The Business Driven PMO

Guest Post: Ian Knox, VP Marketing, Daptiv

I attended Gartner Symposium/ITxpo 2011 in Orlando last week for the world’s biggest industry conference focused on IT leaders with over 7,500 senior IT executives (including 2,000 CIOs). Here are some of my takeaways from the Gartner sessions at the event:

(1) CEOs continue to worry about business uncertainty. The four major risk areas of (1) government direction, (2) commodity prices, (3) financial stability, and (4) popular confidence are causing continued business uncertainty. Although many business leaders are publicly stating a bullish ‘Plan A’, they are privately considering a scaled back ‘Plan B’ if some of the risks materialize.

(2) IT budgets will be flat for 2012. Similar to the last 2 years, Gartner is predicting flat (<2% growth) in IT budgets for 2012. However, flat IT budgets do not mean that IT is perceived as not delivering strategic business value. In a recent survey, 52% of CEOs see IT providing innovation or growth opportunities for the business vs. the typical cost reduction, efficiency and effectiveness benefits. Other areas of the business are seeing budget cuts, so flat or slightly growing IT budgets should be viewed positively.

(3) IT needs to focus on creating measurable financial benefits for the enterprise. Gartner states that by 2016 that 50% of CIO new project spending should be directed towards measurably improving enterprise financial conditions. This reinforces the importance of PMO leaders to help drive this shift by providing CIOs with the right project intake process to pick investments that will align with this strategic imperative.

(3) SaaS PPM tools provide more “Bang for your Buck”.  In the Project and Portfolio Management Applications MarketScope presentation, Gartner highlighted that SaaS PPM tools are driving down cost of ownership and presenting more risk-averse options for customers. One of the criteria for MarketScope evaluation was the overall PPM risks of tools, including price, complexity, start-up, and adoption. It was great to see Daptiv was given the highest MarketScope rating this year of ‘Strong Positive’.

(4) Social business software is primarily focused on marketing and customer service functions.  Although there is a lot of hype about the new ‘social enterprise’, Gartner’s recent Social Media Survey found that ‘strengthening customer relationships’, ‘enhancing brand awareness’ and ‘creating interactive customer relationships’ were the main drivers for social software in the enterprise. Although this will likely change to include project management in the future, increasing ‘employee productivity’ and ‘decrease business costs’ were not yet a hot focus area for social business software.

(5) Discussion of “Project” and “Project Portfolio” gives way to “Program”, “Product”, “Application” and “Service”. Given the broadened use of PPM tools for managing businesses beyond projects, more organizations are now taking a holistic view of their business by using PPM tools to manage end-to-end service portfolios, product delivery, application lifecycle management, and change management programs.

Ian

For a long time we’ve recognized that strong executive support is a key success factor for any project.  The project sponsor role was identified to address that need and now project managers make sure that someone’s name is always in the project sponsor space provided on all of our project documentation. 

But have we really taken the time to make sure that the person we identify as the project sponsor is the right person to fill the role?  Has anyone told them they are the sponsor? Or has anybody bothered to let the project sponsor know what being a sponsor really means and what we need them to do?  If the answer to any of these questions is anything other than a loud, resounding “Yes!” then we may as well leave the space on the form blank.  

Herein lays the difference between defining a project sponsor and truly having a project sponsor – the first looks good on paper, the second produces results.

So here’s my open letter to all those sponsors out there…

Dear Sponsor,

I know that you want this project to be a success and that you expect me as the project manager to dedicate myself to that goal.  I’m more than willing to do that, but here’s what I’ll need from you:

