7 May 2012

Start dismantling your IT project portfolio

There are many different definitions of Project Portfolio Management but at their core they share the concept of a business process for optimising a collection of projects and programmes. Projects are deliberately started, stopped, accelerated, delayed, split or merged to best achieve an organisation's goals.

Project Portfolio Management would appear to be a sensible management discipline so why would a CIO want to avoid it? The fundamental problem is that there are no IT projects and so the IT Project Portfolio should be empty. Nearly all projects labelled as IT explicitly include non-IT elements such as organisation or process changes and cannot achieve their objectives or realise benefits without these. Unfortunately, the remaining projects cannot be completed without risk or impact to the users or consumers of IT services and so also need to manage non-IT elements. Perhaps someone reading this blog will find an exception (in more than 20 years in this field I have not found any) but there will never be enough to justify an IT-only process.

IT project portfolio management without IT projects


If this insight is true why are there so many IT Portfolio Managers running IT project portfolios in so many organisations? The reality is this is a compromise. IT often accounts for less than half of the labour in a typical IT-labelled project but IT factors tend to dominate the list of constraints, hard dependencies and external costs. Over time IT has built up a concentration of scarce capabilities for tackling these factors and has developed a population of project managers who have never managed a project without IT. In the absence of any effective enterprise portfolio management IT has filled the gap. It is much better for IT to take a lead in managing the project portfolio than to leave a gap but there are dangers.

The illusion of IT projects


One danger is that the existence of a portfolio function in IT reinforces the illusion that there are a set of project which only IT people need to be concerned about. Common consequences of this problems are:
  • too much effort is spent on trying to achieve an unrealistic level of certainty about IT costs early in the project before the potential benefits have been validated and sometimes before the benefits have been quantified at all
  • investment can be fragmented restricting the ability of project teams to trade IT and non-IT solutions to problems and get the best result for the business
  • benefits realisation can be neglected and teams become focused on intermediate products (e.g. IT systems) at the expense of other outcomes (e.g. operational changes and cost savings)
  • portfolio decision making can shift from making enterprise-level trade-offs to choosing between competing bids for limited IT resources
  • IT focused project managers escalate non-IT issues and conflicts wasting executive time.

The art and science of portfolio management


Another danger of IT filling the enterprise portfolio gap is that technical or administrative staff are put in roles which do not suit their skills very well. This can lead to:
  • naive attempts to automate decision making by calculating project scores
  • half-hearted efforts to engage decision makers and confront conflicts
  • portfolio management being run as an annual design event rather than an on-going dialogue
  • the portfolio team's scope creeping out to include resource management, project office and other project management functions
  • excessive reporting or bureaucracy.

The journey to enterprise project portfolio management


CIOs need to acknowledge the compromises but keep reinforcing the vision of a portfolio of enterprise projects. My advice on dealing with an IT project portfolio is:
  • Insist on good practice business justification for projects (which normally means that the business benefits are quantified before the IT costs!) and ensure plans encompass realising the benefits and not just delivering the IT. Jim Sistek of Visteon Corp covered this in a recent interview with @marthaheller.
  • Selectively take the role of executive sponsor for particular projects and programmes where this make sense but make sure that portfolio level decisions are evaluated by panels of managers from across the business.
  • Build a project portfolio framework that could, in principle, be overseen by any of the C-level executives. This webcast from Ovum covers the basics although it is quite tools focused.
  • Keep portfolio management lean and let project governance and management teams do their jobs - your portfolio management team may need coaching on how to facilitate the process of good portfolio management instead of trying to control the portfolio themselves.
  • Establish portfolio management as a real-time process not an annual event (@cbcurran discusses some related issues in a CIO Dashboard post).
At some point other executives may start to wonder why project portfolio management is being run by IT when its impact is so much wider. Then you will know it will soon be time to hand on the enterprise project portfolio and start to focus more on the other aspects of the CIO's portfolio.

What are your views? Add a comment to this blog, use the twitter button below to let me know what you think.

Related blog post by Peter Kretzman“No IT projects”? A practical take.

1 comment:

  1. The problem with the term IT Project Portfolio is the first two words. First, anything labelled "IT" is seen as an IT responsibility/problem - not anything the rest of the business needs to worry about. Second, while, contrary to the "no such thing as an IT project" school of thought, there are in certain circumstances - technology replacement with the objective of increasing capacity/performance, reducing cost, or reducing risk - "stand-alone" IT projects (although the decision to proceed with these is still a business decision) most IT projects are part of broader and more complex investments in change - change that is both shaped and enabled by IT, but of which IT is often only a small part. From the perspective of the IT function, a portfolio of IT projects is useful, and indeed necessary, to support the effective resourcing and execution of these projects. However, at the enterprise level, what is required is a portfolio of investments in change, many/most of which are shaped/enabled by IT. These investments should be structured and managed as programmes of change, containing all the projects that are both necessary and sufficient to realize the desired business outcomes and create and sustain business value. These programmes, in addition to IT projects, would include business projects to change all or some of the business model, business processes, people's work, and the skills required to perform that work, reward systems, organizational structure, physical facilities etc.

    To paraphrase your last point, it is way beyond time that executives realized that it is they who must own and be accountable for the performance of this investment portfolio - that accountably cannot be abdicated to the IT function!

    John Thorp

    ReplyDelete

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