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April 2012

A Seat at the Table -- Making Your PMO More Relevant in Time of Change

At the PMO Symposium in Orlando several months ago, Planview's Expert-in-Residence Terry Doerscher and I discussed a number of topics that seemed to permeate the conference. There were a number of sessions decrying the lack of PMO focus on value and benefits. And several sessions spoke of the growing trend toward lean and adaptive methodologies, and how the PMO can best accommodate and nurture them. There were even a few sessions on organizational adoption and culture change -- mine being one of them, and Terry’s being another -- and the measurement of these often-forgotten factors.

Terry and I agreed that, in a sense, all of these topics were about change -- how to manage it, how to anticipate it, and how to leverage it. In that regard, we began to think of the PMO as a "change management office." This, we surmised, would make the PMO a crucial and indisputable partner in any organization's leadership circle.

In such an environment, the PMO's role would be threefold:

  • To foster and manage alignment, including strategic, functional, and cultural alignment
  • To enable effective portfolio management as a way to bridge strategy, operations, and finance
  • To refocus the organization on benefits and value, thus ensuring the best use of limited resources

In performing these critical functions, the PMO would shift its focus away from primarily monitoring and measuring execution success and dictating approaches, though it can and should provide guidelines, tools, and principles. Project managers and their teams should be empowered to choose the correct approach, with everyone agreeing on which items must be standardized, either for general effectiveness or for reporting purposes.

This leaves the PMO to focus on alignment toward value, paying attention to things like: outcomes and key drivers; ongoing validation of benefits and risks; assessments of competency and commitment across the organization; and, finally, integrated portfolio management of projects, services, assets, and products.

It's this broader view of alignment, combined with a business outcomes/capabilities focus, that enables an organization to embrace change and remain flexible and agile. Indeed, a PMO that's down in the weeds, focused purely on on-time, on-budget, and on-scope measures, is missing its key value to the organization.

To learn more about this topic, register the latest white paper titled, A Seat at the Table: Making Your PMO More Relevant in Times of Change.

Application Portfolio Management: Why Organizations Don't Understand the TCO of Their Applications

Application Portfolio Management (APM) is a process used to attempt to capture application performance and spending over time. Recently, Gartner published a report stating that "Fewer than 10% of Global 2000 organizations understand the full costs of their applications." ¹ Why are so many organizations failing to do this right? I believe these organizations are using a "bottom-up approach" instead of the "top down approach" as mentioned in my previous blog titled, Application Portfolio Management: How Much Are Your Applications Really Costing You?

What's the difference?

Top to Bottom ApproachThe commonly used bottoms-up approach starts with trying to understand and integrate with the asset relationship data in the configuration management database (CMDB). It also requires the gathering of asset data attributes from an asset management system and the creation of financials to track the assets that relate to the applications. Then, any projects that relate to those assets or applications are verified. What's wrong with this approach? It is extremely time consuming to implement. The data may not be accurate in these systems, which then starts an initiative to clean up the data. The goal becomes complete transparency and precision of all assets and applications, as well as building out the service catalog rather than application portfolio management.

My previous blog briefly discussed using an automated, top-down analysis technique that breaks down large application portfolios into smaller departmental subsets that are easier to manage. To be more specific, this top-down approach begins with simply listing all of the applications that IT manages. This can be accomplished by asking each business unit what applications they use most and what drives the most value in the organization. Once the list is created, identify the attributes that should be tracked for each application, such as number of users, business and technical value scores, and the technology platforms the application runs on.

Next, determine costs by:

  1. Talking with Finance to determine the current process for tracking application costs. If it's not tracked at the application level, work with Finance to establish better application cost and forecast tracking methods moving forward. It's okay to start with estimating the cost allocation percentage per application and refining over time.
  2. Looking at the project portfolio already implemented. Many projects are tied to application releases or implementing new applications. The labor and other costs related to those applications can be rolled into an application portfolio management software solution.

You now have the beginnings of an application TCO and portfolio that enables you to make decisions to eliminate redundant applications or de-scope planned projects tied to non-strategic applications. This will lower your "run-the-business" costs and expenses while fostering a better relationship with the CFO and your business sponsors.

I want to hear from you. What are your strategies for understanding the TCO of applications? Share your experiences and best practices -- leave a comment below.

¹ Gartner, Inc. (Darryl Carlton), "APM Has a Critical Role to Play in Developing Your Application Strategy" March 15 2012.

Related post: Application Portfolio Management: How Much Are Your Applications Really Costing You?

