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PPM in 2014 is All about Value

When looking at PPM in 2014, there is one dominant trend – a focus on value.  Speaking at the recent Microsoft Project Conference in Anaheim, Gartner Analyst Donna Fitzgerald told a standing room only crowd that what clients are doing today, simply isn’t good enough.  Improvement depends on an ability to deliver value.

Fitzgerald used Gartner’s maturity scale to tell the story.  She said in order to climb the scale and move from a place where organizations are delivering consistency and process controls to a point where they’re delivering innovation and a continuous stream of value, people need to truly understand how value is defined in their organization.  She explained that there is a chasm between levels 2 and 3 of the maturity scale and in order to bridge that chasm, businesses need to focus on value and better portfolio management which includes value quantification.

“In organizations the focus is now shifting to what is competitive advantage…that makes the success of the planned investments more important,” Fitzgerald said.  She added that the new view of success isn’t about the completion of a project but rather value being generated which requires that projects deliver the enablers not ROI and she emphasized, earning maximum value requires change.

Fitzgerald said that by the time many organizations see the need to change, it’s too late.  “This is our window to move fast and start making changes.”  Among changes she says need to happen are existing practices such as project approval.  Before projects are approved, the business must be clear on what substantive value they’re delivering then establish a tracking mechanism and dynamic reviews to ensure projects stay on track to deliver that planned value.

How do you measure value?  Fitzgerald went through three key points.

  1. Value is not always financial but is expressed in measurable terms – financial or other.
  2. PMO needs tools and information to realize the value – “box checkers” won’t cut it.
  3. The PMO must design the support systems to support value goals – virtual business cases, strategy and value statements and deliverable-based milestones.

She stressed that value generation and benefits realization are not synonymous.  Benefits are contingent on factors outside of the project but measuring value delivered by a project can include a contributor or enabler of a program and is monitored throughout the life of a project.

Her rules for measuring value and financial management capabilities:

  • Projects and programs are approved in portfolio context only
  • Projects are evaluated for the degree to which they support strategy
  • Each project defines how benefits realization process is tracked
  • The portfolio supports dynamic reviews
  • Project/program has to include all changes to get it done, not siloed to different areas

Fitzgerald said it’s time to adopt an enterprise perspective and find a way to provide visibility people can understand.  Although the integrated portfolio approach has been discussed for years, she said today, it’s an imperative.  “The PMO of the future will be a portfolio office…it will think and speak in the language of money, it will be consultative and analytical, it will understand value and how the business can generate it.”  She went on to say that the PMO office will be capable of determining when an investment is going south before it’s too late and is not afraid of confrontation.

Her closing recommendations:

  1. Learn the language of money – adopt a financial focus to support value generation.
  2. Develop a collaborative approach to the business case that focuses on measurable value.
  3. Have a portfolio tool to support value and a strategic focus.
  4. Portfolio transparency and visibility is critical and ensures funding decisions are made in a portfolio context.
  5. Look at product management which provides a longer term perspective and ensures your analysis includes all interdependencies.

“Fundamentally you’ve got to make sure that the analysis is there to support good decision making.”

Ben Chamberlain

Ben Chamberlain is the Chief Product Officer and is responsible for the strategic direction and worldwide go-to-market activities for UMT360’s Strategic Portfolio Management (SPM) software solutions. He is an accomplished enterprise software executive with more than a decade of experience of building innovative SPM solutions that have helped global 2000 companies drive business transformation and increase their business agility. Ben joined UMT in 2002 and was responsible for the in-market success of UMT Portfolio Manager which was acquired by Microsoft in 2006. Ben has a degree in Business and Sports Science from Surrey University (UK).