Project portfolio management excellence is a mythical IT beast – often bragged about and rarely bagged, writes Murali Kulathumani.
By Murali Kulathumani, Director of IT Strategy and Planning, Symantec Corporation
A CIO’s mandate is essentially that of a change agent. She is expected to affect change for the better in systems, performance and capabilities of the organization. The time tested way to effect change is through a well-managed portfolio of projects – a project being a temporary endeavor that results in an end product/capability/service. However, a well-managed project portfolio is one of those mythical IT beasts – often bragged about and rarely bagged.
Herein I will explain why an impactful portfolio is actually within reach with a back-to-basics approach. I would also like to share some surprisingly effective (and attainable) strategies which have worked for me, and invite your inputs on the same.
Rather than dive into a dry discussion about ROI and phase gates, let’s consider a close analog of portfolio management in our personal lives: wealth management. (After all, a well navigated career in IT should hopefully result in us needing the services of a competent wealth management advisor!)
What are the basics I would expect from a wealth management advisor? First, I would need to know what I am invested in. What kinds of instruments? How did we select them among an ocean of alternatives?
Secondly, I need to know how each of my investments are doing – what’s the 3 year return? 1 year? YTD? How does it compare with initial projection?
“A well-managed project portfolio is one of those mythical IT beasts – often bragged about and rarely bagged.”
Third, what’s the return on investment – are we making money? If not, why not? What holdings do we need to drop/change/add to course correct?
Finally, how hedged are we for risk? What are our doomsday scenarios – are we employing options to hedge? What are our exit strategies?
Lack of PMO Rigor
This information is standard for any competent wealth advisor to provide. Yet we would be amazed at how hard the equivalents to the above items are to obtain in an enterprise portfolio.
Most projects in a portfolio do not go through a rigorous entry checklist. Many are legacy hand-me-downs (“We’ve been doing that project for the past 5 years, original players have all moved on”).
It is rare to get up-to-date information about the financials and performance of the projects. If your organization is able to provide spend by project each month, consider yourselves in the exclusive hard-to-attain minority.
Finally, most projects have no exit strategies – there simply is no mechanism that compares what the project is doing versus what was promised, either in performance or benefits – and no way to kill the underperformers.
This results in the all too common scenario of bad projects crowding out the good, slowing down enterprise transformation efforts to a crawl. How do we reclaim the advantage? The following three steps, while not a silver bullet, have proven to work in diverse settings –
- Screen for viability and validate alignment of screened projects with strategic direction
- Perform honest assessment of validated projects’ performance
- Make funding contingent on meeting agreed upon milestones
Validate Current IT Projects
Let’s be honest, most portfolios are full of investments that, in retrospect, seem like mistakes. Optimistic forecasts, poor planning, antiquated technology decisions, proposals driven for historical reasons that don’t make sense anymore, unrealistic benefits promised…. You get the idea. However there is a great deal of reluctance in owning up to these “mistakes” and cutting losses.
There’s always a mindset of “but we’ve spent so much on it for all these years.” This is like hanging onto our Pets.com stock from 1999 hoping it hits $1000 again – unlikely. Worse than the Pets.com stock, the bad investments in a corporate portfolio actively choke out the good projects, resulting in a significant retardation on enterprise transformation. How? By draining money, manpower and executive mindshare, these bad investments prevent us from picking new bets that could actually deliver.
So, the first step is to formally terminate (preferably by committee of CIO direct reports) any projects that are obviously misaligned. We do that by actively validating alignment of projects to the strategic agenda. Other than a few quick-win projects that are aimed at improving efficiency, it’s a good practice to ensure that all our sizable projects are in lock-step with the strategy imperatives of the organization.
It’s a great idea to do a post-term on why these were started and why the decision was made to terminate them.
Assess Project Performance
Now that we’ve filtered for the right projects, how are these projects doing? It’s quite likely that some of them will NOT be doing well. A first step to assessing long running projects is to get a historical total of money spent on them as well as a list of benefits delivered so far, and compare these numbers to the original business case used to fund the project.
What if there’s no business case? This is not only concerning but also far too common. The only remedy then is to draw up a business case, approve with appropriate levels of governance, and start holding these projects accountable. This is simultaneously the hardest and the most necessary task. As we do these for a bunch of projects, it may become apparent that some projects just need to be ended. (Imagine you come upon a project with $50 million spent over the years and the only visible output has been to keep a large team of contractors busy for several years. The decision should not be hard).
Tie Project Funding to Milestones
Now that we have a list of validated, well performing projects – how do we ensure these stay on track?
This is usually the part where we are confronted with project plans that are hundreds of pages long. However, the CIO is not looking for minutiae about builds, meetings and bug fixes. It should be possible, with competent program/project management staff, to abstract the project scope of each project into well-defined concrete deliverables that are usable by IT and the business. (For example: “Have Cloud backups up and running for the enterprise with defined uptime SLAs”).
By coming up with a curated list of milestones (date-bound and money-bound), for each project, it should be straightforward to navigate the portfolio and start observing meaningful returns. A great tool for performing the above is a modified form of Earned Value Management, called mEVM, which I will address in a future article.
Murali Kulathumani is Director of IT Strategy and Planning at Symantec Corporation. Kulathumani has over twenty years of experience in IT, including leadership roles in program and portfolio management. He is the author of the forthcoming book, A CIO's Guide to Portfolio Management.