Project Management Institute

Spreading the portfolio management mantra



Sometimes, having a big-picture, portfolio-level view of all your projects isn't just nice—it can make or break your business. Just ask Richard Shapiro, who manages the IT program administration office of Royal Caribbean Cruises Ltd., Miami, Fla., USA.

In the turmoil following the terror attacks against the United States on 11 September 2001, Royal Caribbean was hit especially hard. People were afraid to travel, and many customers use airplanes to get to a ship's point of departure. “We were immediately thrown into survival mode,” Mr. Shapiro says.

Losing the business was a very real possibility, but Royal Caribbean employed Niku's portfolio management, project management and scheduling software to its advantage. (Niku recently was acquired by Computer Associates International Inc.) “We were able to use the system to know instantly what we were working on, and all projects were locked down,” Mr. Shapiro says. The portfolio tools made it possible, for example, to identify Web-based software projects that could be put on hold or eliminated, and the company reduced its IT efforts based on that data. When things returned to relative normalcy a year later, Royal Caribbean used the software tools to identify which projects were worth restarting, given the new business climate.



Today, the company's marine division uses the project management components in Niku's Clarity portfolio tool to manage the refurbishment of its 29 ships—a critical process for a company that updates its fleet constantly. Refurbishment can be a major undertaking; for example, one cruise ship was cut in half, extended 73 feet and reassembled. “There's tens of millions of dollars on the line when you do these things,” Mr. Shapiro says.

The portfolio management system also helps employees perform what Mr. Shapiro calls demand management: capturing opportunities, then forwarding them to the company's governance organization. This group functions as a business opportunity council that then decides which proposed projects to fund. “Once [they're] funded, then [those] project plans become established and are managed through the system,” he says. Business managers also can use Clarity to monitor the status of their pet projects, using a dashboard summary screen that lets them drill down to the details.


Portfolio management software offers executives big-picture project visibility.

The trend toward accountability in business has pushed portfolio software toward better monitoring capabilities.

Corporate performance management is another feature that changes how executives use portfolio software.

The real challenge with portfolio software lies not with the tools, but with the users, who must become more technically proficient.

Most users at Royal Caribbean have almost complete read-only rights to portfolio data, while only project managers or their designees can change project plans. Senior managers normally can't change the portfolio views, which Mr. Shapiro's department oversees. “It's all about control,” he says. “It's all about understanding, in detail, if needed, what's going on.” Armed with such companywide data about projects and resources, managers can get a better understanding of cross-team impacts.

Keith Kerr,
Director, Solutions Development
Robbins-Gioia LLC

Project portfolio management (PPM) software aims to provide a 30,000-foot view of the entire landscape of an organization's projects and resources. Geared to both non-technical executives as well as project managers and team members, the software helps organizations decide which projects to fund. It groups the projects or programs and analyzes them as investments in nearly the same way that Wall Street managers look at portfolios of investment securities.

By comparison, desktop project management software, such as Microsoft Project and Niku's OpenWorkbench, is focused on the “how” of projects, executing them once they've been approved. PPM gathers financial information from multiple sources—project management software, but also human-resources and enterprise resource planning (ERP) software and data warehouses—to give decision-makers a complete view of all dedicated human and material resources.

Integration with corporate data was the main reason that PT Excelcomindo, a telecommunications company in Jakarta, Indonesia, chose portfolio software from its ERP vendor, according to Adi Prasetyo, PMP. Mr. Prasetyo, who heads the company's project management office and the PMI Jakarta, Indonesia Chapter, says that SAP Project System (SAP PS) software helps his board, middle management, and project managers achieve “better alignment to corporate strategy, better resource management, better change management process and tracking, and better project results.”

PPM software typically presents the information in a dashboard: a rich mix of pie charts, bar graphs and color-coded scorecards complete with red-yellow-green status lights that help alert managers to problems. Collaboration features make it easier for employees to share ideas and participate in decisions, perhaps through online polls and discussion groups. Users can try what-if scenarios and perform risk and cost-benefit analyses on potential projects and portfolios before committing resources. Managers also can monitor the actual portfolios in real time. Some products have workflow tools to facilitate secure movement and control of documents.


Recognizing the growing demand for PPM, most of the major, enterprise-cLass project-management vendors introduced portfoLio applications several years ago. Leading vendors in this group include Artemis International Solutions Corp., Niku Corp. (now Computer Associates), PlanView Inc., Primavera Systems Inc. and Welcom.

Notably absent from that list, but still of centraL importance, is Microsoft Corp., whose Microsoft Project remains the de facto project management software standard, providing scheduling and resource management for project managers and teams. Microsoft has striven to add enterprise capabilities to Project by beefing up its networking capabilities, primarily by forging closer Links to the company's SharePoint collaboration server.

