Project Portfolio Management Megatrends
As we look forward to what’s next for Project Portfolio Management (PPM), there are several trends that will play out over the next few years. The fundamental tenets of PPM such as visibility and centralization of data will continue to drive value, but new trends are emerging now as PPM transitions from powerful concept to real-world practice.
The basics are in place. Analysts and thought leaders have chronicled how PPM applications have fundamentally altered the project landscape. By integrating project information in one place, PPM changes how organizations approve, plan and deliver projects. From a bottom line perspective, PPM enables organizations to improve their return on project investments.
Trend 1: No Longer Just Nice: No longer a leading edge practice, PPM has started to transition from a “nice to have” into a “must have.” In the private sector, PPM will become a competitive necessity, especially in sectors where time-to-market, quality and cost control are key success factors. In the public sector, PPM will raise the bar for financial accountability for programs and projects, and that new level of visibility will become expected by constituencies. In fact, in some cases it has already become a mandate.
Senior managers will begin to expect a certain level of visibility and accountability for the project portfolio. They will grow increasingly accustomed to reliable reports and metrics that tell them what’s going on as of right now, as well as providing a predictable pipeline of what is coming up next. The lessons learned in the leading edge organizations will begin to carry forward, not just through case studies and press coverage, but through the migration of experienced leaders who have seen the value and the impact. Experienced leaders will carry those tools and techniques with them from one assignment to the next.
Trend 2: Predictable Implementations: Early stage PPM implementations were all unique. There were very few best practices in place and organizations were still learning about the impacts that PPM would have. The pioneers were learning as they went, which is typical in a newly developing market discipline. Increasingly, we will see much of the mystery of PPM transition into standardized implementation approaches. Predictable and standard patterns for successful PPM are emerging, and these patterns mitigate both risk and cost. These patterns correspond to what my company calls PPM Domains. Similar to the way there are best practices for configuring a chart of accounts for financial accounting, best practices are now emerging for configuring your PPM applications.
Standardized approaches to PPM implementations must address the entire lifecycle of the project portfolio. These standard approaches include functions such as workflows, reporting and metrics. I like to address the entire PPM lifecycle via three standard PPM Domains: Manage Supply & Demand, Prioritize the Project Portfolio and Deliver Projects and Applications. These three domains of PPM activity emerge in every PPM implementation, and they provide a vehicle for successfully phased implementations. Standard approaches and best practices are emerging for each domain, and these standards are eliminating much of the labor-intensive guesswork of implementations.
Trend 3: Software as a Service (SaaS): As SaaS continues to move from interesting to viable to a competitive threat, PPM solutions are ideally suited to run as SaaS applications, otherwise known as PPM On Demand. There are several reasons why SaaS is so well suited for PPM: rapid deployment; team collaboration; reduced risk of failure; tighter vendor/customer relationships; reduced cost of implementation and support. But perhaps the biggest reason is the rapid innovation cycle. It’s at least twice as fast to deliver innovations to customers in a SaaS model, and as a result PPM using a SaaS model is evolving rapidly.
Since SaaS applications have little to no technical implementation (servers, data bases, etc) they are up and running in short order. When a SaaS application uses a multi-tenant architecture, it should be as easy as “File + New + Save” to complete the technical aspect of a new customer implementation. Provisioning of new hardware and software is incremental and highly efficient, so there is lower overhead to support each customer. Perhaps even more importantly, the human resources required to implement and run such a system are already in place, trained and leveraged. What this means is that once you decide to implement, the entire technical aspect of the implementation should take just a few minutes.
Project teams must work well together to be effective. At their very core, projects are a team sport, and there are many different levels of team collaboration. You have big teams broken up into smaller teams; you have teams that cross boundaries within organizations; you have teams that cross boundaries across organizations. And it is a well-established fact that communication is one of the core factors of project success or failure. Teams that communicate effectively are more successful than those that don’t. SaaS applications are designed from scratch to operate securely over the web, which means that teams within and across different organizational boundaries can easily access the PPM applications and information from anywhere at any time.
