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January 1, 2002

Healthy, Wealthy, and Wise

Is the time nigh for an IT portfolio management office in your organization?

Steve Bonham

As the economic tide ebbs and flows, IT departments get varying pressure from CFO staff to prove the value of technology-driven projects throughout the enterprise. But because various business units have initiated a sea of silo projects during the good times, aggregate project valuation and health have become difficult to determine.

A common method for tracking and supporting projects throughout an enterprise is through a project portfolio office. An IT-sponsored portfolio management office (PMO) can provide visibility into the health of projects and a support structure to help with project successes. Furthermore, a PMO that is empowered to audit business initiative proposals, as well as ongoing and completed projects can ensure the clean return on investment (ROI) mapping required to show aggregate project valuation. And, although establishing a PMO in an organization can be very time intensive, the CFO wants this valuation yesterday.

BUILDING SUPPORT

So, with IT staff already stretched thin to support a multitude of ongoing projects, how can a CIO develop a PMO quickly with limited resources while at the same time overcoming the strict political barriers to organizational change a PMO will introduce at the executive and middle management layers? Through phased releases and intense organizational involvement, a small PMO development team can prove valuation of technical projects to CFO staff quickly and successfully.

Although many organizations will have some of the elements of a PMO in place, they won't have the necessary foundation to support such elements in the long run. This organizational support foundation must be in place before the benefits of a PMO can be fully realized (see Figure 1). But getting it in place and keeping it there requires the PMO team to organize and maintain support. As the PMO team builds support among the executive staff, business units, and IT department, the team needs to advertise all the benefits that a centralized project oversight organization can provide.

PMO provides a whole host of benefits:

You can more consistently track projects and business initiatives by creating structure through software development methodologies and business case templates.
The PMO can provide an auditing function that can prove health, risk, and valuation of all projects.
The PMO can provide training curricula to develop, and thus help retain, the IT staff.
By having a clear window view into all corporate projects, the PMO can help IT better manage human and asset resources across projects.
By establishing an architecture branch, the PMO can ensure new projects leverage existing assets and avoid duplicate, silo implementations.
By being aware of any interproject dependencies, the PMO can have seemingly unrelated projects react appropriately to shifts in corporate strategies.

The ultimate gains from a PMO are for executive management to be able to read and manage their project portfolio as they do their financial portfolio quickly and effectively and for program managers to complete on-time projects that meet projected ROI.

Changing the Business

Before a PMO initiative can start, the PMO team must realize that such an initiative is a type of corporate reorganization. Change-averse middle management in the business units will need to alter the way they propose technically based business initiatives, application designers will need to justify their designs to a central architect committee, and project managers will need to follow consistent methodologies when running their projects.