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Building an Innovation Portfolio -- 10 Key Takeaways [Infographic]


I recently hosted a discussion with Forrester's, vice president, principal analyst serving CIOs, Chip Gliedman and Planview's NDP solution market manager Carrie Nauyalis about innovation and portfolio management, and how the two relate. I've included an image of the visual notes designed during the live event. They provide a visual reference for the topics and key takeaways.

Infographic: Building and Managing an Innovation Portfolio

We Had a Lively Discussion on Five Topics

  1. What an innovation really is and how it differs from change
  2. The capabilities needed to support sustained innovation across the enterprise
  3. Driving innovation forward and who typically takes the lead
  4. How to leverage an innovation network that culls ideas from inside and outside the organization; and last, but not least…
  5. How portfolio management can tie all this together

My 10 Key Takeaways

  1. Ideation is not innovation ‒‒ Innovation is a process that spans products/services, processes/operations, markets/business models, and organization/governance.
  2. Innovation differs from change; innovation:
    1. Is ongoing, not episodic
    2. Often has distinct governance and funding
    3. Implies a greater degree of creativity and risk
    4. Success metrics are different (often the driving principle is "fail fast, fail cheap")
  3. Balancing Risk vs. Reward is key; strive for innovations that drive value
  4. Exploit the entire ecosystem including employees, customers, suppliers, and more
  5. Innovation may be "everybody's job," but to thrive it is best driven, or at least supported, by a single area.
  6. Regardless of where innovation "sits" in an organization, the CIO role is going to need to shift to support the growing trend toward more innovation initiatives
  7. Product Portfolio Management (PPM) helps operationalize innovation throughout the Ideation, Product Planning, Development, and Launch processes. It also helps align projects and other investments with products, and aligns products with brand strategy.
  8. Be sure to make room in your project portfolios for innovation projects, even smaller efforts that may not have a major impact on current business operations, but help enable business change or growth.
  9. PMOs should not only help accommodate and support innovation projects (relaxing their methodology and metrics as appropriate), but should encourage and drive the trend. This can also serve to improve the image of the PMO as a bureaucratic bottleneck.
  10. To drive innovation, you need:
    • A strategy for driving and managing innovation
    • A culture that fosters innovation
    • Ideas! And lots of them!
    • Processes to filter and vet the ideas
    • A portfolio view of your innovation prototypes
    • Governance and control processes for innovation

For more information, listen to the full Webcast discussion Building and Managing an Innovation Portfolio. Meanwhile, I'd like to hear your thoughts. Who drives innovation in your organization? What processes do you have that ensure innovation is considered? What is the maturity level of your innovation program and what challenges are you facing? And lastly, what do you find stifles innovation in your organization?

The Top 5 Priorities for Your PMO in 2013


On January 28th, ProjectsAtWork featured an article by Jerry Manas titled, Were the Mayans Right About Your PMO? In it he covers the 5 key things you need to worry about concerning the fate of your PMO ‒‒ a list of undeniable trends and predictions for the coming year.

The article follows the End of the World Webcast Jerry hosted where he dropped some ancient Mayan knowledge that dispelled all of the "end of the world" myths that were floating around, but also brought to light a startling statistic that indicates that your PMO could face its demise if you don't make these 5 key points a priority in 2013. Did you know that 75% of PMO's are dissolved within the first 3 years of starting?1

In the article, Jerry leverages the doomsday theme as a background to drive the point home that in order for your PMO to avoid becoming a statistic in this New Year it needs to address the following:

Top 5 Priorities for Your PMO in 2013
  1. Floods (Resource Management)
  2. Blindness (Predictive Analytics)
  3. Risky Adventures (Innovation Projects)
  4. Crevices (Portfolio Management)
  5. Beasts (Understand Agile)

Here's a look at the article:

"In December, I presented a webinar dispelling the numerous myths about the Mayan end-of-the world predictions, not the least of which is the fact that the circular sun stone tablet referred to in 95% of the websites predicting doomsday is in fact Aztec, not Mayan. But I did, however, share the more realistic doom and gloom cautionary messages for PMOs in 2013 ‒‒ specifically five things to worry about, all undeniable trends that have been heading our way like a freight train with faulty brakes…"

Continue reading the full article by logging into the ProjectsAtWork site.

What are some of your PMO's priorities for 2013? Share by leaving a comment below.

