Abstract
ITPM (Information Technology Project Management) is an essential activity for any IT organization to succeed. Projects must be evaluated and ranked in order to be decided upon and prioritized effectively. Shortcomings exist and must be addressed using optimization tools and methods in order to ensure efficient execution. Project portfolio management, which is the management of all projects within IT, allows for comprehensive project management that can ensure organizational success. Many effective ITPM tools exist to assist in project execution that must be understood, evaluated, and utilized properly. These tools include Business Case documentation for each project to lay out the reasoning for each project and project ranking curves, which can be optimized to best prioritize projects prior to the project selection process. ITPM tools have shortcomings that must be understood ahead of time to prevent project inefficiencies or failures. These shortcomings can be mitigated to ensure the best possible selection of projects and to ensure the best possible outcome for each project within the project portfolio being executed by an IT organization.
Keywords: Information Technology Project Management, Project Portfolio Management, Risk Mitigation, Project Portfolio Management Tools
ITPM (Information Technology Project Management), which should always be utilized, is essential if company resources are limited and managers are not available to assist in ways that would benefit the organization (Gliedman, 2002). These resources may be financial, staffing, systems, and other business-related contributions. Gliedman reveals the components of ITPM and he demonstrates the way project portfolio management tools can meet the needs of project portfolio managers. According to Gliedman, few organizations regularly perform portfolio planning, analysis or comprehensive reporting. The result of these shortcomings cause IT organizations to operate with less information than is needed to succeed. Gliedman suggests adding an appropriate set of project portfolio management tools to improve IT alignment, effectiveness and resource utilization. Despite the fact that project portfolio management is discussed regularly in the IT trade media, Gliedman suggests that few organizations actually adopt ITPM as a function (Gliedman, 2002). This lack of ITPM within the IT industry can be very detrimental to any IT organization.
Comprehensive project portfolio management is essential to IT organizational success regardless of the size and scope of each project. There are some notable issues that must be addressed in order to successfully implement project portfolio management within an IT organization. These issues will be revealed and discussed in order to prevent failure caused by unseen risks. By addressing each shortcoming and by optimizing each process, risk can be properly mitigated and success can be ensured.
Project portfolio management tools are used to generate ranking curves, which are the risk-adjusted values vs. project cost. They also produce efficient frontiers, which are sets of optimal portfolios offering the highest expected return for a defined level of risk. Efficient frontiers also show the lowest risk for a given level of expected return. These tools are useful for plotting curves and then placing each project along the curve. Each project can be ranked and compared in order to prioritize them effectively.
Shortcomings exist that must be understood and addressed in order to use project portfolio management tools more effectively. “Many project portfolio management tools lack optimization engines and therefore, they lack the ability to generate efficient frontiers” (Lee Merkhofer Consulting, 2011). Optimization engines create more value by providing the ability to group projects in a way that will best utilize the available budget, instead of simply grouping projects based on rank. “The ranking curve misses opportunities to use unspent budget. At best, a ranking curve will only match the efficient frontier at precisely the cumulative budget levels that result when projects are added to the portfolio in rank order. Ranking fails to identify the portfolios on the efficient frontier that lie between these points” (Lee Merkhofer Consulting, 2011).
Risk is fluid and must be monitored and re-evaluated continuously throughout the life of each project. Controls and processes should always be in place in order to properly maintain risk mitigation. Ranking curves and efficient frontiers should be regenerated periodically to prevent projects from being blindsided by changes in the level of risk. “The right controls and processes to address the ever-changing risks of meeting company strategies and objectives are an absolute must for sustainable success” (Ernst & Young, 2014).
“A sound project portfolio management capability requires the following: informed managers, involved participants (including the right level of executive sponsorship), good facilitation, and appropriate processes, systems, and tools” (Pennypacker, 2011). When managers and stakeholders are well informed throughout the life of each project, better decisions can be made that will keep each project heading in the right direction at all times. This also prevents micromanagement, which can hinder project execution efficiency. Participant involvement is critical to project success since it better spreads out the execution activities among the team, and it helps in the facilitation of each project, which is also very important. When you add appropriate processes, systems, and tools, projects will execute smoothly, quickly, and correctly. Proper assessment of the processes, systems and tools must be performed beforehand to ensure the best fit and to optimize productivity.
Among the tools that can be utilized for a project, the Business Case is one to be seriously considered. A Business Case documents the reasoning for initiating a project. It allows for better decision-making and it provides the information needed to determine whether to proceed or not to proceed with a given project. “The Business Case is a foundational and essential tool that provides the necessary facts and data for understanding the value, cost, and benefit of implementing a project. It also lists the assumptions used to reach the touted conclusions, the various options considered, and the required cash flow for implementing the project” (Pennypacker, 2011). The utilization of the Business Case tool will allow for better project judgement, project selection, and project prioritization as projects are added to the project portfolio to be managed within an IT organization.
The utilization of effective project portfolio management within ITPM will greatly increase the rate of success for any IT organization. Project selection and prioritization will define the project portfolio. Resources must be properly allocated to outfit each project with everything that is needed to execute them effectively. Tools are available to optimize the process each step of the way during project execution. Lastly, risk mitigation is the key to success for every project and must be evaluated regularly to prevent unseen issues from creeping in.
References
Gliedman, C. (2002). The many faces of IT portfolio management. Research Digest,5(3), 1-10. Retrieved from http://tvertne.org/tmp/IT_portfolio_management.pdf.
Lee Merkhofer Consulting. (2011). Best practice project portfolio management. Priority Systems. Retrieved from http://www.prioritysystem.com/reasons6b.html.
Ernst & Young. (2014). Strong risk management practices and internal audit capabilities as drivers as drivers for growth. Retrieved from http://www.ey.com/gl/en/services/advisory/ey-accelerating-high-growth-companies-climb-to-the-top.
Pennypacker, J., & Retna, S. (2011). Project portfolio management: A view from the management trenches. Garnert Group. Retrieved from http://www.gartner.com/it/content/911400/911412/project_portfolio_mgmt_excerpt.pdf.
