OUTSIDE THE BOX Forum: A Practical Project-based Model of the Enterprise
The purpose of this first of four articles is to set the stage for the life cycle of projects, programs and portfolios within the enterprise.
It introduces a model called the Enterprise-level Project Management Model (EPMM). To date articles on project management assume the existence of a project with little discussion of where that project comes from; the business validation and expected business value; why there is even a project and how to manage it within the constraints of the enterprise. In effect projects are treated as if they were islands independent of external constraints and factors. Nothing could be farther from the truth! Imbedding the project into an enterprise context introduces a number of factors external to the project that impact the project management life cycle (PMLC). Many of those factors are related to resource capacity and schedule availability. This article sets the stage for the Enterprise Project Management Model (EPMM). It encompasses these factors as well as others and the attendant management decisions that arise.
The origins of the EPMM date from the 1960s. The Objective/Strategy/Tactic Process was in its embryonic stage at that time and in use at Texas Instruments in its Corporate Research & Development Division in Dallas, Texas.
The Business Environment
The Business Environment is fickle, somewhat unpredictable and continuously changing. In the past 60 years it has been heavily influenced by the relentless march of technology and the intrusion of the internet into all aspects of our economic and social lives.
Business is global
Outsourcing dominates the support service businesses (call centers and help desks, for example) and software development (I am constantly plagued by Indian-based businesses looking for software development contracts). The US is trending towards becoming a knowledge-based economy and suffered the loss of many jobs that will never return. The number of displaced workers continues to grow as businesses struggle to recoup their market positions. You may not sell in the international markets but your competitors sell in your markets and your business decisions are forced to take on an international perspective.
Success goes to the creative and courageous
Those who can envision products and services put themselves at great risk. The early entrants into social media applications are testimonials to that success. But the secret is more than a matter of creativity. The business idea must include barriers to entry or an unknown software developer will replicate your idea and from his dining room table in Mumbai will set up a competitor business and your business will be in harm’s way. So the business environment is one of high speed and high change with technology and the internet as the driving force. On the positive side, the world is your market. Place has no place in the marketing mix! It is obvious that an EPMM is a critical success factor (CSF) in the 21st century marketplace.
The Business Environment – A View from the Top
Figure 1-1 illustrates the business environment from the highest level. Processing it and making it your own is fundamental to our discussion of projects, programs and portfolios in the proper context of the enterprise. It takes a village to effectively manage the Enterprise Project Management Model (EPMM) and generate sustainable business value. Defining that village and how each of its citizens interact and depend upon one another is critical to the success of the EPMM. This is a critical element in this book.
Figure 1-1: The Business Environment
With that understanding of the continuous changes in the Business Environment, Market Opportunities will come and go. If you can’t seize the opportunity immediately, someone somewhere on the planet will! The opportunities will be internal (problem solving and process improvement, for example) and external (new product, service and processes for meeting the needs of an expanded customer base, for example). Taking advantage of these opportunities requires a culture characterized by openness and creativity and business practice managers that are not afraid to take reasonable business risks. Windows of opportunity open and close sometimes without warning (due to the introduction of new technologies, for example). Projects that thrive in this risky environment are complex projects and require solid collaborative efforts between business managers at all levels and project managers as the enablers of business ideas.
Clearly Enterprise Capacity is the driver of any strategic model. So any Tactic that relates to the creation or maintenance of Enterprise Capacity will be a strategic project. Capacity is defined at the resource level and was first discussed in EPM1e. When we elevate the discussion to the enterprise level, resources take on a different perspective and become an enabling factor and a constraining factor. Management decisions regarding Resource Capacity are complex and challenging due to the number of dependent factors.
Market Opportunities can only be exploited within the capacity of the Enterprise to support them. The Business Environment is in a constant state of flux so Market Opportunities will come and go. Any of those opportunities can be exploited if and only if Enterprise Capacity adjusts to align with those opportunities. One of the big questions for senior management is how to spend enterprise resources and how to adjust that allocation as Strategy Portfolio performance occurs.
