Should you treat IT as an investment portfolio...

...or as a town planning project?

The tools of the trade

Often project portfolio management tools are used to wrap existing project management tools. After all, there's no point in implementing new tools when everyone's already familiar with Microsoft Project.

It's not surprising that Microsoft's Project Portfolio Server 2007 is part of its Project family, and links in to the existing Project Server 2007. Individual projects can carry on using desktop copies of Project, along with team copies of Project Server.

Meanwhile, programme management teams can use the Project Portfolio Server to bring information from across the business into one place. Project Portfolio Server can be used to standardise reporting, with common templates – as well as holding the information in one central repository.

Taking a leaf out of the CRM book, project portfolio management systems gives businesses one place for stakeholders to find information about projects, increasing the overall understanding of just why resources have been deployed, and just where. Common reporting standards are important if you're going to implement project portfolio management techniques.

The built in form tools in Primavera's ProSight portfolio management tool are used to build input screens that can help capture the information you need. Custom forms like these make it easier for users to give you the information you need – and using a web UI there's very little learning curve.

One of the key features of any project portfolio management tool is the ability to manage project governance. Governance is a key component of any programme management discipline, and it's important that each project is well managed if it is to be delivered successfully. There's a lot to consider when defining project governance rules – especially when delivering the components of a service-oriented enterprise. While some portfolio management tools come with governance guidelines, you're most likely to use these as the basis for documenting existing governance rules, and to share them with the rest of the business.

Tools like Microsoft's Project Portfolio Server can be used to take governance rules, and then use them to build governance workflows. You get the option of using bundled pro forma workflows, as well as developing your own. Development best practices are also part of governance, and while most portfolio management tools aren't designed to push development standards to developer's desktops, they can help manage the development process – including marshalling code through test procedures.

IT departments need to be in sync with the rest of the business – there's little point in rushing ahead with the latest technology if there's no actual business benefit. A business' IT strategy needs to be aligned to its goals. Project portfolio management tools need to be part of this process, and the information that's used to determine priorities needs to be available to both sides of the equation – the business stakeholders and the development team.

As businesses need to respond to rapid changes in their operating environment, project management teams need to respond as quickly – if not quicker. Changing conditions mean changing requirements, and these lead to changes in resourcing and in project priorities. The portfolio metaphor is a good one, as stock portfolios are dynamic entities, changing in response to the vagaries of the market. Project portfolios need to change the same way.

Vendor offerings

Hewlett Packard's purchase of Mercury has given it a suite of development management tools to go alongside its operational management tools. This has led to an interesting cross-fertilisation, and the recent launch of its Project and Portfolio Management Centre.

There's a lot in HP's offering – from portfolio management and optimisation tools to demand management tools that help track the requests delivered to IT departments. You can make sure you've got a complete history of your organisation's IT requirements, and then use this information to prioritise development plans. There's plenty of scope for project portfolio management to become a key part of your development process. HP's tools can be tied into its quality management suite, so that application and test results can be tied directly into project and portfolio governance.

Project portfolios need to be optimised to account for strategic requirements – as well as handling the constraints of variable budgets and available staff. This is the hardest part of project portfolio management. Any tool you use will need to be able to help you map out the possible scenarios, so your projects always deliver the most value to the business.

There's a distinct cross-over between portfolio management tools and business intelligence, with good project portfolio management tools distilling this information into an easy to understand dashboard that can be shared across the business. Visualising portfolios and portfolio business value is one way of delivering this information. Microsoft's Project Portfolio Server offers several different visualisation techniques, including using bubble charts to show the relative value of projects, and their importance to business strategy.

A similar approach is taken by Primavera's ProSight. Here "investor maps" are used to show the elements of a project portfolio. Business users can drill down into the maps to get more information about specific projects, while portfolio managers can use them to explore different scenarios.

Alongside analysis tools, scorecards help keep information visible. ProSight's scorecards show several different performance indicators, and can be used to show when projects have problems. The performance indicators used include budget, service level agreements, and changes in business value. Project portfolio management isn't really a tool for new businesses or for small businesses.

It's really a tool for large businesses that are managing large numbers of projects across many divisions. Smaller organisations are better placed to understand their development plans, and are more likely to have effective lines of communication between the IT department and the rest of the business. You'll find that it's large enterprises that are more likely to be working with many tens or even hundreds of projects, where there's little visibility on just what's being done where.

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