The Future of Project Portfolio Management – Perspectives from the Gartner PPM Summit

Gartner gave us an interesting look into the future of PPM this week, and projects as we know them may be left behind. I’ve been wondering about this for some time, as the pace of business continues to accelerate and business changes – represented by projects – are called on to deliver results faster and more frequently. But I’m getting ahead of myself.

Let’s rewind from projects back up the business stack for a clearer view. Gartner did this nicely from their opening keynote through their multitude of breakout sessions – many of which were standing room only. In this note I can only summarize the model, but I will delve more deeply into each area in future posts.

First, we must remember why we execute projects – to implement change in the business. Be it incremental improvements in efficiencies enabled by minor software enhancements, or transformational change in the form of a merger – projects have been our vehicle. Gartner rightly points out that the pace of this change is accelerating to the point where it is almost constant. Can the old annual planning cycles and waterfall projects really keep up with this pace?

Most projects today involve changes to some application system, as IT has become thoroughly embedded in most modern enterprises.  Techniques like Agile can continuously release improvements to these applications, taking in ideas for change and working them into a continuously prioritized stream of stories. And these stories – which represent useful business changes – can be released frequently. We are now talking weeks or months to roll out changes to applications, instead of years.

How to manage all those applications? Enter Application Portfolio Management. Much like managing a portfolio of projects, APM rationalizes and prioritizes applications. Andy Kyte (VP & Gartner Fellow) gave a dynamic presentation on APM for Executives that boiled this concept down to some simple truths. He reminded us that applications are really means to an end – business value. Using that as the goal enables us to make decisions not only about which apps should stay and which should go, but where they should reside. Do we really need all those systems in house, or would a SaaS or even a BPO model provide the desired business outcomes more efficiently?

This brings us to the top of the stack – business value. IT systems do not in and of themselves provide any value at all. So what does IT really provide? Business Capabilities! And here Gartner sounded an interesting new theme. Instead of seeing capabilities as just part of the EA stack, consider these like products. A SaaS shop like Daptiv, of course, delivers PPM capabilities as a product – and we see it that way. IT shops should consider that they are really delivering products like Purchasing Management, Workforce Management, and Strategic Sourcing. Viewing these as products allows IT to focus their efforts on delivering business value rather than just technology.

So now we see the full model being proposed by Gartner. It really uses some tried and true techniques from Enterprise Architecture and adds a few twists. We start with business capabilities at the top, which are now enabled by IT products – apps and supporting infrastructure to enable those capabilities. And we move away from simple application and project management to product management. And now that we have products to support, we implement a continuous change cycle – such as Agile – to ensure changes to the business outcome driven capabilities are implemented quickly and frequently.

The current pace of business is such that the old model has lost its usefulness and would leave us eating someone else’s competitive dust.

Part 1: The Role of Organizational Change Management in Project Success

In its most fundamental form change management is what we do to control and manage the impact of a change.  For example, Project Change Management provides us with a mechanism for controlling and managing changes that left unchecked could prevent a project from accomplishing its objectives.  System/Configuration Change Management is how we ensure that changes to computer systems and applications have been adequately tested and controlled so as to minimize the risk that a change will cause an error or interruption in service.  But how are we managing the impact of changes on people in the organization?  Are we deliberately taking action to control the impact of change and encourage adoption or the change or are we assuming that everyone will joyfully embrace change and adopt whatever is being introduced without question, resistance or complaint?

Experience shows that the most successful change efforts, whether they involve the introduction of a new product, business processes, or a business model, include a conscious effort to understand and manage the impact to people and affected organizations.  Indeed, Organizational Change Management (OCM) is quickly becoming one of the disciplines or practice areas recognized as essential to project success and we will frequently see specialists and consulting firms specializing in OCM either involved in major projects or in helping organizations implement OCM processes.  But in organizations or projects that don’t have formalized processes or resources to dedicate to OCM activities, the responsibility for identifying, planning and executing OCM-related activities falls to the manager and the project team.

In this article, we will explore why OCM needs to be considered in every project and how effectively identify, plan and manage those changes to support project success.

Organizational Change Management as a Project Component

Organizational change is generally defined as making changes within an organization that will affect the way the way individuals and groups operate and interact.  Introducing new processes or technologies may change the way jobs are performed, redefine roles and responsibilities, or change reporting structures.  More often than not organizational changes involve new expectations, new processes and tools, new partnerships and relationships.

In some cases changes to the organization are intentional and the role of Organizational Change Management in the project is obvious.  Organizational transformation initiatives and projects are undertaken with the primary objective of consciously introducing specific and often sweeping changes designed to improve organizational performance.  These projects focus on the changing the way the entire organization or a large part of it operates.  Transformation projects involve radical restructuring of job responsibilities, operating processes, and reporting relationships, major changes to how employees are evaluated and compensated and, in some cases, attempts to change the underlying organizational cultures and behaviors.  While these projects and their parent initiatives introduce significant organizational change, these are fairly well documented and the literature is filled with case studies and strategies for managing the changes resulting from kind of endeavor.

In other projects however, organizational change is not the primary project objective but instead a by-product or a component of the project:  something that impacts the organization in such a way that the organization and its people must change to adapt to or absorb that impact.  Much like a rock hitting a pile of sand, organization changes form as a result of the impact whether or not it was intended or accidental.  For example, consider a project to move a department from one office space into another – while the project team might be focused on the move itself, the people being moved are focusing on things like is the new space comparable to their old space?  Is it larger? Smaller?  Located closer to a window? Farther away?  Might their new location be perceived as  more or less prestigious than their current space?  Is the new space that someone else has been given a reward?  Or perhaps a punishment?

