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Certificate Series Recap – Project Portfolio Management Masterclass, Session 1

Please find the following transcription of our PPM Masterclass webinar being provided by MPUG for the convenience of our members. You may wish to use this transcript for the purposes of self-paced learning, searching for specific information, and/or performing a review of webinar content. There may be exclusions such as those steps included in product demonstrations. Watch the complete webinar at your convenience. The speakers for this transcribed session are Dr. Shan Rajegopal and Rich Weller, who will be designated as [Dr. SR] and [RW] respectively to indicate the speaker in question. 


[Dr. SR]- Just to give you a quick overview is that what you will do is in Session 1 there is— today we will do the understanding of what portfolio management is all about and its value to companies. And then we talk about preparing the position itself, portfolio management into companies. This is to expect towards that we can sell it internally. For example, do you want to deploy portfolio management? How do you sell it to your senior executive, your management team? Alternatively, how do you sell it to another organization? That will be covered up in Session 1.


Session 2 will look into how you deploy portfolio management. We look into the deployment, into— expect there is investment optimization which looks into the portfolio planning and prioritization and optimizing the portfolios of the investment side of it. And then we also cover part of deploying portfolio to the managing the complexities which will involve like a benefits management; we will involve a portfolio performance management, [inaudible] work and risk management. And then we will look into the resource and capacity optimization in terms of actual ability of you deploying a portfolio, how you get this projects executed successfully. And final [inaudible]— how do you embed and sustain portfolio management capability within an organization. That means how do you make it as a business— as usual, etiquette towards your organization and managing that. So that we’ll cover in the last session.


So what is the objective of these sessions? Well [inaudible], you will want to give an understanding of what portfolio management is and recognize the areas of pains. We wanted to prepare and organize for your company to accept the strategy, portfolio and benefits management process— and how you go about executing it as a change project. Cause one of the key thing is that the strategy for buying from the organization so that you can manage it as a change project and that, and they can sustain the capabilities. We also introduce a portfolio tools and techniques, which Rich has highlighted on your— Use Microsoft 2010 to help in the expedition of the tools application.



Understanding Portfolio Management and Its Value to Companies


For me to give you an overview of how portfolio fits into an execution capability of company, I’d like to introduce this model. I know this model, to some of you, have heard it last week but it’s very significant understanding is this is called the S—I—O Model, which is Strategize, Implement and Operate. Companies normally are very good in strategizing; they have all the top consulting companies of the world advising them and they have a very clear picture of where they want to go in terms of the vision and the strategy and they can understand where they want to go into Operationalization.


The essence is that the moving from the strategy to operationalize—that’s where the implementation comes in. So when we talk about implementation, we represent this from the diagram as the bridge partner. So whereabout organizational projects program at portfolio management, capability and maturity—it represents the strength of the bridge in terms of where the program, the project managers can go across successfully. If not, what you understand is that in the river that flows underneath, there is a huge amount of current as well as crocodiles existing. Like with any organization, there are all these political sensitivity that occurs if you do not manage your execution well. So implementation…


So when we talk about implementation, it’s providing the bridge for the organization—that the translation of a good strategic thinking into actionable and achievable plans that yield the desired operating result. What it says is that an organizational competency in the discipline of programs & project drives successful implementation of business strategies. In other words, we can also say program and projects are the language of work. And I think a lot of you will be aware—projects and program over the last decade has actually moved up the majority curve but more and more companies are very well to capable in executing projects and programs. However, linking it to portfolio becomes a key consideration.


[RW]- Hey Dr. Shan, before we move to the next slide, we’ll see if we can—we’ve got a question coming in here and we’ll see if we can field this at this point and time. The question that’s coming in is, [***-Desired State of Portfolio Management] “How much of portfolio management is—incorporates the managing the organizational project risk or the risk for the project to the organization. How much of that is incorporated into portfolio management?”[***]


[Dr. SR]- Very much so, the answer is actually. The management of risk is, actually, a very key part of portfolio management. You cannot separate risk from portfolio management. In fact, one of the criteria we use is risk in terms of actual ability of project in terms of execution as part of portfolio management.


[RW]- And then we’ve got another question that came in, Dr. Shan, “On the previous slide where we had Strategy, strategize on the island that’s setting in the distance—based upon my experience and education from the business world, the items that would fall under there—are those things that we learned about as far as like vision, mission and objectives? Is that what would get incorporated under that strategize item?”


[Dr. SR]- Absolutely correct. That’s correct.


[RW]- Ok. “And then with respect to the implement—is that the action plans that we would develop to get us over to this operate state?”


[Dr. SR]- Absolutely correct. That’s right.


[RW]- Ok, great. Thanks for the clarification there, Dr. Shan.


[Dr. SR]- Thank you. Is there no further question? You will want to Aligning Portfolio to Delivery Capabilities.


Now, this is a very important slide because what it does is it integrates the whole aspect of what we have learned over the years as project managers—one’s project management, one’s program management and now when we are talking about portfolio and how—it aligns together as an organizational delivery capability.


So in the early days, if you look at—companies are very good in understanding project management capabilities—it says, “Ok we will help project management capability.” What this means is that we are going to be doing the things right so that [inaudible] how quickly [inaudible] our work product and the efficiency [inaudible].


Next, after we have raised the maturity capability of project management, then we’re thinking about program management. And what is program management? It’s—I define program management as a multiple interdependent projects linking together and what it does is in getting the right things done—so there’s a very clear outcomes and business benefits and effectiveness that comes out of it—that’s program management.