Q1 Reflections

The beginning of any new year brings with it a familiar cadence of activities for our organization. Most revolve around ramping up a fiscal year with our sales team and launching the latest version of Planview Enterprise®. This annual cycle certainly represents one of the most intense times of the year. Preparing for sales and consulting meetings, launching the latest release, and the subsequent GA process make Q1 a big push across the country.

Part of our product launch plan is a comprehensive process of touching base and briefing all of the industry analysts that cover the portfolio management space. Every year, as the portfolio management segment continues to grow, this activity gets larger and larger. Globally, we are interacting with close to 30 analysts across a wide range of sectors. This body of work always provides interesting insights I thought I'd share a few highlights.

Enterprise software is a good place to be. In addition to introducing our latest products, part of these briefings is a review of our previous year performance as a company. We were fortunate to have a very strong 2011, a record year across most metrics. From our analyst meetings it was clear that we did better than average, but it was equally clear that enterprise software companies across the board had strong years. As we continue to read varying reports about the state of the economy, software is a strong sector. In short, organizations are still looking to drive efficiencies in their operations and focus their limited capital on innovation -- software is a good investment on both fronts.

Software as a Service (SaaS) continues to gain momentum and drive growth. It is no surprise that the cloud and SaaS are hot trends in software, but the full impact of this trend. We all read about the pure SaaS players that are the poster children for this trend may not be obvious. But the other side are the hybrid companies like Planview that for the past several years have aggressively retooled themselves to leverage the SaaS trend while continuing the commitment to new and existing on-premise customers. In 2011, SaaS represented over half of our new customers, and our SaaS offering created incremental new market opportunities that were not addressable before. The analysts I spoke with recognize that "established" software companies need to be hyper aggressive to serve this new landscape and this has been our approach.

Markets are built by best of breed players. Across the analyst community there is validation that portfolio management is seeing tremendous growth in traditional segments like IT and also in a variety of line-of-business (LoB) segments. IT product portfolio and program management (PPM) has been a vibrant market for many years and these new LoB segments are emerging markets that require commitment and investment to reach their full potential. In my conversations I think it is safe to say that it is the best-of-breed players, like Planview, that are making these investments. The mega-enterprise software players have too broad a product portfolio to apply the focus necessary. They are not agile enough to navigate the dynamics of these new segments. Someday they will look to harvest the opportunities created, but in the mean time, the best-of-breeds will drive forward. This is common in many categories; we are now living it in PPM.

Product Portfolio Management has "Crossed the Chasm." As mentioned previously, we are experiencing a period of rapid growth in the use of portfolio management. One of these areas is the use of PPM by product development teams looking to make the best pipeline selection decisions and ensure the optimal use of their precious engineering resources. This has been a growing trend, but during this year's analyst briefings there was a sense of critical mass to this conversation. Indeed, when posed the question, every analyst I spoke with agreed that this application of PPM has "crossed the chasm." I will spare everyone a lesson on the technology adoption lifecycle, but this is an important moment in the expansion of the portfolio management discipline. If you want to learn more, plan to attend PIPELINE 2012 on May 10.

Just a few observations from our annual analyst briefings, I hope you find them useful.

Tackling Your IT Organization's Alignment Issues

I recently had the opportunity to talk with Terry Doerscher, Expert-In-Residence for Planview, about a topic that seemed to strike a nerve when we hosted the recent Webcast, Positioning Your PMO as a Change Management Office. When we got to the segment in the Webcast on operational alignment the questions from the audience came pouring in. How do I measure alignment in my IT organization? What questions should I ask of the business to get IT aligned? How do I even know if I'm aligned?

So, when I had the chance to talk with Terry, I had to ask him more about this. As we learned from the Planview 2010 PMO 2.0 Trending Survey Report, alignment issues are among the most common of operational hindrances. Departmental silos are the greatest single challenge reported by survey respondents, with 68% characterizing organizational disconnects as a "significant challenge" or "critical problem." If you are experiencing similar challenges in your IT organization, I invite you to take just a few minutes of your time to listen.

Listen to the podcast

Listen to the podcast as Terry breaks down the elements that make up operational alignment and how you can (and why you should) work to improve your organization's alignment to begin improving overall operational efficiency and effectiveness.

Are you ready to tackle your IT organization's alignment challenges? As Terry explains, it may not be as daunting of a challenge as it may seem at first. What do you think? How will you work towards being more aligned with the business? Would you consider your IT organization to be well aligned with the business already? What did you do to get to that point? Let me know what you think! I look forward to hearing from you.