Portfolio Management What’s it all about?

1. Portfolio Management What’s it all about? Rich Murphy Founding Partner EPK Group LLC richmurphy@epkgroup.com

2. Agenda What is Portfolio Management? Why it’s important Facts and history Some Tips

3. Some Definitions Project management is the process of planning, measuring, and taking corrective action to complete a specific project on time and within budget A Program is a project or a collection of related projects which facilitate the realization of Strategic Business Objectives.

4. Definitions Portfolio Management is the process of aligning investments with corporate business needs and the analysis and proper mitigation of investment risks

5. “Portfolio Management” must consider ALL the effort Portfolio management is about “doing the right things” and making best use of your resources. Resource management is the critical success factor for effective portfolio management

6. Portfolio Management • Which projects best support the corporate strategy? • Where should the resources from a project nearing completion • best be allocated? • Which programs, projects, and infrastructure support efforts • are currently behind schedule, over budget , and why? • Do we have enough of the right people to successfully take • on a key initiative? • How is the resource plan impacted when a new project is added • to the portfolio? • What project should be the next to start? …is a process…something we do, to answer these questions like:

7. “Portfolio” and “Project Management” • “Strategic/Optimization” PPM • Project Portfolio Server • “Tactical” Portfolio Management • NIKU, PlanView, Primavera, Compuware • EPK-Suite (budgeting/cost, stage-gates,scenario modeling, project initiation) • Project Management • Microsoft Project and EPM • Collaboration/workforce management • SharePoint • Project Server • EPK-Suite resource management

8. Function Audience CXOs, Governance Board Line Management, PMO Project Management Project Managers Support and Operational efforts, simple projects Complex projects Team Members

9. 71% of all IT projects fail, come in over budget or run past the original deadline. Every year, $75 billion is spent on failed IT projects in the U.S. How are we doing? Source: The Standish Group • 74 % of IT effort goes to operations/support • 26% to “projects” (but of that only ¼ are “strategic”, • meaning they affect the bottom line)

10. How are we doing? 88.9 100 Organizational PM Maturity 80 60 40 6.3 3.2 20 0.8 0.8 0 • More than 50% of all projects fail to meet budget, deliverables or delivery dates • Project failure is down to 15% - but time overruns have doubled. • Less than half of completed projects meet business expectations one year after implementation • Heroics is prevalent – more than we’d like to admit Source: PM Solutions Level 3 Level 1 Level 2 Level 4 Level 5

11. How are we doing? • “We’re developing enterprise PM processes, but we’re not seeing real improvements outside of some individual projects” Source: BIA and Giga Information Group

12. What does this mean? • There have been slight improvements in PM practices • Many still aren’t buying into the concept of organizational project management • Result is that reactive behaviors stemming from habit and external pressures tend to preside over proactive ones. • Personal and political preferences decide priorities more than alignment with business goals

13. Portfolio Mgmt. Investment & Prioritization Decisions Alignment with Objectives Program Mgmt. Program & Project Dependencies Integrated Delivery Relationship of project, program, portfolio management Collaboration Project Mgmt. Consistent, Repeatable Delivery People, Process & Technology

14. Portfolio Management Maturity Stages Stage 5 Leveraging IT for Strategic Outcomes Stage 4 Improving the Investment Process Stage 3 Developing a Complete Investment Portfolio Stage 2 Building the Investment Foundation Stage 1 Creating Investment Awareness Source: US Government IT Investment Management Standard

15. What are the Business Challenges that portfolio management can solve? • How do I prioritize initiatives across my organization? • What is the status of our top five initiatives? • Do we have the right people working on the right projects? • Do we leverage knowledge and best practices across people and projects? • Do we have the skills and capacity within our organization to achieve our long term goals? Portfolio Management is about helping to manage the future not accounting for the past