And then you start thinking about portfolio—that’s where the original thinking of organizations were from. And this will apply for once for process, people and tools. Now, when you start thinking about portfolio independently, it became a big issue because maturity doesn’t go from project to program to portfolio. Several years ago, a Stanford University detailed a major study to understand when does maturity—how does maturity in projects, program, portfolio go [inaudible]. The studies actually indicated that organizations need to baseline the project, the capability in terms of delivery for projects, program, and portfolio as a time [inaudible]. So as you can see the noted average, which the maturity should move from left to right, so that what it means is that you need to understand: what is your project management maturity, what is your program management maturity and portfolio management maturity because—portfolio management maturity is knowing where to go, as a direction, as a strategy and doing the right thing will be balancing adjusting it to maintaining that you achieve your strategic initiatives, your vision and your strategies. So that is a conscious alignment between all of the projects, program and portfolio.


And what it also—the study indicated is that your maturity for projects can be at Level 3 for example— program can be Level 3 and portfolio can be Level 1. Doesn’t matter but it’s important as an organization that you need to understand that maturity. What was interesting—because I was tested as one of the pioneers in [inaudible] portfolio for fifteen years ago, I realize one thing is that how portfolio came about—I remember when fifteen years ago, I was actually parachuted into large service based organization and my former boss came with me and says, This company is a huge company, several billion dollars in [inaudible]— they’re having a lot of challenges in the sense that projects were constantly late, people were working overtime and late, cost overruns having a scopes and not met—just a huge amount of challenge. So what we did was we went to the organization and first thing we did was ask how many projects that they had. And the senior executive highlighted about 120 projects.


So what we did, things some of you were experiencing fifteen years ago, is that we define what a project is and then we do all the leg work—we took an Excel spreadsheet and went around getting how many projects, getting an inventory on the projects. And you would have, you would meet someone who would then be surprised—the number of projects in the company was almost at 500, 490 odd projects were in it. So you can imagine the executive thinking it is 120 odd projects and in reality there were 490 odd projects. So there was a huge kind of a bank of people in ten year spread and nothing has been done.


So what happened was that in the early days, organizations thinking was Oh I have, my project capability is done; I don’t think about portfolio and then I look at program. Now, this was also actually—what do we call it—increased by the technical, by the tool maker—let me get rid of Example 1. When project management had multiple projects coming in, they went to the tool maker like Microsofts of the world; they asked if I have multiple projects, how I manage it. So managing multiple projects became kind of a portfolio of the early days of thinking.


So the issue was very technical in the early days; portfolio wasn’t even aligned to a very strategic level until over the last five years, organizations started to realize that more and more research and work has been done to see that portfolio is not really—it’s not technical, not part of—in the way that you need it to be— technically it is that but however the essence is from where the greatest value that you get is from the strategic perspective—you aligning with a strategy and identifying the investment, that you want to make the best return for your money.


And that’s the alignment that came in the vault.


[RW]- Hey Dr. Shan, I think now would be a good time—we had another question came in—I think now would be a good time to ask that question. So the question is, “What’s the size of some of the portfolios that we’ve seen with respect to the number of projects that are within a portfolio?”


I’ll take a shot first and then I’ll let—Dr. Shan, perhaps you can give your experience. And it’s going to be that answer that everyone hates is, at least from my perspective, well it depends!


It depends on what level you are within the organization as to the number of projects that are within there. These portfolio management processes and techniques can apply, you know, we’re trying to decide which projects we should move forward with. Maybe it’s within, we’re applying that within a program that has just a handful of projects but we need to apply some of those techniques—so I’m saying in my mind it could be a handful, all the way up to working with an organization right now at the very top level—thousands of people, very large organization and they are probably going to have somewhere in the neighborhood of about 8,000 and these are projects and/or potential projects.


So again, it kind of depends on where you’re at, who you’re working with and what you’re trying to achieve. Dr. Shan, can you give some background from your experience?


[Dr. SR]- Sure, cause in fact what comes to my mind is how long the [inaudible] is. I’ll try this. The question is actually a valid question because a lot of organizations are concerned, you know—can possibly be applied to a small number of projects or to a lot of projects, a big portfolio, and a small portfolio— it doesn’t matter.


The process that we are introducing is a very scalable process so it doesn’t matter whether there is a small number of projects, a smaller portfolio or it could be large. I’ll give you an example—a small number of projects I have done, a portfolio introduction to projects which have been given fifty, less than 100 projects—companies that [inaudible] and from a portfolio value for, we agree about what—50, 60 million. They have done those projects. I’ve also worked on projects that on the portfolio have reached at about 400 over projects—in the value of about 300 million. There are those I have done for 1,000 projects— for a portfolio of value in excess of 2 billion.


So, again, it doesn’t matter. Each portfolio, the essence and the thinking is that—is my investment that I’m having, is it going to give me the return so—what does portfolio actually does? It helps you to prioritize your project, rank it and then optimize your portfolio or project in relation to the constraints that you have. That is the power of a portfolio.


So, now in organizations, a lot of constraints are coming up—specifically in money terms. So whatever the portfolio is, you actually—you tighten up on the flow of money. So as a result, you can actually capitalize that and say— book in this amount of money for this year; this is a portfolio for this we can do, the rest we can reschedule it, we can re-scope it or push it away, or we can outsource it, whatever.


So it helps in the decision making process. Does that answer the question?


[RW]- I believe so.


[Dr. SR]- Ok. Good.


For next baseline, The Terminology of Portfolio Management.


So what is portfolio management? It’s an organization’s process of making and managing project investment decisions to maximize business benefit given the level of risk and constraint. So it goes back to the first question—risk is the key part of portfolio management.


So Measure yourself a Benefit—what are those? You can define it by financial or strategic impact on the organizations. For a starter, what we will do is we will go for the strategic impact as a way because in order to align the consciousness of the strategy, you need to identify the strategic impact first and normally in the portfolio process we go through, we will create strategic value proposition into calculating the benefits.


