Portfolio management implementation at the IT department of a major mobile telecom operator

Abstract

The author of this presentation is the Project Leader and Methodologist Provider of a Project Portfolio Management Initiative that is taking place since April 2003 in the IT Department of a major mobile telecom operator in Portugal. Due to confidentiality agreements the name of the company won't be revealed.

This paper will start presenting Project Portfolio Management general knowledge in the context of IT Portfolio Management. A brief context of IT Department and company initial status will be referred to.

The internal development of an ISO 9001:2000 program in the IT Department was the driver for this Initiative, as well as the need for an IS/IT project and process management standardization along with the lack of a PMO structure.

Symptoms were classic:

  • Lack of processes standardization among different projects and project teams;
  • Lack of project and resource management integration;
  • Insufficient information for the decision process of the internal demand management process;
  • Alignment between Business strategy and IS/IT strategy not perceived of inefficient;

Characterization of the consultancy methodology steps used will be provided, as well as its adaptation to the reality of the customer environment.

Description of the project charter and project development plan will be presented. The influence of project definition assumptions and constraints will be revealed and discussed in detail.

The paper will continue focusing on the actions carried out until the present time. The IT Department “PMO Implementation Project” will be presented and analyzed in considerable detail. Successes and failures will be discussed in a lessons-learned in the end of the paper. Project Portfolio Management Initiative's future steps will be anticipated.

Introduction

“The model for the future is the [project-based] professional services firm [which can] organize in project teams that change shape with regularity. It's a creativity-based world, a talent-based world. That logic is absolutely unstoppable.” (Peters, 1999)

IT Governance and Project Portfolio Management

IT Strategy and Governance

The goal of IT strategy and governance is to ensure alignment of IT investments with program objectives and priorities, while maximizing return on investment and minimizing risk. In the context of enterprise architectures, alignment is sought not just for parts of the organization, but also for the enterprise where applicable. Organizations must establish the processes and organizational constructs through which program and IT executives can make and implement effective, long-term decisions. The scope of these decisions encompasses IT strategy, priorities, IT-related policy and management practices, operating and capital budgets, and issue resolution. Moreover, these constructs must ensure joint accountability of both program and IT executives for the decisions they make. An IT Governance model comprises six core components:

  • Strategy
  • Enterprise Architecture
  • IT Portfolio Management
  • Business Case Analysis/Capital Asset Planning
  • Program Management
  • Performance Management

The first three components are focused at the enterprise level. Effective strategy is the foundation for IT modernization initiatives. The strategy identifies goals and priorities used in managing the IT portfolio including processes, people, and technology. The Enterprise Architecture defines transition plans and implementation dependencies that drive IT investment decisions. Portfolio management is the bridge between strategy and execution and ensures that individual initiatives are on track to meet the organization's overall goals. The last three components are focused at the initiative level. Individual initiatives segment an organization's modernization objectives into realistic pieces. These initiatives require program management, performance management and business case analysis that build towards the agency's Capital Asset Plan.

IT Governance model core components

Exhibit 1 - IT Governance model core components

IT Governance

  • It's about maximizing the business value of IT investments
  • IT investments should support business priorities
  • However, most IT organizations lack the processes and systems required to assess (measure and manage) value, cost, risk and performance of the services they provide

 

IT Governance requires

  • Clear understanding of the business strategy
  • Defined IT organizational decision making structures
  • Decision making and performance management standards
  • IT business management systems that enable governance structures

IT Investments

  • IT investments represent over 50% of capital expenditures in organizations today
  • The META Group estimates that as little as 25% of the work of IT consists of projects. The rest is spent responding to support requests and maintaining the systems that run the business
  • Upon completion, every project turns into an application of infrastructure asset or component thereof which require maintenance and support

IT Portfolio Management

  • IT Portfolio Management is the discipline of managing IT investments as you would a financial portfolio, balancing potential return, fit with objectives, and risk assessment.
  • Enables organizations to establish and adopt a formalized process for measuring and monitoring the value of IT investments

A five step process

  • Determine the needs of the business
  • Evaluate the costs, risk and benefits of potential investments candidates
  • Prioritize and select those investments that best align with business objectives
    • Alternate portfolio scenarios are evaluated against key business objectives and the impact on existing systems, investments, resources to determine the best investment mix
  • Set schedules and balance resource requirements
  • Measure and manage the value of the portfolio over time
IT Portfolio Management Process Framework by Archer & Ghasemzadeh (1999)

