In many organizations, IT functions something like a stealth bomber -- an effective piece of machinery that lots of folks never even see.

That was the case for the City of Tacoma, Wash. “Work was being done on a regular basis but we couldn’t quantify it,” says Bradd Busick, manager of Change Management. “It puts (IT) at risk if our CIO meets with a business unit, and they say, ‘What have you done for me lately?’ and he can’t answer that question.”

When he came on board in late 2007, many of the city’s IT projects “were technical successes but political failures,” says Busick. For instance, an SAP implementation in 2003 that consolidated over 100 legacy systems into a single enterprise system was completed on time and on budget. Yet it was “less than well received” by stakeholders because the need for the change was not clearly communicated.

The 150-person IT staff managed projects largely via “Excel spreadsheets, sticky notes, e-mails and hallway conversations,” says Busick. Producing and updating spreadsheets was a manually intensive process, and inconsistent data resulted when, for instance, one team member made changes to his or her spreadsheet and neglected to inform other team members.

This was especially problematic due to the wide variety of projects handled by the city’s IT staff. It serves general government entities, including the City Council, Public Works Department and shared services such as human resources and finance, as well as the city’s revenue-generating public utilities, including Tacoma Power, Tacoma Water and Tacoma Rail. “The one thing that transcends all these business units is they need IT,” Busick says.

This kind of ad-hoc approach to project management is not uncommon among IT organizations, says Gartner analyst Daniel Stang. It typically results from IT’s frequent focus on responding quickly to problems, which creates a “first come, first served” way of managing projects.

Busick decided to introduce project portfolio management (PPM), a process designed to help determine the optimal mix and sequencing of proposed projects to best achieve business goals. This is especially important for a public sector organization like the City of Tacoma, says Busick. “As a city, we use taxpayer dollars, so we don’t have the luxury of making too many mistakes.”

Busick purchased an on-demand governance tool from Innotas, software that automates project management, from initial request to execution. Business managers log into the system every month and prioritize their needs, which Busick says ensures his team is spending its time on high-value projects rather than lower-value ones. Business managers access dashboards that show time tracking, status reporting, and exactly what IT is working on for them. IT uses the system to track hardware, help-desk tickets and maintenance items.

The software-as-a-service delivery model was a plus, says Busick, who cites several benefits commonly associated with SaaS, including lower upfront deployment costs and speed of implementation. A browser-based interface that lets employees work whenever they want, with no need for a desktop client, is also important for Tacoma, given its focus on the environment. Last summer the city introduced a Climate Action Plan with the goal of reducing its carbon-based emissions. "Being green is an incredible asset for us," he says.

Innotas President and CEO Keith Carlson says the total cost of ownership for his company's subscription-based pricing model, which includes the Innotas license, all upgrades and a designated customer service manager, is typically about a third of the cost of comparable on-premises solutions. In addition, customers pay a one-time implementation fee. According to Stang, a company with 250-350 users can expect to pay about $250,000 for a robust on-premises PPM system from a large enterprise vendor, plus an additional $175,000 a year for professional services and ongoing maintenance.

Stang defines governance as “the structure, roles and business rules that define who has their say and who gets their way when it comes to top-down IT strategy planning” and says it’s a crucial element of PPM. "You have to have governance before you have a project to manage. Somebody has to give it the green light,” agrees Busick.

The business, rather than IT, should drive governance, says Stang. It works best, however, when an IT liaison communicates regularly with business units and helps them “rationalize (and re-prioritize) investment plans while considering the resource constraints of time, people, and money.” The ultimate result should be improved communication between the business and IT.

Governance and PPM also make the entire organization more flexible and responsive to market forces, Busick says. “A lot of organizations get together and make an annual work plan, but that assumes business needs aren’t going to change for the next 365 days. I don’t know of any business whose needs are that static.”

PPM isn't a cure-all. As with most any software implementation, both IT and business units need to tweak their processes to make PPM work, adds Busick. In Tacoma, business units "had to step up to the table and tell us what they wanted" rather than passively waiting for deliverables from IT. Instead of their accustomed practice of tracking projects in Excel, IT staff had to log into a new interface. And IT had to learn that its customers "deserved this kind of visibility." To help with these changes, Busick recruited about three dozen key employees across the organization to trial the system and evangelize it to their coworkers.

These kinds of changes can be tough, at least at first. "When you've walked long enough with a broken leg, you learn to accommodate with a limp. If  you have to re-break leg, is there pain associated with it? Yes. Organizational transition can be painful," says Busick.

While organizational flexibility and improved communication between the business and IT are great benefits, they are tough to quantify, says Stang. “The problem is, most IT departments not yet practicing PPM do not have a centralized data source to baseline their current performance against current work management behaviors. Therefore, the quantifiable PPM benefits cannot be realized through a metrics system until that baseline is captured,” a process that requires about 12 months worth of work.

Enhanced visibility of the project pipeline is “the biggest soft benefit” of PPM, says Stang. “From visibility, the proactive decisions that are made based on a trustworthy, centralized data source leads to effects that can be quantified.”

Nine months into the Innotas implementation, Busick says he expects to be able to illustrate cost savings by showing how better prioritizing projects has reduced the need for external consultants.

There is also clear value in showing exactly how and why IT funds were allocated, he says. “At the end of this year, I’ll be able to show how much money was spent and why. If the number-one priority was really expensive, we’re still going to do it. I think everyone will agree that is better than spending money on projects that were of low value.”