And the others, of course, are the Measure of Risk— that is achievability of the project in terms of the investment of the likelihood of you being able to deliver the benefits with the amount, with the budgeted amount of timeframe that you have.


And finally, which is really key part is the Contraint—the, both, financial and resource capacity. Finance is a very key part and I know companies are starting to have, get the pinch at a senior level and say, “I have a 20 percent cut in my budget. I have a 30 percent cut in my budget. So what should I focus on? Which project should be in and which should be out?”


So those kind of decision making are key for organization. And after that, can those projects be achieved based on my resource capacity with the optimization capability in delivering that for the making that decision a key part of portfolio management.


Let me give you a very quick and understanding this whole process of a portfolio management is actually what you would call as a—enabled, affected by four different areas.


One is the environment that you are in and depending on which industry sector you are in, you will have a different, what you call approach—ability to tailor the portfolio to that environment.


Secondly, you need to understand the scale of your organization and the changes that your organization is going through because what will happen is that your organization’s changes—this will take a huge amount of mindset change—so are they able to face those changes.


Thirdly, there is also the culture of the organization. When I’m talking about the culture of the organization, what I’m looking at is what is the readiness of your company to work in a more robust and transparent way—cause what will your management provides very clear transparency of the senior executive and what it does is that it will enforce your leadership team and key stake holders to work in a more systematic and accountable way. Is that a culture within the organization, acceptable?


You need to understand this because I and my team has faced a lot of challenges when we introduce portfolio management where the champions and senior executives are very key in driving the transparency and what happened to all that—the middle management level will start to realize this is a big issue and you will be surprised—they will be [inaudible] to the whole process and you can have a lot of challenges.


So that’s one of the reasons why we are looking very strongly to manage the deployment of portfolio management as a change management project—because you have to mentor, you need to coach, you need to ensure people buy into the process because it greatly give clear transparencies to the leadership team. And as a result, a lot of people—I don’t know, consciously or unconsciously, have a fear of—what do you call, accountability.


Some of the Challenges Faced with Portfolio Management, as I mentioned, the ability to create a climate and culture for buying into the process. The other key challenge is actually how well are they able to locate resource in terms of making sure the projects are selected and balancing the projects.


Now, again, [inaudible] the proposal, you start to realize that the process takes into account necessity of how you select projects through what we call categorization and managing the demand that comes in.


The third challenge is actually tracking the right balance between short and long term projects. I like this in a lot of ways because some of the [16 inaudible] long term projects are critical projects, long term transformational projects, and some short term projects that are included for more context if you look at [inaudible]… so how you balance it and we have a methodology that explains how it’s important to manage that and how you locate your funding towards that.


Just to look one step further, I’ve come across one or two companies primarily in the biomedical sector where they look into long term projects that means, they—in terms of product and new products and new organizational capabilities, where should they be moving towards. Again, that is in the line with division and strategy—long term projects they have worked it in that way. So you get companies are moving also in that direction using long term project as a guidance for the vision and strategy.


There is, on there, challenges are doing that for inputting data and forecasting estimates, markets, volumes, costs, etc. There are two aspects towards these challenges:


One is the collection of information and that is rolled up from the projects when you track and manage a portfolio performance. Again, the reliability of data has been, always been [inaudible] and a lot of challenges have been faced—specifically, for larger programs whereby you’re tracking the benefit and the value of those portfolio to your organization. So that is always a challenge that has been faced.


The other [inaudible] to the other side is actually, we have come across in the first move in consumer goods whereby in terms of getting the feedback from the marketplace and managing your portfolio of products to be released—again, that also has been a bit of a challenge but some of the larger progressive companies of the world like P & G and [inaudible] Universe are doing quite a fabulous job in that field.


Better linkage of our strategy to portfolio of projects—this is real fundamental because a lot of times, companies are thinking, “How is my strategy aligned to the actions planned that I’m taking, the projects I’m taking…;” a portfolio will do a real conscious alignment. We have done that for several companies in how do they align their strategy with their portfolio.


Better balance & resource allocation across SBUs, divisions & technologies—again, this is a—you must [inaudible] is ideally should apply across the whole organization but unfortunately it’s a long journey to make it deploy across organization; so sometimes what we do is like we have done in the strategy business units or divisions, or depending on technologies—we use and then we do it on a slow, cascading slow rollout basis. But ultimately, the pool of money that comes in at an organization on location should be based on the portfolio of the projects that are selected. That is still the way of, for many companies and most of the companies are working at corporate level as they use of the budget, they use the budget [inaudible] levels.


Better balancing across functions and level of involvement—this is very important because normally business owners as well as it fits in the IT area for example—IT have a certain areas of projects, looseness of certain projects that’s always what we call conflicts and occurrence—so, portfolio of how to claim visibility of the projects and better—what do you call—discussion terms able to be, come to a mutual agreement of, between functions as well as IT in this case.


Having more credible financial metrics & tools—this is risky because [inaudible] we go to the person in the next couple of days, you start to realize that we will link their strategy, their certain metrics and as a result able to track based on a business case—and this is a project you want the shipping, to provide the value and able to track the value afterwards and that’s a huge power because currently quite a lot of organization face this challenge of “Are we measuring the programs, that project for the portfolio that we have selected.”


[RW]- Hey Dr. Shan, we’ve actually got a few questions that have pulled up. I was wondering if now would be a good opportunity to answer some of those.


[Dr. SR]- Yes, please.


[RW]- Ok. So here’s the first one I’ll toss over to you. “How does an organization go about measuring their maturity level? Do you have any suggestions for that?”


