Focus on Corporate Portfolio Management
He said WHAT?!?! - How to Effectively Manage Communications Between Technical and Non-Technical Professionals
Effective communication between technical and business professionals is one of the most critical - and elusive - skills to master. It is particularly imperative as you work with your internal clients to establish business priorities and develop a portfolio of projects and programs that properly aligns to those business objectives. As experienced IT professionals, we’ve all been there at one time or another. One of your IT resources makes an offhand comment to your business counterpart that is misinterpreted and results in an angry email/phone call to you. You receive a caustic email from an IT resource with senior executives copied in on the conversation. What began as a high-level discussion of functional requirements turns into a long-winded, techno-jargon-laced discussion of coding specifications and screen flows.
While the instinctive reaction of some is to keep technical personnel as far away from the business as humanly possible, this is not a realistic solution over the long term because you are only delaying the inevitable. IT and business personnel must be able to work together to establish business priorities and identify tactical and strategic projects that align properly and are in full support of these established priorities. To do this, IT leaders must share the following key principles with team members in order to avoid communication gaffes and, ultimately, help set a strategic direction for the future:
1. Don’t air your dirty laundry
By no means am I suggesting that you keep secrets from your internal clients. However, as a general rule, internal IT problems that have no bearing on the business and serve only to cast doubt on your ability to get the job done should be kept within the team/department and dealt with appropriately. Team personality conflict, for example, has no business in a meeting with your business clients. Similarly, avoid gossip, rumor, and speculation - to be safe, stick with the facts.
2. Draw the line
Drawing the line between “professional” and “personal” can be particularly difficult as oftentimes friendships develop between coworkers in the office. However, it is best to clearly separate business from personal, especially in written (e-mail) communication. One rule of thumb is to presume that your email is being sent to the Chief Executive of your company. Does it convey the right tone? Is there any ambiguity or room for misinterpretation of the message? Does the wording of the message convey professionalism and tact? If not, you need to consider rewriting the message, or even having someone else review the message. Just because the CEO was not in the original distribution list, he/she could at one point be a recipient of the message (intentionally or otherwise).
3. Start from the top
Too often, technical-minded individuals are prone to begin with the end in mind - jumping waist-deep into the gory details. After all, in doing so they are demonstrating their knowledge of the subject matter and speaking from a position of comfort and familiarity. However, too much is often simply that - TOO MUCH. By starting with the details, you run the risk of losing your audience, running out of time or otherwise not being able to clearly communicate your message. Begin by providing a high-level overview of the subject matter - just enough to convey your message. Additionally, by starting simple you are demonstrating that you are respectful of your audience’s valuable time. You should have ample opportunity to delve into details as your audience demands.
4. Tell him to step away from the keyboard
Before he sends that angry response to the most ridiculous question he’s ever been asked, urge your teammate to STOP. While the capability does exist, the “recall” function on your email system generally does not work, and I certainly wouldn’t rely on it. Instead, recommend that he compose the email, save it to draft, and leave it alone. When the emotions subside, go back and re-read the message. Quite often he will find that, with a bit of revision, a much more objective response can be crafted that will convey composure and professionalism. While it might feel better to vent, doing so can have lasting negative effects on your relationship with the customer.
In the end, we are all human. We are not perfect. Sometimes we will have to work with our clients to resolve conflict, clarify misunderstandings or otherwise clear up communication mistakes. However, by following these tips we can keep the drama to a minimum, allowing us to focus our efforts on solving customer problems and adding technical/strategic value to the organization.
Rob Vick, a Principal with Amplio Consultants, brings strong leadership, communications and relationship management skills as a proven leader in the telecommunications and healthcare industries. Rob has a solid track record of forging relationships with his clients; building, implementing and supporting solutions that exceed client expectations; and engineering and deploying process improvements that reduce bottom-line costs, improve employee productivity and increase shareholder value.
New IT Dashboard from Federal CIO Vivek Kundra
The Federal government’s new CIO, Vivek Kundra, launched a Federal IT Dashboard today. It is a good tool to first in understanding where the money is going. It looks like about $74B is going toward IT investments, and it is not surprinsing to see that the DOD gets close to half that spend (45%).
