Best Practice in IT Management - Has PPM's time come?
PPM (Project Portfolio Management) software products have been around several years now. They are used by IT departments, project teams, program managers and others to both manage projects but also to constantly monitor and adjust one’s project portfolio. These tools are quite useful for IT and non-IT management to evaluate:
- how well specific projects align with corporate strategy and business objectives
- which projects should take priority over others
- program-wide dependencies for key resources
- and more
PPM solutions are broader than basic project tracking tools as they can be used to manage a number of related or distinct initiatives, individually and collectively. They also do more than capture costs and report status. They give visibility into an entire group of projects. This is critical as it gives executives the insights they need to make decisions regarding capital allocation, personnel deployments, project start dates, project cancellations, project deferments, etc. Better PPM solutions utilize a number of financial metrics (e.g., hurdle rates, internal cost of capital, ROI, TCO, payback, etc.) to bring the portfolio into a manageable light.
With all the positives for PPM, I would expect that every IT group would have such a toolset by now. Apparently, just because something is a good thing (e.g., eliminating saturated fats from one’s diet) doesn’t mean people will necessarily do it. People, in contrast to what they say, act illogically not rationally.
Maybe it’s time for some logical software buying in IT.
IDC, the IT research firm, has completed an analysis of the PPM (Project Portfolio Management) software market. I had a chance to review their new report “
How Project and Portfolio Management Solutions Are Delivering Value to Organizations
” as well as talk to the author of it. I also verified some of their observations with an executive of CA. CA produces the CA Clarity PPM product.
In IDC’s research, they identified a number of benefits that IT organizations gain when they implement a PPM product. The magnitude of the benefits are significant – actually, they can be huge. Their sample reported savings of:
- 37% cost/project reduction
- Redundant projects dropped by 78%
- Reduction in project failure rate of 59%
How did these (and many other) benefits occur? The answer, it turns out, is that many IT departments score relatively low on a maturity scale when it comes to PPM. In the IDC case, the average firm scored a 1.9 out of a four point maturity scale when they decided to acquire a PPM solution. Afterwards, these same firms reported a maturity score of 3.2 after implementing PPM. To put this in context, a firm scoring in the 1-2 point range has a mix of ad-hoc and structured processes for resource management, IT governance, business relationship management, IT demand assessment and other factors. To get a higher maturity score, IT groups would need to possess more standardized and applied methods of aligning projects with business strategies, evaluating financial and operational outcomes, etc. across all global IT resources.
When you cut through it all, you see that IT departments are using project tracking tools but not necessarily using PPM tools. That’s a big difference. Spreadsheets and other desktop applications that capture project time & expense are not equivalent to a true PPM solution. They can give you visibility into a single project but really underperform across a large number of projects.
Backing up that observation, Carl Landers of CA shared with me that the ‘majority (of IT shops) haven’t adopted PPM yet’.
Maybe it’s time to do that now – especially with the economic trough we’re going through.
Smart IT departments in a down economy must:
- eliminate any redundant or wasteful project efforts
- optimize the deployment of IT resources to get the best return for the organization
- eliminate project failures
Back of the napkin methods won’t cut it in a down market. While spreadsheets may get a small IT group the insight they need, mid-to-large enterprises will doubtlessly need a tool focused on all of their projects, collectively, and the business issues associated with each. IT could also benefit from a tool that presents project information in the language (i.e., financial metrics) of the executive team.
I recently watched the IT leadership team in action at a major NYSE traded firm. In that room, I was the only individual who knew how to calculate NPV (net present value). The CIO certainly knew what it was but his lieutenants didn’t.
If your IT group still doesn’t have a PPM solution, should this be one must have item to get your group during this recession? With SaaS-based versions of these products on the market, is there really any reason not to?