Microsoft's offerings are more properly caLLed enterprise project management (EPM), which allows the grouping of projects and managing them over a network. Thus, Microsoft Project often is the foundation of PPM systems, and most PPM programs can read and write Project files.

A much smaller number of vendors specialize just in the portfolio piece. Their products must rely on third-party project management tools to gain access to project data. Métier Ltd., Pacific Edge Software and ProSight Inc. are the three most prominent examples. To distinguish their products from multi-leveL PPM and the more bottom-up EPM, these vendors often use the term “top-down” to describe their style of portfolio management.

As portfolio management has become more popular, vendors from other software categories have tried to capture a share of the business. So-called business-intelligence vendors such as Business Engine and Cognos Inc. sell high-Level business software that resembLes top-down portfoLio management, complete with dashboards and scorecards. In addition, ERP vendors such as Oracle Corp. and SAP America Inc. offer project and portfolio-management modules.

These software makers have taken advantage of the Internet and its user-friendly Web interface to make it easier for customers to involve more of their empLoyees and business partners in portfolio management. “We needed a flexible tooL with not too much overhead,” says Thomas Wuttke, PMP, president of the PMI Munich, Germany Chapter and managing director of 9:pm, a project-management consuLtancy. The firm chose PMTalk, a Web-based project portfoLio software product from Threon, a Belgian vendor.

In the past three years, two broader trends in business software have washed over PPM products like tidal waves, changing how they are marketed by vendors and used within organizations. In some ways, PPM has become a mere feature or methodology within a more comprehensive class of tightly integrated business applications.

In the aftermath of the accounting scandals at Enron and WorldCom, governments around the world, including the United States with its Sarbanes-Oxley Act of 2002, have required companies to track resources more carefully, record who had control over the assets at any given time and tighten their financial reporting. The goal—and new buzzword—is accountability. Although the core financial applications in ERP are the primary accountability mechanism, PPM software also has a role to play, given its ability to monitor project resources.

Governance is another in-vogue term that has lately been marketed as a selling point of portfolio management.While it can be and often is applied to any line of business, it focuses on the narrower problems of IT, such as achieving a better alignment of technology investments with overall business objectives. Many PPM governance suites, in fact, are marketed as IT governance solutions. At the same time, by applying PPM and governance techniques directly to IT, companies can transform their core businesses in ways that are only possible through technology. They can use IT as a mechanism to improve governance in non-IT areas.

In recent months, the trend has evolved toward corporate performance management (CPM). Oracle, for example, sells a complex CPM software solution that includes a PPM module as one of 20 applications for a variety of budgeting, planning and performance-management tools.

There's also a recent trend toward using PPM to manage hard physical assets, such as buildings and equipment. “At the heart of it, the portfolio management system is really just about managing your assets,” says Keith Kerr, director of solutions development at Robbins-Gioia LLC. PPM vendors also are adding specialized versions for new product development (NPD), an important function in many companies that fits neatly into the PPM model. NPD inherently involves both the cost-benefit analysis of portfolio tools and the practical issues of project management.

It's a Project, Too

Ironically, choosing and implementing a PPM product calls for many of the same portfolio analysis and project management disciplines. “The major challenges with this system and systems like it are not technology-oriented,” Mr. Shapiro says. “They're process-oriented.”

Mr. Kerr agrees, saying many organizations struggle not so much with implementation, but with how to use the tools on a daily basis. “It's the ability of your organization to agree with the information coming out of the system,” he says. “You have probably get by with manual rollups from spreadsheets, instituting portfolio management more as a methodology than a system, Mr. Kerr says. “I would tend to err on the side of manual tools, like Microsoft Excel and Project, to right-size the tool and the investment for the organization. Some of these tools can get really expensive to deploy.”


Still, Mr. Kerr says the issue often comes down not to the amount of money, but to finding the right depth and breadth of deployment for your needs. There has to be a balance. Software vendors will try to maximize the number of PPM licenses, while companies should track the return of the newly automated processes. “There are probably relatively few people who really need heavy-duty access to the project management system,” he says. “In reality, that information doesn't roll up very well,” due in part to human factors, not the PPM tools’ capacities.

Unless a broadly accepted project management culture permeates an organization, most companies can until the company has institutionalized basic planning and control practices.”

But if they do decide to implement PPM software, which comes first: the methodology or the software? It's a common question, and Mr. Kerr recommends implementing them simultaneously. The real test of PPM software's value—and of portfolio management methodologies in general—is whether it directly results in changes in resource allocations. “The value is in taking some of the emotion out of the decision-making process,” he says. PM

David E. Essex is a freelance journalist specializing in information technology.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.




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