Feature

Closing the Governance Gap With Project Portfolio Management (PPM)

Having problems allocating project resources? PPM measures available resources, such as time and money, against all the proposed projects and applies a consistent methodology to align them with the goals of the business.

June 16, 2008 — CIO — Trying to run an IT project without knowing your resources is like trying to buy a car without knowing how much money you've got. Unfortunately a lot of companies still try to do just that, but project portfolio management (PPM) can help.

Jerry Hodge, senior director of information services at appliance maker Hamilton Beach Brands, located in Glen Allen, Va., thought his small IT department had about 20 projects. It turned out the company had 60 of them. Shawn Johnson, assistant director of project portfolios at Principal Financial Group, a Fortune 500 financial services company, recounts the story of three project managers showing up at a planning meeting with project plans that all called for 100 percent of the same resource in the same time period. And of course the most common result is projects that are doomed from the beginning because no one realizes there aren't enough resources available.

Enter PPM. In effect, it is meta-project management; it's about managing the process of project management and aligning it with business goals. The aim of PPM is to measure available resources, such as time and money, against all the proposed projects and apply a consistent methodology to align them with the goals of the business.

"Project Portfolio Management lets you look at all the competing investment opportunities and determine which will have the greatest impact on strategic objectives," says Lewis Cardin, a senior analyst who follows PPM for Forrester Research in Cambridge, Mass. "As far as business executives are concerned you're getting them where they live because they're being measured on those objectives."

This isn't easy and it isn't pain-free, but it is increasingly important. Cardin points out that almost 20 percent of current IT budgets are going into project development. Meanwhile, only about 30 percent of companies have implemented project portfolio management, although 70 percent or so say they have project management offices to oversee projects.

"The adoption rate by business is pretty phenomenal," Cardin says. "We look at the key players and they're doing 25 or 30 or 80 percent growth in customer numbers and licenses sold."

Currently, there are more than a dozen major vendors of project portfolio management. In recent years IT players like IBM, HP and Oracle have made acquisitions to add PPM to their own offerings. Meanwhile, project management companies such as Primavera and Planview have strengthened their PPM offerings. In addition to companies selling software, vendors such as Innotas are offering PPM on the software-as-a-service (SaaS) model.

Three Legs of PPM

Although PPM involves sophisticated software, it is not about software. The software is only part of it and the other parts are, if anything, more important.

"There are three legs to the triangle: people, process and tools," says Hodge, who uses Innotas On-Demand PPM, an SaaS product for his 30-person IT group.

The place to start is business processes. "Without a defined process, you're going to struggle," predicts Principal Financial Group's Johnson, whose company uses Primavera's PPM tools to manage about 1,000 project management users and another 5,700 workers who use Primavera time sheets as part of their project responsibilities.

Cardin puts it more strongly. He says that Forrester has found that one of the most common reasons for failure in PPM is in trying to establish PPM before the business processes are in place.

"You have to understand business process and the business problem," agrees Tony Velleca, the CIO of UST Global, a Viejo, Calif., IT and business processing services company. UST Global uses Innotas for about 5,000 users working on more than 600 projects. Velleca notes that this process focus has to follow through to training as well. "Our first set of training was probably too technically oriented. Changing the context of the way PPM was presented helped us quite a bit."