada K2P-2K3 eDS transportation Security canadian Department of613.236.3773 fannie Mae administration national Defence fifth third Bank Department of interior canadian Blood Services ford Motor company Department of justice fugen Department of transportation general Motors Department of Veterans’ affairs Hewlett-Packard environmental Protection agency johnson & johnson executive office of the President landmark, a subsidiary of Halliburton national aeronautics andwww.robbinsgioia.com lockheed Martin Space administrationinfo@robbinsgioia.com lucent technologies 800.663.7138 Merrill lynch defenSe aGenCieS Pricewaterhousecoopers Department of Defense Public Service electric & gas u.S. air force Qwest u.S. army ©2006 Robbins-Gioia, LLC ® All rights reserved regions Bank u.S. Marine corps united airlines u.S. navy 02-14w022103_10steps Verizon office of the Secretary of Defense Wachovia Defense logistics agency Wells fargo