Organizational impacts may also result from the deliverables of the project or from how the project is organized and how it operates.  In other cases the impact is to the project itself; internally or externally introduced organizational impacts that force some organizational elements within the project to change.  Whether internal or external, caused by the project or affecting it, all of these impacts have the potential to significantly change the schedule, cost or scope of a project or program and, as such, require mindful and effective management.

Identifying Organizational Change Impacts

Like managing anything else, the first step in managing organization change is to identify what kinds of organizational impacts may result from the project effort.  Like in risk management there are organizational changes that we can anticipate and others that may appear from nowhere.  Needless to say, we want to anticipate and plan for as many as possible.

Identifying organizational impacts and changes can be difficult even when they are the primary objective of a project and expert resources are deployed to carry them out.  In fact, a large number of transformation projects are challenged or fail outright.  If the success rate is that low in initiatives where organizational change is directly linked to the project objectives and, hopefully, have been considered and planned for, it’s not surprising that organizational impacts resulting from other types of projects are not addressed in the project planning or execution processes and remain invisible until they become significant barriers to project success.

Why are organizational impacts and their attendant risks so often overlooked in projects?  Project management texts frequently identify and describe organizational risks, numerous published case studies on project failures cite organizational change issues as major contributors to project failure, and most experienced project managers have sat through at least one risk brainstorming sessions where someone on the team has brought up an issue or risk relating to organizational change.  In fact, most project managers and teams recognize the potential for risks associated with organizational change, but tend to dismiss them as unmanageable, indefinable or inconsequential.

So the first challenge is simply recognizing that organizational change will be needed for the project to accomplish its objectives.   While sometimes obvious, there are often projects where the need for change is more subtle or where the agreed upon deliverables may be in conflict or inconsistent with the beliefs or values of the organization.  For example, an effort to implement a heavyweight, detailed control process in an organization that prides itself in its speed and agility will require much more attention to organizational change than the same effort might take in an organization that highly values structure, discipline and rules.  In other words, for the project to succeed the mismatch must be recognized and the appropriate changes to the project and/or the target organization must be made.

Even when we recognize that our project will require some level of organizational change management,  we encounter a second challenge; clearly identifying and defining the specific impacts that may  result from or be created by any given project or effort so that efforts to mitigate or manage them can be included in the plans for the project.   This difficulty stems in part from the fact that the reaction to, and much of the impact of organizational change is emotional.  Rather than facing a straightforward issue or risk like ‘ part x doesn’t perform to specifications’,  the project manager is faced with concerns about changing behavior and beliefs, impacting morale and job satisfaction, and anticipating a myriad of emotional reactions which may not respond to a fact-based rational response.  In short, while many of us intuitively know that there will be an impact, we may be hard-pressed to define that impact and come up with effective approaches to dealing with them.

Recognizing the need for organizational change management as a component of an effort and establishing strategies and plans for meeting that need are critical first steps but much more is needed to ensure at organizational impacts are understood and effectively managed in a project.

Planning for Organizational Change impacts

Once we’ve identified where organizational change is likely, we can plan for it.  Obviously planning for organizational change is more proactive than dealing with it as an issue during the project.  Planning can include identifying organization change management activities as part of the project scope and schedule or addressing it as part of the Risk Management Plan.  Needless to say, your approach should be driven by the scope and impact of the change.  The more extreme the change and the more people effective, the greater the need for proactive organizational change management.

Any effort to plan for organizational change must consider: 1) A single project may introduce a number of different organizational impacts, 2) changes may impact different individuals and groups in a variety of  ways and 3) organizations are made up of people will not all perceive or react to the change(s)  in the same way.

Likewise, teams planning for organizational change need to be mindful that the sources of organizational changes are not always obvious.  While most of us are fairly sensitive to how the outcome of our project might require changes in the way individuals and groups operate and interact, we may not recognize that the execution of the project itself may introduce major organizational impacts.  Take for example the major project that requires significant participation of people normally assigned to operating groups. Whether the assignment is full time or in addition to their ‘real jobs’,  these people and the people who are not assigned to the project are being asked to change the way they operate and interact.

As another example, in the early 1980’s I was involved in a project to convert a loan collections operation from a paper-based system for keeping records and notes on collection calls to an on-line system.  The new system required collectors to type their notes using a keyboard.  While quite a bit of planning was done around implementing the new system and training the collectors to use it, and we had not considered the possibility that some of the collectors might not have keyboard skills (the majority did not).  As soon as this came to light, we arranged for training and practice sessions in touch-typing.  Fortunately we caught the issue early enough to minimize any cost or schedule impact.

Unfortunately the lack of keyboard skills was just the beginning of our problems.  It turns out that no one had considered the impact of the transition on productivity:  Forced to use a new technology with newly acquired, beginner-level skills, collections the first month after implementation dropped by 40%.  While some productivity drop had been anticipated by the organization’s management, what was not anticipated was the huge turnover in the collection staff that occurred shortly after the implementation.  It turns out that the collectors’ compensation plan was heavily based on commissions and bonuses for dollars collected and a number of them  were aggressively recruited by a competitor and left for compensation packages that would enable them to recover the income they had lost during the initial implementation.

Here was a case where we recognized the potential impact of using a keyboard, but we didn’t think beyond the objectives of the project to the individuals within the organization.  The moral of the story is that we need to consider a broad set of possibilities in order to really plan for organizational change.  This means looking at how we might be disrupting both individuals and the organization as a whole.

Change is by nature disruptive.  The introduction of new systems, processes, products, tools and methods all have the potential to upset the normal operation of the organization and how individuals see themselves in that organization.   If t we are unable to effectively manage the level of disruption, the backlash will prevent a fully successful realization of the desired project outcomes.  Likewise, if the project team is effective in managing and minimizing the disruption the effected organizations will be more likely to accept and readily adopt the changes being implemented.