The New Federal IT Dashboard
My first impression of the site was that it had a sleek look and a nice feature of automatically advancing through the information, but I got a bit puzzled about the information I was actually looking at. After years of designing IT dashboards I can say that graphics without numbers and labels may look cleaner, but they don’t tell you much. By digging a little deeper on the site we can find the details on how the evaluations are performed, but it would be nice to make it more obvious on the home page. Here is how the evaluations are made:
The evaluations are split between Cost, Schedule and Agency CIO Evaluations. Cost evaluations are done using a point system. At the top of the scale, less than 5% variance from planned is 10 points and at the bottom, 50% or greater is zero. Schedule evaluations also use a point system where up to 30 days late is 10 points and 90 or more days late is zero. For the CIO evaluation, the factors are:
- Risk Management
- Requirements Management
- Contractor Oversight
- Historical Performance
- Human Capital
- Other (factors that the CIO deems important to forecasting future success)
Each factor is evaluated using the following rating:
This information, which I refer to as Portfolio Health Management in my first blog, is not only critical, but a key project portfolio management practice. But does it deserve the front page of the federal IT dashboard? As I mentioned in my first paragraph, one of the key benefits is to see how much is spent where. I would prefer to see on the right side the type of projects funded by each agency (spending categories) like IT Security, Infrastructure, Informational, Efficiency, etc. It would also be nice to see the total budget for each agency as well as how much has been allocated, how much is in progress, how much has been spent on canceled projects, how much is completed successfully, etc.
Finally, for a deeper dive, I look forward to seeing the upcoming features stated on the website. More analytics through the Earned Value Management (EVM) approach where applicable will be very beneficial. Using the PMI terminology, the Cost Performance Index (CPI) and the Schedule Performance Index (SPI) would especially be more telling than a simple green, yellow, or red indicator. I’m also eager to see how flexible the ”Participation” features will be:
- Additional chart customization features
- Agency-generated content such as widgets or mash-ups using IT Dashboard data
- Personal portfolios (create your own portfolio of investments to watch and subscribe to updates to these investments)
Overall, I think this is major progress in the right direction for a transparent federal government, but a dangerous tool if misunderstood by the viewers.
Are you ready to analyze the demand for your 2010 portfolio? (Part II)
In this Part II, I will cover how to put in place the basic PPM processes that will allow selection of the best projects for 2010. These steps will also lay the foundation for an ongoing PPM function that will communicate the status of the portfolio while staying proactive with changes in strategic directions and projects at risk. If we take the perspective from a single project and the PMI methodology, most of what I cover here will correspond to the Initiating Processes for a project.
(For steps 1-6 please see the previous blog post, Part I).
7. Design a demand management process for new initiatives
This is a critical process in PPM and one of the most difficult to get right. The tricky part is to have enough information to make the best decisions without spending too much time collecting the data. The main issue is that organizations do not always reserve time for their resources to spend on analyzing and sizing the demand. This creates tension between the people requesting the analysis and the people providing the analysis of the work required to complete the project.
Simply put, demand management is first about collecting and understanding the initiatives from the wish list of all functional areas (if the portfolio is at the corporate level; if not, it’s the wish list of one major functional area). Next, it’s about prioritizing and selecting the best ones to fund. The typical steps in demand management are:
8. Establish communication guidelines and knowledge sharing methodology
Another important piece of the puzzle to put in place early on is communication of information related to the PPM processes. All stakeholders need to understand new initiatives coming down the pipeline and how each stacks up against other projects on the list. You want to make the process as transparent as possible to the organization. This is one of the key objectives of a PPM function so that the decisions involve all key players. Optimizing communication will require integrating PPM with your collaboration platform (like SharePoint, eRoom, etc.) or shared folders.
9. Decide on criteria for evaluation and create a prioritization model
As mentioned above, demand management includes scoring and prioritizing projects. First, you need to develop criteria to score your projects. Typically, criteria can be split between benefits (or rewards) and risks. Your organization will have to spend some time here establishing criteria that reflects existing finance processes and corporate culture. Some examples are:
- Benefits/Rewards
- Financial (NPV, ROI, Payback)
- Strategic Alignment
- Business Criticality
- Other technology benefits (i.e. architectural alignment)
- Risks
- Duration of implementation
- Technical complexity
- Limited resources
- Cost
- Project dependency
- Change management
Each project will be scored (1 to 5 or 1 to 10) against all criteria using specific guidelines to ensure consistency (for example: if NPV>$100K, score=5). Then, weigh each criterion, as not all criteria will have the same importance. The more sophisticated models will change the weighting based on the category for the project (i.e., a strategic project may be able to accept more risks than an informational project since the benefits may be much greater).
