11/16/2007 by Marco Gerussi
Project Portfolio and Project Portfolio Management (PPM) are well established terms used in many industries and heavily by software vendors. Accordingly, there are some standards and a number of software solutions that support the planning and controlling of ideas, initiatives and projects. But do these approaches and tools really meet the actual needs of organizations?
Reasons for New Projects
There are different reasons to initiate a project. Maybe an existing application requires enhancements, a new product has to be launched, processes need to be optimized, current infrastructure has to replaced or an organizational change is necessary. Despite all these different reasons projects have a lot in common and realizing such projects most often involves IT and its systems.
Portfolio Prioritization Process
Because of the limited resources of a company and even more of of it’s IT organization usually a portfolio prioritization process is in place. The idea’s or project’s importance and feasibility are weighted. Among others that could be through it’s
- strategic alignment,
- quantitative benefits,
- qualitative benefits
- resources needed,
- organizational impact.
During the entire prioritization process often complex processes, analysis, mathematical methods and risk matrices are implemented and specialists are involved. Frequently the results of these weightings are summarized in a business case. Using a funnel with several prioritization steps helps to reduce the amount of planned and executed projects to make sure that the organization’s resources are used in an effective and efficient way. At this point the question comes up if the defined criteria really can be weighted precisely enough. Is the necessary data available or is the organization starting a blind flight into a foggy data sky?
Impact of Projects
During the prioritization process the impact on the different departments and the expected resource needs are estimated. Usually, the IT organization and its limited and for this reason highly critical resources, e.g. experienced CRM developers or SAP specialists, build a bottle neck. But what is exactly the basis for such estimations of future efforts?
Weighting becomes an issue
How do IT organizations plan their resources, asses their risks, identify interdependencies and forecast their future efforts? The best process is useless if the relevant data is not available. Unprecise or wrong estimates during the prioritization result in overtime orders, scope reduction and reduced testing during the project execution. In many cases projects for this reason have to be canceled, or roll-outs lead to failure and breakdowns are predictable.
Critical resources – the crux of the matter
Limited resources, often highly specialized employees with key know how and experience, cannot start working on new initiatives. They are blocked by work on delayed projects. Additionally, they very often have to support operations after official project closing. These efforts were not considered during planning. And here the vicious circle starts. The organization reacts lethargically and inflexibly on new requests and therefore cannot satisfy the (market) demands in time.
Impact Analysis – Critical Success Factor for Project Planning
How can this problem be solved? Precise Impact Analysis is the key advantage of the IT organization and of the overall portfolio prioritization process. Tool-based Impact Analysis needs to be integrated into the processes and the data management of IT. Its data needs are supported through a Comprehensive CMBD (Configuration Management Database), which is embedded in the lifecycle of all applications (Application Lifecycle Management, ALM), That enables IT to point out impacted organizational (business units, roles, security, etc.), technical (programs, transactions, change requests, etc.) and descriptive (documentations, concepts, test cases, etc.) objects and their interdependencies.
IT management gets a tool to early estimate new initiatives more detailed, assess risks and actions more precisely, can point out interdependencies and assign resources effective and efficient. The organization reacts more effectively and creates lasting solutions resulting in advantages for future projects. Through the information loop the information content gets better and better and the estimations become meaningful.
Appropriate processes, specified weighting criteria and defined responsibilities as well as authorities build the basis for a successful project portfolio prioritization process. Through continuous improvement the process maturity can be increased.
However, to enable the IT organization to make precise and significant estimations, necessary tools for keeping of data and so-called Impact Analysis have to available. Those build one module of an ERP4IT that supports IT management and enables it to contribute to the company’s vision and strategy in a more optimal way. And that should already start at the early planning stage on basis of useful information. Otherwise the prioritization does not really make that much sense.