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What’s So Bad About Spreadsheets?

Top Five PPM Trends to Watch Out For in 2014

Insights and Trends: Current Project Portfolio Management Adoption Practices

Life after project completion: Is a project complete without benefits realization?

How Important is Adoption for a PMO?

What’s So Bad About Spreadsheets?

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:

  • Consistency is hard to maintain when storing data in spreadsheets. A particularly pernicious problem with using spreadsheets is its tendency to auto format fields. In addition, there's a significant risk of messing up data when it's held in a spreadsheet.
  • It's extremely difficult to develop accurate spreadsheet models. The software development community has invested extensively in developing agile methodologies, frameworks and tools to improve the quality of software. In comparison, relatively little work has been done to improve the quality of spreadsheet modelling -- and the work that has been done has had minimal impact on spreadsheet users.
  • It's also all too easy to enter incorrect data into spreadsheets. A wrong keystroke and a formula is replaced with a static value, rendering the calculations meaningless. Another (ab)use of spreadsheets is its use in business models -- strategic planning models, forecasts, simulations, what-if analyses, etc. With limited insight into data and superficial view of results, spreadsheets should not be made the foundation for significant corporate decisions.
  • Transparency: Spreadsheets are disconnected. All feedback, ideas and requirements are stored in separate files and there is no easy way to relate them to each other. This way the initial intent behind some features can get lost and the flow of context disrupted.
  • Traceability: It’s almost impossible to manage something that you cannot track. With spreadsheets information is usually scattered across multiple files and folders. There is no easy way to get a complete view of the task in progress and/or its status. This can delay decision making and increase time to market.
  • Planning: Spreadsheets are very one-dimensional in nature. However, seeing the interconnectedness and hierarchical arrangement of all requirements and tasks is a crucial element of the planning process. It allows you to properly allocate resources, create schedule and prepare for impediments. Using spreadsheets is a tedious and error-prone task as in most cases one will need to update information across multiple files even for the smallest adjustment in plans. In addition, there is no easy way to make sure that everyone on the team/organization has the latest version of the plan and is working on the things with highest priority.
  • Collaboration: Team collaboration is the key for every organizations success, and this is especially true for geographically dispersed teams. Usually collaboration occurs over some kind of document. The most common way to share such information with other members of the team, when you use spreadsheets, is to email it. This can lead to problems like multiple versions of the same file being updated simultaneously, delays in decisions, and miscommunication. This lack of a common environment where a team can collaborate is one of the biggest limitations of spreadsheets.
  • Salability: Spreadsheets are really intended to do the analysis not to the “database”. Although we try, the more data that is in this “database” increases the likelihood that a simple error made with a typo will result in these aforementioned errors.
  • Referential Integrity: Well we have already established that spreadsheets should not be considered as a “database”. But maintaining the integrity of data relationships is fundamentally not the role of the spreadsheets.

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.

Posted on: June 27, 2014 03:24 PM | Permalink | Comments (7)

Insights and Trends: Current Project Portfolio Management Adoption Practices

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.

Posted on: January 07, 2014 02:37 PM | Permalink | Comments (4)
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