PPM and a whole new generation of acronyms

We used to think just about project scheduling in this industry. When I got my start in the early 80’s we had an acronym that everyone was striving for. It was CPM. Nowadays there are many who’ve never heard this acronym. They remember CPM as an operating system that looked somewhat liked Unix or DOS and worked on the Apple. For those of us who have been trained in project scheduling, we know that CPM referred to the Critical Path Methodology algorithm, the kernel of modern project scheduling.

When project management software first became available for the PC, it was CPM software, or project scheduling software that we were referring to. Many modern systems owe their start and still carry as their core, the CPM algorithms that were developed in the 50’s and 60’s.

A few years ago, the acronym EPM became a hot commodity. Enterprise Project Management was the way to go. For modern organizations to become effective it was not enough to schedule the project. Management had to extend the project management concept to the entire organization. “Projectizing” an organization became proper English (even though Word is complaining about it as I write this). The movement towards EPM continues today. It is a migration from person-by-person project scheduling to collaborative project team management that I believe is just in its infancy.

One of the most productive by-products of this era was how people in the project management industry have started extending their perspective beyond scheduling. One of the most exciting trends in the last couple of years has been towards Project Portfolio Management (PPM) and Product Lifecycle Management (PLM). A corollary of this is Asset Lifecycle Management (ALM) and I’m sure you can start to imagine that the acronyms don’t stop there. With this new movement we’ve seen PPM pop up as a new industry within the EPM space in a way I think is very exciting.

So what is Project Portfolio Management?

The “elevator” talk would go like this: If Enterprise Project Management is about “doing projects right”, Project Portfolio Management is about “doing the right projects”. Let’s take a look at this new industry from a couple of perspectives starting with the question, “When does a project start?”

We tend to start the project management conversation from a fixed scope of work. We act as though these scoped out projects, executive sponsors and budgets are floating out in the ether just waiting for a project manager to reach out and grasp one but of course we all know this is not so.

So, what is a project before it’s a project? Is it just an idea? Just a proposal? Just a working theory?

Does it become a project only when the project starts? Perhaps if it’s construction, only when the ground is broken?

How about this: A project begins its life as an idea. The source of the idea is irrelevant. But at the moment anyone spends the least amount of time on this idea, it’s a proposed project. Now, if you’re in the IT business like I am or in R&D or in Bio Research or… well just about any industry, you can’t pursue every idea.

Ideas come across my desk at the rate of 2 or 3 a day. There are thousands of abandoned ideas in our company’s history. How do you decide when to take an idea and apply resources to it and make it into a proper project? In many organizations this is the least scientific process they have. The selections are done on a purely subjective basis, perhaps by the single vote of the owner or by the forcefulness of the project sponsor. It is very common to find that the selection of projects is almost purely personality based.

I recently visited a bio research firm that had over 3,000 new projects per year. Now some of these projects never advanced past the hairbrained idea stage but the structure of this organization was such that they could very effectively evaluate projects at the earliest stage and abandon them if they no longer met key criteria.

One aspect of PPM attacks this challenge as an analytical exercise. We start by examining what makes the business run and I very much like this. For years I’ve been a proponent of making sure that whatever project environments we create meet a business (rather than software functionality) need. PPM is perfectly aligned with this.

We also want to determine what business factors are most significant for this particular organization so we can evaluate the projects that are considered. We might consider the return on investment or profit for a project or the project’s strategic alignment or its risk or the match of the resource requirements to available resources. What is important for this organization to function?

Next, we need to be able to determine the relative importance of each of these factors. For example, all things being equal would you take a high risk project if it was a good fit for strategic alignment? These two exercises take some time because each company is different and are at different stages in their development. The relative analysis is done in a pairwise comparison that results in relative calculations of the weights of each business driver.

Next we need to assess each potential project. A PPM system would calculate values for each of these business factors for each project. Then projects could be ranked by multiple criteria to determine the most effective selection of projects. Projects which might score low on some criteria could be forced into the mix to cover things like security or essential maintenance which might have a low return on investment but the not doing of which might carry enormous risk.

Executives who must choose from among a longer list of projects to see which have merit are loving this new approach. For the first time, they can place an empirical value next to their decision and are comforted by the fact that their selections have been ranked with others in the organization.

This is one important aspect of PPM but by no means the only one.

Another tenet of this methodology is to follow projects from the idea stage to the delivery stage. The notion of stage-gates, a series of phases and reviews through which each project must pass was invented in Montreal by a fellow named Robert Cooper. The stage gating philosophy has been adopted by thousands of organizations world wide to help follow projects as they advance.

Perhaps a project had merit at one time but perhaps the market conditions have changed since it started and the anticipated return on investment has changed. A stage gating system would include reviews to catch such discrepancies and would force organizations to confront the difficulties in their project’s worthiness long before it became active and before more resources were spent on a losing cause.

That’s Project Portfolio Management and there are a number of exciting tools in this space. Among others, Microsoft’s new Project Portfolio Server 2006 and ProSight are quite interesting.

Product Lifecycle management carries the perspective one level higher. Aside from just the building of a project, PLM asks, “What happens after the project is delivered?” This now brings in the overall support, maintenance, enhancement and evolution of a product line. For people in the IT or Engineering worlds, this is essential. The experts who invented, then designed and, probably helped build the system are the only people who will be able to help it be deployed, evolve, create new versions, and support users.

PLM is fascinating because it encompasses a lot more of an organization’s total work load. Remember, resource leveling and analysis is interesting only when it’s accurate. Trying to do a resource plan without including the day-to-day work of maintenance and product evolution is just insufficient and will yield inaccurate analysis.

PLM is a huge and growing industry. Products like Agile and Sopheon are of particular interest here. This is a hugely growing industry with IDC estimating that this market is over $8b within the next couple of years.

So, CPM to EPM. EPM to PPM and PLM coming on strong. Don’t despair. I’m sure once we’ve absorbed these – there’ll be lots of new acronyms to learn.

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