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Exploration of the portfolio management journey for project investments in a typical company. www.clinchitb.com

Neil Creasey

on 31 March 2011

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Transcript of PMO to EPM

PMO EPM 2 Projects Portfolios on time on budget Optimisation Delivery focus Benefits focus Tools.

To provide or support your process? Strategy Initiatives Programmes Projects Supply or Demand Portfolio? 1 3 Investment thinking 2 Benchmark for portfolio performance
(against what?) The PMO to EPM transition. Analysed! Prompted group discussion of shared learnings. Facilitated by Neil Creasey. Agenda Quick introduction of EPM (to get everyone on the same page)
Facilitated group discussion on three common topics
Open forum for other topic(s) (subject to time)
Wrap-up of learnings from the session Stakeholder management Communicating Controlling Constraints Outputs Outcome Benefits Goals Enterprise Portfolio Management Other discussion ideas Should EPM come from PMO roots? Is an IT infrastrucutre portfolio any different? Should the PMO be part of an EPM? Is 'one solution fits all' the right way? A fool with a tool is still a fool. Introduction Discussion Wrap-up Tactical Strategic Supporting commentary. PMO's typically support a single supplier (eg IT) and their view of a portfolio is a supplier view - all the work from all sources they have to do.

EPM's support a multiple supplier (eg IT, real estate, legal, marketing, facilities management, etc.) and multiple demander portfolio.

One key decision is whether we have a supply or demand driven portfolio as it will drive the governance - particularly to identify who has what say on portfolio decisions.

Professional services businesses suit supplier portfolios, but most other businesses suit a demand driven portfolio.

Creating an EPM from a PMO requires a complete reversal of thinking from a supply driven to demand driven model, yet many pursue an EPM using the same PMO model. Supporting commentary.

There is one view that a tool is used to support corporate process, hence the process needs developing first, and then applying to the tool.

There is a dilema however that many tool vendors 'suggest' the process you should use to get the most from their tool.

Some EPM's even use the vendor's suggested process as their process up front leading with a tool to implement it.

There is somewhat of a chicken and egg situation that may require an iterative plan to settle at the final process. Market awareness of the flexibility of tools to support your own process is prudent.

There is no wrong answer, but the course of action to develop, implement, and host your process needs a plan.

Avoid the mistake of transitioning to a process only to transition to a significant change of process when a tool is selected. Supporting commentary.

Portfolios deliver benefits in a managed fashion.
Benefits are planned against a corporate benchmark. This often considers market conditions, business direction, past performance, etc.
Strategic decisions on how the investment dollar is split between the investors (business units) are made based on the corporate benchmark.
The breakdown of the optimal investment instruments (supplied services) is used to align and realign the portfolio, thereby minimising risk, and keeping the supply true to the corporate benchmark.

The big issue is what you use to benchmark the optimal breakdown of supply in the first place?

How do you accommodate 'pet projects' if you are going to tolerate some entrepreneur spirit. Furthermore how to you accommodate this if the 'pet projects' come from the supply teams?

These are the answers you get using a consulting partner - too varied to answer here.

Just be aware... rules of financial portfolio modeling do not hold true for project portfolio modeling.
What is important is consistency on how all demand and supply parties use the process, yet in many businesses no parties can agree the same way so you need to balance fit for purpose against one size fits all. The pie charts show that being able to reduce the cost of sustaining the business, provides more funding for growth and efficiency investments.

One common theme between PMO and EPM is the need to have projects managed well. Establishing, operating, and maturing an enterprise portfolio office will have a unique set of conditions / issues for any business.

Answers are likely to come from many areas including, PMO, finance, risk management, corporate audit, the board, strategy managers, the business unit GMs or presidents, tool venders, and EPM consultants.

An EPM is an important step in business maturity, that should be taken very seriously in the planning as it will affect many areas of your business, and needs to be done right first time, and is likely to be done in iterations. Supporting commentary.

Tasks Projects and programmes supply vs demand Neil Creasey is a co-founder of Clinch ITB an EPM consulting business to the Australian corporate.
Check out www.clinchitb.com Granite Consulting for the event Clinch ITB for the content Brought to you by Making the right selection. Less confused? Now know what to do! Know where you need help. Have confidence you are already doing it right! Know the direction to take to mature your portfolio process? For others we now know pulling the plug on a poorly aligned project can be a good thing. Except for the fish! with the contribution of Project Leaders. Our results (March 2011).

The Project Leaders group reached the follow high level conclusions;

EPM's do usually come from a PMO.

The work for an EPM journey is grossly under-estimated. It is a mini ERP style event affecting many parts of the business.

Demand driven portfolios are usual but a portfolio governance group independent of demand and supply parties is needed.

Business process should preceed a tool selection, but an open mind about refining process to leverage tool services can occur. Expectations of iterative change need communicating.

Establishing a portfolio baseline is a mature exercise not attempted by many. Industry research shows a typical business would spend 40-45% of all IT project spend on sustaining the business.

Lessons learnt in the EPM journey are not readily available, so there is a strong desire for companies early in this journey to get an experienced guide.
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