1.  Take ownership. If you are really the sponsor you’re supposed to have a strong, vested interest in the success of the project and you need to actively advocate for it. Don’t passively wait for stakeholders to throw up barriers to the project – you need to go out and SELL. I need you to directly address objections and be involved in the sometimes touchy negotiations and horse-trading that is needed to clear the path for the project team.
2. Be part of the project team. Actively engage in defining the objectives and desired outcomes of the project and help to continuously clarify, remind, and refocus everyone on what those are.  When there are conflicting objectives or when difficult issues arise, work with me and the team to evaluate alternatives, make tradeoffs and negotiate with difficult stakeholders to be absolutely certain that there is no question about what we are doing and why. 
3. Be available and accessible. I understand that you are busy but periodically I need your undivided attention. I need to update you on our accomplishments and challenges, let you know if we need help on issues, make you aware of risks, and bring items to you for decisions. My job is to use your time wisely and keep you informed, but lack of access to you makes that all the harder and more time consuming for both of us. 
4. Keep me informed. I realize that things will happen that I may not know about – or that you can’t tell me.  But if something comes up that’s going to impact the project, like reprioritization or a budget cut or even cancellation, the sooner I know the better. I promise I’ll do the same.

Sincerely,

The Project Manager

I talk to clients and prospects on a weekly basis about “What-If” analysis; most of the time the conversation revolves around capacity, specifically having enough resources to execute work. Too often project managers keep their focus on the capacity problem.  However, the problem they truly need to address is a portfolio problem, a demand management problem.  This is true for every organization except those whose revenue is driven directly by their ability to meet the demand, such as professional services organizations.

When clients tell me they’re overworked, there’s a tendency is to focus on capacity issues first. The fundamental question then becomes, are you working on the right things?  Although capacity is one of the common constraints in portfolio management, initiating planning exclusively to focus on managing capacity is fraught with errors.  Organizations focused exclusively on workload have a tendency to manage resources at a micro level and that just isn’t sustainable.  I once had a client where, when he moved his focus from matching capacity to demand and began focusing on the right things, the dialogue changed and he became more connected to the business. Dialogue between the organizations ensued that actually increased the quality of business outcomes.

Ending up with an optimal portfolio is a two-step process. First is to align the portfolio of projects to match the performance objectives (business outcomes) of the portfolio. Second is then to match capacity to that portfolio scenario.  This is an iterative process until you end up with the optimal portfolio.  Don’t be afraid to review these decisions throughout the year -  as business rhythm changes, so might the portfolio.

Aligning the Portfolio

The best practice approach to aligning the portfolio is to first identify the correct mix of project investments that fit the performance objectives of the portfolio. Different outcomes require different analysis; one or more of these approaches may be required to complete the what-if analysis:

• Strategic Intent – focused on completeness of strategic vision or fit. Classically visualized with investment maps (bubble charts). As an example, the x and y axis represents Timing and Risk (although a priority score containing risk is also acceptable). The bubbles represent the project or investment. And the size of the bubble is either cost or an economic return metric such as ROI.  This is a simple, efficient approach and the key is interpreting the “shape” of the investment map (we will need to address that later).  For more portfolio mature organizations, an efficient frontier approach may be appropriate.
• Diversified / Balanced Intent – To provide insight on the right mix of investments. We never want to put all of our eggs in one basket.  This is particularly true for organizations that need to maintain a particular quality level of existing assets. IT organizations have  infrastructure and legacy applications where they need to maintain an acceptable service level agreement. If they don’t renew those assets, and only work on high priority projects, then the expense that the business will eventually need to incur to “fix” those neglected assets could be devastating to the budget. To visualize Balanced Intent, classifying and stratifying investments into those import investment categories and using pie or bar charts to understand the mix of investment is considered a best practice.
• Operational Intent – To provide insight on demand versus capacity.  Although an advanced method, Operation Intent classically takes the selected scenario from any or a combination of the above techniques and applies capacity to it -- Capacity as aggregated to “resource type.”  Ideally that would involve a prioritization metric that will allow scenario analysis to individually adjust the scenario by adding and subtracting projects from the scenario.
• Risk Intent - classically an advanced portfolio technique used for asset analysis and product portfolios. Risk intent analysis would include:
• Market attractiveness versus Business strength and competiveness
•  Tornado charts that evaluate the risk range of multiple topics

Setting up What-If analysis correctly and capturing those scenarios (and the decisions on the scenarios) makes the process go smoother.  Revisiting those decisions and reprioritizing becomes simpler.  Adding and subtracting investment into the “buckets” created for Balanced Intent allows organizations to focus on business outcomes with multiple lenses and not a single view, creating a true apples-to-apples comparison.

