Today’s business organizations are increasingly using software development and IT to capture and apply knowledge that is unique to their business in order to drive innovation and make better use of limited resources. This reliance on IT to support new business initiatives is a major aspect of on-demand computing, business environment in which companies respond with flexibility and speed to any customer demand, market opportunity, or external threat. Realizing this capability, however, has its challenges, including:
- Lack of understanding among business managers about how IT can help achieve corporate goals; many regard IT as a necessary evil.
- In some organizations that recognize the importance of investing in IT to achieve corporate goals, IT projects often do not deliver enough value because they fail to align themselves with business objectives.
- Some IT organizations launch more projects than they can handle effectively; and they neglect to set project priorities based on business objectives.
- IT decision makers in many organizations do not know how to analyze needs and focus resources on projects that would lead to better efficiency and cost savings.
What is Project Portfolio Management (PPM)?
PPM is a strategy that allows organizations to align their IT and application development projects, resources, and initiatives to corporate business objectives by developing and monitoring measures that treat IT assets as financial assets and to run as a project-oriented business. PPM enables integrated management of pipeline, scope, time, resource, skills, cost, procurement, communication, reporting and forecasting and risk management functions.
In essence, PPM allows to manage a portfolio of projects much as one would manage a portfolio of diverse investments, such as stocks, bonds, real estate and so forth. By maintaining a balanced portfolio, one can reduce the risks of individual projects and produce an overall higher rate of return. PPM allows executives and managers to proactively monitor their project portfolios for alignment with business objectives and planned costs and schedules. It also allows them to identify project risks and quickly address them.
Business Drivers for PPM
Why do businesses need a PPM strategy? Let’s look at some of the reasons:
- Limited IT Budgets and Resources: Most organizations need to improve the way they use their existing resources in order to maximize productivity. This applies to both people and tools.
- Need for Better IT Governance and Data for Compliance with Sarbanes Oxley Act (1): Many IT organizations lack a consistent, accountable body for decision making. PPM provides a decision-making framework that helps ensure IT decisions are aligned with the overall business strategy; IT participates in setting business goals and directions, establishing standards and prioritizing investments.
- Need to Improve Project Success Rate: According to the latest Standish Group survey, executive support and clear business objectives are among the top ten (10) success factors for application development projects. PPM includes approaches for achieving both of these requirements.
List of the Specific Challenges by Management Role that PPM Addresses
Key Benefits of PPM
As with any new strategy, introducing PPM into an organization requires an investment of time and effort. However, this investment yields proven benefits:
- Closer Alignment of IT with Business: With an easily digestible, holistic view of their entire project portfolio, executives and managers can more readily understand where IT dollars are being spent and which projects continue to be worthwhile.
- Better IT Governance: PPM helps managers to monitor project progress in real time and provides detailed data to help satisfy Sarbanes Oxley Act compliance specifications.
- Cost Reductions and Productivity Increases: PPM helps managers identify redundancies and allocate resources appropriately; it enables them to make better IT staffing and outsourcing decisions and to spot opportunities for asset reuse.
- Business-Based Decision Making: By viewing projects as they would view components of an investment portfolio, managers can make decisions based not only on projected costs, but also on anticipated risks and returns in relation to other projects/initiatives. This leads to improvements in customer service and greater client loyalty.
- More Predictable Project Outcomes: A PPM strategy bridges the gap between business managers and the practitioners who deliver the projects; it ensures consistent processes across projects and helps managers assess project status in real-time, predict project outcomes and identify inter-project dependencies.
Aspects of IT Management
The PPM strategy addresses four main aspects of IT management associated with specific activities and functions.
The PPM Solution Framework
Governance relates to the most important questions for software development and IT managers: “Are we working on the right things and are we building the right system?” If their teams don’t get this right, nothing else matters. A project might be successful from a schedule, budget or scope perspective, but if it fails to meet business objectives, it fails overall. Efforts to align business and IT objectives are often thwarted by governance issues, such as:
- Project teams use different vocabularies.
- Team members do not understand the business objectives.
- Projects are not prioritized by Return on Investment (RoI) potential.
- Software requirements are not traceable to business objectives.
To address these common causes of failure, a PPM strategy provides support for governance, including:
- Method Management: A consistent, repeatable process, providing the means for establishing a common vocabulary, instituting a framework for assessing project health and prioritizing initiatives.
- Idea/Innovation Management: Support for considering IT project requests in relation to other prospective and current projects (Project Pipeline Management).
- Portfolio Management: Ways to align and prioritize proposed initiatives and projects.
Functionality that enables planning under a PPM strategy includes:
- Program Management: A holistic view of multiple projects and their inter-dependencies.
- Project Management: Support for planning and tracking schedules, establishing milestones and assigning tasks for individual projects, identifying project dependencies, completing Gantt Charts and other reporting artifacts.
- Resource Management: Ways to plan, balance and schedule resources for IT initiatives.
- Time Management: Means to allocate, track and compare time spent on project activities.
- Financial Management: Help with establishing and managing IT budgets; means for capturing expenses and obtaining approvals.
To ensure that developers build systems correctly, a PPM strategy includes functionality for:
- Business Process Modeling: Support for managers to discover, document and specify current business processes with metrics, specify new goals and requirements.
- Requirements Analysis: Means to analyze financials and prioritize projects according to potential business value, define and prioritize requirements, identify/prepare existing assets for reuse.
- Design and Construction: Functionality for rapid integration and/or application development, visual construction and programmatic code generation, unit testing and debugging.
- Testing and Deployment: Support for functional and load testing and for managing testing requirements.
- Change Management: Configuration management and change management support to deploy and monitor the solution.
To verify a system’s effectiveness, a PPM approach includes functionality for:
- Maintenance and Productivity Monitoring: Support for testing and measuring system performance.
- Business Metrics Collection: Means for collecting and analyzing post-deployment business results. PPM also helps you track metrics for component reuse.
- Setup and Monitoring of Service Level Agreements (SLA): Setup for specific IT service levels and metrics collection for response time, service availability and other parameters.
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Mohammad Abdul Khadeer
CGEIT, PMP, CISA, CQA, CSTE, CMMi
Manager – IT Trainings
Engineering Science Institute for Training (Esi)