Is PPM a costly overhead or competitive advantage?

Companies invest heavily in projects and they do so for one compelling reason: their ability to compete might depend on it.

However, their ability to execute these loftier ambitions is sometimes hindered by poorly functioning, costly and process heavy project portfolio management (PPM) environments.

Take this example. In a dramatic, high-level shake-up, the newly appointed CIO of a global client used an organisational restructure to announce the removal of the incumbent IT project management office (PMO).

This was due to its ‘failure to demonstrate value’ relative to the investment cost; a bold move given how much money the client had spent over ten years developing PPM capability across the organisation.

Over the next year, many companies will be scrutinising their project environments and PMOs wondering if they can shift from metrics and administration to delivering competitive advantage, strategic contribution or organisational value.

Companies are starting to demand that PMOs and PPM environments demonstrate value for money and actually deliver it. If not, they’ll be scrapped and the critical core organisational capability of PPM lost. The impressive amount of investment that’s been poured into them in the past two decades will also vanish.

Leading companies are exploring several big changes to adapt their project environments to the brave new world of PPM and PMOs delivering value.

Here are my key predictions for the next year:

  • An immutable performance-management regime will be demanded. The discipline of PPM and PMOs must not only measure the value they purport to demonstrate, but deliver it.
  • The old obsession with compliance, reporting and metrics will be gone. Administrative or policing PMOs that can’t demonstrate their contribution to organisational value, and draw a direct line to competitive advantage, will be scrapped.
  • The long-standing disconnect between project investment, execution and value (benefit) realisation is now intolerable for many — enough so to drive them to action.
  • The increased need for projects and programs to respond to market changes will drive more sophistication and discipline in governance frameworks. Dysfunctional project steering committees will no longer be tolerated and project investment and execution failures no longer allowed. Sponsors will be held increasingly accountable.
  • PPM (software) application implementations that take months to years and cost millions of consulting dollars and teams of organisational change agents are at an end.
  • Executives who have been in some cases slow to adopt PPM as a critical organisational discipline will realise that investing in corporate strategy is unachievable without a value-focussed PMO and highly functional and sophisticated PPM.
  • Clients will expect PPM consultants to come with methodologies and tools to not only optimise the cost of the engagement but guarantee a successful outcome.
  • ‘Generalist’ consultants without profound and specialist PPM expertise and IP, and who take a long-winded, process engineering approach rather than rapidly deploying known and well understood solutions, will no longer be engaged.
  • Gartner has long maintained that there is a correlation between PPM ability and project investment and execution outcomes.

    Our experience in Australia shows that only a fraction (maybe 5 per cent) report being fully mature in their PPM processes. Gartner also states that companies with high PPM capability report a return on investment on their PPM investment of 25 per cent more, three times greater than those with low capability.

    For two decades, organisations have attempted to select, execute and realise value from project investment by utilising PPM’s core disciplines of prioritising, optimising and governing capital and project resources, mostly with varying success.

    In that time, we’ve seen some pretty woeful PPM implementations – really awful, expensive, turgid, overly-engineered, bloated messes that hamper the project investment and execution effort and waste huge amounts of money.

    To reap the full benefit of PPM and PMOs, organisations need to transform their project structures, processes and cultures: they must embrace PPM as a critical and core organisational capability whilst demanding more of PPM as a reliable source of competitive advantage.

    They need to shift the interaction patterns within the business, IT and the PMO and culturally remap the PPM environment away from compliance and towards value.

    This involves shifting the way they adopt and integrate PPM assign scarce resources to project work. Importantly, they must also demand more of PPM consultants and the IP and experience they bring.

    Ultimately, the power of PPM and PMOs hinge on the full and enthusiastic participation of executives who are not afraid to champion the control and discipline required of the sophistication of PPM.

    Creating these conditions will be far more challenging than implementing the processes, business rules, frameworks and methodology themselves.

    Corinne Forrest is head of PPM strategy at PPM Global Consulting.

    Copyright © 2013 IDG Communications, Inc.

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