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Deja Vu All Over Again: Portfolio Management Systems

Volume: 1 Issue: 6

Once again, I am watching the rise of a new technology that while efficient, seems to be trading the potential to really make an impact for the short term feel-good of cost reduction. Don't get me wrong here. There is nothing wrong with cost reduction. Most of us have been living with the realities of intense expense management for a few years now. While it is not fun, for the most part it has been good for the companies whose spending was out of control. But now, I am experiencing, in the words of the esteemed Yogi Berra, "...deja vu all over again."

Portfolio management systems are becoming trendy and they are falling into the same trap that CRM and ERP did. In short, all of the portfolio management systems I have seen are self contained universes of data. They may call out to a centralized project management database, but what they miss is any connection to enterprise strategy. In short, with a portfolio management system, I can slice and dice projects, see the impact on changes in portfolio priorities, recast dependencies across multiples of work streams. Each portoflio managment software package is different. They all have a slick front end graphical display. All this as you can imagine is very useful to a centralized change initiative or IT project office. So, what's the problem?

I remember early in the days of CRM systems when I would sit in analyst or client demos seeing the parade of features designed to streamline productivity and make a sales or service organization more efficient. I always had the same questions. In the midst of discussion about the queue management or CTI, I would be the person asking "How do I use this to develop customer loyalty- and what else will be needed to get a measurable business outcome?" I always felt a little like Diogenes with his lamp, looking for the honest man (or woman) who would paint the full picture of what it would take to get a business outcome besides just software. Of course it did not help that I was in software sales meetings listening to software sales people who had a software centric view of life, the universe and everything.

Now, as many clients are looking at enterprise level portfolio management systems, I wonder at the simple question that seems to have no answer. It is wonderful that I can tie the projects together and understand the impact of changes across multiple program streams. The finance people love the ability to forecast spend or see the impact of an enterprise agreement for services. But, as I asked in a demonstration at a client site this week, "How can I tie a particular project in the portfolio to a strategic initiative or business outcome so that I understand the impact of changes on the business, not just the project portfolios?" I guess I need to be in a different business, because I got the same blank stares that I used to get in CRM meetings. Why is this so hard?

If the operating committee, board or executive committee undertakes key strategies for a given period, there is generally a planning process to lay out the execution of those strategies.  Out of that planning process normally falls a queue of projects. In my idealized world of planning against business outcomes, these projects are not reduced to mere software installations- but for now we will leave that one alone. Once there is an identified queue of projects, the prioritization begins. Since few organizations these days have appetite for all of the projects that they can envision some culling is required from the initial wish-list. If the system used for what-if analysis to make trade off decisions has no relationship to why a project is in the queue, then the prioritization of projects becomes based on someone's optimistic ROI projection, or the relative screaming volume of the execs who are asking for the work- and is disconnected from the original strategy that it was created to serve. It does not seem impossible to me to lay a layer on top of the portfolio to connect each project to those key strategies that they help enable and build the dependencies based on that criteria.

For mid market and smaller companies, this would be an ideal way to engineer in the rigor of setting strategic direction and monitoring spend to ensure it supports the intended business direction. For the larger enterprise, where the connective tissue between strategy and execution can often need reinforcing, this rigor seems to be a must-have capability.

So, if you are looking at portfolio management or other disciplines for managing project spend and planning- ask yourself and your vendor how you connect projects not just to other projects, but to strategic initiatives. If you find one who has an answer, and the answer stands up, consider yourself lucky- and send me a note about who it is. I have some clients who need to meet them.

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