Finally, all scoring and weighting should be combined to create a single list of projects in order of priority. The prioritization process should include a final review and deliberation of the output of the model, where you will need to consider factors that may not have been included in the scoring, and move things around accordingly.
10. Align your strategic direction and portfolio processes with the CFO
As McKinsey Quarterly recently pointed out in the conversation starter What next? Ten questions for CFOs, the CFO will have to keep the organization focused during recovery. Questions like “What shape will a recovery take?” and “Do you have the financial resources needed for an upturn?” are critical for CFOs to answer before shaping the strategic direction of the 2010 portfolio.
Many companies also have a new appreciation for risk. The CFO should provide the new rules of the game for analyzing risks associated with taking on big initiatives, which in turn will impact how the strategic direction takes shape.
New guidelines from the CFO suite may force companies to review the criteria used to evaluate projects. If your company already has a model for evaluating a portfolio, take some time to review it.
11. Gather information for new initiatives
As mentioned in Part I, you should already have obtained information related to non-discretionary projects and projects spanning multiple years. At this time gather information related to the other initiatives on the wish list for 2010. You need to collect enough information in what can be called the project charter to be able to score items against the criteria developed in step #9. Keep in mind that information typically does not come from only one source. The requester should have the bulk of the information, but may need help from departments supplying resources (like IT and finance) for an approximate sizing of the effort and to complete the business case. You could also consider using the newly developed process to review projects currently funded for 2009. You may uncover immediate savings.
12. Score and Prioritize the 2010 portfolio
Once the information is collected, put all the details into the prioritization model and see where everything falls. As mentioned before, make sure you plan some sessions with key stakeholders to discuss the results and make any necessary changes to the list.
Et Voilà! You are now ready to draw the line and decide which projects will be funded based on the available budget.
In future blog postings I will discuss how to manage the finances, create a portfolio oversight mechanism (Portfolio Health Management), and keep track of value (Value Management).
Good analysis to get you started with PPM tools
Each year in June, Gartner Inc. releases its Project and Portfolio Management Magic Quadrant. It shows a 2×2 matrix with ‘Ability to Execute’ on the y-axis and ‘Completeness of Vision’ on the x-axis. It results in four areas that categorize the software providers:
- Leaders - best
- Challengers - less visionary but able to execute
- Niche Players - usually smaller players
- Visionaries - good vision but perhaps less able to execute
It is a good analysis to get you started with understanding the universe of PPM tools. Some vendors have introduced SaaS models that could be implemented very quickly. As I mentioned in my previous blog, before you embark on the journey to implement a PPM tool, make sure you have gained sponsorship, you have put in place a basic PPM process and have used the process for a while (at least as a pilot).
The vendors that appear on the magic quadrant are (please see Gartner’s report for where they fall on the magic quadrant or contact Amplio Consultants for help with tool selection):
- Big players
- Mid-size players:
Some smaller players are not yet on Gartner’s radar screen, but are worth looking into especially for smaller companies:
- Automation Centre (www.acentre.com)
- BrightWork (www.brightwork.com)
- Clarizen (www.clarizen.com)
- Dekker (www.dekkerltd.com)
- Deltek Systems (www.deltek.com)
- Genius Inside (www.geniusinside.com/web/website.nsf)
- GenSight (www.gensight.com)
- InventX (www.inventx.com)
- MaestroTec (www.maestrotec.com)
- Onepoint Software (www.onepoint.at)
- Portfolio Decisionware (www.pdware.com)
- Project Invision International (www.projectinvision.com)
- Project Objects (www.projectobjects.com)
- Project.net (www.Project.net)
- Projility (www.projility.com)
- Skire (www.skire.com)
This year’s version of the PPM Magic Quadrant was released on June 2, 2009. You can also get a summary of the anlysis through some of the large vendors mentioned above.
Are you ready to analyze the demand for your 2010 portfolio? (Part I)
It’s only early June and many corporations begin their project portfolio planning toward the end of the summer, but you read the title correctly. Now is the time to adjust your processes to maximize value and to ensure proper management of your project portfolio in 2010.
In the summer of 2008 there was already uncertainty about a potential recession, but most companies were optimistic as they continued to follow their usual budgeting process to evaluate project funding for 2009. They got a high level understanding of the funding available for 2009 projects sometime in August, and started to build their project portfolio. As bad news started to pile up over the Fall months, companies struggled to keep up with the continuing changes to their portfolio before 2009 had even begun. By the time January rolled in, many of these companies were unsure as to where their portfolio stood. Companies began the difficult tasks of reducing funding for ongoing projects, pushing other projects into next year, and outright cancelling some already-funded projects. These actions created a very unstable portfolio, and thus an unclear vision of what it will take to finish up the year and successfully plan for 2010.
