Example of implementation of an ISD project portfolio | Interview with the PMO

In this interview, Michel Operto, PMO & PPM expert, recounts his experience. Michel had the opportunity to implement the prioritisation and management of an IT project portfolio. If you are a PMO, Project Manager or CIO, this content will be useful if you undertake a similar adventure! Here are the highlights of this experience implementing an ISD project portfolio.

What’s coming up in this article:

• What are the aims of implementing the project portfolio?
• Here are a few useful definitions: Project, programme, portfolio
• The roles and responsibilities of the main stakeholders in this experience
• The main steps
• What you need to remember for your own project portfolio
• Implementation of a project portfolio tool

Project portfolio management: what is the difference between project, programme and portfolio?

• Project:
  • New project: A project undertaken to create a new product or service or to automate a manual process or to create a new customer path (digitalisation).
  • Baseline project: Series of development and maintenance tasks necessary for the proper functioning of an existing application. Evolution of technical bricks for example.
• Programme: A group of linked projects managed in a coordinated fashion and which share a common business objective.
• Portfolio: All the projects and programmes undertaken by the IT department.

What were the aims of implementing the project portfolio?

“I had the opportunity (the luck and the privilege, I should add) to implement the prioritisation and management for an IT project portfolio. I am going to talk about the highlights of this experience here, as I think they may be useful to you if you are undertaking an experience that is even the slightest bit similar.

We have four main objectives when creating and implementing the IT Project Portfolio management process. Here they are, together with a few of the specific issues each one raised.

Maximise project return on investment

• How do you compare projects of different sizes?
• How do you give weight to the various decision-making keys?

Align projects with the company’s strategy

• Avoid turf battles
• Integrate the customer in decision-making
• Ensure decisions are transparent and traceable

Limit the number of projects

• According to what criteria and with what goal?
• How do you identify and kill off “losers” quickly?

Ensure the coherence of the project portfolio

• IT architecture
• Good distribution of investments over time
• Good distribution of investments over the different components of the value chain
• Consideration of dependencies between projects

The roles and responsibilities of the main stakeholders in this experience

• Customers > Express their needs and priorities
• Project teams > Analyse, perform
• Portfolio management > Prepare, challenge, manage
• Project committees > Establish the criteria, prioritise
• Investment review committee > Decide

I will stress here the role of portfolio management, which supplies the data enabling the decision-makers to make their decisions. In my case, the CEO, the IT, Marketing and Sales and Operational Support departments. The portfolio manager does not make the decisions. They act as a facilitator. They facilitate decision-making through the information they provide.

The main steps in implementing the project portfolio

Lay good foundations

To start with, the basis for the work is of course to produce an inventory of the existing situation:

• Projects and programmes started and under consideration
• Existing budgets (allocated and available)
• Existing resources (human, material, etc.)
• Strategic IT plan (if there is one)
• Establish the list of projects

Then establish the project evaluation criteria

This point is particularly crucial, given that the aim is above all to move from a subjective model to a decision model, based on relevant, indisputable facts and information.

So, I have learnt from this personal experience that the criteria must be as follows:

• Simple: Easy to understand and calculate. Often the easiest to understand is not the easiest to obtain. This does not mean that they should not be chosen, but it should be noted that there will be more work to obtain them and keep them up to date.
• Factual: Based on elements which are measurable, indisputable, known and/or visible to all.
• Unique: Multiple metrics must also be avoided, and therefore every effort should be made to use those already in place.
• Indicators: These metrics are there to give the deciders quality elements to enable them to make an informed decision based on facts and that they will combine with their understanding of both business and technical stakes.
• Systematically calculated and prior to any project review.

For example, in this precise case, here are the criteria used:

1. Total amount of the investment: Machines, software, support costs, external services (consultants), resources (internal and subcontractors), travel.
2. Strategic alignment: Impact on the revenue, impact on the costs, operational efficiency, customer satisfaction.
3. Return on Investment: “Payback Period” = The time needed to fully recover the investment through the benefits brought by the project.
4. Likelihood of success: Well-defined, stable needs; ability to absorb the change and re-engineering, process redefinition needs; size of the project; risk of budget or timeframe overruns; risks linked to security.
5. Technical alignment: Alignment on the technical architecture; no conflicts with the convergence plans; simplicity and modularity; dependencies of other projects on this one; availability of adequate resources; availability and stability of the technology.

Design the crossed priorities grilles

Then we designed simple priority grilles which enable the criteria to be crossed two by two.

In this precise example, the overall investment budget was imposed.

We, therefore, crossed all the other criteria with this one to position each project in the grilles.

Take a step back to estimate the portfolio balance

Make sure you are not misled by the colour codes. You should be aware that a portfolio in which all the projects are in the green may not necessarily be optimal. Indeed, with the settings of this portfolio, the green quadrant only favoured the projects for which the returns on investment were very short-term and the least risky. In business, this strategy rarely pays off in the medium- or long-term.

Try to find three-dimensional visualisation models

Another table which was useful to us is the crossed table of risks and benefits in relation to the level of investment required.

This graph positions the projects in relation to each other according to their benefits and chances of success, whilst at the same time visually representing the investments required to undertake them through the size of the bubbles.

What should you take from this experience for your own project portfolio?

Of course, there are efforts to be made on the part of the portfolio manager and the management to initiate the movement, collect all the data and create the right level of attention among the company’s executive management. They will give impetus to your initiative to implement the project portfolio.

Moreover, the Portfolio Manager will also have to roll up their sleeves to:

• Immerse themselves in each project file
• Use their personal network within the company to sell the concept and approach to the company’s highest decision-making bodies and naysayers
• Communicate continuously

The risks you will probably have to tackle

• The frequent reorganisations may force you to re-explain and resell the principles and possibly adjust them. Therefore, carefully target the company’s objectives so that the ambitions of the project portfolio satisfy them. This will improve the likelihood of acceptance by the management committee.
• Estimate the future costs. Indeed, there is a risk that financial pressure during the year may limit your results, inciting some partners to go back to the old way of doing things.
• Anticipate resistance to change during the first prioritisation round-tables. To do so, take into account the business needs in order to include the different stakeholders in the project (employees) from the beginning.

The benefits of implementing the project portfolio

• Have a strategic view of the portfolio. All the members of the business departments meet with you around the same table in order to discuss the project portfolio overall.
• Transparency for all the projects. What is more, good group work to establish the criteria will create cohesion and trust.
• Alignment of the project portfolio management process with that of the company’s investment review.
• Better prioritise and make decisions about the projects. Indeed, you will quickly be able to identify projects to be eliminated or postponed which will not satisfy the criteria. This will enable you to concentrate your resources on those which are the most promising.

What about the tool? Implement project portfolio management software

How do you find the collaborative tool which will enable you to manage a vast project portfolio?

To do so, review the challenges encountered in your company, whether in the management of project requests, risks, budgets or resource management. The PPM tool is an answer to the business needs and must be facilitating for decision-making in project governance.” 

To take things further… How have they improved their project management? CIOs, PMOs and project managers share their experiences!

This article was co-written with Michel Operto, an expert on project management, PMO and IT portfolio prioritisation. Michel Operto also writes the specialised project and portfolio management blog https://dantotsupm.com/