Introduction
Information systems and processes have brought about major technological influence to most organizations. In present business environment, most products and services activities revolve around IT systems.Embracing project portfolio management serves as anintegral aspectfor most organization in succeeding its goals.
The importance of portfolio management is that, it promotes overall project progress, protects the projects during harsh economic times, and gives greater autonomy to organization’s executives in overseeing and locating redundancies, fixing resources and keeping an eye on project progress. This report will discuss the importance of portfolio project management. The reports will also explore the value and challenges of portfolio approach in managing IT projects.
Project Portfolio Management
As it may sound, project portfolio management entails collecting and controlling thefacets of IT investments as a unit of connected tasks in a single place (Levine, 2005, p.48).
Besides providing a unified synopsis of all IT projects, portfolio makes it easier for organizations to understand their investments in terms of balance, size, risk involved and the projected payoff expected. When strategically executed, portfolio management surges IT value by divulging redundant or risky projects whereas uncovering how to sway resources from less valuable investment to value added projects.
To cushion value in the outcome of project success, portfolio embraces different level of management. One of the levels is often in practice is the consolidating all projects in a single database. This level involves putting projects names, projected project costs, estimated project timeframe and assigning members tasks to be performed (Levine, 2005, p.89). Although, collection of these information may be seem tiresome, in the long run, it adds impressive yields such in terms of identifying redundancies in the long run.
Consequently, prioritizing projects in a database ensures urgency is embraced. Projects in a database appear less distinct and symbiotic. Prioritizing projects in a database ensures effective risk analysis and simplifies management.
The value of a portfolio approach to managing IT projects
The value of portfolio management has significant value to businesses which embraces the concept (Levine, 2005, p.97). Though, it is linked to several advantages such as linking organizations concepts and policies with vital work flows, project data and business practices, individual benefits are common. These benefits includes; opportunities, benefits and process improvement
Opportunities
Portfolio approach creates opportunities in an organization. It helps organization to manage IT projects effectively thus encouraging maximization of business output.
This is realized by closely reviewing the operational processes of the business in terms of cost reduction efficiency in service delivery levels, increased profits gains and quality of products. Thus, it simplifies the supervisory and management role of projects manager in resource allocation throughout the project cycle.
Besides, portfolio approach assist organizations to achieveorganizations requirements, improve marketing capability, determine and account for organizational operational costs. Finally, portfolio management enhances identification of potential areas to invest and diversify its resources after careful surveying the market niche’.
Benefits
Portfolio management helps projectmanagers in ensuring that the resources and investments for projects satisfy business needs. In this case, the project managers establishes a standardized level of service which ensures that high profits are achieved, functions are well organized and the overall costs of the project is minimized.
Also, portfolio approach is beneficiary to both the customer and the service providers in numerous ways(Moore, 2009, p. 87). Such benefits comprises of; constant improvement in the overall performance and cost analysisand service levels.
Besides, portfolio management encourages integration of delivery procedures and Just-in-Time systems which aims at waste reduction. Further, it ensures that high service levels are met thus achieving theobjectives of a business organization. The other benefit is that, it acts as a communication and marketing channel for portfolio analysis and cost analysis hence, minimizes overall costs through business strategies such as joint ventures and service standardization.
Process Improvement
According to Moore (2009, p. 123), the methods and tools anchored in portfolio management enable process improvement, standardization and visibility. This is very useful in enabling organizations to complete projects in time allocated. The use of a portfolio approach can enable IT specialists to objectively work on a more profitable project which pays relative returns to the organization.
It oversees that a given IT project is closely monitored and is in compliant with the set out missions and objectives of the project. The common approach of cancelling fully completed projects, which have consumed a lot of resources such as time and money, will be avoided. The portfolio approach enables the free up of IT resources, to carry out only beneficial and viable projects.
The challenges of a portfolio approach to managing IT projects
According to (Bonham, 2004, p.68), portfolio project management is embraced because of its suitability in planning and directing IT projects. However, like any other projects, IT managers face several challenges, some of the challenges includes; implementing portfolio management, short term and long goals,lack of proper legal backup, demand management,costs establishment and the project value(Bonham,2004,p. 87).
Implementing Portfolio Management System
One of the challenges in portfolio project management is executing the project management system. This is because; altering the culture existing in an organization that is anchored on ad hoc project management needs many efforts (Moore, 2009, p. 76). Sometimes, the organization can fail to implement, because they can feel uncomfortable with the change.
Besides, quantifying the benefits and disadvantages of the project can surge the returns on resources or investment of the organization, thus organization with less resources is hard hit (Bonham, 2004).
Short and Long Term Goals
An organization is faced with the challenge of whether the project being implemented will serve either short or long term goals. When an organizations deals with a project lasting a few weeks or months, it is viewed that implementing a portfolio management is not worthy because it will results in unplanned overheads. Organization views that portfolio management is worthy long term goals because it helps to underwrite efficiency in planning and thwarts possible risk that an organization could face.
Lack of Proper LegalBackup
A number of IT projects are managed by private sectors which lack efficient and elaborate mandate of sustainability. This often has resulted in informal decision-making processes by organizations. Informal decision-making processes have contributed to unsatisfactory final projects which lacks transparency and accountability(Bonham, 2004, p. 127).
Demand management
The unrelenting persistence and changing demands bestowed on organizations project teamshave contributed to portfolio inability to address key organization’s needs. Thus, the demand has exposed project teams’ diversified risk in their operations.
According to Moore (2009, p. 103)multi-tasking between tactical demand, operational demand and strategic demand against available assets, staff and budgets exposes the organization’s project team to higher magnitude of risks. Besides, theIT department undergoes an uphill task when trying to estimate the time and cost measures for a given project.
Costs establishment
Due to the complexity nature of IT projects. Accounting for the overall expenditure of a given project is complex. This is because several departments such as procurement, accounts, research and development, marketing and Human Resource are involved.
Determining the precise costs involved in the project is very difficult due to lack of transparency within the system (Moore, 2009, p. 87). An efficient transparent system, which shows the relationship between the levels of services and overall operational cost, should be in place.
Displaying the project value
Determining the efficiency levels of the projects in relation to the technological value is also a problem. It is therefore challengingto establish whether IT personnel for new demands be outsourced or acquired in-house(Bonham, 2004, p. 112). For portfolio to provide standardized value, availability of a real-world operational data should be in place.
Conclusion
Portfolio approach in project management helps simplify project processes and activities in organizations. Besides, it is vital for organization because, it helps inaligning project management practices in tandem with strategic organizations aims. This in turn leads to utilizing limited resources available in an organization.
However, smooth portfolio management cannot be successful without firm project documentation plan, accurate estimates of resources and information in relation to actual resources consumed.
This report has addressed portfolio project management in terms of what it means and benefits to an organization. The paper has identified that, opportunities, benefits and process improvement are merits associated with the approach. On the other hand, the paper has pointed out that; Implementing portfolio management system, short and long term goals and lack of proper legal backup among other factors are the challenges linked to portfolio project management.
Reference List
Bonham, S., S., (2004).IT Project Portfolio Management, London, Artech House
Levine, H., A., (2005).Project Portfolio Management: A Practical Guide To Selecting Projects, Managing Portfolios, And Maximizing Benefits, New Jersey, John Wiley and Sons
Moore, S., (2009).Strategic Project Portfolio Management: Enabling a Productive Organization, New Jersey, John Wiley and Sons