What’s So Bad About Spreadsheets?
Project Portfolio Management,
Spreadsheets are ubiquitous, heavily relied on by organizations to manage data and make critical business decisions. Spreadsheets are an excellent tool for independent analysis. The problem is that they are often stretched far beyond their home territory. Furthermore, spreadsheets tend to have limited scalability beyond the desk and the fidelity is constrained by the organization’s ability to invest in additional technology capability to manage its reliability.
It’s imperative to note that the goal of inputting data in a spreadsheet is not to get an answer, but to get the correct answer. Often a wrong answer is much worse than no answer at all. There are a number of features of spreadsheets that present a challenge to error-free analysis. It is extremely common for data to be added to a spreadsheet after it has been created. The augmentation of data can go wrong, rendering a correct spreadsheet incorrect. Even the most experienced practitioners, using all the armory at their disposal to prevent mistakes from creeping in as they work, will make common errors from time to time. The requirement in organizations to work under huge pressure to achieve deadlines makes the probability of error even higher. Some of these errors will be caught by the fail-safe mechanisms built in. But some will not.
Additionally, many spreadsheets take all night to compute. These computations can be complicated and commonly fail. However, when such spreadsheets are replaced by capabilities more suited to the task, it is not unusual for the computation time to be cut to a few minutes and the process much easier to understand.
Why Do Organizations Continue to Use spreadsheets?
The technology acceptance model holds that there are two main factors that determine the adoption of a technology: the perceived usefulness and the perceived ease-of-use. Perception need not correspond to reality. The perception of the ease-of-use of spreadsheets is to some extent an illusion. It is easy to get an answer from a spreadsheet, however, it is not necessarily easy to get the right answer. Thus the distorted view. The difficulty of using alternatives to spreadsheets is overestimated by many people. Safety features can give the appearance of difficulty when in fact these are an aid.
The hard way looks easy, and the easy way looks hard.
When Do Spreadsheets Go Wrong?
In a recent survey conducted by Daptiv, it was revealed that 76 percent of IT organizations still rely on spreadsheets for critical decision-making purposes. Spreadsheets are good when small amount of data needs to be managed. However, the "spreadsheet as database" is not always easy to maintain. At some point of enterprises will need specialized application capability to manage their database for managerial purposes. Research, such as that reported by Raymond Panko in "What We Know About Spreadsheet Errors", has found that most of the spreadsheets used by organizations contain errors—and that a considerable number of those errors are serious. In one case reported in Panko's research, the error would have caused a discrepancy of more than a billion dollars! Finally, academics have published studies of the prevalence of spreadsheet error and have sought to identify circumstances dangerous in the context of error and other circumstances that are regarded as safer. Therefore, unless spreadsheets are being used for single functionality, it must not be overburdened with complex calculations and codes.
One of the most widely used tools for project management in software teams today is the spreadsheet. Although fairly cheap and easy to use, spreadsheets are extremely vulnerable to errors. They hide problems that can hinder the success and create more costs than one has planned for. Here are some of spreadsheets’ inherent limitations:
To be fair, spreadsheets aren't the only models that contain errors. We all know that software has its fair share of bugs. But the sheer number of spreadsheets, coupled with "homespun" development, and the difficult of reviewing their logic, makes spreadsheet development the Wild West of the modeling community. If you are using spreadsheets for anything more than individual prototyping in your organization, I would recommend you to seriously consider replacing them with models that are more suitable.
The business world is forever changing and for organizations to thrive they must be able to adopt or, even better, be an early adopter of the noted trends and predictions. All neatly wrapped up as the top strategic PPM trends for the coming year, Daptiv predictions focus on increasing the benefits of Agile, greater applicability for PPM solutions across the board, and enterprises spearheading the creation of strategic PMOs, influenced by the reliability of benefits forecasting.
Here are Daptiv’s top 2014 predictions for the Project Portfolio Management industry:
Insights and Trends: Current Project Portfolio Management Adoption Practices
Project Portfolio Management,
In order to stay competitive, today’s top management is confronted with the critical task of analyzing and improving the ability of an organization to change, survive, and grow in this complex and changing global economy.
Organizations have thus been moving from operations and business as usual, to implementing change through project management as part of their competitive strategy. The ability to successfully execute projects is what drives the realization of intended benefits and the achievement of business objectives.