[Dr. SR]- Yes, I have. The maturity level—you are looking at project management maturity, program management maturity, portfolio management maturity—we have, they’re all tools available for measuring maturity at all of that level. If you look into my earlier slide with the triangle, and it shows the maturity level, and it can be measured. There are tools available that I think they can contact us when we leave and explain more details in terms of how it can be done.


[RW]- And that—


[Dr. SR- Interrupts]- It can also be benchmarked against industries that we are looking at.


[RW]- And that was kind of a secondary question, “Is there a public tool out there that is accessible to assess or perform an assessment or a survey.”


[Dr. SR]- Yes, depending which country you are in. I know in the United States we have the PMI, have actually come up with an assessment tool. And if you are in the UK, our OGC also have come up with a tool to help with the measurement. Those are processing tools that are in place that you can use. But those are not specific tools—but more as guidelines in how you do that. So you can do it yourself or you can get someone to do it for you.


Does that answer the question for them?


[RW]- And then there’s one again that kind of refers back to the pyramid slide. And the question is coming from Gerald, “Should you try to align the maturity of the project, the program and portfolio all at the same level?”


[Dr. SR]- Right. Not necessarily so, no. Because you’ll never get everything aligned. Ideally—where it is become a perfection, it is very difficult to do that, to be honest. I have done it for a large automotive company in the UK, where align it. I have done that for another large oil & gas company. It doesn’t fit all in the same—it doesn’t align together. You will tend to find project management delivery is much higher than it tends to be—program to be maybe the same or maybe less but for the tend to be far much lesser normally. But what happens is that we have—the toolkit you have in terms of the maturity—it gives you a very clear deliverable of what you can achieve in order to move up the curve. And that is really helpful, to be honest.


[RW]- And then there’s one more question. There’s one more question from this slide, Dr. Shan and I guess this is a case where a picture is worth a thousand words. Someone is asking, [****] “How important is the people variable with respect to the success of portfolio management?”[****]


[Dr. SR]- That is the most important question, actually to be honest. Cause tools and processors are easily done. People are the most important—whoever it is, you’re absolutely right. Unless we have the people buying, unless we have the key stakeholder buying, it will be very difficult to—[big gap] where there’s, hit absolutely the nail on the head. People is the key part to it all. In fact, that’s one of the reasons on whether or not you can find the portfolio management, I say the culture of the organization, with the readiness to work in a more robust and transparent way, the collective will of the leadership and the key stakeholders—that they want to work in a systematic way. So the people part is key. And that’s also one of the reasons why I’ve been highlighting an, a strategy to manage your portfolio in the climate as it change contact. It’s very key. Very key.


Any other questions, Rich?


[RW]- That’s it for now.


[Dr. SR]- Ok. Good.


What I wanted to do is highlight the Triple Constraints in Project and Portfolio Management.


This is quite the interesting dive-in because I think all of you will be aware in, when we talk about projects we talk about scope, schedule, resource or cost here—there’s the triangle. And what I’ve done is if we put in the values—portfolio comes into this picture. Again, portfolio is also managed as a triple constraint in order to manage—first is the strategic alignment. This is the executive expectation. What is my strategy, where am I going and how do I get where I want to go and achieve better solution in the marketplace or better product release in the marketplace—whatever is the strategy is.


What then, there—[inaudible] at its true level. One is the investment view and one is the resource or demand view. So what I mean by the investment view—they are limited with a certain amount of money that they can invest in in order to achieve their expectation. This is the first part of the deployment and looking at—and this is how portfolio in the last couple of years have started to come up because a lot of the companies are constrained by their finances. As you know, the market is so volatile that organizations have to cut their budget in terms of the investment. So what happen is that the—if I have this limited amount of money, what is the kind of value that a [inaudible] would get. And Rich, what is the American tone for that—for, you use?


[RW]- Like, biggest bang for your buck?


[Dr. SR]- Biggest bang for your buck—I don’t like that expression actually. So, your biggest bang for your buck—how much money are you going to invest in order to get the optimal value for the investment you’re looking at—looking at projects as investment, key investments [inaudible]. And this is where the budget cycle—we will call upon, over the last several years—most of the time, I’ve been called upon to, by, I would see these executives from companies when they have a budget cycle coming and they say, “Shan, I have a 20 percent cut in my budget. I need to understand— how can I make it such a deal a way that [inaudible] the money I’m investing into the project that everybody buy into it…”  That was the key chat, the key question that came up and true enough, you got in at the budget cycle period investment.


Now, I don’t 100 percent agree that you should be at annual process because as I progress in, we are going to do a mindset change for the senior executives who come see me with the budget thinking—why are you going for budget, but as you progress over the years, portfolio must not be on an annual cycle; it must be on a quarterly review period. And when they start to buy into that, [inaudible] they start to come in far much more effectively off in the strategic alignment.


The second part, which is at the moment still to—a lot of, some of them are struggling is “Once I’ve selected my portfolio and I’ve understand this is my investment—how do I know that this is achievable?” This is the resource capability executing your projects. Again, the expectation comes, ‘How are you going to track the benefits that are going to come out of it. How are you going to manage that more effectively? Do I have the—does the organization have the capability to deliver what we want to do in the market or do we need to get external resource coming in to get it done.’ So the focus of the resource and the capacity becomes another constraint that has been pulled in the organization.


A lot of organizers sometimes forget about it because it’s too technical— so what happens is that senior executives have come across—we will, uh, be fine, ok I have a 100 million, I’ve got to cut 20 percent, 80 million investment—about 80 million, select a project—now you guys go ahead and get it done. So, a lot of senior executives sometimes do not get themselves involved in the resource and capacity understanding and that can be an issue because after a year down the road or six months down the road, when they do, “How is this project not executed? We already got the funding,” but they do not have the capability or they do not have the resource to do that particular project. So again, it’s a good [inaudible] that needed for understanding the resource for achieving the portfolio project selected.


