Project Management Institute

Good for business

BY SANDRA A. SWANSON :: PHOTO BY JIMMY WILLAMS

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Robert Kelly, PMP, Red Hat, Raleigh, North Carolina, USA

The old silos are breaking down.

Many organizations are implementing new, less rigid business structures that emphasize collaboration across departments. To that end, project managers working within business units can help provide a big-picture view of the organization—one that sheds light on resource allocation, aids portfolio planning and detects risks.

Any disconnect between an organization's project management staff and its business units causes major problems, says Dave Pratt, PMP, managing partner for DHP Project Services, a project management consultancy in Yelm, Washington, USA.

Mr. Pratt stepped in to help a state agency with a US$15 million project that had derailed after six months. It stalled, he says, because the project manager worked for the IT department—even though the initiative supported the agency's primary revenue-generating business operations.

“The project manager did not know who the business sponsor was for the project; the vendor hired to deliver the system didn't deliver; and the users had been left out of the loop,” explains Mr. Pratt, who also serves as an adjunct professor for South Puget Sound Community College's project management program.

It was a highly technical project, but Mr. Pratt found answers not through the IT department but from the business unit. He says he “prowled the halls of the agency” one day, looking for the project sponsor. “Once I found him, educated him and introduced him to the project manager, the project immediately gained traction,” he says.

“A couple of the project's objectives were deferred until another phase could be started, but the majority of the functionality was brought online,” Mr. Pratt explains.

Career Path: Business Skills Required

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It's not enough to just know the tools and techniques of project management, says J. LeRoy Ward, PMP, PgMP, executive vice president of global learning and development, corporate marketing and consulting at ESI International, a project management training and consulting firm in New York, New York, USA. “These days people hiring managers and business executives want them to have a full understanding of the business they're working in.”

His company partners with organizations that, as a general rule, only assign the role of a project manager to those who have a technical or business background, or who are already in the business unit. “Organizations definitely prefer to have a project manager who knows the business from the ground up,” he says.

360-DEGREE VIEW

Having project managers as core members of the business unit has significant benefits—not the least of which comes in portfolio planning, says Robert Kelly, PMP, project manager of global lead management at Red Hat, an open-source software maker in Raleigh, North Carolina, USA. When he worked at the computer manufacturer Lenovo, he was an embedded project manager in the service, sales and marketing department. “The project managers on our team partnered with the product managers to optimize, create and implement new service offerings in our project portfolio,” says Mr. Kelly, also a managing partner at Kelly Project Solutions, a project management consultancy.

Product managers are often the ones who analyze the competition, review market trends, and validate their organization's current capability to provide a roadmap of new services or products to help achieve revenue targets, Mr. Kelly says. “Traditionally this is done in somewhat of a bubble, with little or no input on the viability of the proposed plan from other functions in the organization.”

As a result, executives unknowingly sign off on a plan riddled with resource, budget and capabilities conflicts. “And the organization spends the next year trying to move mountains to hit the numbers,” he says.

But when project managers are core members of the business unit, the portfolio more accurately reflects the organization. Because project managers work closely with all of the functions in an organization, they often know of systems limitations or other initiatives that could affect the proposed roadmap, Mr. Kelly says. In addition, project managers are often cognizant of similar efforts or vendors' capabilities, allowing them to combine or more efficiently leverage existing resources.

When project managers work across functions, they know the workload undertaken by various departments, including IT, legal and marketing, for instance.

The First Line of Defense

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When organizations have a project manager who understands risk management from a business or technical perspective, he or she can help identify and qualify risks to develop a response strategy as well as monitor the risks over time.

“It's amazing how lax organizations are in risk management,” says J. LeRoy Ward, PMP, PgMP, ESI International, New York, New York, USA. “As projects get going and there are so many things to do, they are not diligent enough in their risk management reviews as project milestones occur.”

A thorough lessons-learned session at the end of a project will focus on how well the risk management process was conducted during project execution, Mr. Ward suggests.

Unmitigated risks can have a ripple effect on an organization's project portfolio, warns Robert Kelly, PMP, Red Hat, Raleigh, North Carolina, USA.