1Margo Visitacion, "PMOs: Stop Being the Office of 'No,'" Forrester Research, Inc., Nov. 11, 2011

4 Dashboards Vital to Profitability for Tech Services Companies


In the first section of this two part series, 13 Key SRP Metrics Vital to Profitability for Tech Services Companies, I outline specific metrics necessary to measure performance across multiple business units for successful resource planning within Technology Services organizations. This blog will discuss the top dashboards required to provide visibility of those key metrics, giving the current status and historic trends needed to support effective decision making.

For a comprehensive view into business performance, technology services companies should use the dashboards to look at information from four perspectives.

  1. A top-level business perspective dashboard will typically focus on the financial performance of the business. It should monitor revenue and margins, as well as unbilled work in progress and future revenue forecasts. Controls should be in place to avoid revenue leakage. Monitoring on-time submission, review, and approval of timesheets is critical.
  2. A client perspective illustrates the revenue and margin achieved from projects delivered to them, their satisfaction levels, and their current demand for additional services.
  3. A service perspective summarizes all projects being delivered for each service line. The demand for and profitability of each service can then be determined, as well as any changes needed to be made to increase the margins achieved. The actual daily rates achieved by each role should be monitored against targets. Non-billable effort such as rework should also be tracked.
  4. A resources perspective is critical. As a global services company, increasing the utilization of resources across each region is the key to driving revenue and profit. Creating global resource pools that can be utilized on projects across the world can reduce local headcount and increase productivity. Each day a resource is on the bench equals lost revenue that can never be regained. Ultimately, every Technology Services organization should attempt to drive up their resources billable utilization, as every 1 percentage increase you can get from resources goes directly to the bottom line in terms of profitability. Getting good visibility of future demand and the knowledge and experience required to deliver it successfully will allow the most effective planning of resources.

The dashboards outlined provide access to the 13 key metrics critical to the profitability of Tech Services organizations. When considering a software solution for services resource planning (SRP), I recommend Tech Services organizations include these 13 metrics and dashboards on their list of requirements. Look for a solution with in-depth reporting and analytics capabilities that provide visibility into information that helps drive decisions that are most important within the organization.

What's on your dashboard software? Is information readily available? Share by leaving a comment below.

Related post: 13 Key SRP Metrics Vital to Profitability for Tech Services Companies

13 Key SRP Metrics Vital to Profitability for Tech Services Companies


Having worked in the Professional Services industry for nearly 25 years, I have helped numerous PSOs and IT organizations utilize software solutions to manage their businesses. My extensive experience as both a management consultant and software design has given me a unique perspective into Services Resource Planning. As the need for it becomes increasingly prevalent, I am eager to share my insight.

Vital Metrics for Tech Service CompaniesServices Resource Planning (SRP) is critical for success for all service-driven companies, particularly in the technology services industry. Accurately identifying project requirements and optimizing resources to deliver those projects is essential. This two-part blog series will provide a high level overview of the types of metrics and dashboards that are commonly used in tech services organizations that have mastered SRP.

Fundamental to managing any services business is good visibility across a number of functional areas. Insight into how each area is contributing to or hindering profitability is vital. There are key metrics that need to be monitored from three perspectives: Enterprise-wide, Services and Client. Looking across the enterprise, the starting point is on the financial side. There must be a clear understanding of:

  • 1. Total Revenue – a sum of revenues from individual projects, including consulting revenue by service type and location
  • 2. Margin – revenue minus direct costs
  • 3. Overhead costs – indirect costs such as facilities and administration, etc.
  • 4. Profitability – margin minus overhead costs

From a services perspective, metrics should be broken down by service type, from implementation to training. Analytics will help determine:

  • 5. Revenue by each service
  • 6. Margin by each service
  • 7. Which services are driving revenue and growth
  • 8. Which services are under performing
  • 9. What factors may be driving margins down, such as revenue leakage and low billing rates

From a client perspective, the focus is always on keeping the client happy and buying additional services. Client retention is based primarily on client satisfaction, which can be measured with surveys and post-implementation reviews. To ensure client satisfaction and ongoing revenue, however, there should be tools in place that provide real-time access to:

  • 10. Project Status, including milestones, financials and risk
  • 11. Revenue & Margin from current and completed projects
  • 12. Demand for additional services reflected in the pipeline
  • 13. Cost of sale per client (effort taken to close a deal) – this can have a significant impact on the true profitability of a project

As previously stated, visibility into all areas of the business is paramount. Beyond the financials, resources are another major component to consider because tech services companies aren’t selling a product as much as the knowledge of their people. Employee satisfaction and turnover rates, in addition to utilization, are valuable metrics to observe since good, skilled people take their knowledge with them when they leave an organization. This puts the company at increased risk of being unable to deliver the expected service without interruption or modifications.

