IT at the Speed of Business:

Why Spreadsheets No Longer Cut it for Strategic PMOs

Table of Contents
Introduction The Importance of PPM Why Spreadsheets Fall Short PPM Requirements Conclusion

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Introduction
In an age of tight budgets and global competition, businesses need their IT organizations to do more than complete on time, on budget and with the required functionality. They need IT to become a true business partner, ensuring projects are not only done right but that only the right projects those that make the best use of limited budgets to meet the most critical business needs are approved. To help with this ongoing prioritization, leading IT organizations are moving to Project Portfolio Management (PPM) which continuously evaluates each IT project in the context of all the IT investments the business could make. By providing all stakeholders with current, consistent, business-focused metrics on the costs and business benefits of projects, PPM allows managers to continuously rebalance spending as both the status of projects and the needs of the business change. However, PPM cannot be done costeffectively with makeshift tools such as spreadsheets that many IT organizations now use to manage standalone projects. Spreadsheets do not make it easy for users or managers to share and analyze consistent updates on the status and benefits of various projects within the portfolio. They do not provide real-time information a safeguard for accurate and consistent data, nor the workflow capabilities required to link the cost of IT initiatives with business benefits. This white paper breaks down the critical role that PPM now plays in positioning IT as a strategic partner and asset to line of business units, and also evaluates why traditional tools such as spreadsheets are not adequate to support PPM, and what to look for in a PPM management solution.

The Importance of PPM

IT is under pressure as never before to deliver not only standalone projects, but business benefits, as efficiently and effectively as possible. This requires the IT staff to track not just traditional metrics such as budget, time and scope, but whether and how each project helps the business meet its strategic goals. Business managers need easy-to-understand, customizable reports on these metrics so they can make the proper funding choices. Meeting these needs requires a portfolio approach to project management that dynamically assesses the ongoing costs and benefits of multiple projects. This allows the organization to reallocate spending as the status of each project, and its value to the business, may change over time. IT organizations that fail to adopt PPM are often left scrambling to carry out conflicting business objectives from different groups, unable to focus enough staff and effort on the strategic initiatives that open new markets and deliver quantum leaps in revenue or profits. Without PPM, IT organizations are often seen only as a cost center vulnerable to downsizing or outsourcing, rather than as an integral part of the enterprise, creating value for the business. PPM is especially important for the many organizations spending 75% or more of their budgets maintaining existing applications, rather than developing strategic systems to drive new growth or efficiencies. Since many companies lack an adequate inventory of their existing systems, much less a PPM capability to triage associated activity, tracking managing, and prioritizing maintenance or enhancements of said systems is difficult at best, with sizable costs remaining largely invisible. PPM helps provide consistent, accurate and easy-to-understand updates on the status of individual projects to all technical and business stakeholders, along with measurements of how these projects help reach strategic goals such as increased

Expands the project community to

create a governance partnership between the Project Management Office (PMO) and the executive/operations side of the business.

Vastly reduces the potential for project

failure, by placing greater discipline on project selection. It removes politics from the project selection process, replacing it with a reasoned and ordered selection process conducted by the PMO and a Governance (or Investment) Board. profit margins, market share, customer satisfaction or shareholder value. This clear, consistent communication makes it easier to find and fix problems more easily and less expensively, to target spending on the most business-critical areas, to increase alignment between IT and the various linesof-business, to improve the control and management of IT budgets and to provide improved visibility into IT expenditures.

Is integrated with strategic initiatives,

return on investment goals, and resource/ capacity planning, and

Tracks and communicates the

performance of active projects to all stakeholders in ways that clearly displays their status and identifies critical performance areas. But achieving all this requires far greater capabilities than can be provided by the trusty spreadsheet.

According to a recent Forrester Research report, PPM:

Expands the project lifecycle to cover

the entire life span, from the identification of an idea, need or opportunity, through the development and execution of the project to the realization of benefits.

Why Spreadsheets Fall Short

Spreadsheets are commonly used to track the status and cost of IT projects. This is understandable because they are a widely available, inexpensive and easy-

Unlike spreadsheets or traditional project management software, specialized PPM software supports the consistent, accurate and auditable sharing of project information among stakeholders in IT, business and operations.
to-use way to arrange information, perform calculations and, in a limited and ad-hoc way, share basic metrics across managers and project participants. Individuals can use Excel to create charts and reports, query remote databases, generate complex models and planning scenarios and create budgets, forecasts and operational reports. But the main lure of spreadsheets their ease of use by individuals limits their value for department wide or enterprisewide project management. Because they are created by different users drawing on different sources of data and varying rules for defining metrics, the resulting spreadmart (as defined by Wayne Eckerson at The Data Warehousing Institute) is not based on a central, validated single version of the truth. The productivity of the project management

staff suffers because they must combine information from multiple spreadsheets, transfer information among them and reformat the information. Many users also waste time making changes to the look and feel or create custom views that add little value. Spreadsheets also lack the workflow controls that require, for example, critical choices to be made at specific times, or that certain conditions are met before a project moves past critical milestones. All this makes it harder to dynamically and continuously balance the organizations investment in various projects. Because each user designs their own data structure and flow and computational regimens, and because there is no audit trail among different versions of the same spreadsheet emailed to different stakeholders, mistakes are common and difficult to find or correct. This makes it

Project Portfolio Management makes IT a strategic business partner by allowing it to not only manage individual projects, but to make sure that only the projects that help achieve strategic business objectives are funded.