Organizations that execute projects successfully employ effective Project Portfolio Management (PPM) practices as a tool to manage and drive change. Given the strategic impact that projects have on business, organizations must follow effective PPM processes that capitalize on innovation; measure progress, value, and risks; and confirm that the right projects can be delivered in alignment with organizational strategy
We at Daptivconducted a survey to examine the challenges faced by today’s businesses now thatincreased scrutiny over budgets (aka “doing more with less”), efficiency and effectiveness are key factors of successful organizations. The survey’s main objective was to identify current trends in PPM, and pinpoint the characteristics of PPM that are applied in higher-performing organizations. This survey was conducted among 300 project managers and senior executives attending the PMXPO Conference. Some of the key inferences from the survey were:
Why do product managers and senior executives take on PPM and implement software to support it? According to our survey, their top reasons (in order) are prioritizing projects, gaining visibility into live projects, planning and preparing for future projects, and managing cost and resources. A whopping 62% answered “all of the above”. This makes obvious that PPM is providing a lot more value than simply improving project execution.
Assessing the current adoption of Project Portfolio Management across sectors, the survey revealed that 64 percent of the respondents use PPM tools to manage their general IT projects while the remaining respondents deployed PPM solutions for compliance, product development, training and mobile related projects.
While establishing and communicating projects goals to the project management team can assist in the identification of project risks and constraints that may impede the achievement of those departmental goals, limiting the scope of project portfolio management tools within an organization can have rippling side-effects in the overall achievement of organizational goals. According to PMI’s 2012 Pulse of the Profession In-Depth Report: Portfolio ManagementReport, the majority of portfolio managers in highly effective organizations spend 75 percent or more of their time on portfolio management. The report further indicates that in organizations where managers focus on strategic as well as departmental goals, 70 percent of projects meet or exceed their forecasted ROI, compared to 50 percent at organizations where managers rarely focus on strategic goals.
Another interesting fact that came from the survey was that 76 percent of the respondents still use homegrown spreadsheets internally to manage projects in some capacity. Since 55 percent of respondents have more than 1,000 employees, this can easily lead to PPM data integrity issues and ponderously slow feedback loops. Definitely not a path that enables firms to pivot with rapidly changing business conditions. Moreover, from our experience this manual approach significantly impacts project performance. Today’s organizations need to see and trust information as it develops to make decisions that will help them outpace their competition.
While the BYOD movement is taking corporations by storm, our survey found that nearly 75 percent of respondents are not applying PPM techniques or software to their rollouts of smartphones and tablets. IDC recently forecasted that by 2017, total PCs are expected to drop to 13 percent, while tablets and smartphones will contribute 16.5 percent and 70.5 percent respectively. Considering the BYOD trend is only going to gain momentum in the near future, IT needs to get on the bandwagon and start actively managing this effort. Such forward-thinking strategic project planning transforms organizations from defensive and reactive to proactive and dynamic.
One of the key qualifications of a project is that it has a definite start and a definite end, though “ending” a project with a proper close-out process would appear to be an after-thought. Our survey revealed that 24 percent of the respondents do not conduct project reviews at all. That is a big number considering that of those who do, only 15 percent find they are meeting their project targets. The very last part of the project life-cycle it is often ignored even by large organizations, especially when they operate in multi-project environments. When the project is delivered, the closeout phase must be executed as planned. It plays a crucial role in sponsor satisfaction since it can create a lasting impression.
These findings are consistent with what we’ve experienced in our PPM consulting engagements. For many businesses, elements of PPM may already exist, but in non-linear and disjointed fragments. The most important factor in the success of PPM is aligning the portfolio with organizational strategy. The positive effects of strategic alignment lead to higher levels of project and portfolio performance, and increases stakeholder satisfaction with their organization’s project portfolio management practices at all levels of portfolio scale and complexity.
Life after project completion: Is a project complete without benefits realization?
In our day-to-day project management and PMO activities, the easiest and the most important thing to miss is plan for ahead what happens AFTER we cross the finish line. So technically speaking, once project managers hand over the reins of the completed project to the business owner, their job is just half done. For a project to be considered complete, project managers must focus on the other half, which is “Benefits Realization”.
Benefit realization is the confirmation that the value a project was expected to generate really does get delivered. In our everyday project management lives it is easy to get buried in details around task management, risk mitigation, resource capacity, balancing budgets and all the other moving parts. We often forget why we set out to do the project in the first place: the delivery of a product or service, an enhancement or improvement, or a capability. For example to meet some new regulation, standard or market demand. But what if, after we deliver the goods, and did exactly what the customer asked for, we realize that all the effort and resources we used to deliver the project don’t amount to what they were supposed to? That’s exactly what benefits realization is all about.
