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Project Portfolio Management

Managing Project-Based Businesses in Turbulent Times

Published By Michael Fauscette
Managing Project-Based Businesses in Turbulent Times

No one will argue that the economy is creating many business challenges for project based businesses. Thinner margins, slowing revenue growth, fewer projects, lower bill rates, changing customer and employee expectations, and new technology trends including the consumerization of IT are daily topics for many executives. In these rough waters, how does the successful executive navigate through all of the challenges and thrive when others fail?

On my personal blog, I recently wrote an article titled, Sense and Respond, Operating a Social Business where I discuss the management concept, sense and respond, that I believe is absolutely critical in today’s business environment and has the potential to form the foundation of the next generation business operating model. Developed in the early 1990’s by an IBM researcher, the concept has the capability to transform businesses in this post-industrial, information-driven Internet economy. If you’re interested, I invite you to read it yourself when you have a chance.

This blog will highlight one of the key components of the sense and respond model: the ability to collect and analyze critical business information in real or near real time, and use that data to make timely business decisions.

So how does this apply to the project-based business? Project-based businesses are optimized by managing to key performance metrics, which has always been the best approach. The problem for many firms is that getting the required data out of disconnected and poorly designed systems can be near impossible, and even if you can get the data, do you trust that it’s correct?

What Do I Mean by Performance Metrics?

These key business indicators are broad across the entire business operation and include things like:

  • Revenue and profit margin down to the project level
  • Billable resource utilization across all locations/offices
  • Resource schedules
  • Forecast and pipeline
  • Project close rates
  • Project portfolio risk view
  • Project history
  • Project progress
  • Client open issues
  • Client lifetime value and profitable

Many project-based businesses I talk with are running on disconnected systems not designed to manage a project-based business. Many of them have systems that they have customized heavily to try and make them “fit” and/or are stuck on old technology. Some even have developed their own systems that require constant upgrades and maintenance and often do not deliver the information they need.

The Solution

There are fairly new systems available that are integrated across the entire project lifecycle and are purpose-built to operate a project-based business. These systems are called Services Resource Planning (SRP) and provide all the tools to optimize resources, manage project portfolios, optimize profit, effectively manage client issues, and optimize firm financial management, all in an integrated system with projects at the core.

Operating in a sense and respond model requires reliable, timely business data and to get that you must have integrated systems in place that can provide the right data at the right time. For project-based businesses, SRP delivers the data necessary to navigate your business effectively and are absolutely an essential part of your business strategy.

I want to hear from you. How are you currently gathering performance metrics in your organization? Are they accurate? Share your experiences by leaving a comment below. For more information on this topic read the latest IDC Executive Brief titled, Services Resource Planning: Systems for Effectively Managing a Project-based Business.

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Written by Michael Fauscette

Michael Fauscette, Group Vice President, leads IDC’s Software Business Solutions Group which encompasses research and consulting in enterprise software applications including ERP, SCM, CRM, PLM, collaboration and social applications, software partner and alliance ecosystems, open source software, software vendor business models, SaaS and cloud computing, and software pricing and licensing. Having spent an extensive amount of time working with software end users throughout his career, Mr. Fauscette has a business process oriented and end user focused approach to software research and analysis. He conducts market research, analysis and consulting on emerging markets and technologies like social business, enterprise 2.0, go to market strategies, end user requirements, application implementation, vendor business models, partner strategy and end user experience.