My first encounter with Project Portfolio Management (PPM) sprung from the needs of our clients’ IT departments. They were inundated with all sorts of development projects. Some were directly attributable to the IT department, but the majority of the initiatives came from business units. The solution was to create an IT project portfolio which included projects that the IT department was involved in. Soon it became evident that almost all projects had a connection to IT.
IT departments have often been the prime movers in PPM because they try to optimize the use of their limited resources. Prioritizing projects is one of their most essential portfolio management tasks. Prioritization happens at least once a year during budgeting, but in the ever-accelerating pace of change project decisions must be done constantly.
There are basically two types of criteria for project decision-making: strategic and operational. My experience is that the IT management’s view of PPM is more often operational than strategic. Their main concerns are:
- How to spend investment money in different technologies and solutions,
- How to manage resources so that the most critical projects can be done in time and budget.
Internal customers are not satisfied if project spending is dictated too much by the capabilities of their IT department. They expect a more business-oriented decision process.
Many of our corporate IT clients have identified the dilemma and have tried to incorporate business and strategy-related criteria in their project portfolio. They can, for example, try to evaluate how projects contribute to achieving the company’s strategic goals. They are also able to visualize how balanced the portfolio is according to selected business criteria.
We have seen how the initiative of the IT department to take the project portfolio to a more strategic level has lead to an increased interest in the business owners of the IM systems. They have concluded that all internal development would benefit from the use of PPM and want to implement it corporation-wide. This implies that every project must be evaluated using the same corporate criteria.
Are there grounds for having separate IT project portfolios? Some of our PPM clients have solved the question by having a portfolio structure that allows augmented content for IT. The enterprise architecture-related criteria are used corporate-wide, while the IT management specific content is visible to those who are directly involved in IT decisions.