If this is a close description of your situation, now is the time to regain control of your portfolio of projects by making urgent process and organizational changes that will lay the groundwork for a more agile environment. The goal is to have the changes in place in time to have an impact on the 2010 portfolio decision process, but where should you begin?
I want to pause here and mention that Project Portfolio Management (PPM) is an ongoing activity throughout the year, but the reality is that there is normally a major effort to prioritize and decide on the bulk of the initiatives in the Fall (following the budgeting process). If you are new to the PPM concept, see inset. 
Since it’s already getting late in the year to start a full blown PPM strategy, I will discuss the key processes to focus on within the next several months to get you where you need to be for 2010:
1. Get sponsorship for the PPM effort
As with any successful project, establishing a new PPM function will need a strong sponsorship from the top (C-level preferably). The PPM function should be considered a separate function than Project Management Office (PMO), although they both could reside under the same leader. (I will explain my point of view on this in an upcoming post.) With that in mind, the benefits of PPM include:
- Enhanced project definition and value clarity prior to approval
- Better alignment with strategic direction
- Superior objectivity for project prioritization and selection
- Fewer redundant and overlapping projects
- Tighter financial management
- Greater accountability for investments
- Increased ability for resource forecasting
- Earlier detection of at-risk projects
- Faster and more focused reaction to drastic priority changes
- Advanced tracking of value creation
- Improved communication throughout the organization in terms of project focus, how changes are taking shape, and how specific initiatives are evolving
Forrester recently reported that “implementing a PPM solution (process and tool) produced an expected return of 255%” (see The ROI of Project Portfolio Management Tools). Other research shows that project redundancy dropped between 10 and 80% (depending on the size of the organization), and project failure rate dropped as much as 60%.
2. Inventory projects for 2009
Make a list of all completed, current and future projects that have used or will use funds this year. Do this exercise across all functional areas. When making the list, try gathering the following information for each project:
- Project description: title, objectives, problems it resolves, high level scope, sponsor, project manager
- Financial information: Budget at Completion (BAC), Estimate at Completion (EAC), CPI (if using earned value), and NPV
- Schedule: est. start, est. end, actual start, actual end, and SPI (if using earned value)
By simply making a list you could potentially uncover duplicate efforts, or even poorly performing projects that should be eliminated. Pull the right people to make decisions and take actions now on those quick hits.
Note that the tool is not important at this time. This list can easily be captured within a spreadsheet or a simple database.
3. Categorize your initiatives
Have you been managing your portfolio of projects as a suite of programs? Ensuring success for a set of programs is the role of the PMO. For PPM to be successful, the initiatives should be grouped to reflect the balance between risk and reward elements as well as alignment with strategic directions. Some of the categories often seen in portfolios are:
- Strategic (typically higher risk, but also higher rewards like innovation, new markets/products, new sales channels, etc.)
- Efficiency (ERP, automation, cost savings, business process improvement, increased control, etc.)
- Informational (business intelligence, reporting, knowledge mgmt, collaboration, etc.)
- Non-Discretionary (legal and statutory, regulations, critical maintenance, etc.)
- Maintenance (system upgrades, infrastructure investments, etc.)
Once you have the first draft of categories, try to organize projects in your current portfolio and make adjustments to categories as needed.
4. Establish targets
Review how much funds will be spent by category this year using your current portfolio. Use the current share of the pie for each category as a baseline and decide on target percentages for next year considering the current economic conditions and the specific outlook for your industry. As an example, if you plan on spending 15% of your portfolio on strategic projects this year, should you increase or decrease this number for next year?
5. Determine the budget
The budgeting process typically evolves over a period of several months, but use the initial estimate per functional area to determine how much money will be available for projects in 2010. Using the target percentages, allocate an amount to each category.
6. Start building your 2010 portfolio
Based on the 2009 projects and new strategic directions, start building your 2010 portfolio:
- Include multi-year projects that will use up funds in 2010
- Keep projects that started in 2009 but will not be finished until 2010
- Add non-discretionary projects that you need to deliver in 2010
The rest of the portfolio will come from the demand management process, which I will explain next week in Part II.