Some of the Benefits Expected from Portfolio Management—what it does is it creates a common basis for discussion, discipline & consistency. This is very powerful, actually because I was referred—what do you call—to financial company, it’s a wealth company; they do management of wealth for people. The COO was talking to me and he said, “Shan,” one of the best part of portfolios was that he brought all of the issues up on the table together so that we have a good discussion—because as you go through the process, you stop to realize that one of the power of the portfolio process is that it creates commonalities for the buying, from even different business—so everybody buys into it and as a result, when you have the selection on the projects in the portfolio and the investment decided, they can easily see why those have been selected. And as a result, they can then zoom in on those which are the borderline case for discussion. So it’s a really powerful way of getting a good buy-in.


It also helps them focus on the major projects, on those breakthrough or transformational projects because then, you automatically—because of the high strategic value, it will get into the organization, into the portfolio.


And then it leads to a better strategic fit. What it does is because of the process, you start to realize that you will align the strategy—alignment of the strategy, you start to realize the priorities of the project will be made the priority of the strategy of the company so there’s been good strategic fit.


Provides balance between short and long term projects, I’ve highlighted that. And helps us to concentrate on fewer but more worthwhile projects. Again, it goes back to what Richard say—it’s better bang for your bucks. So you’ll get better value for the money that you’re investing and even [inaudible] worthwhile projects.


Achieves improve for time to market—this is quite critical for product companies who are releasing product into the market where the window of opportunity for you to capture the market share is really important. So, again this—I have come across a major organization which I have a case of—it’s a little R & D company where time to market was critical for some of the portfolios.


And if I support and it creates better buy in, again as I say different business owners understanding the process and how decisions are made—they have a, let them buy in and it goes to strategic planning. So instead of running like a headless chicken every—when the budget cycle comes, you can actually manage your planning process in a much more systematic and accountable way on a quarterly basis where the demand of capture [inaudible] selecting it and going true. And it saves a lot of time moving the budget cycle time.


I have put in this slide called the Consequences of Not Implementing PPM—So there will be people who offer me from product bids—this is primarily for product bids organizations where [inaudible] is used. So if you do not have any portfolio management, what does it means? It mean there is a reluctance to kill projects. New projects are added on—there is no focus. So what is the result you get? There are too many projects, resources are spread thin, and execution suffers. And what happen—there is an increase time to market and higher failure rates. So again, this is the consequence of you not implementing a portfolio.


And if you have no portfolio manager, what does it mean. These are weak decision points. So even if you have a life cycle for example, the decision points are weak in terms of you do not have—what do you call—go/kill decisions. And dividing your resources to something else and getting better returns. So what is the immediate result? You will turn in too many mediocre projects with a low value and some of the good projects are starved. And what this provide is the few top product winners you have into a lot of chaotic launches.


No portfolio management also means that there is no rigorous criteria. When there is no rigorous criteria, what happens is selection are based on emotion and politics. Whoever shout loudest gets it. As a result, you are selecting wrong projects. So projects are selected based on people’s personal interests, their personal agenda and what happen is that it is not in line with the organizational strategy and hence, you have failures coming now.


Finally, no portfolio management means there is no strategic criteria for your project selection. What it also means is that the signal to earlier—that is a lack of strategic direction, alignment to the, direct to the strategy of the organizations. And what it does is that it dilute the efforts and new products don’t support your strategy that comes up.


So, on the whole, it’s—the other way you want to look at it, instead of the benefit you say “What if you do not have a good PPMing process. What will be the consequence later,” the consequence will be disastrous for the company. I remember reading the article when General Motors went down to [inaudible] and there was a quote—if I was to end this—the president of PMI quoted and I agree with it, “If General Motors had a better product portfolio management process in place, they would not be in the current state that they were last year.”


I’m going to share an example with you—this is a Case Study for an R & D company. It’s an Environment Industry. The R & D director was the one that I worked very closely with and they had the R & D strategy done by one of the top consulting, strategy consulting company of the world and what he had was he wanted to find out—“I have this R & D strategy—how do I translate this R & D strategy into actionable work to be done. How do I select, how do I lock my funding in, how do I invest,” that was the biggest challenge the R & D director had. So we spent quite a lot of time with him—myself and my team—to understand what the R & D strategy was. So you need to actually understand what is a strategy and how do you want to align. So what we did was we create a categorization which we’ll go through later on in our Session 2. We did a categorization for the product release in a very systematic lay out decision tree because what they were working is that—they had certain technology, they had certain market—they were looking into new market, they were looking into risk based projects and also they were looking into—what do you call—Sky Blue research.  So they had this kind of—[inaudible] and understand which project for each category and that was a powerful way when they did that decision tree process.


And then what we did was we develop a demand and portfolio process guide—do you want to capture the new ideas and get a close project. So again, the demand capturing was how new ideas comes in and we created a criteria selection process that shows my ability and quite a lot of items where they selected the projects.


Now, what we also did was and interestingly, we wanted to capture the idea of strategy—our strategy idea was moving towards. So we used what we call an AHP process. It’s called the Analytical Hierarchy Process, which we’ll cover later on. To capture what drives the R & D strategies and identify the impact and evaluate those ideas. And then we use a Portfolio tool to optimize the investment and align the resources. Because one of the key need was the resources because they had 650—what do you call— R & D scientists who are working on different projects and that was critical for them— they can’t be spread. The focus was key for them. And then we had a Governance process to help manage [inaudible].


So what this provided us was actually, the company was very improved decision they were making—approach that made me understand where the strategy—one of the projects and means to that—and as a result, some of the projects actually improved in  terms of speed to market to release so it was very successful in that sense.