SaaS implementations involve virtually no technical component to the implementation, so the risk of the “go live” is significantly reduced. But the technical aspect of any software implementation is only part of the risk. Two other big risk areas are in business process change and end user adoption. SaaS applications are designed to be highly configurable, which makes them more adaptive to the needs of unique business processes. In other words, users don’t have to write code to automate business processes. Finally, the SaaS business model depends on end user adoption for financial success. That translates into a laser focus on the user experience, which in turn leads to greater adoption.
SaaS vendors get paid by their customers over time, which leads to a compensation model that requires several years to mature from the standpoint of the SaaS vendor. The economic terms of such a relationship create a financial motivation for the SaaS vendor. The SaaS business model depends on the successful adoption of the application service, and thus SaaS vendors pay very close attention to their customers. If SaaS customers do not derive value from the application service, then the SaaS vendor won’t realize the financial return from the customer. SaaS stands for Software as a Service, and the operative word here is “Service.” High levels of service are simply built into the business model.
Reducing costs has historically represented a key factor in outsourcing any “non core” service or capability. In addition, outsourcing “non core” efforts enables an organization to focus its limited resources on “core” activities. Very few organizations would consider PPM software to be a “core competency” and so, bearing these expenses represents an unnecessary burden. Traditional “on premise” PPM applications are expensive and they consume valuable resources. Upfront license fees can be substantial, and the costs of implementation, support and upgrades can be daunting. With SaaS, those economics change. Implementing PPM as a service is not only less expensive; it allows organizations to focus their limited resources on more pressing objectives.
PPM has emerged in recent years as a next generation practice that builds on the disciplines of project management and program management. With an enterprise wide perspective, PPM incorporates other techniques and practices and fundamentally changes the ability of an organization to manage projects as investments that should have a predictable return. It’s not just project management software with some new features – it’s a brand new application. This new discipline requires a new set of tools and technologies, and those technologies are maturing with each release of the PPM suites. With SaaS as the delivery model for PPM, the innovation cycles are accelerated, which means that PPM capabilities are improving at a rate that is significantly faster than traditional on-premise delivered software.
Trend 4: Collaboration across Boundaries: Collaboration means communication. It is now a well-known phenomenon that communication is one of the key success factors for projects and project teams. Because PPM solutions involve a large number of team members who are working together on tasks and deliverables, PPM solutions are beginning to drive more and more collaborative capabilities. But these collaborative capabilities aren’t just unstructured chat sessions. They are fully integrated into the work plan and the reporting systems, so that the knowledge is captured and available to broader audiences. What we are going to see is what I call “collaboration beyond your own domain.”
Departments and teams must communicate and collaborate in order to be effective. As the number of team members grows, the number of communication points grows, and that leads to greater project complexity. On top of that, project teams are often distributed across offices, time zones and cultural boundaries. Since communication is so essential to success, distributed project teams are challenged before they start. One way that PPM provides relief is to create a framework that incorporates all team members into the project. But this is not just some amorphous workspace for files and shared electronic white boards. PPM provides a structured environment that is aligned with the goals and objectives of the project itself. For example, team members can capture threaded discussions on the task itself rather than in some invisible instant messaging or email discussions.
PPM creates visibility across teams, and many organizations have different team members working across organizational boundaries. A project may be broken up into separate functional teams or even separate organizational teams. These boundaries establish barriers to communication and information that can impede the success of the teams. PPM applications will continue to advance their ability to provide appropriate levels of visibility without sacrificing security. This is one area where PPM poses an important departure from traditional project management solutions. Since PPM is inherently collaborative, and since those points of communication may cross sensitive boundaries, PPM applications must be able to provide secure access controls so that team members see what they need to see and nothing more.
Projects often require the participation of different organizations with different reporting structures. Multi-organization projects have unique success factors. Different organizations may have different goals and objectives for the exact same project. In the simple case of two organizations collaborating on one project, one organization might be focused on cost and time-to-market, while the other might be focused on revenue and resource utilization. These divergent objectives can create significant challenges to the project and, when multiplied across the portfolio, the challenges multiply. PPM systems have already begun to provide a platform where different organizations work together on the same core deliverables, even though they may have different objectives. This shared visibility impacts the balance of power on a project-by-project basis, but it will ultimately create the most benefits for the project sponsors, and will probably impact how incentives are developed and tracked.
