We have all heard the story about How the Grinch Stole Christmas. Every organization has a “Grinch” of their own, most specifically a project portfolio management (PPM) Grinch. The Grinch is the naysayer, the one who is always skeptical about portfolio management benefits, the one who cannot open their eyes beyond the initial costs and see return on investment (ROI), and the one who ultimately stops you from making improvements in your PMO.
Here is how the Grinch is stealing from you:
One of the most important charters of any project management function or PMO is to deliver projects successfully. Success is a broad term and will vary from organization to organization – commonly success is measured by on-time and on-budget project delivery. According to the Project Management Institute (PMI), the industry-wide project success rate is 64%. Considering the tools and processes available to PMOs, this should be considered a failure. While much is out of our hands, many unsuccessful projects can be prevented through proper communication, tracking, and decision making. For example, in the case of on-time delivery, organizations that implement a high maturity of portfolio management will see 71% of their projects on-time, as compared to 41% for those with low or no portfolio management. The same case is for on-budget projects with high maturity portfolio management organizations reporting 74% on-budget projects versus 46% (Source: PMI). By not implementing portfolio management in a PPM system, your organization is missing an opportunity for more on-time and on-budget projects.
Delivering value or having the perception of delivering value is one of the biggest challenges for IT PMOs. In fact, according to the State of the CIO, 56% of business executives still view IT as a cost center. This perception is also why 72% claim their PMO continues to be called into question by senior management (Source: ESI International). Your PMO is delivering value, but the inability to demonstrate this value contribution is hurting you. There are many ways PPM can help demonstrate value – prioritization based on business alignment, portfolios for better decision making, detailed resourcing plans, and accurate forecasts or roadmaps. My favorite one is having the ability to determine ROI on strategic projects or initiatives. According to PMI, organizations that consider themselves as “portfolio management leaders” can demonstrate ROI for 30% of their strategic initiatives, as compared to the reported 7% from other organizations. A best-of-breed PPM solution will provide top-down visibility and configurable reporting to demonstrate ROI, regardless of how your organization defines return.
Communication & Reporting
Another critical expectation from project managers and the PMO is accurate communication and reporting of projects and initiatives. This may include project health, risks, schedule updates, or some other key performance indicators (KPIs) agreed upon by the organization. Over 80% of business executives believe that project management teams should report on project status as one of their primary objectives. However, it is not happening – only 33% of business executives feel project managers are doing status reporting well (Source: Gartner). Why is this the case if most would not argue this is a focus area for the role? Many organizations have not enabled project management teams with the proper tools to do effective and efficient reporting. A PPM solution will provide several configurable reports and dashboards to facilitate communicating with all stakeholders – from team members, to management, and the line of business (LOB).
Decisions will be made based on current information, but when the environment changes, the PMO should strive to have organizational agility. Adapting to changes is critical as nothing in today’s business world is static – priorities change, resources move (or get moved), and business needs evolve to stay competitive. PMOs should constantly look for ways to increase agility and stay aligned with business goals. Organizations with portfolio management have 6x higher strategic adaptability – ensuring they are more likely to be aligned with business objectives than those without portfolio management (Source: PMI). High levels of business agility creates a rippling effect – alignment ensures working on prioritized items, prioritization ensures focus on value, delivering value results in changing perceptions, and so forth. PPM solutions that support both portfolio planning and project execution capabilities will enable organizations to increase business agility and reap its benefits.
As you wind down the year and start to plan for the next one, don’t let the PPM Grinch steal from you. Develop the argument and justification for investing in PPM software. Here at Innotas, we have put together a new guide, “Building a Business Case for Project Portfolio Management (PPM): Enabling Every Level of the Organization” that will help you communicate the benefits of PPM for each role and level in your organization.