Most CIOs struggle with a common problem: the insatiable demand for IT work from other departments. Most strategies for dealing with this involve work request intake processes and prioritization schemes. Some may take the extra step of allocating their resources, usually against projects. But if you simply look at the problem statement, the path to a solution becomes more obvious. To balance the load we must match the incoming demand for work against the supply of resources to perform it.

In many IT departments this work comes into the organization in an ungoverned fashion. Minimally, support work may come in through a help desk system, but sometimes not. When not flowing through a defined process, projects may come in via email, hallway conversations, or direct requests to technical staff. This subjects all staff to the dreaded “death by a thousand paper cuts” as work comes from all directions to just about anyone in IT.

There are several keys to successfully balancing IT’s often overwhelming workload:

1. Consider all of IT’s work and staff, not just projects and programmers. As everyone in IT may get involved in the various types of work IT does, narrowing in on just one aspect will not solve the problem.

2. Govern the workload by scale. Tickets are governed by help desk queues, enhancements by targeted percentage policies, and projects by a formal intake funnel. Each of these groupings is governed in a different fashion, each ideally comes through its own intake process, and therefore each needs to have resource allocations planned differently.

3. Plan capacity early. Like any other department that produces tangible product – in our case various technologies – a little planning is in order. Capacity planning is the science and art of aligning all incoming requests with the proper work teams and deciding which ones hit the floor when to make the most efficient use of available capacity. Just like in manufacturing, capacity planning must be done long before efforts like projects are launched. Done properly, this reduces the scramble for resources and minimizes conflicting priorities. It also allows more work to complete without interruption, reducing inefficiencies caused by churn.

4. Track all time. To truly understand the workload in IT, everyone from the CIO on down must log their time. It is simply not possible to segregate the work by one specific IT area or one type of work – no matter how the department is organized. At a minimum, they must log time to the different scales and types of work and to individual projects. Without this critical feedback, even the best planning process is just guesswork. 

Above all, IT’s job is to provide information technology that supports and enables the achievement of business strategies and goals. Ensuring that all work is properly governed and planned helps IT stay in alignment and deliver to those goals efficiently and effectively.

We all feel the pressure of “Do more with less.” Run lean. Increase quality. Move faster. These are not just management-speak, they are reality. The macroeconomic climate of the past few years has mandated we find new ways to increase efficiency or be left behind.

Successful teams are finding new ways to use their tools to meet these pressures.  By defining a single source of truth that is available anywhere, anytime you can begin collaborating in real-time for leaner execution.  How does this work? Let’s take it piece by piece.

Single source of truth. The first step is to ensure stakeholders understand which systems are the systems of record for a given type of information.  Your financial data goes in your financial system.  Your project planning and execution belongs in your PPM system.  HR information in its system.  Integrate them for the big picture view but define a single system for each function.  Constantly reinforce with all stakeholders the need to keep the systems current in real-time.  Putting off your updates to the system will keep your organization from finding that next 10% in your business.  Wondering if the data is reliable will restrict your ability to be nimble. 

Available anywhere anytime. Make sure your systems are available wherever and whenever your stakeholders are working.  Productivity is now pushing us round the clock and round the globe and our systems need to support that. If yours don’t, you need to look at new systems. SaaS and cloud technologies are making it clear this is the new norm.  Removing any friction in accessing your systems will ensure the single source of truth remains reliable and accurate. 

Collaboration in real-time. Change how you work together (with another individual, an executive steering committee, etc).  Always open up your management tools and use them in meetings.  As we all have increasingly distributed teams this is key to keeping everyone engaged and aligned.  Guide the discussions based on the data in your system of truth.  This keeps the discussion focused, generates buy-in (“we all saw it in the meeting”), removes ambiguity and creates accountability.  Capture decisions and changes in your systems as the meeting is happening.  If your systems make it too cumbersome to edit information quickly consider new tools or push vendors for better user interfaces.

By defining a single source of truth, ensuring your systems are available anywhere anytime, and collaborating in real-time, you will help your teams do more with less.