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Bob Walker EPM TSP

Bob Walker EPM TSP. The Importance of Organisational Portfolio Management. The Importance of Organisational Portfolio Management. Agenda: In this session we will be discussing and reviewing The importance of aligning Project and Programme Portfolios to key business goals

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Bob Walker EPM TSP

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  1. Bob Walker EPM TSP The Importance of Organisational Portfolio Management

  2. The Importance of Organisational Portfolio Management • Agenda: • In this session we will be discussing and reviewing • The importance of aligning Project and Programme Portfolios to key business goals • Formulating and executing sound business processes • Identifying key metrics • How to identify and select the right portfolio • Microsoft HR use of Portfolio Management

  3. The strategic context for effective portfolio management:Holistic, inclusive, top-down Primary Source: McKinsey, 2004 Vision (Short- and long-term strategy) World-class companies can demonstrate a clear alignment throughout their organisation and studies have shown exponential performance improvements for those who adopt this approach Investment in activities and initiatives that do not clearly align with strategicgoals is wasted. • 5 Key Elements of Effective Strategy • Initial focus on issues, not numbers • Inclusive, open discussion – involving unit heads as well as CXOs – to promote communication and understanding of final targets • In-built ‘what-if’ and scenario planning, with reviews and updates as necessary, not dictated by the calendar • Agreed ‘strategic’ metrics to track progress – not necessarily all financial – reviewed regularly • Linked to performance management / compensation package Strategic Performance Indicators (Key drivers & metrics for assessing progress) Key Structures & Capabilities (Organisation, Business & Technical Architecture, Performance Mgt) Business Activities (Projects, new initiatives, day-to-day work) Skills, Competencies & Behaviours (Training & Development, Reward Structure)

  4. The business context:The track record is disappointingly poor • Significant Issues • Regulatory requirements (SOX etc) necessitate greater transparency in decision-making • Need to cope with growing organisational complexity • Ever-more challenging business climate: • - requires demonstration of effective results, quicker • - need for greater agility and flexibility • Pressure to minimise spending while investing in value-added activities 50% of projects are still evaluated independently rather than as part of a portfolio 45% of projects only go ahead because a senior executive insists 21% of projects, in hindsight, should have been approved but lost out to those with more vocal support 40% of organisations don’t conduct any kind of post-implementation review 36% of projects are found to have over-stated their potential benefits 84% of organisations remain unable to demonstrate the link between IT or capital budgets and business needs 69% of major capital projects are neither on time nor on budget Industry average for ‘successful’ investments is 50% or less Primary Source: Standish Group, 2006 Primary Source: McKinsey Survey of 2500 global executives, 2007

  5. Confidence, Transparency and Flexibility 4 Key Reasons Why Organisations Turn To Portfolio Management: • To save money / budget • To demonstrably add value in the programme / project investments • To improve transparency – usually at the behest of external stakeholders • As a catalyst for significant process improvement, usually in one of the following areas: • Business case / project approval • Business agility (‘what if’/ scenario planning) • Delivery control and benefits management

  6. Generic Benefits • Creates a common currency for comparing investments and making better-informed decisions • Ensures decisions made according to verifiable data, not politics or ‘noise’ • Creates a clear and quantifiable link between strategic objectives and initiatives undertaken • Uses a benefits-led approach to delivering strategic projects. • Reduces management time spent on decision-making through greater focus on high value initiatives • Reduces overall spend by eliminating low value investments • Promotes organisational agility through modelling of ‘what-ifs’ and other detailed scenario analysis - decisions to change taken within minutes

  7. How to identify and select the right Portfolio • Define your strategy • Prioritise your strategy • Capture your investment proposales • Align your investments • Make good decisions • Review & renew

  8. What is Strategic? • “The plans made or the actions taken in an effort to help the organisation fulfil its intended purpose“ • Drives Competitive Advantage • A strategic organisation can choose to be tactical, a tactical organisation cannot choose to be strategic!

  9. Strategic Priorities • All your intentions may now be strategic........ .....but not all strategies are equal! • Create a prioritisation based on reality not emotion

  10. Where are my projects? • Standard criteria for measuring: • Costs • Benefits • Resource requirement • Time • Risk • Common process • Build a “book”

  11. How do you Choose! • Who shouts loudest? • Boss’s prerogative? • It got passed over last time? • Everyone else has one! • Compliance and regulation?

  12. Change is a Constant • Be flexible • Kill quick • Review regularly • Be provocative

  13. Microsoft HR and Portfolio Management

  14. Business Situation • Previous fiscal years had ~80 projects in the pipe • Organizational overload • Prior business framework attempt did not achieve desired results • No measurable link of projects to strategy • HR Operational Excellence Team established in FY07 to address planning issues: • HR Leadership team sponsorship • 2 Program Managers • Project Delivery Framework virtual global team ~ 14 people • Portfolio Management Office virtual global team ~ 18 people

  15. IT Situation • Prior IT project selection was more of a funding process because projects were pre-determined by the business • IT receives disparate IT project requests from each HR area – not a consolidated list • IT budget is allocated to each HR area based on prior year’s budget instead of by rationalizing the strategic impact of projects • IT had no governance or focus around IT investment ROI or project rationalization • IT Personnel did not feel “strategic” to the organization • IT Business Architecture and Foundation Solutions Team established in FY07 to address portfolio and integration issues: • Business architect • Six Sigma Black Belt Process Engineer • PMO Program Manager • Integration Solution Manager

  16. Summary of HR & IT Situation • Pain • Confusion • Costs • Blame • Not consistent • Re-invention

  17. New Approach • Learn from the past • Take small steps – phases and quick wins • Strong emphasis on change management and stakeholder management

  18. New Approach • Think globally • Program manage it like a project/establish cross functional team • Leverage the Project Portfolio Server 2007 tool to help facilitate the process (focus on the process vs. tool)

  19. Results • Portfolio went from 84 projects to 14 • Portfolio aligned to HR and IT drivers and goals • On-track to deliver dialed movement to business drivers • Better HR and IT resource allocation

  20. Results • Improvements led to: • Better communication • Clear governance and accountability • Streamlining of the project selection process • Focus on business and shareholder value • Clear rationalization of IT investment

  21. Success Factors • Executive sponsorship • Clear Strategy to make trade-offs • Phased approach • Leverage best practices and expertise in process, change management and program management • Diversity of cross functional team • Project Portfolio Server enabled real time decision making

  22. Next Steps: Continuing the Journey • Measure strategy and portfolio outcomes • Complete project framework to enable consistent execution • Manage change and on-going project status updates • Refine planning for fiscal year ’09 • Expand scope to include “small” projects • Incorporate gap analysis on business capabilities • Move organization bandwidth from “As Is” to “Aspire to”

  23. Recommendations • Secure leadership team sponsorship • Keep it simple • Take small steps to demonstrate quick wins • Communicate often along the way • Leverage technology like Project Portfolio Server to enable data driven decisions/trade offs

  24. Take Away’s • Portfolio Management involves all parties • Do not try and take on everything • One persons Strategic is another persons tactical • Executive Sponsorship from Business and IT is essential

  25. Thanks • Chris Mills – CxO Consulting • Paul Major – Program Framework • Microsoft – • Carol Bubar, Senior Director Operational Excellence, Microsoft HR • Francis Gan, Senior Director HR Business Architecture and Foundations Solutions, Microsoft IT • http://technet.microsoft.com/en-us/library/cc297284.aspx

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