Setting up shop

SPOTLIGHT Portfolio Management




IF YOU'RE ORGANIZING a portfolio management office, you've got your boss's attention. It could be a major new project that turns out to be a mass of smaller programs and projects or a slew of additional programs and projects creating a new revenue stream for the company. Or, maybe your supervisors have finally realized that ad hoc management isn't cutting it. In any case, the early stages of portfolio organization present an opportunity to establish relationships, systems and expectations that can make or break both your company—and your career.

The reason for establishing a portfolio management office usually comes down to money. “You have a big enough budget that management is now interested,” says Louis Dale. Based in Fairfax, Va., USA, he has served as an independent consultant to the U.S. Department of Homeland Security and other government agencies for the past five years. Whether the measure is the number or importance of your projects, he says, “the critical mass is big enough in terms of budget [that] the right people are interested.”

Money is a great motivator in most organizations. It can get you in the executive suite or through the boardroom door. Portfolio office organizers can use the senior-level entrée usually offered in these early stages—and the leverage a new budget brings—to implement systems, set up processes and manage expectations.

This also is your shot at learning the board's and executive suite's strategic priorities and goals. “It is essential that you have clarity and agreement around the priorities or strategic outcomes that the organization is trying to achieve,” says James Gordon. A senior manager in the consulting practice for Deloitte in London, U.K., for five years, he recently transferred to the Vancouver, British Columbia, Canada office.

“If you can identify the priorities of the organization and align that with the goals of the organization, and address the gaps you have in the organization around how well you're supporting the priorities, you can make the whole process richer in content and direction, more meaningful to [the] stakeholder,” Mr. Gordon says. “You're being more transparent, and you can educate people about why you are and aren't doing certain things. When you bring that together, you can make more strategic decisions about the specific activities you're going to fund.”


“Buy-in at the lower level is also important,” Mr. Dale says. Consider establishing an integrated product team open to operational, financial, IT and other departments affected by or influential upon the portfolio office's work. An organizational communications management plan can keep the new office on message when imparting data, scheduling or information to senior executives. “You need all the stakeholders who are going to be directly affected by your projects,” he says.

Representatives of three organizations spoke with PM Network about their experiences with recently bestowed portfolio management responsibilities.

Maturing the Organization

Project managers tend to think of portfolio management in terms of what it can do for them. Executives who authorize and fund portfolio systems often have a different agenda, however.


Senior executives “don't want to see a bunch of numbers. They want to see the bottom line,” says Nicole Luosey, PMP, research and development program manager at biopharmaceutical company Dyax Corp.

The company needed a better understanding of the economics of its ongoing projects. “Project management isn't exactly a culture of biopharmaceutical [companies],” Ms. Luosey says.

That's begun to change at Dyax. The increased need for internal resource management is putting a new emphasis on time tracking and accurate billing to better understand resource allocation across funded and internal projects within the organization. Processes to formalize those functions, in turn, helped the company prepare for critical Sarbanes-Oxley corporate governance audits and compliance. It also has enforced the need to comprehensively manage projects in a portfolio. “Getting users to accurately bill time and understand what they track in projects helps us forecast against internal projects as well as [outside] projects,” Ms. Luosey says.

Project managers review their work assignments through internal online portals with charting and polling capabilities that provide snapshots of each project's progress. Ms. Luosey can review the entire portfolio of Dyax projects and generate reports executives want in plain English.

Project managers “are being asked different questions than they used to,” says Jason White, director of business account management at PlanView. The Austin, Texas, USA-based company helped implement its portfolio software vendor at Dyax. “It used to be, ‘When will the project be live?’ Now it's, ‘When is the return on investment coming?”'

Dyax also has honed its business processes. Data dumps that used to take a day now need just 10 minutes. Better alignment between research hours forecasted and those actually used not only tightened budgets, but also convinced executives of the value of portfolio management. “The tipping point is the drive from upper management for more information,” Ms. Luosey says. “This has made us a lot more mature”

Mandated Maturity

Sometimes the organizational maturity necessary for successful portfolio management isn't a choice, it's a necessity. That's what happened at West Corp., an outsourced communications, conferencing and collections company.

In 2004, executives decided to overhaul the hardware and software technology behind its advanced speech recognition platform. “It was a major revenue-producing platform, a major imperative,” says portfolio manager Kate Wolfe, director of strategic technology at West.

The upgrade consisted of 83 subprojects involving hundreds of tasks. Multiple cross-dependencies meant each project's completion hinged on others being finished on schedule for load testing, reverse compatibility, documentation and the like. These in turn required more precise resource scheduling. Then the system had to be implemented in stages across West's multi-site telecommunications network.