Visualize! Now, you see an airport here. This is an LA airport. I was on a trip to Germany several years ago talking to some of my counterparts and some of my clients in Germany. One of the things they asked me was, “How do I make it in simple terms…,” this was four or five years ago and I was running a session with the German clients and they—and I, while in my flight, flying I was thinking, “Well how is the best way to explain to them,” and I came up with this—so immediately I took an airport screenshot of LA came up and what I told them: to visualize the iPod for your management process and thinking as an airport.


What do you mean, the iPod is the air traffic control. So, here the air traffic control—what you are doing is that you have large jumbo jets that are coming in and you can say the pilots of the jumbo jets would be the program managers, the passengers would be key stakeholders are coming in and then there are smaller aircrafts that could be projects and those pilots will be project managers. So what you are doing is that you are stacking them up in terms of priority, in terms of the criticality or whatever the reasons you have and then you have the overall view, the visual—the bird’s eye view of who’s coming in and what is the criticality of them and you are landing them according to those rank.


So if you want a very simple thing of what—airport as a means of portfolio coursing where you stack them up, you prioritize them and you land them. And landing the project means delivering the benefits as needed, interrupting, without any—but of course, in any airport, you can have critical projects coming up and last minute there are urgencies and so forth. Same thing in your lives, in your organizations—some projects can come in due to some management need for urgency—just fine, you need to put that in, in the autopilot-ing investment.


I hope that this here picture of, on a simple way of visualizing portfolio process, which—


[RW]- Yeah, thanks Dr. Shan. We do have a few more questions that have pulled up here. Um, Golkul(?) has a question—it kind of takes us back to the, you mentioned the Pcubed assessment and Golkul was wondering is that assessment done via tool or does it involve interviews with senior stakeholders or both? Was wondering if you could speak to that.


[Dr. SR]- Sure, there is both actually. We have a tool available to look at and we also have—what do you call—interviews that can be done, cause when you do interviews what happens is that—I assume this is for [inaudible] assessment, we have a tool that actually uses you to do a quick, a quick way of assessing where your portfolio is and then we can use a value calculator based on the organization industry benchmark by farthest [inaudible] to see where your, what we call the highest value can, the quickest value, the highest value can get is the least amount of effort so they go ahead to see what you can do. So that’s a tool, Excel based tool.


We also do [inaudible]…process… [Inaudible cont.]


[RW]- And then, thanks Ken. There’s a comment coming from Ken about the Project Management Institute’s OPM3—-that’s a product that they have: Organizational Project Management Maturity Model if you want to know more—Dr. Shan, there’s a couple questions here. I’ll toss them out. If they don’t fit best here, if you think maybe we need to parking lot them I think that Larry would be ok with that.


His question is around—looks like they’re working, have a portfolio management process in place and able to pull together a good bit of information about their portfolio projects. Larry, I’m kind of sanitizing your question here a little bit. His question is, [*] “How can they do a better job of educating their executives as to what they need to see and how to leverage that information?”[*] That’s the question comes from Larry.


[Dr. SR]- Ok. Educating the executive, I think that’s—who’s the current champion, that’s one thing. Using the current champion within the organization, we need to actually spend— what they call—spend time in educating executives. Educating executives is a key part to it. So, they need to understand what your paying point is. That’s number one. Number two is that you need to use the language, which is they are familiar with other than Projects, Programs language—you need to use language, which are like, return on investment—how can you elevate their paying point. You need to be very sharp, sharp and successive in the kind of works that you present to your senior executive in terms of coaching or mentoring them.


That would be the key part, I would say. So, prepare yourself well with the paying points, the pains that they have and how portfolios actually helping them and create kind of a—making sure a Governance is rightly in place to support that, so that they are aware of the value and the contribution of portfolio to the organization—you’ve already having it done because you need to engage it and sustain it because if they don’t find the value of those portfolio—that case, they will not be supportive. So you need to have a constant panel of communication and governance to help to educate as well as coach and mentor your senior executives or key stakeholders basically.


Any other questions, Rich?


[RW]- Yeah, another comment coming across here with respect to portfolio management systems or tools. Donna suggesting that you need to make sure that the system has the ability to incorporate pet projects into the portfolio.


[Dr. SR]- That’s a very good comment because any organization and every organization do have senior executives who have their pet projects. No matter how you much you want to create a systematically—she’s right, absolutely. We need to—if the boss says you want to put this project in, you can say no, right? Hahaha. Yes, you need to have that in.


But what happen is that the essence in this—you need to understand putting in this project, you need to understand the achievability of it. So what you have to explain—if the boss says this project is in, how does it affect other projects, which projects should be in or out—do you have the capability to do this critical push. So you need to be clear and that’s why the governance is important and when you put forward into that—you need to clearly communicate that, saying this project is [inaudible], wasn’t it? But now is it acceptable, no problem. However, you have an issue in terms of re-scoping another project, of delaying another project, or you need to take this project and start it later, or we need to take over this project to have this resource it—whatever it is. You need to understand what the options are.


So what you do is that you go back to your senior executive who come up with the pet project and put it into the portfolio—you give them three options and one recommendation. This is what I would say—these are the options, bang bang bang. I recommend that you need to reschedule this for the pet project and so this is what I would recommend. Go up with them, just do an exact—say I accept this; however, there are three options we have and this is my recommendation for us to move forward for putting in this pet project and what I would say.


[RW]- Ok. Thanks Dr. Shan. Here’s a good one for you. [**-Desired State of Portfolio Management]Bill is in an organization where they have a sizable portfolio. However, they don’t have anyone who’s willing or is currently championing that portfolio. [**] Any suggestion for how to find a champion and get them up to speed.


