On February 9, 2004 Mercury Interactive, the global leader in business technology optimization (BTO), announced the release of Mercury Portfolio Management 5.5 within its IT Governance (ITG) Center. Portfolio Manager 5.5 is the first upgrade to the product since the company acquired leading ITG software vendor Kintana. Portfolio management software tracks and manages projects and gives IT leaders a top-down view of project proposals, projects currently under way, and completed projects. The enhancements to the new product focus on optimizing IT project portfolios and providing out-of-the-box best practices examples to help customers govern, enforce and automate project execution, reduce the risk of projects and maximize return on investment (ROI).
Mercury Interactive also announced the Portfolio Management Fast Start Program. The program provides customers with a fully functioning portfolio view of the 50 to 75 most important projects within the company in less than two weeks. Mercury designed the Fast Start program to deliver immediate value to IT managers responsible for creating proposals, managing budgets and justifying IT projects. The program includes all software licenses, education and professional services needed to implement the solution.
Event Analysis
The moves strengthen Mercury Interactive’s position in the BTO market. Most companies do not have a good grasp of what their project portfolio is and where corporate resources are deployed. Many companies historically have used basic project management tools and spreadsheets to manage all of their IT projects. As IT becomes better integrated into the business processes of the corporation, it is inefficient to manage projects in this way. CIOs have been interested in the idea of better IT governance and portfolio management for years, but most corporations have been hesitant to move forward with a full project portfolio management solution because of the lack of best practices and integrated solutions. Also, point tools for portfolio management focus only on projects. New projects account for only 20 percent of current IT spend; 80 percent of budgets go to maintaining the current operating environment. Mercury Portfolio Management uniquely enables companies to quickly adopt a company-wide approach to managing the entire portfolio lifecycle from proposal initiation, justification and review, to project execution, deployment and benefit measurement. In addition, Mercury ITG consolidates information on both projects and day-to-day operational activities for a complete management approach to IT.
Market Impact
IT governance has become one of the top strategic priorities at many companies today. With enterprises focusing on optimizing the business value of their IT investments, Mercury is poised to take a leadership position in this market. The Fast Start program removes all of the excuses companies have had not to move forward with IT governance and will drive greater adoption of the solution. We expect Mercury to continue stretching its lead in the BTO market, with corporate revenue growing from $506 million in 2003 to $800 million in 2004, making it one of the premier management solution vendors in the industry.
Vendor Winners/Losers
- IT Governance is one of the keys to a successful BTO implementation. Mercury Interactive is the only BTO vendor that can deliver an ITG solution that moves closer to the ultimate goal of true IT business alignment.
- Legacy management framework vendors BMC, CA and Tivoli do not have an ITG solution and trail Mercury Interactive in the BTO market.
- Current ITG and portfolio management vendors such as PlanView, Niku and Primavera will need to expand their offerings beyond their current niche project focus. Portfolio management software needs to enable companies to manage all their projects and operational activities across the entire portfolio lifecycle.
With companies focusing on IT efficiency and better business technology alignment, IT governance will become a must-have for most large enterprises. It will become increasingly important for management vendors to offer ITG as part of their overall suite of products. Those that continue to sell point solutions will find it increasingly difficult to compete in this market.
Vendor Recommendations
- Continue to broaden your portfolio through partnerships and acquisitions. IT management vendors need to roll out solutions that can improve application quality, manage risk and compliance, and improve performance across the application lifecycle.
- Remove the barriers to adoption. Programs such as the Portfolio Management Fast Start enable enterprises to deploy an ITG solution quickly with minimal risk and cost. Once the enterprise sees the benefit in a limited deployment, it will be easier to justify a large-scale implementation.
- Provide best practices benchmarks for success. Because ITG will be new to many companies, most will not be able to measure whether the implementation provided maximum benefit. It is incumbent upon the vendor to provide the necessary benchmarks to help companies measure the benefit the solution delivers.
- Proceed cautiously. Although we urge all companies to get started immediately, we do not advocate wholesale adoption of BTO or ITG. Take a measured approach with a handful of projects, gauge the results and move to a larger implementation when you are satisfied. Fast Start is an ideal method for companies that are unsure of the value that portfolio management will deliver.
- Beware of process change. Whenever end users, IT employees or management have to deal with process change, the new initiative risks being ineffective unless people receive adequate training. IT governance will cause IT to think and react differently, which may cause some initial hesitation. Strong training and upper management support is imperative for a successful implementation. Start by creating early wins leveraging out-of-the-box best practices from vendor offerings before you configure such solutions to your unique requirements.
- Ensure strong management sponsorship. Our observation is that organizations that have been the most successful in their ITG initiatives all had a clear senior management mandate. This sponsorship was in turn backed by a well-planned educational effort to internally sell the value of the initiative and create buy-in from all stakeholders across lines of business and IT.