First Financial Streamlines Project Management with PPM

First Financial Bankshares, Inc., a financial holding company with more than $3 billion in assets, is using the Portfolio Management element of Innotas on-line IT Governance solution to replace the cumbersome, timeconsuming process of managing multiple projects with Excel spreadsheets. After evaluating several vendors, First Financial Bankshares chose Innotas because of its ease of use and its ability to rationalize and catalogue all the projects the business needed to track. Combined with Innotas application portfolio module, the project portfolio capability provided more visibility into the work and helped facilitate improved organization around workload and project management ownership. The PPM solution has allowed First Technology Services to begin building a project management office, and facilitated weekly Project Labs in which project managers review real-time reports and executive dashboards and set priorities for applications, projects and tasks. Executive dashboards give management better understanding of project health and costs, as well as the status of high priority work. short of supporting PPM because it is optimized to support only the traditional metrics of time, cost and scope. It is also usually designed only for use by those directly involved in projects, rather than strategic stakeholders such as senior managers and operations staff. Systems designed specifically to support PPM help to bridge the gap between the project side

impossible to verify the accuracy of the updates distributed among stakeholders, leading to misunderstandings, misinterpretation and wasted time as various participants attempt to reconcile their data. Most importantly, it leads to poor decision making based on outdated or inaccurate data, and the inability to properly prioritize projects based on business initiatives and/or their value to the organization. Spreadsheets, therefore, lack the consistency, standardization and workflow capabilities required to set goals and to report results clearly and consistently across the organization to facilitate portfolio project management.

PPM Requirements
While traditional project management software addresses many of the shortcomings of spreadsheets, it falls

and the operations staff. Spreadsheets lack the controls and workflow to allow dynamic project information sharing and anytime portfolio visibility, says Cinda Voegtli, President, ProjectConnections. com. True project portfolio management tools quickly pay for themselves by allowing the organization to not only manage the underlying projects effectively, but to get sophisticated real-time insights for prioritizing all the project work. They also provide metrics, workflow and reports that measure how well individual projects align with corporate strategies, evaluate benefits and risk, and help to optimize the use of limited resources on proposed as well as approved projects, and to prioritize both pending and active work. To provide this sophisticated range of capabilities, companies should use specialized software that has been designed to address the issues of project selection and portfolio maintenance. Such tools should be able to:

Spreadsheets lack the controls and workflow to allow dynamic project information sharing and anytime portfolio visibility. True project portfolio management tools quickly pay for themselves by allowing the organization to not only manage the underlying projects effectively, but to get sophisticated real-time insights for prioritizing all the project work.
- Cinda Voegtli President,ProjectConnections.com

Compute the benefits, risks, and ROI of

individual projects, including their potential to increase revenue or reduce costs.

Let users build high-level plans based on

Perform what-if analysis to predict the

long-term, strategic business requirements. Align the project portfolio with the

effects of adding or eliminating projects. Include menu-driven capabilities to

organizations strategic plans and enterprise architecture.

build forms, screens, reports, dashboards and workflows without resorting to programming. This should include executive-level display of project health data and by-exception reporting of poorly performing projects.

Prioritize and rank projects based on

their alignment with corporate strategies and their cost.

Provide context-sensitive help tools

that help users accomplish specific tasks in the system. Deliver out-of-the-box content in the form of best-practices methodologies to help users get the benefits of PPM most quickly.

Where Spreadsheets Fall Short for PPM

Spreadsheets lack:
Standards for data collection. Standards for data presentation. Audit capabilities to validate data. Methods to reconcile conflicting data from various sources.

Include pre-configured templates and

dashboards to encourage the toolss adoption and use. Unlike spreadsheets or traditional project management software, specialized PPM software supports the consistent, accurate and auditable sharing of project information among stakeholders in IT, business and opera rations. This expands project management beyond the traditional parameters of time, cost and scope to how well each project aligns with strategic business needs. They provide a foundation on which business and IT managers can together make reasoned choices about which projects to support, based on business priorities rather than politics or gut feelings.

Workflows to assure clear, consistent communication among all stakeholders.

Conclusion
PPM lets project managers make the leap from tacticians executing standalone projects to strategic business partners helping to make business-critical decisions about project portfolios. This not only is a career-enhancer for the project manager, but drives greater value for the business. But just as you wouldnt trust a room full of investment managers using different metrics to track your stock portfolio, enterprises cant rely on standalone spreadsheets emailed among different project managers to measure the success of various IT projects. To realize the dramatic benefits of PPM, organizations must invest in the specialized PPM tools that deliver the consistent, reliable, and shareable data required to properly prioritize IT projects as technology and business needs change.

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Thousands of users leverage the power of the Innotas on-demand IT Governance solution, spanning a wide range of industries including financial services, healthcare, retail, high technology, telecommunications, manufacturing, insurance, media, government, energy and more. Offering a sophisticated solution that includes all the key elements of Project Portfolio Management (PPM) and Application Portfolio Management (APM) Innotas helps clients significantly reduce total IT costs while accelerating product evolution and streamlining workflows.

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