Exhibit 2 – IT Portfolio Management Process Framework by Archer & Ghasemzadeh (1999)

Effective implementation

  • Defined processes for decision-making
  • Criteria for evaluating alternative scenarios
  • Metrics for measuring the ongoing value of investments
  • Systems that support these processes

IT Portfolio Management vs. Project Portfolio Management

ITPfM takes a step beyond PPfM by balancing the value and risk of the entire IT Investment portfolio:

  • Projects
  • Applications
  • Infrastructure

Setting the case

Working environment

X Company is in Portugal, a major Telecom Operator in the Mobile Communications market, with 5 million customers and 1200 employees. IT plays a crucial role in company business strategy definition and implementation. The IT Department is divided in 3 divisions (Operations & Infrastructure, Systems Management and Business Applications) involving 500 people: 220 internal, 280 from external service suppliers.

In 2002 X Company started an ISO 9001:2000 certification program; its IT Department began a business processes reformulation and adaptation Initiative accordingly to the broader company objective to be achieved by the end of 2004.

The CobIT (Control Objectives for Information and related Technology) Framework, an IT Governance standard proposed by ISACA (Information Systems Auditing and Control Association) was chosen as a reference model.

CobiT Framework for IT Governance

IT risk, control, audit and assurance are evolving beyond CobiT towards the broader concept of IT Governance; an integral part of enterprise governance.

“By 2004/05, we believe failure to classify and manage IT investments within a portfolio will put 15% of all enterprises at risk in terms of viability.” (Boyle)

IT Priorities

  • Strategic Alignment
  • Value Delivery
  • IT Asset Management
  • Risk Management
  • Performance Measurement

COBIT - Control Objectives for Information and related Technology (IT Governance Institute, 2003)

Control : “The policies, procedures, practices and organisational structures designed to provide reasonable assurance that business objectives will be achieved and that undesired events will be prevented or detected and corrected.”

Control Objective: “A statement of the desired result or purpose to be achieved by implementing control procedures in a particular IT activity.”

CobiT: An IT control framework

  • Starts from the premise that IT needs to deliver the information that the enterprise needs to achieve its objectives.
  • Promotes process focus and process ownership
  • Divides IT into 34 processes belonging to four domains and provides a high level control objective for each
  • Looks at fiduciary, quality and security needs of enterprises, providing seven information criteria that can be used to generically define what the business requires from IT
  • Is supported by a set of over 300 detailed control objectives

Starting Point

The initial internal assessment provided the following AS-IS picture of the IT Department:

  • Insufficient information for the priorities setting decision process;
  • Lack of decision process definition (needs and initiatives decision process definition in course);
  • Frequent changing initiative (current and new projects, application maintenance, etc) priorities, causing dramatic impact on resource allocation;
  • Frequent postponing of delivery dates (due to poor effort estimation);
  • Often requisite change demand (due to poor requisite and change management processes implementation);
  • MS-Project Professional use in stand-alone mode by Project Managers as general practice;
  • Time-Sheet internally developed application generally used;
  • Formal Project Management Methodology lack of evidence;

IT Department realization of internal specialized project management skills absence and decision to procure a Service Provider in order to establish a Project Management Office in the department.

The PMO Implementation Project

Implementation Approach Solution

An IT Project Management processes and tools specialized service provider was selected and an implementation approach was decided.

The next figure summarizes this implementation approach solution:

Solution Implementation Approach

Exhibit 3 – Solution Implementation Approach

Solution Assessment

The approach initial phase - Solution Assessment, developed by the Service Provider involving key stakeholders of the IT Department, revealed a set of requirements, assumptions and constraints:

  • Establishment of a Project Office;
  • Adoption of a proven PM methodology;
  • Definition of Project Development and Control Processes compliant with CobIT Framework;
  • Evaluation and Selection of a Project Portfolio Management (PPfM) Tool, preferentially Microsoft-Office Enterprise Project Management tools;
  • Integration of the PPfM Tool with Time-Sheet internal application;

Project Charter and detailed Project Plan documents elaboration by project team (including people from both Service Provider and IT Department).

