A Question Of Scalability

 

A common misperception of Portfolio Management is that it’s simply what Project Managers do, just on a larger scale or from a higher organizational perch. It’s an easy mistake to make in the PM world. Just as a Control Account Manager is responsible for the Work Packages that make up the Control Account, so Project Managers are responsible for the combined Control Accounts that make up the project. So, naturally, the person in charge of a collection of projects is a “portfolio manager,” right?

Well, not exactly, and I just happen to have a story that illustrates this.

A certain scheduling software company was hosting a “train the trainer” course for their recently-released upgrade, which was being sold as a type of portfolio management platform. At the end of the course, I and two of my colleagues were invited to a lunch meeting with this company’s CEO, and some of his associates. We were seated at a long table, my team sitting directly across from the software company’s execs, and over convention center chicken and mixed vegetables we began discussing the essence of portfolio management.

The upgraded software, in addition to doing a robust job of critical path scheduling and resource-loading (this system’s resource-loading was so good, in fact, that my organization regularly used it to generate the Basis of Estimate), introduced modules that would allow for time card entry and the capture of travel expenses. It was on these two modules that I began my analysis.

To the best of my recollection, I started by saying that their software already did a good job over in the Project Management side of things, but if they wanted to advance into portfolio management, they would be far better off capturing Strategic Management elements, rather than poaching a few Asset Management elements from the general ledger. They asked me to clarify.

I told them that no general ledger system that’s worth the name is going to be lacking a payroll function. By trying to peel off timesheet from the general ledger and into the organization’s scheduling software – no matter how robust that scheduling software may be – they would be presenting their platform as a rival to the general ledger. I continued that there’s no intuitive reason why an organization would remove that capability from their Finance and Accounting department, and hand it over to the Program Management Office.

The CEO replied along the lines that they felt that the newly added-on modules represented a logical target in the expansion of the scheduling software: however, as he was speaking (but outside his peripheral vision) I could see the proverbial light bulbs going off over his execs’ heads. They, at least, were getting what I was saying.

I went on to say that, even if they could make the argument that timesheet entry is better performed through the scheduling software, that they would never make a convincing case that travel belongs there. Travel expenses are part of Accounts Payable. The very best they could hope for would be to provide a 100% seamless interface with the organization’s ledger, but, given the wide variety of accounting packages out there, that that would be virtually impossible.

The CEO repeated some rather bland verbiage about how the organization was confident that they were moving in the right direction, and the conversation turned to more jejune topics.

However, in the next release of the software, I don't remember that the time sheet and travel entry options were noticeably absent. I’m sure it was just coincidence.

As to the question of whether portfolio management is simply program management writ large, consider the instance of the United States Post Office. Some years back, the were running an advertising campaign aimed at getting people to write more letters at a time when the postal rates were fixed at a point where they were actually losing money for every letter posted. So, in a real sense, whomever they put in charge of that advertising campaign, or project, was working at cross purposes with whomever was trying to stop losing money for each letter mailed. I wonder if those two (or their teams) ever met each other and, if so, what they had to say.

To summarize, I wish to overturn two common misperceptions about Portfolio Management: it is not just Project Management on a larger scale, nor is it poaching certain information streams from the general ledger into the PM information software. And those organizations that believe to the contrary are working at an inherent disadvantage.

So, what is a working definition of Portfolio Management? I’m glad you asked. First, a few ground rules…

Look at that! Out of blog space for this week. Tune in next week for a clearly articulated, workable structure for extended PM practices into valid Portfolio Management.