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Monday, 11 April 2011 15:42

Who Needs Project Portfolio Management?

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Statistics show that the interest in Project Portfolio Management (PPM) solutions has been steadily growing over the last decade.  A recent article in a prominent financial magazine asserted that the total software revenue for this market grows at 10% annually.[i] Why so much interest?  For starters, many businesses still struggle to, as the writer put it, “align resources with business demands.” 

The Definition of PPM 

Gartner, one of the leading information technology research and advisory companies, publishes the Magic Quadrant, an annual report that highlights the leaders in the PPM market.  Gartner defines a PPM solution as one that supports a majority of the nine areas described in the Project Management Body of Knowledge (PMBOK) from the Project Management Institute (PMI), which are as follows:

  1. Project Integration Management
  2. Project Scope Management
  3. Project Time Management
  4. Project Cost Management
  5. Project Quality Management
  6. Project Human Resource Management
  7. Project Communications Management
  8. Project Risk Management
  9. Project Procurement Management 

Gartner's definition has become rather standard, which has led to the commoditization of the PPM software industry.  There are, however, plenty of tools omitted by the Magic Quadrant that help customers solve their project portfolio management issues without a hefty investment or drawn-out implementation time frame.  The key to finding the right solution is knowing what your needs are and how to meet them without buying more than you need. 

Who Needs PPM?

Any organization with multiple projects and resources needs a way to track, allocate and manage them effectively.  Project managers simply cannot keep track of hundreds of team members and projects without a tool for communication and data visibility. recently published an article stating that many companies purchase large, complex PPM solutions with more functionality than they will ever use or need.[ii] The writer noted that these companies wind up with a partial rollout, while a better option would have been to go with a Software-as-a-Service solution that they could scale as needed.  Imagine how much money and resource time is wasted by oversized solutions that are only partially rolled out. 

Different organizations have different needs for PPM, but there is some basic functionality that all can benefit from: 

Costs and profitability

The main cost for many projects today comes from human resources, meaning that these costs can only be tracked through labor hours.  When team members track how long it takes them to complete various tasks, project managers can understand how much the project truly costs overall.  One employee's time is more expensive than that of another employee, and those costs can add up on major projects, so adding labor rates to the time data is crucial. 

Once you understand what projects cost, you will know which projects are profitable and which are not.  This gives you an impressive advantage over your competitors. They do not know where their profits are coming from, but you do, which is the only way to thrive in a competitive business environment. 

Resource allocation 

In order to understand who can be scheduled to work on particular tasks, project managers must first understand each person's current allocation and vacation schedule.  For example, if a software developer is needed for a project but all of the developers are 100% allocated to other projects, the project manager cannot assign them to his/her project.  This affects the scope and time frame of the project, and sometimes, it can even affect whether or not the project is taken on at all.  Likewise, if a business analyst is the only one qualified to perform a certain task, but this person has 6 weeks of vacation coming up, the project manager needs to know ahead of time and plan accordingly.  Simply planning projects without any real data in hand is foolish.

Think of each person's workday as a 3 layer cake. One layer is vacation, one is process work, and the other is project work.  If you do not know how much vacation an employee is taking next month, then you do not know which project tasks you can assign to him.  If you do not know how much of his time is spent on other projects or in departmental meetings and other non-project "process" work, then you do not know which project tasks he can handle.

Things to Avoid

The fact is that many of the project portfolio management solutions in the Magic Quadrant involve a hefty investment and drawn-out implementation time frame. Customers of such vendors can often expect to pay several hundreds of thousands of dollars for these tools, which is a lot of money for what often ends in a partial rollout.  Some unhappy PPM customers have been known to lament their purchase of a “million dollar timesheet.”  When choosing a solution, make sure that you do not pay a large amount up front and put your career on the line because the salesperson told you it will all work out fine.  This is why SaaS solutions are so important – businesses can roll the solution out to one department or group first to see how it works before committing to a larger purchase, therefore minimizing the risk. 

Businesses today are turning to PPM solutions to help them execute projects successfully and understand their total costs.  While many look immediately to the Magic Quadrant and large PPM vendors to solve this problem, it is important to remember that other players in the PPM space can offer the functionality you need for a fraction of the price of more complex solutions.  The best way to select a PPM tool is to first isolate your immediate needs and then research until you find the solution that will work best for your company.

About the Author:

Curt Finch is the CEO of Journyx. Since 1996, Journyx has remained committed to helping customers intelligently invest their time and resources to achieve per-person, per-project profitability. Curt earned a Bachelor of Science degree in Computer Science from Virginia Tech in 1987.  As a software programmer fixing bugs for IBM in the early ‘90’s, Curt Finch found that tracking the time it took to fix each bug revealed the per-bug profitability. Curt knew that this concept of using time-tracking data to determine project profitability was a winning idea and something that companies were not doing – yet… Curt created the world's first web-based timesheet application and the foundation for the current Journyx product offerings in 1997. Curt is an avid speaker and writer. Learn more about Curt at

Read 11926 times Last modified on Monday, 11 April 2011 15:55

Curt Finch is the CEO of Journyx. Founded in 1996, Journyx automates payroll, billing and cost accounting while easing management of employee time and expenses, and provides confidence that all resources are utilized correctly and completely. Curt can be found on Twitter at @CurtFinch and on Google+ at +CurtFinch.

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