The reference here is to the resources that are available for allocation to projects. In a multi-year planning horizon resource capacity might be upgraded or increased through projects, programs or portfolios designed for the purpose of expanding or enhancing enterprise capacity to more effectively align to and to support attainment of the Objectives defined in the Strategic Plan.
Resources and resource types (financial, physical, human, information and intangible) are defined later in this chapter. As stated above resource capacity, availability and the interdependencies among those resources is both a constraining factor and an enabling factor. As a constraining factor what the enterprise should do is limited by what the enterprise can do and finally leads to what the enterprise will do. As a counter measure to the constraining factor the enterprise needs to assure the alignment of not only resource supply but also resource availability against the business demands for those resources. So resource capacity is a dynamic tool that can be adjusted as a deliverable from the planning exercises. Expanding or enhancing resources will reduce the schedule contention between resources but that is a business decision that arises during the fulfillment of the Strategic Plan.
As an enabling factor resource managers collaborate with functional business managers and LOB managers to creatively solve problems and enable the exploitation of new business opportunities. These collaborative efforts result in the commissioning of projects, programs and portfolios to project managers who function as the enablers.
The constraining factor and the enabling factor and their implications at the enterprise level will dominate our discussion and development of the EPMM across all chapters.
The integration of Objectives/Strategies/Tactics (OST) into a system is an embodiment of the Strategic Planning Process (SPP). OST has its roots in the emerging product planning processes developed and used by Texas Instruments in its Corporate Research & Engineering Division in the early 1960s. TI/OST required one quarter each year for the development of the strategic plan. The objective of the planning exercise was to identify 200 feasible new product ideas. The expectation is that the result would be bringing a handful of new products to market. At that time I was a systems engineer at Texas Instruments and benefited immensely from my understanding and use of their planning systems. I have taken the TI/OST processes and practices and brought them up to current standards and expectations and imbedded them into the EPMM. The EPMM is a game-changer for project managers and is presented here for the first time.
Objectives are generated at the highest levels of enterprise management as a direction-setting guide for those who will suggest Tactics for reaching the Objectives of the enterprise. In effect, the enterprise knows where it is (its current state) and knows where it would like to be (its desired end state). The missing ingredient is how to get there? Strategies and their aligned Tactics describe that journey. As Figure 1-1 clearly shows, those Tactics are defined through a collection of projects, programs and portfolios.
Strategies are the guide for proposing Tactics and are the short-term variables in the SPP.
Each Strategy has a Strategy Manager. They are assigned as part of the SPP and manage their Strategy until all projects in their Strategy Portfolio are completed. The responsibilities of a Strategy Manager include:
- Strategy Portfolio planning and management
- Monitor portfolio performance and content in order to maximum expected business value contributions from their portfolio
- Adjusting project scope and schedules to accommodate resource capacity and availability
- Monitor portfolio performance and adjust resource allocation to assure maximal business value to the enterprise.
- Negotiating resource requirements and utilization among all Strategy Managers
The relationship between Objectives, Strategies and Tactics can be complex and create interdependencies due to resource capacities and dependencies among and between resources. At the Objective/Strategy level the following apply:
These will be offered in the form of potential project, program or portfolio ideas to be carried out within the planning horizon (3 or 5 years is common). Tactics are ideas for products, services or processes submitted to the EPMM in the form of one page documents called Project Overview Statements (POS). (The POS was first introduced in 1995 in EPM1e and has matured to its present form.). The extent to which a Tactic aligns with the Strategies of the enterprise is an important factor in any prioritization exercise of the proposed Tactics. The strength of that alignment and other factors (like risk and expected incremental business value) are the basis for decisions on which Tactics will be prioritized and approved. These projects, programs and portfolios represent the Tactics that convert available resources into incremental business value.
Tactics turn into approved projects, programs and portfolios. These are constrained as shown in the Scope Triangle which occupies the center of the Business Climate in Figure 1-1. It is a critical graphic that must be fully understood as it has several applications across the life of a project, program and portfolio. We will see those applications at the enterprise-level in this book. For a comprehensive discussion of the Scope Triangle and its application at the project level see EPM6e.