The Business Driven PMO

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.

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.

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.

In an informative Q&A session with Daptiv, Joe Pringle Managing Director Project Delivery, Forum One sheds light into how Daptiv PPM helped his company gain better visibility into planning, scheduling and executing projects seamlessly across the organization. Pringle is responsible for overseeing operations and project performance, including resource allocation, client satisfaction and project finances at Forum One.

Q: When did you feel the need to graduate to a PPM solution? 

A: As we grew in size we realized that our existing solutions were limiting our capabilities to manage resources across the organization. It became difficult for us to manage people across geographies and gain insight into how projects were being implemented simultaneously. We knew that there was a better way to allocate resources and keep track of developments in real time.

Q: What were your next steps?

A: We were clear about the fact that we wanted to keep our staff focused on doing exceptional work for our clients rather than on overhauling an in-house project management solution. So before moving ahead, we gathered all the necessary information regarding process requirements/needs and improvement areas internally. Consequently, we examined various SaaS based alternatives for Project Portfolio Management. Having done that, we zeroed in on Daptiv as it offered the best feature set for our resource management, project management, and project performance needs.

Q: Can you discuss the key problem areas identified after the internal assessment?

A: One of the key process improvement areas identified up front was creating an integration between Salesforce.com and Daptiv.  At that time we were having difficulties transitioning a project from sales to delivery.  So we created an integration solution utilizing Daptiv Connect^TM that monitored an “opportunity” in Salesforce.com until it reached a specific stage in the sales cycle.  In addition to that, the other important area we needed was the ability to create real time reports and dashboards that reflected our business model.

Q: Can you elaborate a little more on the execution process?

A: We decided to get Daptiv on-board pretty quick and it took us about two months to transition completely to the new platform. We worked with Daptiv’s professional services team to configure, set up and migrate content from existing platform into the new system. One of the many things we liked about Daptiv PPM was its flexibility to accommodate our business model.

Q: Did the deployment of Daptiv PPM add value to Forum One processes?

A: We knew what we were getting into and had a clear idea about our needs. Before Daptiv, we had to used a home grown web application and  Excel spreadsheets to track staff utilization, performance across different groups in the company earlier. Daptiv PPM has helped us have a much more mature, robust way to measure and report on our whole portfolio of projects at any time. One major benefit for us was that we were able to understand resource requirements early in the process and could better plan/schedule the start of a project without being resource constrained.

Q: How has Forum One been able to sustain the momentum after implementing all the changes?

A: We’ve grown a lot since we implemented Daptiv PPM. We now have a process for continually evaluating whether our processes are being managed in the most effective way or not. We’ve managed to improve existing tools resulting in improved performances and strong momentum.

Early this week we announced the launch of our upcoming PMO Success Webinars for 2012, aimed at offering real-world guidance on how to build and run a successful Project Management Office.  This free educational series will provide insights and perspectives from PMO Directors and Consultants at organizations running successful PMOs as well as Daptiv’s professional services team.

According to research performed by industry analysts such as Project Management Institute (PMI), the Gartner Group, and Forrester Research, 25% of all PMOs closed within one year and 50% closed within two years. Clearly, PMOs face significant challenges within their organizations. On the other hand, the need to successfully complete projects has never been greater.  Most companies recognize that projects are a major vehicle by which companies grow, improve and meet their business objectives.  The need to plan, monitor, and execute projects has never been greater. Companies decide to setup PMOs to do just that but they often fail to get the desired results from them.  Daptiv’s PMO Success Webinar Series will shed light on how companies can prevent the fall of PMOs and instead turn them into a strategic asset.

We kick off our first webinar titled, “Are You Ready for a PMO” on Tuesday, September 25. It will focus on how organizations can assess the need for a PMO and how they should go about setting one up. Come join the discussion with 250 industry professionals who have already signed up for the series. Panelists will include Mark Perry of BOT International and Dave Blumhorst of Daptiv Solutions, LLC.

To find out about more the Daptiv PMO Success Webinar Success Series, click here.