Often the problem with understanding the challenges of implementing a project and portfolio management (PPM) solution is that we only consider it from the perspective of Project Managers and the PMO.
This is short-sighted. A good PPM solution will positively impact the whole organization. It has a profound effect on key stakeholders in the business. In this four-part blog series, we ask two industry experts what different leaders in the organization gain from PPM. In part one we examine the discipline from the perspective of the Head of Strategy.
How the Head of Strategy Can Benefit From PPM Software:
Philip Martin, CEO, Cora Systems
The strategy realization office (SRO) is tasked with making sure that the company’s strategy gets implemented. So, as Head of Strategy, you’ll have to look at benefits being delivered – benefits realization, both planned benefits and actual benefits. You need to look at their capacity to figure out the best time to run a project. You need to be able to look at scenario comparisons.
You want top-down portfolio planning. Basically, taking your budget allocation and dividing it out across your different portfolios. Once that’s done, you need to do scenario comparisons for those portfolios and be able to make informed decisions. Gathering good project inventory is a vital piece of the jigsaw for you, making sure you can gather the right project inventory to make good decisions.
For example, if you’re in the pharma sector, you might have Plant A, B & C in your organization. One might be in Germany. One might be in France, and the other might in the United States. Each of those three plants might have 50 projects each running. You might want to gather maybe 50 or 60 pieces of data on each one of those 50 projects, which will help you decide the projects you should go ahead with, and which ones you shouldn’t.
For instance, you might be gathering info on the product type. What plant will it be manufactured in? How much revenue would come from it? What’s benefits will accrue from it in the next three, five, or 10 years? What’s the estimated cost of this project if we run with it? What kinds of risk levels are we comfortable with? Have we the capacity to manage it? What investment category does this belong to? Are we investing our money in the right place? Is it strategically aligned with our portfolio?
Are your projects failing (“dogs”) or thriving (“stars”)?
Perhaps you’ve taken on too many “dogs” – projects that aren’t delivering according to your strategy. They’re failed projects. So, for example, you’ve taken on projects into your portfolio that have cost, say, €8 million or €15 million or €100 million. And they have not been successful. The opposite are those “stars” in your portfolio – those projects that are performing and are meeting revenue expectations.
The beauty of a powerful PPM solution is that it gives you a golden thread that links your strategy to your portfolio, your plants, your program, your individual projects, and, ultimately, to your project managers. That golden thread goes the whole way from top to bottom. It gives you linkage across your organization.
Now you really have a proper handle on what drives project profitability. It gives you some science about what makes you successful. Now, you have this fantastic visibility and control over what’s going on. You can make better, more informed decisions that are on your portfolio. It has an immediate impact.
Let’s look at a real-life example. A few years ago, one of our global pharma clients was looking at how to transform its portfolio planning. We asked them how many projects they were running at the moment. They said: “115”. This was, like, six or seven months into the year.
We said to them: “OK, knowing what you know now, how many of those 115 would you not run with?” “They said “seven or eight”. We asked: “What was the value of them?” It was about €20 million. That’s €20 million down the drain. It doesn’t have to be that way.
Imagine if you knew at the start of the year that you were going to waste 20% of your budget on the wrong projects. Wouldn’t it be an awful lot better if you had a PPM tool that allowed you to do that proper strategy realization planning in advance so you weed out all that wastage?
Paul Rees, Head of Client Services, Cora Systems:
As Head of Strategy, you want to balance your portfolios and prioritize effectively. You want a clear handle on the most important projects that should be done. Which projects need to be prioritized? Sometimes that might mean halting in-flight projects and bringing in pipeline projects.
There will always be a continual evaluation of those projects as they go through a planning and a delivery cycle. From a strategy perspective, it is very much: are we delivering the right portfolios? Also, are we delivering to the timescales that we committed to?
You might have a number of projects within your portfolio that are struggling. You could assign additional resources to those projects to assist with them, but actually, they might be low-performing projects and non-important projects – so you could actually be throwing good money after bad.
The prudent thing to do if you had all your portfolio information readily available to you would be to actually stop those projects. It’s human psychology, once you’ve started a project, you don’t want to have egg on your face. You want to complete it. Actually, it’s a harder decision to make, but sometimes you need to say enough is enough. Let’s bite the bullet. Let’s stop this project. Let’s cut our losses and pivot towards the projects that are profitable.
The wonderful thing about a PPM solution is that you can easily determine that all projects you’re delivering are fully aligned to your strategic objectives – and profitable.
How Cora PPM can help the Head of Strategy
- Portfolio Selection: Auto-select the preferred portfolio based on your criteria and compare alternatives, ensuring your portfolio delivers the maximum return.
- Prioritization: Using criteria, based on your requirements to score and weight projects, slice-and-dice data to come up with a repeatable, reliable, and robust portfolio scoring mechanism.
- Better Decision-Making: Increase return on investment, eliminate “CEO-specials” or “good-hunch” and enable decisions on the portfolio to be made with clarity and without guesswork.
- Top-Down Budgeting: Logically split budget across your portfolios. Easily track forecasting from execution against portfolio budgets to measure performance.
- Benefits Realization: Plan and track benefits realization across the organization.