We’ve all heard of ROI – return on investment. It is the concept of an investment of some combination of resources (people, money, equipment, etc.) yielding a benefit to the investor. A high ROI means the investment gains compare favorably to investment cost. As a performance measure, it is one of the best methods to evaluate the efficiency of an investment. ROI does not exclusively have to be in financial terms. It can easily be an operational advantage, an improvement in position, or other positive change. In order to compare the efficiency of a number of different investments we need to compare like measures, which is why a financial ROI is one of the most commonly used. Unfortunately, without benefits realization, our ROI is simply a guess. And that is why benefits realization is so important.
I’ve discussed with many of our clients about this and have found out that there is a need for a wide degree of maturity around the realization process. This is an indication that while the concept of realization is gaining interest, it is still far from a mature practice. Which presents a great opportunity for those organizations that are not doing it – now is a great time to implement this practice.
How to launch a benefits realization initiative?
One of the best approaches involves setting goals, tracking against those goals and including a ‘hand-off’ step, similar to the passing of the baton in an Olympic relay race. Tactical steps you can take include:
One last point is that it isn’t always about the money. Sometimes projects generate other value, such as an improvement in customer satisfaction, or increase market share by launching a game changing product. It is important to be able to quantify the value of these types of projects even if they do not generate direct revenue or cost improvements. Many organizations call these ‘Level 2” or “Indirect Benefits”.
Finally, is a project complete without benefits realization? To the project manager who’s already run their marathon and marked the project as complete, I expect their answer to be ‘yes’, but common sense tells us otherwise. As a best practice, one of the most important factors in a projects success isn’t “how we did it” – coming in under schedule or under budget – but “what we did” – that the project delivered what it set out to do.
How Important is Adoption for a PMO?
Project Portfolio Management
What makes a successful PMO? A great deal of hard work? Definitely. But there are some other ingredients in that “special sauce” that enables a PMO to succeed. Let’s explore.
A few years ago Jack Welsh of GE fame lead a keynote speech on large programs. He was presenting to the business leaders of some of the largest enterprises in the world. The speech began something like this:
“If you can’t get top management to support your program, don’t even bother. Don’t even waste your time.”
Why did Jack say that? Because to him, adoption is so important that a program is doomed to fail without it – all the way from the top to the bottom. You can spend an extraordinary amount of time, effort and financial resources around setting up a program, developing a methodology and implementing a solution but without the team being ‘on board’ with your program you will have a very difficult time succeeding.
Once we can secure an executive sponsor, and have them attend the kick-off, and elaborate why the initiative is so important, what’s next? The next step is making sure everyone is listening. Does everyone in the program understand what the sponsor just elaborated? Are they clear with what the objectives are? Do they understand their role in helping achieve success? One of the best examples that come to mind comes from the early 1960’s, before man landed on the moon, where President John F. Kennedy was touring the NASA Manned Spacecraft Center. A humble and down to earth leader, JFK encountered a janitor as he was being guided through the facility. He stopped the entourage and approached the janitor and asked him what he does there. The janitor replied: “I’m putting a man on the moon.” Surely he knew he wasn’t directly flying an astronaut to the moon, nor did the director of the space agency tell him to answer that way if the president asks. No. The mission of the center was so clear from the very top to the very bottom that every single person knew what their contributions were working towards.
Next idea has to do with appreciation for the stakeholders and user community. A program is most successful when everyone is able to contribute to its design and change. Capturing end user feedback and letting the PMO evolve and grow is essential. Why is this so essential? Simply because when we set out to design the program, we may not have taken everyone’s perspective into account. We may also not have thought about how each role would interact. But more importantly, you increase the chances of success by casting your feedback “net” as broadly as possible. There’s an old story that helps demonstrate this idea. On some highway, a trucker is driving his semi. He approaches a bridge with a sign that warns of 13’ of clearance. Thinking he can fit, he continues onward only to hear the sound of crushing metal and his truck quickly stopped. He gets out of his rig and finds his trailer wedged under the overpass with no easy way to get out. The state police are called followed by the civil engineer. Bridge plans are reviewed and a crowd starts to gather. A little girl walks up to the engineer and says “mister, why don’t you just take the air out of the truck’s tires?” The truck is lowered and is now able to roll out. Sometimes the best ideas come from the strangest places. But even more important, one of the people in the community was able to share an idea that had a direct impact on solving a problem, enhancing a positive framework across the entire community.
Of course, there are many other aspects to user adoption, but getting the support from the entire organization, from the top to the bottom, is essential to your PMO’s success.