16. A Simple Survey • How do you get data on your organization’s financial situation? • How do you get data about your staff? • How do you get information on projects you’re responsible for: • what’s “late”? • what’s over budget? (before it actually is) • who’s available to work on a new project? • Survey says: “I call the person I think knows the answer” (80 of 100 respondents)

17. True Portfolio Management • To properly control and manage this environment: • There must be a total inventory of projects, operations, initiatives • Management must be able to prioritize relative to business objectives • Decisions must be evaluated against resources capacity and budgets • All efforts must follow a common process (stage gate workflow) • Accurate tracking of actual performance against budgets and resource plans is required

18. Start with a simple inventory of all efforts Some Tips

19. A Actual Situation Overview: This is what the new CIO inherits… A large organization with $750M in annual revenues; 5,000 employees, and 150 IT staff. Historically successful, but struggling to reduce costs to keep pace with economic downturn CEO hires a new CIO with a clear mandate to turn things around.

20. Given a Mandate for Change by CEO Snapshot of Current Organization Current Culture: Vertical Silos with projects often thrown “over the wall” to other departments.

21. List of Known Projects 200 “projects” identified: 50 business & 150 IT-related. This “fire drill” provided lots of detail, but little insight.

22. Next Steps for CIO Initiates a 6-week review of current portfolio environment. Requests a plan to standardize all projects Wants recommendations for retaining, consolidating or killing projects. Also wants assessment and recommendations on organizational project management maturity

23. Six Weeks Later…

24. Projects Assessed in 3 Ways • Is the Project Right ? Strategic Fit Complexity Business Value Time to Complete • Is the Mix Right ? Risk Profile Planned, or Near Completion Fast vs. Measured Strategic vs. Tactical • Is the Priority Right ? High Priority Continue Low Priority Don’t continue Not Sure ? Re-Assess, Re-Scope, Gain Consensus

25. Fast-forward 12 months… as the CIO reviews findings Big Question: What’s the Payoff?

26. Rescue (11) 5% Maintain (84) 43% Accelerate (8) 4% Kill (47) 23% De-prioritize (28) 14% Absorbed (23) 11% (Kill Criteria: Redundant, Conflicting, Out of Control, Irrelevant) A Major Portfolio Realignment Only 20% of the business projects had formal plans; 50% had none at all! Of the original 200 projects, more than one-third were either killed or absorbed.

27. Strong executive sponsorship … resistance to change would have doomed us. • “Fluid” alignment with business objectives … what works today may prove deadly tomorrow. • Early warning alerts & “root cause” analysis … catching problems early made a huge difference in the ROI. Lessons Learned Notable Quote: “Accountability and cross-functional cooperation were new to many managers. Changing our reward system helped to speed up the transition.” -- CIO

28. 1)Implement a Stage-gate review process Some Tips

29. What are Stage-gates? They are not phases of a project They are the approval/review process steps that all efforts should pass through, not just major projects IT Governance Board should be directly involved in the stage-gate reviews

30. Example of Stage-gate process

31. Some Tips 2) Address costs

32. Cover all costs and time-phase

33. Address Benefits and cash flow

34. Scorecard View with costs

35. Some Tips • 3) Is “resource management” the real problem in your environment? • If so, focus on the resource planning process • For most IT organizations it is the problem • Matrix organizations • Resources work on many projects • And “operational responsibilities also • Priorities constantly change

36. Do high level Resource Planning, not just “bottoms up”

37. Resource Planning - Individuals

38. Resource Planning – consider all the work, including “requests”

39. Capacity vs. Demand

40. Some Tips • 4) Carefully consider reporting needs • Exception based reporting • Orient reports to management levels • Extensive graphical views • Limit number of reports any person receives • Reporting and views are probably the single biggest factor for user acceptance

41. Example-Interactive Scenario View

42. Example-”Bubble Chart”

43. Make use of graphical reporting

44. Make use of graphical reporting

45. Scenario Modeling

46. Q and A

47. Free EPK-Planner www.epkgroup.com/mpaplanner.htm