Putting projects in a portfolio works wonders

A bird's-eye view of IT projects is beneficial, some say

Using Project Portfolio Management (PPM) to have an of overview of all the IT projects in an organisation can eliminate duplication, save money and boost the standing of the CIO, according to advocates.

Writing on CIO.com, Scott Berinato says PPM lets organisations collect and control their entire suite of IT investments as one set of interrelated activities in one place — a portfolio.

“In addition to providing a centralised overview of all IT projects, a good portfolio will make it easy for CIOs to make sure their IT investments are well-balanced in terms of size, risk and projected payoff,” Berinato says.

Writing on Computerworld.com, Melissa Solomon says PPM is a way to group projects so they can be managed as a portfolio, “much as an investor would manage his stocks, bonds and mutual funds”.

According to a white paper by Berkshire Consultancy, 50% of global 2000 companies have adopted some form of PPM implementation. The white paper notes that companies using PPM had a 10-15% cost reduction, allowing them to free up capital for new investments.

CIO’s Berinato says that when used wisely, PPM increases IT’s value by exposing projects that are redundant or too risky — as well as revealing how to shift funds from low-value investments to high-value, strategic ones.

He gives the example of a US IT services firm which created a spreadsheet of a small sample of the IT projects underway at the company. Eighty percent of the 120 projects overlapped.

“There were 14 separate projects trying to accomplish the same thing with customer-facing websites, for example,” writes Berinato.

That company went on to develop a database to catalogue all IT projects, quantifying risk and return, setting priorities and aligning IT projects with the business and saved $US3 million (NZ$4.3 million) in the first year by eliminating redundancy alone.

Because PPM requires close collaboration with the business, Berinato says it is impossible to do without being aligned with the business — another positive benefit.

Berinato says all projects should be put in one database which contains “project names, descriptions, estimated costs, estimated timeframes and staff members assigned to work on the projects.

“Collecting all that data may be a chore, but it can yield impressive results in the end.” The projects then need to be prioritised and Berinato acknowledges that PPM doesn’t necessarily make that easier.

“Ranking projects is not a science… But just going through the exercise gets IT and the business talking.”

The projects can then be divided into two or three budgets based on the type of investment.

Berinato concludes that in some ways PPM helps concede that IT is not different or special — that it operates like any other part of the business.

“The CIO can use the same tools as the CFO and have the same accountability as a senior sales executive. The reward for the CIO is clear: a more central and crucial role in the business.”

Computerworld’s Solomon says the obvious benefit of PPM in IT is that it gives executives a bird’s-eye view of projects so they can “spot redundancies, spread resources appropriately and keep close tabs on progress”. She says the appeal to CIOs is the focus on projects as a portfolio of investments: “Discussions aren’t just about how much a project will cost, but also about its anticipated risks and returns in relation to other projects.

This way, entire portfolios can be jiggered to produce the highest returns based on current conditions.”

She says the old system of approving projects, managing them independently, and evaluating them as a whole at the executive level only when it came time to put together annual reports doesn’t meet today’s needs. Companies need to have a real-time overview to ensure all projects are working together, Solomon says.

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