Don't Make These Project Portfolio Management Mistakes

Ann All

Yesterday I wrote a post in which I detailed some of the benefits enjoyed by companies using IT service management, particularly service catalogs, and project portfolio management (PPM). I got a comment from management consultant Vaughan Merlyn, an EVP with collaboration software provider nGenera, who pointed me to an excellent post he had written on common mistakes in IT portfolio management.


He listed several mistakes:

  • Lacking a tangible IT investment strategy. Too many companies, Merlyn wrote, simply start with a budget and funding sources. Then, "projects get picked off until the bucket and funding is consumed-everything else sits in a backlog. When projects are prioritized, it tends to be based on meeting the needs of individual business units rather than achieving broader corporate business goals."
  • Managing a laundry list of IT projects rather than taking a more strategic and holistic view of portfolio management. Companies that do this primarily evaluate their projects from a time/budget perspective, which reveals little about overall business value.
  • Not thinking about risk/return profiles in a meaningful way. Wrote Merlyn: "This tends to emphasize low-risk, low-return initiatives and starves the enterprise of the more innovative and potentially 'game changing' IT plays." In April I wrote about a portfolio management approach that puts IT projects into one of four categories: strategic applications, which are key to sustaining future business strategy; key operational apps, necessary for current success; support apps, valuable yet not critical to success; and high-potential apps, which may be important in attaining future success. Though the fourth category is obviously important, many IT organizations struggle with allocating some portion of their budgets and resources to these kinds of projects.
  • Including only new, major initiatives in portfolios, and not the more mundane activities that typically comprise much of the IT budget.


I think it's instructive to look at Motorola's actions during its adoption of an IT portfolio management strategy, a three-year initiative that changed the way its IT organization delivered services to the rest of the company. Motorola human resources executive Keith Leust wrote a three-part series of articles on the effort. I've linked to part two here because of the passage on governance, which can be found near the end of the piece. Parts one and three are worth a read as well.


Leust described how Motorola began managing its investment in key initiatives, projects and programs on a global basis. "This enables the organization to monitor investment of valuable resources, minimize duplication of efforts, and determine how to leverage programs across businesses," he wrote, benefits that should sound familiar to advocates of PPM.


Gartner analyst Daniel Stang stressed the importance of the right governance structure in a PPM strategy when I interviewed him in June for a story about the city of Tacoma's (Wash.) implementation of PPM. Stang suggested the business, rather than IT, should drive governance, although IT should communicate regularly with business units and help them "rationalize (and re-prioritize) investment plans while considering the resource constraints of time, people, and money."


Because PPM requires a fundamental shift in the way many IT organizations operate, it isn't easy -- at least not at first. Said Bradd Busick, manager of Tacoma's Project Management and Administration Office:


When you've walked long enough with a broken leg, you learn to accommodate with a limp. If you have to re-break the leg, is there pain associated with it? Yes. Organizational transition can be painful.





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Add Comment      Leave a comment on this blog post
Feb 17, 2010 6:49 PM Shane Deay Shane Deay  says:

Great article Ann!

The IT Service Value Management methodology from http://www.iabsm.org (International Association for Business Service Management) is an excellent continuation of several topics outlined above with an emphasis on prioritizing projects based on the Business Value and quality (real and perceived) of the service being delivered.  It's worth a look!

Jan 14, 2014 9:18 AM Sammy Nanto Sammy Nanto  says:
Great share admin. I really like such an informative article. These articles are very helpful in the IT business. Reply

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