Portfolio ManagementPortfolio ManagementWhat’s it all about?What’s it all about?

Rich MurphyRich MurphyFounding PartnerFounding PartnerEPK Group LLCEPK Group LLCrichmurphy@epkgroup.comrichmurphy@epkgroup.com

What is Portfolio Management? Why it’s important Facts and history Some Tips

Project management is the process of planning, measuring, and taking corrective action to complete a specific project on time and within budget

A Program is a project or a collection of related projects which facilitate the realization of Strategic Business Objectives.

Portfolio Management is the process of aligning investments with corporate business needs and the analysis and proper mitigation of investment risks

Portfolio management is about “doing the right things” andPortfolio management is about “doing the right things” andmaking best use of your resources. Resource management ismaking best use of your resources. Resource management is

thethe critical success factor critical success factor for effective portfolio managementfor effective portfolio management

…is a process …something we do, to answer these questions like:

• Which projects best support the corporate strategy? Which projects best support the corporate strategy?

• How is the resource plan impacted when a new project is added How is the resource plan impacted when a new project is added to the portfolio?to the portfolio?

• Which programs, projects, and infrastructure support effortsWhich programs, projects, and infrastructure support effortsare currently behind schedule, over budget , are currently behind schedule, over budget , andand why? why?

• Do we have enough of the right people to successfully take Do we have enough of the right people to successfully take on a key initiative?on a key initiative?

• Where should the resources from a project nearing completion Where should the resources from a project nearing completion best be allocated?best be allocated?

• What project should be the next to start?What project should be the next to start?

“Strategic/Optimization” PPM• Project Portfolio Server

“Tactical” Portfolio Management• NIKU, PlanView, Primavera, Compuware• EPK-Suite (budgeting/cost, stage-gates,scenario modeling,

project initiation) Project Management

• Microsoft Project and EPM Collaboration/workforce management

• SharePoint• Project Server• EPK-Suite resource management

04/21/2304/21/23

StrategicPortfolio

Management

TacticalPortfolio Management

Approval and review of ALL effortsBudgeting and Cost Management

Resource Planning and Management,

Workforce Management and Execution

Timesheet completion, status reporting,Identification of risks, issues, change control, support help desk

Support and OperationalSupport and Operational efforts, simple projectsefforts, simple projects

Complex projectsComplex projects

Project ManagementProject Management

FunctionFunctionAudienceAudience

CXOs,CXOs,Governance BoardGovernance Board

Line Management,Line Management,PMOPMO

Project ManagersProject Managers

Team MembersTeam Members

71% of all IT projects fail, come in over 71% of all IT projects fail, come in over budget or run past the original deadline. budget or run past the original deadline. Every year, $75 billion is spent on Every year, $75 billion is spent on failedfailed

IT projects in the U.S.IT projects in the U.S.

Source: The Standish GroupSource: The Standish Group

How are we doing?How are we doing?

74 % of IT effort goes to operations/support74 % of IT effort goes to operations/support26% to “projects” 26% to “projects” (but of that only ¼ are “strategic”, (but of that only ¼ are “strategic”,

meaning they affect the bottom line)meaning they affect the bottom line)

More than 50% of all projects fail to meet budget, deliverables or delivery dates

Project failure is down to 15% - but time overruns have doubled.

Less than half of completed projects meet business expectations one year after implementation

Heroics is prevalent – more than we’d like to admit

Source: PM SolutionsSource: PM Solutions

88.988.9

6.36.3 3.23.2 0.80.8 0.80.800

2020404060608080

100100

Level 1Level 1 Level 2Level 2 Level 3Level 3 Level 4Level 4 Level 5Level 5

Organizational PM MaturityOrganizational PM Maturity

“We’re developing enterprise PM processes, but we’re not seeing real improvements outside of some individual projects”

IssuesIssues This This YearYear

Last Last YearYear

Changing Organizational Changing Organizational PrioritiesPriorities

50%50% 43%43%

Change ManagementChange Management 40%40% 35%35%Risk Assessment and Risk Assessment and ManagementManagement

36%36% 37%37%

Alignment between project Alignment between project and organizational goalsand organizational goals

21%21% 20%20%

Project Mangement Skill LevelProject Mangement Skill Level 33%33% 34%34%Scope ClarityScope Clarity 49%49% 50%50%Source: BIA and Giga Information GroupSource: BIA and Giga Information Group

There have been slight improvements in PM practices Many still aren’t buying into the concept of

organizational project management Result is that reactive behaviors stemming from habit

and external pressures tend to preside over proactive ones.

Personal and political preferences decide priorities more than alignment with business goals

C

olla

bor

atio

n

Co

llab

ora

tion

People, Process & TechnologyPeople, Process & Technology

ProjectMgmt.

ProjectMgmt.

Consistent, Repeatable Delivery

ProgramMgmt.

ProgramMgmt.

Program & Project Dependencies

Integrated Delivery

Portfolio Mgmt.

Portfolio Mgmt.

