Reducing IT failures with project portfolio management

Project portfolio management (PPM) vendors claim their tools give organizations more control over IT projects, create stronger alignment between business goals and IT operations, and reduce project failure rates. To evaluate these promises, and to determine whether PPM can really keep project ducks in a row, I attended a briefing by HP, which offers the Project and Portfolio Management Center PPM suite.

From an IT failures perspective, PPM brings discipline to four key areas:

• Standardizing the investment criteria used to evaluate project funding. PPM requires an organization to define the requirements against which it will prioritize and measure all projects. The business case used for evaluating new project investments should include financial metrics, describe acceptable levels of operating risk, define ROI expectations, and so on.
• Making project-related investments explicit. PPM establishes a project inventory process through which organizations can track all existing and future IT investments. This reduces the number of unauthorized, "shadow" projects and ensures all projects are fully budgeted before starting.
• Prioritizing projects across the enterprise. PPM helps IT departments prioritize projects based on "fit" with company business goals, financial requirements, and risk tolerance. Project fit is determined when prospective projects are compared with the organization's investment criteria and policies, as described above in the first bullet.
• Providing a way to measure project success, relative to organizational investment policies. By putting explicit tools and processes in place, PPM makes it easier for IT to track project success and failure. Tracking results means it's easier to improve over time.

PPM helps organizations use well-defined criteria, rather than ad hoc guesses, when deciding which projects to fund. Dennis Gaughan, Research Director at AMR and one of the briefing presenters, told me in a follow-up conversation:

Without PPM, many organizations make project investment decisions based on whoever screams the loudest or is most politically well-connected, irrespective of what's best for the organization. As a result, many projects are funded that should not have been. PPM offers a reference methodology against which these projects can be evaluated objectively, thus avoiding bad investments.

THE PROJECT FAILURES ANALYSIS

In my opinion, PPM offers an effective vehicle for helping organizations institute rigor, discipline, and maturity into IT investment decisions and operating processes. By explicitly making IT funding decisions rational and transparent, PPM systems can bring IT closer to the business, which alone will improve project success rates. From an operations perspective, tracking and measuring projects against pre-defined business metrics would certainly help stop small problems from becoming large failures.

On the other hand, PPM is not a silver bullet for preventing IT failures. PPM tools cannot replace substantive organizational and executive commitment to doing IT right. Nonetheless, organizations committed to reducing IT failures, increasing the value of IT, and enhancing IT's credibility will find PPM a worthwhile investment.

[Thanks to Erin Muhlhan from Burson-Marsteller]