He worked on a project to develop a stand-alone service offering, which was not a core aspect of the organization's business. The plan included rolling out the service in about 75 countries, but a member of the finance team pointed out that there would be an enormous tax burden for the business in certain parts of the world.

“We eventually identified which countries the organization could sell stand-alone service in while not putting the rest of the business at risk,” Mr. Kelly says. “If I was not a part of the business unit, then I would have delivered the service and moved on. However, I was a project manager in the business unit and knew this would have an effect on the entire portfolio.”

Delays in project launches, deteriorating vendor relationships and uncovered systems limitations all have an effect on the assumptions and dependency of other projects within an organization.

Mr. Kelly uses a bare-bones risk matrix that includes:

Risk Item: A description of the risk.

Probability: Assign a number from 1 to 100 (with 100 representing the greatest probability).

Impact: Assign a number from 1 to 100 (with 100 representing the greatest impact).

Priority: Add the numbers for Probability and Impact, then divide by 2. The risks with the highest numbers need to be addressed immediately.

Preventative Action: What can be done now?

Owner: Who is responsible for the preventative action?

Contingent/Response Action: If the event is realized, what is the plan?

Owner: Who is responsible for the contingent/response action?

Case Study: Prioritization Worksheet

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Embedded project managers improve the prioritization process, attests Kristen Carney, product manager at Vertive, an online coupon company in Austin, Texas, USA. “When project managers are embedded in business units, companies can launch better products faster.”

That includes a more informed approach to making decisions about what gets cut from a project to accommodate demanding schedules. This skill was put to the test when Ms. Carney and her team led a project that required a rapid turnaround. Instead of a typical seven-day turnaround, the company wanted to launch a new website in four days, in time to announce it at an industry conference.

Her team, which consisted of two developers and a designer, spent two hours asking questions such as, “What are the top three problems our new site will solve?” and “What are the top three features our site will use to solve those problems?”

The process helped uncover features the team wanted for the site but ultimately had to postpone due to their technical difficulty.

The site launched on time, Ms. Carney says, because the up-front planning resulted in highly targeted prioritization of the site “wish list.”

“Because I knew ahead of time what features would be technically difficult, what were the three most important features and our four-day project goals from the CEO, it was easy to say, ‘Cut improvements to email sign-up so that we can spend more time working on improvements to the display of coupons,’” she says.

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IN THE SOFTWARE PRODUCT DEVELOPMENT INDUSTRY, AND IN MY ORGANIZATION IN PARTICULAR, PROJECT MANAGERS ARE AN INTEGRAL PART OF THE BUSINESS UNITS.

—Tathagat Varma, PMP, Yahoo!, Bengaluru, India

“Let's say a business wants to develop a product that requires new terms and conditions to be created in two dozen countries, and will require that the call centers provide support for their customers,” Mr. Kelly says. “The project manager will be able to work with these groups to understand their contributions, the sequence and timing of these activities, and how that fits into the rest of roadmap.”

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Additionally, the project manager might know that the legal team is writing terms and conditions for a similar product, or that IT is developing a new functionality for a current product that would work on this project.

“Legal is concerned with legal, and IT is concerned with IT,” Mr. Kelly says. “It is the project manager who can provide 360-degree vision of the business goals, market trends and strategic objectives with the tactical efforts of the development teams to both the business and functional managers.”

NO CHOICE IN THE MATTER

Some organizations would never even consider not placing project managers in business units.

“In the software product development industry, and in my organization in particular, project managers are an integral part of the business units,” says Tathagat Varma, PMP, senior director of strategic programs and business operations for Yahoo!'s research and development center in Bengaluru, India. “Yesterday's bloated monolithic organizations were too territorial and inefficient. Ultimately, they became self-serving and slow to respond to changes, let alone proactively manage them.”

The solution? Project managers need to manage interdependencies across multiple reporting structures and align all parts to the overall strategic objectives of the business unit, he says.

By embedding project managers in business units, an organization can maximize its portfolio's ROI and navigate complexity. PM

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.

PM NETWORK FEBRUARY 2012 WWW.PMI.ORG
FEBRUARY 2012 PM NETWORK

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