Decisions that change and improve a services business rely heavily on all of these metrics so their accuracy and reliability must be ensured. When companies understand what's driving the top level revenue and margin, they have greater control in boosting profitability across the business.

Do you have visibility into the metrics from the enterprise, employee and client perspectives? What are some of the key metrics that drive profitability in your organization? Share by leaving a comment below.

Services Resource Planning -- Changing the Game for Service-Driven Organizations


In my previous blog, Blindsided: Why Service-Driven Organizations are Unprepared for Swings in Demand, I discussed some of the pain project-based service organizations are currently facing... To summarize, virtually every organization experiences the following challenges:

  • Unreliable forecasting means incoming demand is always a surprise
  • Poor visibility of resource utilization; to find the resource information they need they must look in multiple spreadsheets and/or make multiple phone calls
  • Specialized, higher cost resources are consumed on low margin engagements and activities
  • Project execution methods are inconsistent, wasting resources on rework often cause delivery delays and customer satisfaction problems

But there is a light at the end of the tunnel. The following abstracts tell the stories of two real world service-driven organizations overcoming their resource management challenges and their achievements realized.

SRP in Clinical Research Organizations (CROs)

This leading service contract and research organization provides clinical services in Phase I-IV clinical research studies to the pharmaceutical, biotechnology and device industries. The company has offices in 20 countries and 2,700 employees worldwide.

Prior to implementing SRP, their business issues included:

  • Unreliable forecasts (revenue, costs, hours) that led to missed delivery dates and the inability to drive profitability and margin levels of trials to target levels
  • Poor visibility of resource utilization, which led to poor project prioritization and valuable resources being consumed on low margin engagements and activities

Once they implemented an SRP solution including enterprise portfolio, resource, and project management, they reported the following benefits:

  • More timely and accurate information led to better prioritization of projects, skill set matching, and staffing of projects and thus increased revenue and better margins
  • Go or kill decisions were made more quickly based on more accurate and timely resource and financial key performance indicators
  • Improved responsiveness and timely project delivery to end clients has led to increased customer satisfaction and increased repeat business

SRP in Technology Services

This example features a customer in the technology consulting industry that provides global services, software, and processing solutions for financial services, education, and the public sector as well as support services for their large global client base.

Prior to implementing an SRP solution, they faced the following challenges:

  • Lack of visibility into resource availability and skill set utilization across regions were causing revenue loss
  • Project delays were a leading cause of poor resource utilization and availability problems
  • There was no unified view of financials across the business, so data was kept manually, leading to inconsistencies and confusion

During the solution implementation period, for the very first time, the company had access to resource utilization with a detailed view over time, which provided additional insight into issues that were previously hidden using the previous process.

Now with SRP:

  • They have one "system of truth" that allows them to view all global projects, resources, and financials enabling focus on the most profitable projects in alignment with corporate goals
  • Executives have access to real-time data based on key metrics and analytics that allow faster, better business decisions based on fact rather than "hunch".

These are just two examples of customers who suffered from the lack of visibility into their resource situations and after implementing SRP using Planview Enterprise, are no longer blindsided by swings in demand. For more information about Services Resource Planning, download a copy of the latest IDC Executive Brief titled, Service Resource Planning: Systems for Effectively Managing a Project-based Business. I would like to hear from you. How are you dealing with the challenges of managing resource pools in your service-driven business?

Related posts: SRP and PSA -- There IS a Difference and Blindsided: Why Service-Driven Organizations are Unprepared For Swings in Demand

Blindsided: Why Service-Driven Organizations are Unprepared for Swings in Demand


In my last blog post, SRP and PSA -- There IS a Difference, I discussed the major differences between Services Resource Planning (SRP) and Professional Services Automation (PSA). In short, SRP addresses the capacity and demand issues that drive resource decisions and revenue forecasting, whereas PSA focuses more on the mechanics that drive the quote to cash process, such as order processing, billing, and so on. Both are needed to effectively run a project-based service organization.

