Friday, September 21, 2007

The common misunderstanding of Project & Portfolio Management

Project and Portfolio Management (PPM) is often misunderstood to be simply a method of managing multiple projects. This misses out on the key benefit of PPM which is to do with aligning projects with the strategic goals and direction of the organisation. To assign the PPM function to the Project Management Office (PMO) is to severely limit the advantages that can be achieved from it.

The core mistake is to think that PPM is fundamentally the management of multiple projects. This definitely is not so. PPM is the management of the project portfolio so as to maximise the contribution of projects to the overall welfare and success of the enterprise.

PPM effectively bridges the gap that exists between the PMO and other business operations. It is about bringing projects into harmony with the strategies, resources and executive oversight of the organisation and it provides the structure and processes for project portfolio governance. It is not so much about doing projects right as it is about doing the right projects right. Projects that are out of line with the organisation’s strategic goals or that have excessive risk can waste precious resources and time.

The ability of managers and employees to stay strategic, i.e. focus is on advancing the organisation’s strategic goals, is vital for an organisation if it is to move forward as a single unit. If projects don’t advance those strategic goals (directly or indirectly) then they waste resources and energy. We can call such non-strategic projects ‘distracting projects’ because they misdirect parts of the organisation’s intent as defined at senior management level in the form of strategic goals. Distracting projects can be thought of as projects that negatively impact on the overall aerodynamics of the portfolio. They hinder the portfolio’s ability to move the company forward in the direction set out by senior management.

The earlier that an organisation can weed out ‘distracting projects’ the better. In fact, not starting ‘distracting’ projects at all is the ideal!

As an example of a company that successfully weeded out distracting projects consider the following the merger between HP and Compaq. During the first 90 days of the merger the global project management office stopped over 100 projects or programmes that were not aligned with the emerging strategy or made poor use of resources. This is a rather extreme example but one year after the merger they had achieved over $3 billion in savings. In a later blog article I will examine this merger in greater detail and look at the way HP implemented PPM throughout the organisation.

The integration of projects and other business activities cannot be achieved without good communication structures. Key information must be shared. Management needs to be able to clearly communicate what the strategic goals of the organisation are and the PMO needs to be able to provide visibility on how those goals are being pursued (directly or indirectly). What often happens is that both groups (management and the PMO) are off in their own worlds, working to do the best that they can pursuing their own objectives. What a waste!

PPM sets out to bridge the gap between these groups by providing two way communication. One of the best ways of describing what PPM is about is to say that it provides insight.

Management get insight into what is happening throughout the organisation in the pursuit of its strategic goals. The rest of the organisation gets insight into what direction management wants it to be moving in.

It has been said that PPM is largely about process, people and technology. The technology is vital to allow the communication to take place and provide good visibility into what is happening in the PMO. Serena Mariner provides portfolio, project, resource, demand and financial management for complete Project and Portfolio Management. Unlike other products whose bottom-up approach is difficult to implement, Mariner offers an approach that ensures rapid results and on-going incremental value. With packaged integrations to Serena ALM applications, Mariner provides complete visibility into the entire application lifecycle—from initial idea to application retirement.

For more information click on the link below or contact us to request a visit so that we can discuss the Mariner solution with you.