Community Trip Report Program and Portfolio Management Gartner Symposium/ITxpo Orlando, Florida 8-13 October 2006 Key Takeaways This Trip Report highlights the sessions from Symposium/ITxpo for attendees interested in program and portfolio management. It also encapsulates key questions, findings and challenges identified from the members of the program and portfolio management (PPM) community and conference attendees. PPM was the focus of a specific track at this Symposium. Many related sessions were also held in the Application Development and Management, and IT Leadership — What Matters tracks. Four common themes emerged from the analyst presentations, workshops, user panels and one-on-one analyst sessions:

 Establishing scope, charter, organization and initial processes for PPM disciplines — The culture of the organization, skills of the people involved and executive sponsorship must be accounted for. Also key is the need to be flexible, because initial attempts are generally not automatic "best fits." PPM initiatives also mean getting involved in issues in ways that go well beyond the traditional IT bailiwick. PPM can be integrated into an enterprise in many ways — through a single program or portfolio management office (PMO), multiple PMOs, virtual PMOs, PPM leaders within functional groups, matrixed roles and more. The key is clear responsibilities and stakeholder and executive support.  Metrics and measures — Effective prioritization of projects and resources requires good metrics. Keep them simple, few in number and directly relevant to a business need. Don't collect information you don't know exactly how you will use. Investment categories provide the "buckets" for projects and programs to be placed into. Then each project gets measured in a three-layer framework of:  Traditional on-time/on budget/to quality metrics  Business value measures (we recommend operational measures from the business be linked in here)  Process measures — Project forecast accuracy, cycle time and others that can be used to improve the internal execution and management of projects and programs  Business engagement — Determining strategy, managing expectations, gaining consensus, and fighting/managing political situations are key parts of the PPM leader's job, but not always the most desirable ones. Stakeholder analysis, establishing simple frameworks you can build consensus around, looking for quick wins and early "friends" can jump- start business engagement.  People and skills — All PPM leaders are not the same. A simple guideline to find the right skills for the right job is: "Project management is mechanical, program management is emotional and portfolio management is political." Also, some project managers grow into program and portfolio managers, but also progress through their own career stages of apprentice to novice to journeyman to master. For all of these roles, career path is important, but often nonexistent. Project manager certifications are good entry points, but not sufficient for most complex project, program and portfolio roles. Conference Highlights These Symposium sessions are some that were particularly valuable for program and portfolio managers: "The Emergent PMO: Projects, Programs and Portfolios" PMO can refer to a project, program or portfolio management office, according to Research Director Matt Light. This tutorial looked at how PMOs support the design, development and implementation of IT projects, what job roles and skills are needed, how the PMO deals with outside providers, and the various organizational roles. Mr. Light explained the value of linking the PMO to other centers of excellence and to the governance board, the significance of examining and carefully assessing failed projects, and the importance of anticipating new PMO support roles and responsibilities. PMOs spend considerable time designing and deciding on process. Establish consistent but flexible processes. "Just enough process" is our term for this. Design a light, medium and heavy set of processes, depending on impact and complexity of the project or program being executed. The "heavy" process should be used for systematic, long-term projects and the "light" process for fast projects to take advantage of opportunities that won’t exist for long. The basic process should be the same for every project so that people become familiar with it and so they don't have to wrestle with a new procedure every time. "Program and Portfolio Management: Trading Money and Time for Results" Vice President and Gartner Fellow Emeritus Audrey Apfel introduced the PPM activity cycle — the Gartner model of the phases, actions and activities that those managing program and portfolio functions need to perform. The six stages of the activity cycle — Define, Select, Execute, Evaluate, Evolve and Communicate — are areas used to assess an organization's PPM maturity. Also, emphasis was placed on PPM leaders "setting up for success" by ensuring quality inputs into each of the phases. Spending time defining the type, quality and frequency of input will create more efficient processes and quality input. "Guidelines for Complex Program Management" To cut the odds of ending up with a failed program, Ruth Steinberg, Managing Vice President, Gartner Consulting, offered a framework that can help program managers ensure honest, clear governance for large programs. Precise definitions that differentiate projects and programs are essential. Her recommendations to program managers include: Get an executive sponsor that is truly engaged. The level of engagement with the program can mean the difference between the sponsor's commitment to the program or simply his or her involvement in it. They need clear accountability for ensuring the right things happen throughout the program.  Don't do one-way communications — practice managing expectations. Even programs go through "hype cycles." Expectation can soar during the funding phase, change throughout the planning phase and hit the "trough of disillusionment" during implementation. Program managers need to monitor expectations, solicit active feedback and incorporate changes where necessary, communicating and listening at a level beyond traditional status reporting.  Properly define execution governance. Governance is not the place to get day-to-day tactical decisions made in a program. No one generally ensures these types of process, and detailed decisions have defined owners and ways to resolve them in a timely fashion. Program managers must set day-to-day process, and cover conflict situations and other kinds of program control.  