Project Portfolio Management: Make Room for Potential

Ann All

Last month when I interviewed Jeanne Ross, co-author with Peter Weill of "IT Savvy," she told me that many companies couldn't tell her how much of their annual IT spending is run vs. change. And that's a problem, she said: "Lots of people tell us that's a hard question to answer, they don't think of it that way. And you certainly can't improve it if you don't think of it that way."


One way to change your way of thinking is to apply a portfolio management approach suggested by Colin Ashurt in a silicon.com column. Every IT project must fit into one of four categories:


  • Strategic applications, which are key to sustaining future business strategy
  • Key operational apps, which are necessary for current success
  • Support apps, which are valuable yet not critical to success
  • High potential, which may be important in attaining future success


It's the final category that tends to throw people since "there is clearly an opportunity, but the detail of how to realize it is not clear," writes Ashurt. It's important, he says, to allocate some portion of the budget and IT resources for investments in high-potential projects. Then, he says, assign them to "small, high caliber" teams and give them small budgets and short deadlines. It'll take a strong leader to recognize these opportunities and ensure they don't get tangled in red tape. A close relationship between IT and senior business leaders is also helpful. He writes:


They won't all work -- but some of them will provide valuable new innovations that will lead to strategic projects later on. If they fail, better they fail now, having had minimal investment, than later after much more would be at stake.


I got a similar take in an interview with Mike Harris, owner and president of David Consulting Group and one of three authors of a new book titled "The Business Value of IT: Managing Risks, Optimizing Performance and Measuring Results." Harris advocated "creat(ing) an environment that has room for pilots and experiments (and) set(ting) aside some small proportion of the budget to see if quantum changes can be made in the way IT supports the business."


This kind of an approach won't work without effective governance, a point I hope I got across in my story about the project portfolio management approach used by the City of Tacoma, Wash. Brad Busick, the city's manager of Change Management, told me how business managers log into an online system every month and prioritize their needs, which ensures his team spends 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. For this to work, business units "had to step up to the table and tell us what they wanted" rather than passively waiting for deliverables from IT, and IT had to learn that its customers "deserved this kind of visibility," Busick said.


Incidentally, Ashurt also recommends an Agile development approach, which has its detractors. You can read the comments of one of them on a post I wrote yesterday about a Forrester Research study that indicates business analysts should familiarize themselves with Agile methodologies. Wrote reader Al Gibson, who says he's been involved in software development for 20-plus years:


Funny how it's rare within big corporations that Agile is a grassroots thing. It's always some "consultant" knocking on the door that sells the PHB on grand visions of harmonious magic and impossible positive metrics.

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Add Comment      Leave a comment on this blog post
Aug 7, 2009 12:45 PM Pradeep Bhanot Pradeep Bhanot  says:

Ann, the use of Agile processes in software is pretty mainstream in software development projects and they do tend to be used for subsets of larger more traditional frameworks. The time for service portfolio management has certainly come as many organisations have had PMOs for over 5 years and have matured their PPM and Service Management practices to a level where they have the infrastructure, processes and metrics in place to make meaningful SPM decisions.

Innovation management is a natural front end to a PPM process. I like the way you describe how the idea selection as a process can be aided by PPM to find the projects that can deliver value fastest with the lowest burn rate, which is what is needed as we prepare for an economic recovery.


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