Trend warning: project portfolio management is the cool thing to be doing this year.
By that I mean managing a portfolio of IT projects in a co-ordinated, integrated fashion, ensuring that they collectively meet the needs of the host organization and deliver in concert on the strategic vision of the organization hosting them.
Sounds straightforward. Easy to screw up, though.
To whit: Had the interesting experience of participating in the review of the project portfolios of an organization that was going through a big merger. The story that follows is absolutely true, even if I am embellishing a little bit for dramatic effect.
Primary driver for said merger? Cost takeout, to the tune of some $300 million. Pretty clear what the organization was looking for on a strategic basis – it doesn’t get any clearer than this.
Turns out that the $300 million in savings was to be realized through the execution of 96 different projects. Lots of projects, yes, but not unrealistic for an organization of this size.
Having had managers throughout the company identify all 96 of them, the next step was to organize them into a series of portfolios, and assign responsibility for the management of those portfolios accordingly.
This is where the fun started. There were, broadly speaking, three types of projects that comprised the 96: IT projects, operational effectiveness projects and HR projects.
The president decided to put his most experienced people in each of these three areas in charge of the project portfolio. He appointed a very senior IT manager as IT portfolio manager, an operational wizard as operational effectiveness portfolio manager, and his best HR thinker as HR portfolio manager.
One clear goal, 96 projects and three nice, clean, functionally oriented portfolios for them to operate within. The president was happy. At least until he started down the accountability path.
“Right then,” he said to his newly appointed IT point person, “we all believe in accountability in this organization, and I need to understand how we’re going to break down the accountability for achieving the $300 million in cost savings. Tell me, how much of the $300 million can I put the 35 projects in your portfolio down for?”
He didn’t like what he heard next. “Well,” came the answer, “in and of itself, this portfolio will not deliver any of the $300 million savings we’re looking for.”
As you can imagine, the president almost had a cow. “Thirty-five IT projects with a projected budget of nearly $15 million and we’re not going to get any savings at all?”
Before the president blew a gasket, our trusty IT portfolio manager clarified his answer: “I said that this portfolio will not deliver any of the savings in and of itself. IT projects rarely do. We’re only going to see the savings through a combination of projects across the three portfolios, IT, op effectiveness, and HR.” And then he pulled out the list of 96 projects, all nicely housed within their three portfolios, and started marking it up with a yellow highlighter.
“We’ll get $20 million in savings if we can get these five projects to work together,” he said, as he highlighted two projects in IT, two in op effectiveness and one in HR.
Then he pulled out a green highlighter and said “And we’ll get another $15 million in savings if we can get this IT project and these two op effectiveness projects and this one HR project to deliver together.” He marked the four projects in green.
The president called in his other two portfolio managers into our meeting, and I watched as the four of them spent the afternoon highlighting the combination of projects across the three portfolios that would deliver the $300 million in savings.
And an interesting thing happened on the way to the Coliseum. Turned out that eight of the projects were, in fact, orphans – they really didn’t fit into any combination with any of the other projects to save money.
And here’s where the president showed why he was the President. He cancelled the orphan eight on the spot (cut $5 million bucks from the company’s project budget in one fell swoop, too), and then he reorganized the portfolios.
“It occurs to me that we’re going about this the wrong way,” he said. “If the way these projects are organized into portfolios isn’t going to allow me to pin cost savings targets on them, they’re of no earthly good. It may be easy to categorize them functionally, but that doesn’t really get at the $300 million in savings we’re looking for, does it?”
And with that, he reorganized the remaining 88 projects into a series of 10 portfolios, each of which contained some combination of IT, op effectiveness and HR projects which, most importantly, he could tag an anticipated cost savings to.
Moral of the story – project portfolio management is a good thing to be doing, and we’re going to see a lot more of it in the next year, but let’s make sure that we don’t organize our portfolios functionally just because it’s easy to do.
And so I ask you, how are your organization’s project portfolios organized?
Hanley is an IS professional in Calgary. He can be reached firstname.lastname@example.org.