Most service-driven organizations have the front-end and back-end "mechanics" system (often PSA or a customized ERP system) in place but few have mastered the ability to synchronize demand with delivery capacity. Perhaps this is why so many service-driven organizations struggle when the inevitable swings in demand happen, sending them scurrying to get a handle on their resource situation.

To begin with, let's look at the typical pain points service-driven organizations tend to experience.

Service-Driven Challenges

In speaking with numerous Operations VPs and staffing directors about their business challenges, the following points hold true in virtually every organization:

  • Unreliable forecasting means incoming demand is always a surprise
  • Poor visibility of resource utilization; to find the resource information they need they must look in multiple spreadsheets or make multiple phone calls
  • Specialized, higher cost resources are consumed on low margin engagements and activities
  • Project execution methods are inconsistent, wasting resources on rework often cause delivery delays and customer satisfaction problems

For these organizations, it is critical to be able to optimize the global resource pools because the resources are the business. Specifically, service-driven businesses need to be able to accurately synchronize demand with delivery capacity. They must drive operational excellence and maximize their revenue by optimizing the timing vs. availability vs. profitability equation to improve the management of their global resource pools. The last piece of the puzzle is to establish financial transparency into the true cost of service and project delivery to improve forecasts and develop reliable proposals for future projects. Without these items in place, all of which SRP helps address, the organization is at a disadvantage.

In my next post, we will look at a few real world examples of how different services organizations have struggled with the similar challenges and how Services Resource Planning is changing the way they do business. For more information about Services Resource Planning, download a copy of the latest IDC Executive Brief titled, Service Resource Planning: Systems for Effectively Managing a Project-based Business.

I want to hear from you! What are some of your challenges your organization is facing? Share your experiences by leaving a comment below.

Related post: SRP and PSA -- There IS a Difference

New PMO Directions Explored at Gartner 2012 PPM: Reasons Why You Should Rethink Your PMO


In my presentation at the Gartner 2012 PPM Summit, I discussed "Delivering What Matters: Focusing the PMO on the Big Picture." I presented a number of themes, all of which, to my delight, aligned quite nicely with the collective keynotes and presentations at the conference.

There's no doubt that the role of the PMO is changing, and it was nice to see this issue play such a prominent role at the summit.

Seven common themes that emerged include:

  1. Gartner PPM SummitEmbrace Multiple Approaches -- Project management is no longer about a one-size-fits-all methodology. There's a right time for an agile approach and a right time for a more directive waterfall approach. Even large programs can take the directive path or be more adaptive. An enlightened PMO will have guidelines for when to use which.

  2. Agile is Here to Stay -- Especially for efforts with high uncertainty, or where exact requirements are not clearly definable, more and more organizations are moving to adaptive and iterative development methods. It's reached a critical mass, and the PMO can no longer afford to stick its head in the sand concerning Agile. Equally, the PMO must be aware of the culture shift it requires and manage change accordingly.

  3. The PMO is a Vital Component of Managing Change -- Constant change is the new normal. But when an organization has their vital information segregated across multiple spreadsheets and systems, it becomes nearly impossible to adjust the sails when the wind changes. The PMO is in a unique position to provide the knowledge, processes, and tools that support alignment and integration across strategy, operations, and finance. As such, it can no longer afford to keep a narrow focus on project execution methodology.

  4. The PMO Can Foster Innovation -- To thrive in today's dynamic environment, an organization needs to allow room for a number of higher risk innovation projects, within reason. The PMO can help create effective portfolio management and governance methods to aid the organization in achieving a balanced strategic portfolio of projects, products, and services.

  5. It's Not Just About Projects Anymore -- The handwriting is on the wall. Gartner's saying it. Other industry analysts are saying it. And I've been saying it for a few years now. An organization is an ecosystem, and the best way to organize work and resources is byproduct, not project. That's not to say you shouldn't manage projects, but those projects must tie to products (internal and external). In other words, value definition lies with products. But don't think of products as "hard goods and soft goods" as much as a certain set of functions, features, and capabilities that allows the end user or customer to function effectively, which takes us to our next item…

  6. Think in Terms of Capabilities -- In the olden days (i.e. the last few decades), IT and other service delivery functions were focused on solutions. In the extreme, solutions were conceived with a misguided view of what the providers "thought" people wanted or needed. Now trends are showing a shift toward speaking to business and functional capabilities. You're no longer implementing a software product; you're implementing the ability to xyz (pick the function of your choice).