[Dr. SR]- Yeah. I think Bill should take over that job—his company should take over for that actually. Yes, I think it’s how you sell the portfolio internally. That’s the key thing I would say. If you have a sizable portfolio and that’s—a lot of money is involved, I’m sure a lot of people will have interest. It’s, I think one of the big problem is people are ignorant of what portfolio’s about. I mean, ten years ago, fifteen years ago when I first started out—everybody thinking portfolio was some kind of black art, nobody knows how it done. Whereas now we have a clear, very clear sustainable and repeatable process supported by good tools to help in that.


So, what happen is that once you have a very clear, transparent and duplicable process and is very clear how it links to strategy—it’s much easier, whoever is going to champion it can champion it because they are aware of it. That’s the power of knowledge actually. Because if they are ignorant, they are scared to take on the responsibility. If they are aware and they are knowledgeable of the process, it’s much easier for someone to champion it.


[RW]- And I just wanted to make a comment to Alan, Ron and Scott who have all submitted questions or comments—all very well. Some with respect to the process, some with respect to the tool—project server, things that are upcoming. Guys, I got your questions here and if we don’t get to them today, we’ll get to them in the next session. So thank you very much. So, Dr. Shan if you could carry on.


[Dr. SR]- Yeah, sure. You’re going to Prepare Position to Sell Portfolio Management— “The dogmas of the quiet past are inadequate to the stormy present.” I think all of you know there is huge amount of changes in the marketplace now and as a result, there’s a lot of challenges with companies in the way they want to move forward. And it’s continuously a changing world.


So What Does Executives Want to Know—they want to know what is a mix of potential that is going to give them the best utilization of their human and cash resource so that you can maximize their long-range growth and original investment for the firm. They want to know that.


They also want to know how the projects support the strategic initiative, which is part of the long term—part of their strategy: Are my projects supported with my strategic initiative, am I going to get the returns that I’m looking at, am I going to need to use so much of savings, will my project be releasing at this critical point in time in the market, to capture the market and so forth.


How will the projects affect the value of my corporate shares—definitely that has a huge amount of impact on the projects of corporate shares. Because the execution of your project actually have a huge amount of relationship with the performance of your organization and there are several books that have been released where they have linked the culture of execution capability, is linked with the shared performance of the companies. And this is also directly related towards senior executives—for example, CEOs, companies, what we called as strength of her work and integrity towards business analysts affecting your impact on the shares.


[Possible response by Dr. SR to off-screen comment]- That is an entirely a huge different topic, or discussion but yes—there is impact on your ability to execute will affect the overall performance of the company and in his fault, will affect the performance of your shares.


[Dr. SR returns to slide]- So what mix of projects will take us to the desired future state you’re looking at—these are the kind of questions executives want to know. And again, if you look at the questions it will also reflect the kind of—how you discuss and talk to your executives mixer—a powerful statement, an earlier question that came up educating the executive [<—Transcription Note- Bolded asterisks above indicate question being referred to, question asked sixteen paragraphs up] because you need to speak in the same lingo as your executives and understand where they are and talk to them in that manner, will be easier for them to buy into your, into you, in the process execution rather than talking about project success, you know—cause a lot of projects, I mean, over the last twenty five years, I mean, a lot of project managers are looking and starting to understand that there are spectrum of terminology. So when you speak to the senior level of people or senior executive, their term of reference slightly different—doesn’t say you need to change the language but that will make a huge impact to senior executive to listen to us more.


However there are Some Executives who do this—they prefer not to know how their initiatives and investments going. In this case, very difficult to continue to educate them. If they don’t want to listen to the very difficult, we have to move on with what we are doing. In some cases I used to joke when some of my [inaudible] would come in and says, “Shan, this senior executive is not listening or not willing to buy into it.” I said, “That’s fine. Tell him we can’t do anything about it. It’s not our time, though somebody else will take him over his place who will be more interested in that particular approach,” and it’s true enough—I mean, over the years I’ve seen executives who have actually—one of the key, I call it knowledge myths, when they move from one company to another—most of them are pushing portfolio management as part of their requirement.


It’s moving away from nice to have to must have because they want this ability, they want accountability and they are pressured on their own performances and they want to track that and you start to realize that knowing most of these executives are looking at—less executives are putting their heads in the sands because if they do that, they will not be surviving in the marketplace.


Typical Portfolio Management Pains—Lack of alignment to strategy, we discussed that and we need to understand how we can be done and we will go to a process on how we are going to align with your strategy using business drivers. Managing too many of the wrong projects—will also again help to identify as a key paying point that you don’t focus on the right projects because it is not aligned with your strategy.


You’re unable to prioritize critical projects or kill unnecessary ones—this is another key thing. Killing unnecessary ones. The thing is, it’s not in the nature of humans, probably, to kill anything because they tend to think, “We can do it. We can do it,” so it takes a bit of a hard facts for one to kill an unnecessary project. So again, it has to be part—it has to be very much fact-based so people will not be affected emotionally because it’s not—alignment with projects doesn’t falsely—you can kill the project.


No defined processes for reviewing ideas and business cases—In most cases, I have found that organizations use business case as a [inaudible], jumping over the [inaudible cont.] rather than using it as a key way of measuring the benefits the business get if identified. Again, that is a very key part of a portfolio—in business case, there’s a front end is capturing what are the—how do you say—align to the strategy, what is the benefits impact statement, did he have the metrics and that in the portfolio in place and then followed by tracking the benefits for that particular portfolio programs.


Senior executives driving personal agendas—this is very true and was highlighted earlier. There are always, what do you call, hidden agendas. So, whether you want to be emotional and politics in way of making decisions where who shout loudest or you want to make it as a fact-based approach in making some decisions.


Attempting too many projects simultaneously—this tends to be an optimism of resource actually. They think, “Oh, we can do all this. We can do this project, we can do this project.” That’s quite common to hear.