Investment & Prioritization Decisions

Alignment with Objectives

Stage 1Creating

Investment Awareness

Stage 2Building the InvestmentFoundation

Stage 3Developinga Complete

Investment Portfolio

Critical ProcessesCritical Processes

Investment Process Benchmarking Investment Process Benchmarking IT-Driven Strategic Business ChangeIT-Driven Strategic Business Change

Post –Implementation Reviews and FeedbackPost –Implementation Reviews and Feedback Portfolio Performance Evaluation and Improvement Portfolio Performance Evaluation and Improvement Systems and Technology Succession ManagementSystems and Technology Succession Management

Authority Alignment of IT Investment BoardsAuthority Alignment of IT Investment Boards Portfolio Selection Criteria DefinitionPortfolio Selection Criteria Definition Investment Analysis Investment Analysis Portfolio DevelopmentPortfolio Development Portfolio Performance OversightPortfolio Performance Oversight

IT Investment Board OperationIT Investment Board Operation IT Project OversightIT Project Oversight IT Asset Tracking IT Asset Tracking Business Needs Identification for IT Projects Business Needs Identification for IT Projects Proposal Selection Proposal Selection

IT Spending without Disciplined Investment ProcessIT Spending without Disciplined Investment Process

Stage 4Improving the

Investment Process

Stage 5Leveraging IT for Strategic

Outcomes

Portfolio Management Maturity Stages

Source: US Government IT Investment Management Standard

What are the Business Challenges that What are the Business Challenges that portfolio management can solve?portfolio management can solve?

How do I prioritize initiatives across my organization?How do I prioritize initiatives across my organization?

What is the status of our top five initiatives? What is the status of our top five initiatives?

Do we have the right people working on the right projects?Do we have the right people working on the right projects?

Do we leverage knowledge and best practices across Do we leverage knowledge and best practices across people and projects?people and projects?

Do we have the skills and capacity within our organization Do we have the skills and capacity within our organization to achieve our long term goals?to achieve our long term goals?

Portfolio Management is about helping to manage the future Portfolio Management is about helping to manage the future notnot accounting for the past accounting for the past

How do you get data on your organization’s financial situation?

How do you get data about your staff? How do you get information on projects

you’re responsible for:• what’s “late”?• what’s over budget? (before it actually is)• who’s available to work on a new project?

Survey says:

“I call the person I think knows the answer” (80 of 100 respondents)

To properly control and manage this environment:• There must be a total inventory of projects, operations, initiatives• Management must be able to prioritize relative to business

objectives• Decisions must be evaluated against resources capacity and

budgets• All efforts must follow a common process (stage gate workflow)• Accurate tracking of actual performance against budgets and

resource plans is required

Some TipsSome Tips

A large organization with $750M in annual revenues; 5,000 employees, and 150 IT staff.

Historically successful, but struggling to reduce costs to keep pace with economic downturn

CEO hires a new CIO with a clear mandate to turn things around.

This is what the new CIO inherits…

Overview:Overview:

Current Culture: Vertical Silos with projects often thrown “over the wall” to other departments.

CEO

CEO

VPH.R.

VPH.R.

VPFinance

VPFinance

CIOIT

CIOIT

COOOperations

COOOperations

Region 1Region 1

Region 2Region 2

Region 3Region 3

Region 1Region 1

Region 2Region 2

Region 3Region 3

Given a Mandate for Change by CEO

Given a Mandate for Change by CEO

This “fire drill” provided lots of detail, but little insight.

200 “projects” identified: 50 business & 150 IT-

related.

Initiates a 6-week review of current portfolio environment.

Requests a plan to standardize all projects

Wants recommendations for retaining, consolidating or killing projects.

Also wants assessment and recommendations on organizational project management maturity

Is the Project Right ?

Strategic Fit Complexity Business Value Time to Complete

Is the Mix Right ?

Risk Profile Planned, or Near CompletionFast vs. Measured Strategic vs. Tactical

Is the Priority Right ?

High Priority ContinueLow Priority Don’t continue

Not Sure ? Re-Assess, Re-Scope, Gain Consensus

Fast-forward 12 months… as the CIO reviews findings

Of the original 200 projects, more than one-third were either killed or absorbed.

Only 20% of the business projects had formal plans; 50% had none at all!

(Kill Criteria: Redundant, Conflicting, Out of Control, Irrelevant)

Maintain (84) 43%

De-prioritize (28) 14%

Absorbed (23) 11%

Kill (47) 23%

Accelerate(8) 4%

Rescue (11) 5%

Strong executive sponsorship

… resistance to change would have doomed us.

“Fluid” alignment with business objectives

… what works today may prove deadly tomorrow.

Notable Quote: “Accountability and cross-functional cooperation

were new to many managers. Changing our reward system helped to speed up the transition.”

-- CIO

Early warning alerts & “root cause” analysis

… catching problems early made a huge difference in the ROI.

Some TipsSome Tips

They are not phases of a project They are the approval/review process steps that all

efforts should pass through, not just major projects IT Governance Board should be directly involved in

the stage-gate reviews

2) Address costs

3) Is “resource management” the real problem in your environment? If so, focus on the resource planning process For most IT organizations it is the problem

• Matrix organizations• Resources work on many projects• And “operational responsibilities also• Priorities constantly change

4) Carefully consider reporting needs• Exception based reporting• Orient reports to management levels• Extensive graphical views• Limit number of reports any person receives

Reporting and views are probably the single biggest factor for user acceptance

Q and AQ and A

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