Trend 5: Push Technologies and Analytics: As the PPM market matures, PPM applications are improving their ability to provide meaningful analytics to all layers of management. But these analytics will not just be passive reporting systems. They will begin to incorporate push automation, so that all team members will have access to the PPM information most meaningful to them. In other words, PPM applications will start to come to the user rather than waiting for the user to come to the PPM application.
PPM aggregates the most relevant performance indicators that reflect the performance and status of the project portfolio. With PPM, portfolio managers can go to one place to manage the performance of the entire portfolio of project investments. This creates the opportunity for alerting and notification systems that reach out and actively send alerts to the entire array of stakeholders. Now that the data is integrated and reliable, metrics have real impact. Users will be able to create and configure rule-based thresholds that are monitored centrally. When those thresholds are triggered, stakeholders will be notified via email or other messaging services. Examples might include the crossing of predefined budget thresholds, deliverable status, resource conflicts, etc. This will drive the importance of PPM metrics, which will have the subsequent effect of driving the underlying processes and tools that reflect those metrics and what they mean.
Trend 6: Connecting to the Web: The World Wide Web offers an almost limitless field of information services: intelligent search, web based education, research into standards and best practices, and much more. PPM applications will begin to reach out and take advantage of that information and those capabilities. The key early on will be to connect to the web in a way that adds immediate and clear value.
With more and more services coming on line every day, the web offers a huge wealth of opportunities to complement the PPM offering over the web. PPM applications, especially the SaaS variety, will begin to incorporate other services into their offerings. Examples might include search, learning, content management, wiki, and much more. In addition to other web-based services, the web offers a virtually limitless pool of information and experience-based knowledge. PPM applications will begin to tap into that massive knowledge base to retrieve relevant information. For example, projects that address specific topics will have the ability to perform sophisticated research and bring back relevant information.
Trend 7: Web Services: As a technology, Web Services has moved into the viability stage and more examples are beginning to emerge in the software market as a whole. These services will emerge with increasing speed as the technologies stabilize and as the particular PPM solutions establish sound, scaleable Web Services interfaces. In the beginning, these services will be mostly used for data exchange, but over time we will see the exchange of PPM functionality across the web.
PPM applications need to integrate with other applications to provide a complete solution to the enterprise. Enter Web Services. Web Services offers a new approach for connecting applications, both in terms of functionality and data. Unlike traditional integration, whether hand-coded or through an EAI engine, Web Services offers a radically simplified approach to integration. Although Web Services is still in the early stages of development and adoption, it provides a compelling alternative to traditional approaches to integration.
One feature of Web Services style integration is that you now connect applications via a single Application Programming Interface (API). That has several important implications. A second feature of Web Services style integration is that the interface is publicly available over the Internet. A third key feature of a well-designed Web Services style integration is that it is highly standardized. It must be, or else it simply wouldn’t work. These three features mean that Web Services will become increasingly more reliable, scaleable and predictable. Web Services style integration over the public Internet will remove a great deal of the idiosyncratic nature of point-to-point integration that exists today. That will reduce cost, improve reliability and accelerate the ability to connect applications in a meaningful way.
PPM is no longer a specialty discipline. Customers can now tell the story: PPM has emerged as the next generation of project management. PPM tools and techniques will continue to mature and stabilize, and the supporting processes and content will mature as well. As PPM matures, project managers will spend less time on overhead and more time delivering high value projects. And organizations will get more disciplined in how they spend money on discretionary projects and programs.
Demian Entrekin is the founder and CTO of Innotas. As founder, Entrekin oversaw marketing, product development, sales and services for the company. Today, he focuses on strategic product direction. Prior to Innotas, Entrekin co-founded Convoy Corporation and was chief architect of its initial products. In that role, Entrekin helped the company lead the middleware market with an annual growth rate of 670 percent and played an instrumental role in Convoy’s subsequent acquisition by New Era Networks in 1999. A recognized thought leader in Project Portfolio Management, Entrekin has published numerous papers on PPM and his blog (PPM Today) explores current issues related to successful PPM implementation. During his 18 year career, he has assumed leadership roles as a consultant and as an entrepreneur, delivering commercial and corporate database applications.