The Importance of Organisational Portfolio Management Agenda In this session we will be discussing and reviewing The importance of aligning Project and Programme Portfolios to key business goals ID: 266238
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Bob Walker EPM TSP
The Importance of Organisational Portfolio ManagementSlide3
Agenda:
In this session we will be discussing and reviewing
The importance of aligning Project and Programme Portfolios to key business goalsFormulating and executing sound business processesIdentifying key metricsHow to identify and select the right portfolio Microsoft HR use of Portfolio Management
The Importance of Organisational Portfolio ManagementSlide4
Vision
(Short- and long-term strategy)
Strategic Performance Indicators
(Key drivers & metrics for assessing progress)
Key Structures & Capabilities
(Organisation, Business & Technical Architecture, Performance Mgt)
Business Activities
(Projects, new initiatives, day-to-day work)
Skills, Competencies & Behaviours
(Training & Development, Reward Structure)
The strategic context for effective portfolio management:
Holistic, inclusive, top-down
World-class companies can demonstrate a clear alignment throughout their organisation and studies have shown exponential performance improvements for those who adopt this approach
Investment in activities and initiatives that do not clearly align with strategic
goals is wasted
.
5 Key Elements of Effective Strategy
Initial focus on issues, not numbersInclusive, open discussion – involving unit heads as well as CXOs – to promote communication and understanding of final targetsIn-built ‘what-if’ and scenario planning, with reviews and updates as necessary, not dictated by the calendarAgreed ‘strategic’ metrics to track progress – not necessarily all financial – reviewed regularlyLinked to performance management / compensation package
Primary Source: McKinsey, 2004Slide5
50% of projects are still evaluated independently rather than as part of a portfolio
45% of projects only go ahead because a senior executive insists
21% of projects, in hindsight, should have been approved but lost out to those with more vocal support
40% of organisations don’t conduct any kind of post-implementation review
36% of projects are found to have over-stated their potential benefits
The business context:
The track record is disappointingly poor
Significant Issues
Regulatory requirements (SOX etc) necessitate greater
transparency in decision-making
Need to cope with growing organisational complexity
Ever-more challenging business climate:
- requires demonstration of effective results, quicker
- need for greater agility and flexibility
Pressure to minimise spending while investing in value-added activities
84% of organisations remain unable to demonstrate the link between IT or capital budgets and business needs
69% of major capital projects are neither on time nor on budget
Industry average for ‘successful’ investments is 50% or lessPrimary Source: Standish Group, 2006Primary Source: McKinsey Survey of 2500 global executives, 2007Slide6
4 Key Reasons Why Organisations Turn To Portfolio Management:
To save money / budget
To demonstrably add value in the programme / project investmentsTo improve transparency – usually at the behest of external stakeholdersAs a catalyst for significant process improvement, usually in one of the following areas:Business case / project approval
Business agility (‘what if’/ scenario planning)
Delivery control and benefits management
Confidence, Transparency and FlexibilitySlide7
Creates a
common currency
for comparing investments and making better-informed decisionsEnsures decisions made according to verifiable data
, not politics or ‘noise’
Creates a
clear and quantifiable link
between strategic objectives and initiatives undertaken
Uses a benefits-led approach
to delivering strategic projects.Reduces management time spent on decision-making through greater focus on high value initiatives
Reduces overall spend by eliminating low value investments
Promotes organisational agility through modelling of ‘what-ifs’ and other detailed scenario analysis - decisions to change taken within minutes
Generic BenefitsSlide8
Define your strategyPrioritise your strategy
Capture your investment
proposalesAlign your investmentsMake good decisionsReview & renewHow to identify and select the right PortfolioSlide9
“The plans made or the actions taken in an effort to help the organisation fulfil its intended purpose“
Drives Competitive Advantage
A strategic organisation can choose to be tactical, a tactical organisation cannot choose to be strategic!What is Strategic?Slide10
All your intentions may now be strategic........
.....but not all strategies are equal!
Create a prioritisation based on reality not emotionStrategic PrioritiesSlide11
Standard criteria for measuring:
Costs
BenefitsResource requirementTimeRiskCommon processBuild a “book”Where are my projects?Slide12
Who shouts loudest?Boss’s prerogative?
It got passed over last time?
Everyone else has one!Compliance and regulation?How do you Choose!Slide13
Be flexibleKill quick
Review regularly
Be provocativeChange is a ConstantSlide14
Microsoft HR and Portfolio ManagementSlide15
Previous fiscal years had ~80 projects in the pipe Organizational overload
Prior business framework attempt did not achieve desired results
No measurable link of projects to strategyHR Operational Excellence Team established in FY07 to address planning issues:HR Leadership team sponsorship 2 Program ManagersProject Delivery Framework virtual global team ~ 14 peoplePortfolio Management Office virtual global team ~ 18 people
Business SituationSlide16
Prior IT project selection was more of a funding process because projects were pre-determined by the business
IT receives disparate IT project requests from each HR area – not a consolidated list
IT budget is allocated to each HR area based on prior year’s budget instead of by rationalizing the strategic impact of projectsIT had no governance or focus around IT investment ROI or project rationalizationIT Personnel did not feel “strategic” to the organizationIT Business Architecture and Foundation Solutions Team established in FY07 to address portfolio and integration issues:Business architect
Six Sigma Black Belt Process Engineer
PMO Program Manager
Integration Solution Manager
IT SituationSlide17
PainConfusion
Costs
BlameNot consistentRe-inventionSummary of HR & IT SituationSlide18
Learn from the pastTake small steps – phases and quick wins
Strong emphasis on change management and stakeholder management
New ApproachSlide19
Think globallyProgram manage it like a project/establish cross functional team
Leverage the Project Portfolio Server 2007 tool to help facilitate the process (focus on the process vs. tool)
New ApproachSlide20
Portfolio went from 84 projects to 14
Portfolio aligned to HR and IT drivers and goals
On-track to deliver dialed movement to business driversBetter HR and IT resource allocationResultsSlide21
Improvements led to:
Better communication
Clear governance and accountabilityStreamlining of the project selection processFocus on business and shareholder valueClear rationalization of IT investmentResultsSlide22
Executive sponsorshipClear Strategy to make trade-offs
Phased approach
Leverage best practices and expertise in process, change management and program managementDiversity of cross functional team Project Portfolio Server enabled real time decision makingSuccess FactorsSlide23
Measure strategy and portfolio outcomes
Complete project framework to enable consistent execution
Manage change and on-going project status updates Refine planning for fiscal year ’09Expand scope to include “small” projectsIncorporate gap analysis on business capabilities Move organization bandwidth from “As Is” to “Aspire to”Next Steps: Continuing the JourneySlide24
Secure leadership team sponsorship
Keep it simple
Take small steps to demonstrate quick winsCommunicate often along the wayLeverage technology like Project Portfolio Server to enable data driven decisions/trade offsRecommendationsSlide25
Portfolio Management involves all parties
Do not try and take on everything
One persons Strategic is another persons tacticalExecutive Sponsorship from Business and IT is essentialTake Away’sSlide26
Chris Mills – CxO
Consulting
Paul Major – Program FrameworkMicrosoft – Carol Bubar, Senior Director Operational Excellence, Microsoft HRFrancis Gan, Senior Director HR Business Architecture and Foundations Solutions, Microsoft IT
http://technet.microsoft.com/en-us/library/cc297284.aspx
ThanksSlide27