    In the context of portfolio management, you may be implementing the ability to capture ideas, filter demand, govern intake, prioritize investments, assess resource capacity, and so on. And in the context of software projects, you might be implementing the ability for the business or the end users to achieve some measurable benefit. The key is that projects (aligned with products) must deliver certain capabilities, which are tied to measurable outcomes, which takes us to…

  7. It's the Outcomes, Stupid -- At the PMO Symposium in Orlando late last year, and at the recent Gartner PPM Summit outcomes and benefits realization were prevalent themes. Outcomes, both at the business/functional level and at the enterprise/strategy level are how we measure the value delivered through optimal use of constrained resources and funding.

    Indeed, there were a number of sessions at the Summit that talked about value mapping, and Mark Langley, President and CEO of PMI, spoke of the importance of benefits realization. Astute PMO leaders are quickly recognizing the need to bridge organizational gaps, and promote outcomes-based and capabilities-based thinking across all sectors. This is where the PMO can earn their proverbial seat at the table.

Speaking of seats at the table, in my white paper, A Seat at the Table: Making your PMO More Relevant in Times of Change, I discuss many of the above themes including the PMO as a change agent and integrator; the shift to capability and outcome-based thinking; and the importance of thinking of the organization as an ecosystem (bridging projects, products, services, and more).

It's refreshing to see the industry converge on these themes, as was definitely visible at Gartner PPM Summit. I'd love to hear your thoughts. Is your organization recognizing any of these shifts, and if so, what steps are being taken to get ready?

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.

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.

SRP and PSA -- There IS a Difference -- Part 1


As a follow up to a recent Webcast I participated in titled, The Missing Perspective: A Resource View for Service Driven Organizations, I wanted to begin a dialog around the key take-a-ways addressed in the Webcast as it provides a new perspective and insight into who is using Services Resource Planning (SRP) and why. I have an interest and passion for this topic based on my experience and seeing our customer success. Presented in a three part blog series, I will cover the differences between SRP and Professional Services Automation (PSA), the pain service businesses are facing in today's global economic climate and finally the requirements, key drivers, and recommendations for optimizing your service driven business. To begin the conversation this post will address the differences between SRP versus PSA.

SRP versus PSA

Contrary to traditional thinking, SRP and PSA solutions serve different markets and bring contrasting functionality and value to the table. PSA provides a high level view of what needs to be done in the business and works for everyday mechanics but it lacks functional depth and visibility into critical areas like resource management, demand management, engagement management, utilization optimization, revenue forecasts, and project portfolio management. SRP provides both high-level and in-depth knowledge around these critical components so service-driven companies can seamlessly manage execution to delivery while maximizing margins.

Understanding the Bigger Picture

A service-driven business is intently focused on how to continuously improve their "Quote to Cash" process in their services business lifecycle. On the quote side, the CRM system is used to manage opportunity, sales forecasts, demand snapshots, etc. On the other end, there's the cash side with the ERP system effectively used for invoicing and processing financial reports. The gap that sits in the middle of the quote and cash bookends is often referred to as the "Planning and Execution Gap." Service-driven businesses are always trying to balance current projects and forecasts, and require in-depth resource management functionality that can handle global, complex enterprise requirements. While resource management remains a company's biggest pain point with project execution coming in a close second, companies are typically unaware that there is a solution available that provides this visibility and balance they are striving to achieve.

PSA solutions are wide but very narrow. For global service-driven enterprises, a PSA solution will not work because of its lack of depth in resources and project management. SRP fills the gap and provides organizations with visibility not found in PSA solutions and is the 'middleware' that addresses the complexity of how an organization delivers value, manages costs, directs critical resources, and generates profitability. From a strategic standpoint, companies can really look ahead to what their organizations need are based on demand. SRP is the market that will service these large enterprises concerned about the following:PSA vs. SRP

Key Drivers for SRP:

  • Resource Management
  • Demand Management
  • Engagement (project management)
  • Utilization Forecasts
  • Project portfolio management

Organizations that would benefit from an SRP solution are global with thousands of resources (human and non-human) that are project-driven with a need of greater visibility into revenue forecasting and margin analysis on their engagements.

If you are interested in watching the Webcast,
The Missing Perspective: A Resource View for Service Driven Organizations featuring from me and Margo Visitation, Vice President and Principal Analyst at Forrester Research, you can register and watch the on-demand recording any time.

I'd like to hear from you. Share your experiences and best practices related to managing the "Planning and Execution Gap" and post a comment below.