Back in November, I gave a presentation to an audience of PMO practitioners at PMO Symposium on the reality of putting theory into practice—the feedback was fascinating. While I knew how rare full life-cycle portfolio management is, the audience feedback confirmed that fact and the reasons.
In brief, portfolio management can be broken down into three parts: 1) Portfolio Planning, the process by which projects are selected and placed on the active portfolio, 2) Portfolio Monitoring, the practice of reviewing the active set of projects to ensure balance and performance, and 3) Portfolio Results (aka Benefits Realization), the practice of measuring the return on the investments the projects represent.
I asked the 100+ PMO directors, managers, and other practitioners in the room to raise hands for each practice they have actively in place. As expected, almost all hands went up for monitoring, a little more than half went up for the planning processes, but only two hands were raised for Portfolio Results. That’s two percent in an admittedly non-representative sample. Non-representative in the sense that the attendees at the Symposium are the more mature PMOs!
So what’s going on here? A look at each piece brings the problems into focus.
Portfolio Monitoring at its most basic is simple to implement and provides a lot of bang for the buck. Simply listing all active projects and tracking their health gives executives a much better view of where the money and resources are being spent, allows them to re-allocate if needed, helps them provide visibility to their business colleagues, and allows them to manage performance by exception. Most of this work can be performed by the PMO and project managers, with the results distributed to all stakeholders.
Portfolio Planning requires a bit more effort and requires stakeholders to actually get involved. Many companies have serial, or ad hoc, demand management processes. This path of least resistance requires specific steps be followed,—such as a business case, formal review, and funding approval—be followed. However, by not comparing all requests, serial demand management suffers from prioritization issues and project churn, often since higher priority projects interrupt already approved lower priority projects. By show of hands, this was the most popular, though definitely not the majority, method in use by these PMOs.
Cyclical demand-management reviews on a regular cycle – often monthly or quarterly –forces project stakeholders to compete for resources to support them where a cross-functional steering committee often makes the final decisions. The result is a high-priority portfolio where investments are strategically aligned with corporate objectives. The roadblocks center on getting those cross-functional reps engaged – and getting reps that can actually make decisions!
Of all the components of portfolio management, one would think results would be the most important. And most everyone in the room felt the same. So why is it so rarely practiced? In a word: accountability. To work, business sponsors need to not only to present a business case, but propose metrics that actually get measured post go-live. These measurements might be taken in increments for months or even years in order to fully understand the impact of a given project. Turns out business sponsors know they need certain work (aka projects) performed, but don’t want to take the time for full ownership of the results.
How did the few that successfully implemented benefits realization manage to overcome this organizational resistance? Typically, it was a CEO mandate. Proving once again there’s nothing like good executive sponsorship to drive success.