Phase 1: From Planning to Execution

The project started in July 2003 and a Macro-Plan established:

  • Phase 1 – Deploy to single-business unit (July 2003 – July 2004)
  • Phase 2 – Extend across organization (September 2004 – December 2005)
  • Phase 3 – Full systems integration (July 2005 – July 2006)

Phase 1 PMO implementation strategy resulted in the definition of 4 main iterations:

  • Iteration I – Establish the Foundation
  • Iteration II – Startup with Short-Term Initiatives
  • Iteration III – Rollout with Long-Term Solutions
  • Iteration IV – Support and Improvement

Iteration 1 – Establish the Foundation

  • Establish the project office
  • Identify and prioritize all projects
  • Deploy project management methods
  • Train core teams
  • Successfully complete pilot projects
  • Attain management oversight on pilot projects
  • Establish time and cost collection by project

Iteration 2 – Startup with Short-Term Initiatives

  • Train all project teams
  • Utilize project management methods on all projects
  • Plan, track, and manage resources
  • Collect and manage projects
  • Establish the project management costs for all culture changes
  • Integrate management oversight into all projects
  • Implement project reviews and audits

Iteration 3 – Rollout with Long-Term Solutions

  • Train all business teams
  • Fully integrate PM throughout organization
  • Integrate resource and cost management across the organization
  • Keep management actively involved utilizing PO reporting and analysis

Iteration 4 – Support and Improvement

  • Implement a continuous quality improvement program

Phase 1 was delivered on time, on budget and within stakeholder's expectations, at a high-level of customer satisfaction.

Phase 2 was delayed till September 2005.

Lessons Learned

Based on previous projects as well as this one experiences we can summarize some dos and don'ts of PMO Implementation.

Ten keys to success for deploying the Project Management Culture in an Organization

  1. Keep it simple
  2. Communicate
  3. Make sure that expectations and goals are shared
  4. Focus on value
  5. Support project managers
  6. Take time to understand the organizational problems from various points of view
  7. Conduct pilot tests
  8. Establish incremental goals
  9. Involve the right people up front, starting with your executive sponsorship
  10. Plan

…and Five Ways to Fail

  1. Forget key stakeholders
  2. Demand before providing
  3. Do it all at once
  4. Procrastinate
  5. Work in a vacuum

References

Archer N .P. & Ghasemzadeh F., (1999), An Integrated Framework for Project Portfolio Selection, International Journal of Project Management, 17(4) 207-216.

Boyle, L ( ) Business alignment & IT governance Changepoint p 2 ¶1 http://www.pmg.net/documents/Compuware/Changepoint_IT_Value_analyst.pdf

Charvat, J. (2003) Project Management Methodologies – Selecting, Implementing, and Supporting Methodogies and Processes for Projects Hoboken, NJ: John Wiley & Sons, Inc

Crawford, K. (2002) Project Management Maturity Model – Providing a Proven Path to Project Management Excellence, New York: Marcel Dekker, Inc

Crawford, K. (2002) The Strategic Project Office – A Guide to Improving Organizational Performance New York: Marcel Dekker, Inc

Dinsmore, P. C. (1999) Winning in Business with Enterprise Project Management. New York: AMA Publications.

Dobson, M.S. (1999) The Juggler's Guide to Managing Multiple Projects Newtown Square, PA: Project Management Institute

Dye, L. D. & Pennypacker, J. S. (ed) (1999) Project Portfolio Management – Selecting and Prioritizing Projects for Competitive Advantage”, - Havertown, PA: Center for Business Practices

Gartner's Group (2004) Procedings from Project Portfolio Management Summit 2004, San Diego

Hallows, J. (2002) The Project Management Office Toolkit – A Step-by-Step Guide to Setting up a Project Management Office New York, NY: AMACOM

IT Governance Institute (2003). Board Briefing on IT Governance, 2nd Edition Retrieved 25/06/04 from, http://www.itgi.org/Template.cfm?Section=Home&Template=/ContentManagement/ContentDisplay.cfm&ContentID=6606

Peters, T (1999) Circle of innovation. New York: Vintage Books, Random House

PMI (2004) A Guide to the Project Management Body of Knowledge (PMBOK® Guide) Newtown Square, PA: Project Management Institute, Inc.

Rad, P. & Levin, G. (2002) The Advanced Project Management Office Boca Raton, FL: CRC Press LLC

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 or any listed author.

© Rui Porteiro
Originally published as a part of 2005 PMI Global Congress Proceedings – Edinburgh, Scotland

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