3 Stages of PPM Maturity

Introduction

Are you currently or planning on becoming a Project Portfolio Management practitioner?  If so, it will serve you well to understand the breadth of the organizational model that PPM can provide.  Understanding the range of capabilities available will allow you now will allow you to contemplate a path toward a robust portfolio practice within your organization.  

We’re going to break this discussion down into 3 separate clusters of PPM functionality:  Classic PPM; Full Capability PPM; and Enterprise PPM.  Then provide a summary review at the end.

Stage 1 – Classic PPM

Classic PPM refers to a measure of PPM scope corresponding to a more conventional notion of Project Portfolio Management – the management of sizeable project investments and the resources required for their execution.  In this regime of PPM, investment analysis is being performed on major initiatives and portfolios are constructed.  The resources requirements for these project efforts are assessed and labor efforts identified.  

These initiatives will be assessed in terms of 4 major attribute categories: cost; risk; strategic alignment, and some measure of benefit or return.  Input processes like Ideation, the resource demand funnel, and project intake are defined.  Resources will similarly be classified with resource-centric attributes such as roles, skills, organizational unit, full or part-time, etc.…

At this juncture, Classic PPM scope provides us with major projects classification, prioritization, and selection model.  Resource assignment and loading on the select initiatives is performed.  Time reporting, project tracking, and forecasting are in place.  We are organized for major projects in our portfolio management approach.  NOT BAD!

Stage 2 – Full Capability PPM

What do we need to accomplish to move the PPM Maturity forward into Full Capability PPM?  First, let’s expand the breadth of our existing project capability to include all work.  This means all other project work and all non-project work – the so-called ‘lights-on’ work portfolio.  Accomplishing this means we have captured the total work inventory of the organization.  

In addition to this, resource management will expand to include the total labor resource inventory of the organization.  Further, all resource types (labor, expenses, equipment, material) required for total project costing will be established.

Along with expanding our work and resource reach, we will introduce 2 new PPM capabilities – Strategies and Financials.  The addition of financial management capabilities within the PPM program is a necessary condition for PPM success.  

With all resources now defined, PMs can properly resource and cost out – in dollars – the total project cost rather than abstracting everything to a labor effort only approach.  Strategic alignment is one of the 4 cornerstones used to select strategic initiatives.  We can go one step further and define strategic entities that represent (or contain) organizational initiatives, each with their own criteria for success.  We can even arrange them in a ‘strategic hierarchy’ and decompose an organization’s strategic design.  Indeed, portfolios can be constructed for anything from geographies to organizational unit.  For more information on the strategic arrangement of an organization – see Axelerate’s article “Projects, Programs, & Portfolios in Action.”

With the Enterprise PPM framework now in place, we are positioned to quantify total organizational resource demand and capacity situation.  The total work effort of the enterprise is now identified and organized.  We know what is being delivered in terms of strategic initiatives, other projects and on-going operations.  There is a solid managerial accounting picture of not only labor effort, but the true dollar costs associated with our organizational work – both strategic and operations.  We now understand the what work we’re doing, who’s doing it, and how much it cost. EXCELLENT!

Stage 3 – Enterprise PPM

Our third and final stage of PPM Maturity establishes 3 different sets of functions.  First – Infrastructure is developed, meaning Services, Assets, and Applications as the infrastructure components of Enterprise PPM.  Second, external Products and Services that the organization sells are defined.  Finally, we add a Benefits Realization process to capture both tangible and non-tangible benefits.

Once we identify our infrastructure elements, we can identify the Enterprise Architecture of the enterprise.  The on-going work must be properly allocated to the various entities – services, applications and assets – in order to cost the services that IT provides.  Benefits Realization (using tangible and intangible benefits) will let us quantify value of internal services.  The organization can now begin the process of rationalizing services and optimizing application and asset portfolios.

Our third and final stage of PPM Maturity establishes 3 different sets of functions.  First – Infrastructure is developed, meaning Services, Assets, and Applications as the infrastructure components of Enterprise PPM.  Second, external Products and Services that the organization sells are defined.  Finally, we add a Benefits Realization process to capture both tangible and non-tangible benefits.

Our external Products and Services will collect the costs from projects to and other work to development, enhance and maintain them as well as revenues from sales.  Our Benefits Realization process will allow us to analyze metrics like P&L and ROI.

Benefits Realization as a formal process is a game-changer.  Benefits realization will assess how well our initiatives, modernization, and product improvement efforts perform.  Technology groups can solve an age-old problem – specifying exactly what they are delivering and clearly show why they cost what they do.    

In one fell swoop, our build-out of Enterprise PPM has provided us with defined services, applications, assets and products.  Benefits realization has been established.  We understand the cost/benefit of our innovative efforts.  We have quantified the costs of providing IT services to the organization – the specifics of services to the specific organizational unit.  Rationalization and optimization of the infrastructure is now possible.  Our enterprise architecture is visible.  BRILLIANT!

Conclusion

Okay, let’s take a breath and assume you’ve survived all of this.  This type of PPM adventure is a major effort involving or somehow touching the entire organization.  Let’s review what PPM – from Classic PPM through Enterprise PPM – is giving us.  

First, we’ve organized our organization’s portfolios, programs, and projects such that they correspond to the company’s strategic design.  All project work has been identified and categorized from major initiatives down through smallest organized project. All non-project work has been identified and arranged into the appropriate on-going and operations portfolios.  Our human resource pool is classified and cataloged.  Along with our fully resourced work – we understand resource demand and capacity.  

Financial Management is established within our Portfolio ecosystem and provides a formidable Managerial Accounting view of the organization.  We have implemented a Benefits Realization process so we can develop hard financial returns or soft, intangible returns.    

Our Infrastructure and revenue generating product/service entities are established, cataloged and provisioned with the appropriate operations and project work.  We understand the ROI of our initiatives.  Our Enterprise Architecture is visible and understood.  IT can tell you what they’ve delivered, why they delivered it, how it benefited the company and what it cost.  We have the required information and the means to optimize our infrastructure.