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September 2011

Integrated Portfolio Analysis -- How Did We Get Here and Are We Finally Ready?

Recently, Gartner took a new look at the whole notion of PPM, from an enterprise and IT perspective. For those of you that have seen my previous post, you know that we applaud this change. The landscape outlined in the new Gartner PPM Market Universe is dead on with where portfolio management is headed.

Integrated Portfolio Analysis - How Did We Get Here?A major component of this research is the new Magic Quadrant for Integrated IT Portfolio Analysis Applications. At Planview, we are humbled to be positioned in the Leaders Quadrant in this new Magic Quadrant that redefines the IT portfolio landscape. Rightfully so, the title of this new Magic Quadrant does not include the word "project", because managing projects is just one part of any IT organization. IT organizations provide their internal and external customers with applications and services that run their businesses. Projects are simply a mechanism for driving change within the application and services portfolio, as well as the underlying IT infrastructure. This interplay is at the heart of IT management and hence the new Magic Quadrant.

Certainly we all recognize Gartner's track record for market insight and their influence in the IT community. Gartner's endorsement of "Integrated Portfolio Analysis" is sure to stimulate a lot of conversations in the IT community. But I think it is worth noting several historical milestones that got us to this point.

The first occurred in 2005 when Forrester published what at the time was a seminal perspective on Integrated IT Management or IIM. This report spurred the initial wave of thinking in the portfolio management community on the potential expanded reach of portfolio management. It was also influential in driving Planview's original investment into supporting application and services portfolios as part of our solution. It was probably a little ahead of its time; but Margo, Phil, and team got the ball rolling.

The second moment happened in 2008 with the release of ITIL 4. A significant component of ITIL 4 was the addition of services portfolio management as a formal discipline. This was the next jolt in driving the recognition of portfolios beyond projects. Unfortunately, ITIL 4 momentum was all but squashed by the onset of the economic recession, but ITIL initiatives are beginning to pick up steam again.

The economic recession, and the "new normal" it introduced, brought the third key milestone in this evolution. The intense financial pressure that IT organizations were under drove them to rationalize every aspect of their business. Globally we saw IT organizations go after one of their largest and most costly portfolios with a vengeance -- the application portfolio. The economic recession forced a new level of maturity in application portfolio management.

So that brings us up to today and the latest Gartner research. There is a great opportunity for IT organizations to drive towards an Integrated Portfolio Analysis model. Very few are there today, but when I meet with customers it is clear they see the value, and most are already doing bits and pieces with varying results. Gartner adding its perspective represents another significant milestone in this emerging IT management capability; it will be interesting to see how IT portfolio analysis evolves as a result.

Related post: Brave New PPM World

Highlights from Gartner's PPM and IT Governance Summit -- Part 1: The Evolving Role of the EPMO

Evolving Role of the EPMOAt the opening session for Gartner's PPM and IT Governance Summit in San Diego in June, the topic was "What's HOT and What's NOT in PPM and IT Governance." Speakers Audrey Apfel, Donna Fitzgerald, and Tina Nunno focused on different aspects of delivering value in turbulent times.

Pretty much everything they said aligned with what I've been touting as well.

Specifically, they talked about the future of project-based work in general, as well as where PMOs and Governance are headed. There were four key points that jumped out:

  1. The role of the EPMO is changing, with a focus on leading business change and strategy.
  2. Communication is key, and when communicating to executives, it's better to be interesting than complete.
  3. Traditional governance processes and PM systems crush innovation and stifle the very thing executives are after -- competitive advantage.
  4. PMOs need to be adaptable to the organization's culture and maturity to stay relevant. This must be combined with a focus on progressively driving business capabilities.

Regarding the first item -- the changing role of the EPMO -- I think we've all been seeing this shift for some time now, and it's good to see it validated in the industry. Projects and programs are growing ever more complex and uncertain, leading to more adaptive project management approaches and a renewed focus on business capabilities.

No doubt, tomorrow's PMO (and today's for that matter), needs to shift its focus accordingly in order to remain relevant and vital to an organization. An EPMO is in a unique position to be able to help bridge strategy, execution, and finance in an organization and help align everyone around business capabilities. This, combined with leading the way in portfolio management across project, products, assets, and services can truly make a difference in an organization.

In my next three posts, I'll comment on the other three key points from Gartner's presentation; effective communication, driving competitive advantage and innovation, and driving PMO maturity.

How Portfolio Management Can Maximize CIO Contribution to Shareholder Value

Written by Steven Cristol, Founder and Managing Partner of Strategic Harmony® Partners

Steven Cristol

ZDNet recently ran a piece entitled, "5 Reasons the CIO Can Be a Corporate Sustainability Hero." Interesting and true, but I felt like they buried the lead as journalists like to say. Sustainability is crucial to this story, but far more powerful when considered in conjunction with the CIO's impact on his or her company's brands. So in the dual contexts of brands and sustainability, let's consider one of the most important components of many CIOs' project portfolios: IT projects that enable product development and delivery.

Corporate Sustainability HeroA few months ago the CIO of a well-known consumer electronics company helped me document that nearly half of all his IT projects fell into that category. Prioritization of those projects is often sub-optimized in portfolio management since, as another CIO so aptly put it, "a big driver of IT priorities is which business unit's GM screams at IT the loudest." This obviously sub-optimizes the CIO's contribution to shareholder value creation.

Taking a page from the product portfolio management playbook can trump those politics. Consider that the most strategically sound approach to prioritizing new products/features is based on the combination of (1) alignment with drivers of brand choice (how customers decide between offerings -- i.e., attributes that define ideal customer experience) and (2) competitive impact. As it has become increasingly impossible to manage a brand without proactively managing sustainability, now a third element is required: how sustainably can those products or features be developed and delivered? These three considerations -- ideal customer experience alignment, competitive impact, and sustainability -- when evaluated along with resource requirements and risks, provide as useful a foundation for prioritizing product development-related IT projects as for actual product development projects.

The ZDNet piece had this right: IT touches every division, CIO's know how to work across silos, and they know how to think sustainably -- accustomed to projects with large capital requirements that can no longer be cost-justified without sustainability costs and benefits integrated into ROI analyses. Let's leverage that knowledge by combining it with what their internal clients know: what end customers want and what competitors fear. Tying that all together and then back to product-enabling IT projects is a powerful lens through which to manage CIO portfolio optimization for brand impact and value creation. All of which, when integrated with early evaluation of likely environmental impacts of IT projects, makes the CIO not only a sustainability hero as ZDNet suggested, but a total brand hero as well.

Customers, shareholders, and employees all share in the CIO's triumph when the voice of the companies' customers is injected into IT portfolio management in a more disciplined way. Your comments welcome on whether or not -- and why -- ideal customer experience, competitive imperatives, and sustainability are driving CIO portfolio priorities in your organization. Or how you're handling those screaming GM's.