Change the culture to reward the stopping of projects or programs whose outcomes will not be achieved or will no longer be relevant if they are. "Kill switches" — predetermined stages and thresholds for when programs are re-evaluated to see if they should continue — must be planned in advance, so no one is surprised, and politics can't intervene in good decision making. "The Optimal Portfolio: Balancing Project and Application Costs, Risks and Benefits" Different elements in different IT portfolios are linked, but used for different purposes. Research Director Matt Light discussed the benefits accruing from implementing various procedures, best practices for prioritizing and managing IT portfolios, how project, application and asset portfolios are linked, and how to assess products and vendors in the current PPM market. What People Asked About What are the responsibilities of a PMO? It depends on whether it's a project, program or portfolio management office. As the PMO evolves from one to the next, it drops some functions and adds new ones. For example, project management offices typically manage the training of project managers. Program management offices often drop that function but add responsibility for communication programs. Portfolio management offices manage the realization of benefits from a company's IT projects. Project and program management offices are usually within the IT organization, but the added responsibilities of a portfolio management office take it outside the IT organization — it reports to corporate executives.. How do you build a business case for a portfolio management office? Generally, organizations looking to establish a PMO — where the P can stand for project, program or portfolio — are looking for the following attributes. The relevant ones should be included in the business case for the function and turned into measurable goals in the functional charter:  Improve project execution. The goal should be that projects are delivered better, faster and cheaper. "Better" can be interpreted as better quality (less rework), with higher customer satisfaction (internal or external customers) or other metric. "Faster" initially tracks more closely to "on schedule" but should, over time, enable a shortened schedule for similar types of projects as the organization gets better at it. "Cheaper" goals should encourage better cost forecasting and optimal use of internal and external labor.  Improve investment decision making. Increased reporting and transparency should enable executives to make good decisions. This is a natural adjunct of the beginnings of the portfolio management approach. So, investments get prioritized more optimally. Project spending could actually decrease because bad projects are flagged earlier and fixed or stopped. Alternatively, more "good" project work could be completed as freed-up funds are redeployed.  Project management offices that have proven their ability to manage IT projects are often asked to extend their skills across the company. How do you prioritize among requests for IT projects coming from different business units? A construct must enable consensus on the prioritization criteria. Business unit managers have to wear their "enterprise hats" for this exercise, and they need to have executive support for enforcing the results of the consensus model. Business units need to have full accountability for realizing benefits from any project or program they own and for sharing information within the appropriate governance structure. A representative from a major financial services provider who spoke at the conference said that his company’s portfolio management office holds quarterly or semiannual reviews of projects and investment ideas. Each business unit offers up for review the bottom 10% of projects in terms of performance, and makes proposals for new IT investments. Decision makers from the business units explain what’s going on with the current projects and why the proposed new projects would be valuable. The portfolio management office then recommends how to reallocate resources among the current and proposed projects to maximize benefits to the business. The percentage of the overall IT budget that the portfolio management office reallocates is small, but it will increase as this approach shows results and gains support within the company. Who should I hire? Who has the skills to help me build the right processes and reporting structure? Skill requirements change as the needs evolve from project to PPM. Success at the project level does not automatically translate into success in program or portfolio management. The people who were effective when it was a project management office are detail oriented and execution focused. Program managers need to resolve complex cultural and resource issues across many business units and be proponents for organizational change. Portfolio managers need to be politically astute and business strategy knowledgeable. So once you move past the basic project manager level, increasing specialist knowledge of the particular organization, industry, politics and strategy is necessary. What tools should I buy? Companies often ask this question. PPM tools can accelerate the implementation of your strategy at the right stage. Selection criteria vary widely, and are documented in our research. The biggest caution we can provide is that tool selection and purchase should not lead your PPM strategy. A tool itself cannot do the heavy lifting required to set the right measures, hire the right people and define the right functional charter. Things to Watch For Successful PPM leaders will find their scope of responsibilities extend beyond traditional IT, because PPM disciplines are essentially core business management processes, which are increasingly valuable across the organization. This will require becoming adept in change management, negotiations, and gaining political expertise and credibility. Even traditional project managers will need a more diverse set of skills. What Gartner calls "master" project managers will become hot commodities. Masters have 10 or more years of experience. They know project management so well that they can spot trouble in early stages and take proactive steps to correct it, and address the process gaps that caused it. Masters are the project managers that companies tap to turn around failing projects and to take their organizations to the next PPM level. The marketing of some PPM vendors indicates a gap between expectations and reality. Someone who only saw the marketing messages at vendor display booths on the ITxpo floor at Symposium would find it difficult to tell whether PPM vendors provide software or services. The vendors are trying to sell software to address management issues — for example, business/IT alignment, managing IT spending, transparency, sourcing and staffing. Although such tools hold promise, companies first need to develop organizational roles and processes to take full advantage of them. Few companies have PMOs that have gotten beyond the early stages of maturity. Gartner analysts showed a five-step maturity model with nine categories of performance, such as delivering projects on time, on budget and with good quality. Companies can achieve different levels of maturity in different categories, but no company that Gartner is aware of has exceeded Stage 3 in any function, so much work remains to be done.