The overhaul offered an opportunity to improve West's existing project and portfolio management systems. Ms. Wolfe realized she needed a comprehensive view of the entire portfolio to steer the upgrade to successful completion. She used her authority as de facto portfolio manager to institute weekly meetings, distribute status reports to executives and project stakeholders, and implement new processes for resource scheduling.

Senior executive buy-in was important to the upgrade's success, Ms. Wolfe said, but engaging frontline workers in production and other departments early on could have sped the process. “It would have helped cement the team further because they would have been working toward their common goals rather than just their individual goals,” she says. The same applies for the transition from project to portfolio management—when tactical achievements of individual projects are transformed into strategic goals affecting the future of the organization. It's a lesson Ms. Wolfe says she's applying as West moves toward maturing its own portfolio management processes.

West first consolidated this project's management and then its portfolio management functions on Borland's Tempo platform, an IT governance and management system. Demand, resource, project and portfolio management tools imported information from West's existing systems and ported them to templates stored at a central location. From there Ms. Wolfe analyzes data, customizes reports, allocates resources, manages risks and creates multiple comparative process roadmaps that balance projects' needs against one another and inside the portfolio as a whole.


West Corp., Omaha, Neb., USA

Objective: Major hardware and software upgrade of advanced speech recognition platform, with the goal of preparing a foundation for broader-based project portfolio management operations

ROI: Completed first-phase telecommunications trunking upgrades for “major revenue-producing platform” of the company in late 2005; also, improved resource management and allocation, and Sarbanes-Oxley corporate governance law compliance.

There also has been improved portfolio and project communication with operations, marketing, sales and finance departments that didn't have access to the portfolio office, says Dawn Barber, information systems analyst for West's InterCall conferencing subsidiary. “This will make my job more efficient because everyone will be able to find their own information and I'll be able to work with project managers more directly,” she says.

More than 1,700 projects now work through the portfolio system. “Automated process management really helps as a backbone for portfolio management,” she says. “It's hard to improve your processes if you cannot document how much in resources it's costing you.”

Transforming the Culture

At Brigham Young University (BYU), successful portfolio management offers the opportunity not only to rationalize project-oriented business processes but also to transform organizational culture. Ernie Nielsen, managing director of enterprise project management, noticed it right away. When he presented his first portfolio to BYU vice presidents, they began trading projects so more of everyone's priorities would make budget. “We are truly strategic partners with them now,” he says.

It wasn't always the case. “The first day [in 2001] I was here it became painfully obvious that the project management office wasn't organized the way we needed it,” he says. The then-new enterprise portfolio management office (EPMO) was a dumping ground for projects with little regard for budgets or deadlines. One year it only accomplished 75 projects; a year later, 500 were proposed. Project managers had little interaction with the university departments that were its customers, and had little ongoing understanding of their desired outcomes.


Mr. Nielsen set about reorganizing the EPMO and its relationships with university executives and departments. To start, he inventoried the existing project portfolio. “That was our first ‘aha!’ moment,” he recalls. He formulated a simple, five-level model based on the BYU customer's strategic intent and won approval for it from university vice presidents. Mr. Nielsen then allocated resources by project priority, drawing a line—“big and red and bold”—between those projects the office could handle and those it couldn't. Then he presented his findings to the vice presidents.

“We validated the model with the executives to validate the strategy, not their outcome, and get buy-in with the executives,” he says. That way they couldn't argue that the process was askew when a pet project fell below Mr. Nielsen's bright budget line. “They started collaborating with one another,” he says, “which they'd done behind closed doors before. But now it was out in the open.”

Mr. Nielsen also changed the relationship between the portfolio management tools used by project managers and the processes that fed into or implemented the portfolio system. “That was very important,” he says, “because many organizations go to the tool first and fit the process around what the tool can do. But because the practices are unproven and don't fit the culture of the organization, the tool gets blamed for what doesn't get done.”

BYU adopted Pacific Edge Software's Mariner because it allowed a phased implementation based on the EPMO's evolving needs.

Since reforming BYU's project portfolio management system, Mr. Nielsen says the EPMO's one-year project completion has risen from 70 percent to 95 percent while personnel has fallen one-third and budget has been reduced 47 percent. More importantly, the portfolio office has been systematized so managers have more control and executives have transparency to see what's being accomplished. “Collaboration is the key,” he says. PM

William Hoffman is a business and government reporter based in the Washington, D.C., USA, area.




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