PPM in IT
PPM in IT

Project Portfolio Management Works for More Than Just IT

5 min read

When people hear the term project portfolio management (PPM), many think that it is a process to manage IT projects and investments. This is not surprising considering Richard Nolan first applied the portfolio concept in relation to IT back in 1973 in an article in the Harvard Business Review.

Using project portfolio management principles to manage IT investments has been working well for years. However, there is absolutely no reason those principles should only be applied to IT. In 2006, Anand Sanwal, CEO of CB Insights, and former VP of American Express, said, “I remain amazed at how the entire portfolio management discipline has become largely focused on enabling corporate portfolio management for IT investments. Corporate Portfolio Management should be used for any area where discretionary expenditures and hence investments are occurring including advertising & promotion, innovation/R&D, operations, sales, IT, capital expenditures, etc.” In the twelve years since he made that statement, we have found many companies are applying portfolio management to project portfolios across the organization, but we still run across a fair number of organizations who do not realize that it works for business areas outside of finance or IT.

First, let’s take a quick look at the problem organizations were trying to solve by applying PPM to IT, and if that problem exists in any other areas of business.

Why Project Portfolio Management Makes Sense for IT (and Beyond)

Many companies initially began to apply the concepts of portfolio management to their IT projects because they had no visibility into what was being done throughout the organization, and they had no defined processes for reviewing project proposals.

Senior management recommended whatever projects they thought made sense. Projects were approved without knowing if there was enough capacity to complete them. This meant that most of the time they were taking on many more projects than they had capacity to complete. If strategy changed mid-project, projects were usually still completed even if they were no longer aligned to strategy, which led to a lack of resources or capacity for higher priority projects based on the new strategy. I have personally seen this exact situation in departments having nothing to do with IT. If the situation I just described sounds familiar to you, I encourage you to read on to find out why we think project portfolio management is your answer.

How Project Portfolio Management Can Help

In a nutshell, portfolio management can help you organize and gain visibility and control of your [enter your area of business here] projects. This enables you to make plans that work and deliver value to your organization.

Benefits of project portfolio management include:

  • Getting a comprehensive view of projects in relation to your company’s strategic objectives to ensure that the right projects are being done
  • Keeping all levels of management informed and aligned
  • Maximizing the value of the project portfolio
  • Improving resource and capacity planning
  • Reducing the number of “bad” projects that are approved, and knowing when to cancel “bad” projects that are already in process

How to Get Started with Project Portfolio Management

Have we piqued your interest? Now the question you may be asking yourself is, “Where do I even start?” PPM processes can be very complicated, but they don’t have to be. It makes sense to keep things simple from the start, so I’ll briefly share the basics of the Lean PPM™ method many of our customers have found helpful. You can find a lot more information about Lean PPM™ on our blog and project portfolio management page.

If you are starting fresh with project portfolio management, the first thing you will want to do is create an inventory of all current projects, each project’s status, timeline, resources used, as well as any additional resource requirements and resource conflicts.

Once that is done, you can start the Lean PPM™ process. There are four areas of activity involved in Lean PPM™:

Strategize – translating business strategy into project selection guidelines

This includes determining the criteria to evaluate projects. You have to decide what criteria makes the most sense for your organization (for example, criteria based on strategic objectives, revenue, ROI, or risk). These project selection guidelines will be applied to new project proposals as well as to current projects that have not yet been evaluated.

Collect – gathering new project proposals

Project proposals should include a brief description of the project idea, the benefit the project will bring based on the evaluation criteria, and a rough estimate of the efforts required.

Decide – deciding which projects will be implemented, when

  • Pipeline review: Quality assurance and ranking of the initiatives
  • Portfolio board: Makes decisions on the future composition of the portfolio and the respective budgets
  • Communication of the decisions

Execute – managing approved projects

A large portion of the execute phase belongs to project management. The job of project portfolio management during this phase is multi-project coordination. Project managers are responsible for operational processing, which consists of staffing, recording project status and resource requirements, resolving resource conflicts, and operational project management.

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