Insights and Trends: Current Project Portfolio Management Adoption Practices

In order to stay competitive, today’s top management is confronted with the critical task of analyzing and improving the ability of an organization to change, survive, and grow in this complex and changing global economy.

Organizations have thus been moving from operations and business as usual, to implementing change through project management as part of their competitive strategy. The ability to successfully execute projects is what drives the realization of intended benefits and the achievement of business objectives.

Organizations that execute projects successfully employ effective Project Portfolio Management (PPM) practices as a tool to manage and drive change. Given the strategic impact that projects have on business, organizations must follow effective PPM processes that capitalize on innovation; measure progress, value, and risks; and confirm that the right projects can be delivered in alignment with organizational strategy

We at Daptiv conducted a survey to examine the challenges faced by today’s businesses now that increased scrutiny over budgets (aka “doing more with less”), efficiency and effectiveness are key factors of successful organizations. The survey’s main objective was to identify current trends in PPM, and pinpoint the characteristics of PPM that are applied in higher-performing organizations. This survey was conducted among 300 project managers and senior executives attending the PMXPO Conference. Some of the key inferences from the survey were:

Why do product managers and senior executives take on PPM and implement software to support it? According to our survey, their top reasons (in order) are prioritizing projects, gaining visibility into live projects, planning and preparing for future projects, and managing cost and resources. A whopping 62% answered “all of the above”. This makes obvious that PPM is providing a lot more value than simply improving project execution.

Assessing the current adoption of Project Portfolio Management across sectors, the survey revealed that 64 percent of the respondents use PPM tools to manage their general IT projects while the remaining respondents deployed PPM solutions for compliance, product development, training and mobile related projects.

While establishing and communicating projects goals to the project management team can assist in the identification of project risks and constraints that may impede the achievement of those departmental goals, limiting the scope of project portfolio management tools within an organization can have rippling side-effects in the overall achievement of organizational goals.  According to PMI’s 2012 Pulse of the Profession In-Depth Report: Portfolio Management Report, the majority of portfolio managers in highly effective organizations spend 75 percent or more of their time on portfolio management. The report further indicates that in organizations where managers focus on strategic as well as departmental goals, 70 percent of projects meet or exceed their forecasted ROI, compared to 50 percent at organizations where managers rarely focus on strategic goals.

Another interesting fact that came from the survey was that 76 percent of the respondents still use homegrown spreadsheets internally to manage projects in some capacity. Since 55 percent of respondents have more than 1,000 employees, this can easily lead to PPM data integrity issues and ponderously slow feedback loops. Definitely not a path that enables firms to pivot with rapidly changing business conditions. Moreover, from our experience this manual approach significantly impacts project performance. Today’s organizations need to see and trust information as it develops to make decisions that will help them outpace their competition.

While the BYOD movement is taking corporations by storm, our survey found that nearly 75 percent of respondents are not applying PPM techniques or software to their rollouts of smartphones and tablets.  IDC  recently forecasted that by 2017, total PCs are expected to drop to 13 percent, while tablets and smartphones will contribute 16.5 percent and 70.5 percent respectively. Considering the BYOD trend is only going to gain momentum in the near future, IT needs to get on the bandwagon and start actively managing this effort. Such forward-thinking strategic project planning transforms organizations from defensive and reactive to proactive and dynamic.

One of the key qualifications of a project is that it has a definite start and a definite end, though “ending” a project with a proper close-out process would appear to be an after-thought. Our survey revealed that 24 percent of the respondents do not conduct project reviews at all. That is a big number considering that of those who do, only 15 percent find they are meeting their project targets. The very last part of the project life-cycle it is often ignored even by large organizations, especially when they operate in multi-project environments. When the project is delivered, the closeout phase must be executed as planned. It plays a crucial role in sponsor satisfaction since it can create a lasting impression.

These findings are consistent with what we’ve experienced in our PPM consulting engagements. For many businesses, elements of PPM may already exist, but in non-linear and disjointed fragments. The most important factor in the success of PPM is aligning the portfolio with organizational strategy. The positive effects of strategic alignment lead to higher levels of project and portfolio performance, and increases stakeholder satisfaction with their organization’s project portfolio management practices at all levels of portfolio scale and complexity.

To know about the survey results, click here.

Top-5 Predictions for Project Portfolio Management in 2013

As project management gains wider visibility and recognition in organizations around the world, PMO’s will now develop new tool-sets to serve a broad spectrum of users. Organizations have recognized that projects are a major aspect of their business and more of their people are working on projects and using project management processes. Because projects are a major vehicle by which companies grow, improve and meet their business objectives, the need to successfully complete projects has never been greater. Daptiv forecasts top five PPM trends for 2013 and they are:

  1. PPM will Continue to be the Fastest Growing Category of SaaS - According to the Dataquest research report, “Competitive Landscape: SaaS Project and Portfolio Management Software, Worldwide,” PPM is the fastest growing category of SaaS enterprise software, increasing at a 41% CAGR for the 5-year period of 2009-2014. In 2013, even more organizations will embrace SaaS-based solutions to manage or transform their portfolios. In the PPM world, the benefits of this approach versus traditional on-premise software products include: Rapid deployment, team collaboration, reduced risk of failure, tighter vendor/customer relationships, and reduced cost of implementation and support.
  2.  PPM will Cross the Chasm From IT-Driven to Business-Driven - Organizations have come to realize that much of their growth and future sustainability comes through projects. Projects are vehicles of change, and the best way to improve the management of them is through PPM tools. PMO’s are getting more strategic about where PPM principles can add value, and they are finding green field opportunities for PPM in places that didn’t previously exist. In 2013, we will see an increased emphasis to “projectize” work in different business functions, such as line-of-business divisions, sales, marketing, and human resources. As such, more organizations will begin taking into consideration the business intelligence generated through PPM systems to refine their overall business strategies.
  3. Putting IT back in control of the BYOD explosion: PPM goes Mobile - Smartphones and tablets are poised for dramatic growth, especially with the arrival of new devices from Apple, Google and Microsoft. According to a Forrester report, 66% of employees now use two or more devices every day, including desktops, laptops, smartphones and tablets. As the mobile market continues to grow and with the increasing BYOD trend, enterprises/project managers will look at IT and the PMO to help implement new applications to ensure secure access across dozens of disparate platforms and handsets/tablets being used by the company across multiple regions.
  4. CFOs Give Green Light to PMOs - According to PM Solutions research, 65.8% of high performing organizations have enterprise PMOs. As companies begin to quantify the financial benefits of having a PMO,CFOs will be the ones leading the charge for the implementation of PPM solutions in the year 2013. This in turn will have a positive impact on creating an effective portfolio management operation, and it will be viewed as a way to bridge strategy, operations, and finance. Portfolio management will stimulate the interest and attention of the CFO, as PPM services become a proven method of improving system quality, and project and service delivery levels across the organization.
  5. Economic Uncertainty Drives Need for ROI Accountability - Given the continued uncertainty of the economy, cost management and efficiency will continue to top the list of priorities for most CEOs. In this environment, companies will remain cautious, and we will find companies leaning more heavily on PPM as a way to measure the ROI of their investments. In 2013, PPM will be recognized as a crucial change agent that will help companies’ transition out of recession-area thinking, towards driving innovation and business transformation initiatives at companies both large and small.