No benefits realization processes—this is quite common, I have come across. In fact, a lot of organizations do not have any benefits realization. But it’s up and coming from techno—a lot of, from a portfolio perspective companies are realizing the value of benefits tracking. In fact, for the benefits we need six months work with one major organization where we put in the benefits proof of concept in place. It’s really powerful. We have shown which programs are earning the benefit they are looking at.


Lack of overall visibility of risks, issues, and conflicts—again, that’s on a difficult day.


Inability to proactively manage the portfolio—this could be going back towards having a poor governance or no governance in place. [Inaudible] “…I’m not all there of the process,” as well as the cultural buy-in in terms of managing portfolio as business as usual.


And finally, one reason why projects, as why portfolio deprived of chance is lack of senior sponsorship. How do you get the buy-in from senior executives is really powerful in getting portfolio success, success we’ve mentioned.


The Desired State of Portfolio Management—this is, again as I said, we have been brought in normally on the annual basis for the budget cycle. But what we do is as we progress, we give them a roadmap to say, “Hey portfolio management is not a once a year affair but it’s a regular affair and if you can do it on a quarterly, it would be brilliant.” And this is the kind of state that we propose.


For example, one of the question actually that came up—[**] a sizable project and whether somebody can champion it [**]—in fact, I was involved with a large company where I supported the portfolio manager to sell the concept portfolio to his leadership team. We used this particular desired portfolio management state as a means of selling—because what we did was, asked where they are now—what they want to do in two years’ time, five years’ time, how do they want to manage a portfolio or projects, what’s the investment they’re looking at and how to manage more effective. Using that, we develop a number of presentations—like one of them, we presented this with a specific focus: where do they see themselves in the desired portfolio management state.


So what it does is that it captures a very good and clear process and transparent to everybody. In the Pipeline Management is where you get the ideas or demand for the projects you can see as circles up here [the slide in video], and then what you do is that you prioritize those projects and programs and then you optimize them—so there’s the portfolio optimizer. You have a portfolio planning, portfolio prioritization and then portfolio optimizations. Now, you make some decisions with respect to redundant projects and then the next is you, as each project comes in—because the business cases the longer you are in for some of the key critical projects, you have the planning the benefits and managing the benefits—the benefits management comes in. And then what you do is you—and the performance, the portfolio performance management whereby you monitor your portfolio’s performance; you identify any performance gaps & launch new programs and then go back into your pipe right now and find projects and it goes circle.


This is central to it, is risk management—the question came up the first, [***]to what extent risk is central to portfolio and resource management, which is the achievability of those portfolio projects window.[***] Now, however this whole environment is supported by organizational input—I mean what’s your business requirement objectives are, how you divvy up an alignment with your business strategy to ensure that your portfolio is achievable within your pocket constraints: so what is the budget you have, what are the resources you have.


And outputs that will come out of this is the, you are investing in the right projects and programs. You minimize any kind of conflicts or dependencies to business owners—the investments of the optimal amount with the given amount of constraints that you have, and hopefully the active realization of program benefit. That is little bit behind times for product companies, I know that. But companies are trying to [inaudible] as come across companies are setting up benefits management, benefits management manager need set up and now some of the benefits coming, and the portfolio manager’s jurisdiction to take care of the benefits of the somewhat key programs. So it’s moving slowly but surely in that direction.


Reliable Monitoring and Steering of Portfolio Performance—I think what you call like a quarterly performance reviews are coming up—again, this will be part of the governance process and governance framework that decided to place to track and monitor the portfolio performance. So ideally this should go on a quarterly basis to track and you can have a video process behind to track and identify the projects coming in, to making sure which projects are in or out as you go through.


Case Study: Oil and Gas Industry—I worked with the, uh…I’m writing book on the downstream study of portfolio and the benefit—now, for this political organization what was interesting is that the senior executive, the CEO of the company actually came up with five years strategy in terms of where the company should be and how that they can help to—what do you call—to save. Saving was a key part, cost solutions were a key part of it and they wanted to know how we can align some or all of the initiatives coming in.


So what we did was we map the strategy—we came out with business drivers, map the strategy and align strategy to portfolio framework. What was key was we did the, we went in search for the strategy which was good. It was available in slight [inaudible] form which we took it. We went and we defined what drives the industry and what are the key business drivers for that organization and the political industries, and evaluated that with the senior key stakeholders—once we get validated and define the drivers correctly and give examples of some of the projects based on those drivers, we then did a workshop whereby we put in the strategy and the drivers and we ran an alignment process, which of those maps to which. And that was the power that we—in terms of aligning the strategy business drivers.


We then used—what do you call—we converted the drivers into specific metric, value metric with KPIs, Key Performance Indicators, and PPIs and FPIs, PPIs, Process Performance Indicators and Financial Performance Indicators. They have huge—they have thousand over performance indicators so what we need to—we need to align all of that to the strategic, to the value metrics and then align that with the drivers and then that align to the strategy—so we created what we call as a dashboard tracks the performance of some of their key metrics that they wanted to be in place. So for one thousand PIs, we actually are zooming down to seven sixty [inaudible] organizations to track. So that was quite a, very interesting work we did. And then we used a portfolio tool to help optimize their investment.


For this, the first cut we did was a huge saving for that. As you can see, from 350 million, we saved—the account save 120 million and we [inaudible] part and parcel of the ongoing process into it.


Effective Portfolio Management provides the visibility, clarity and confidence to…


Again, as you see the diagram on portfolio optimization, benefits and performance—so it proactively manages your portfolio so you identify investments that will succeed, quickly identify undeliverable benefits and prioritize critical projects and kill unnecessary ones.

Anticipate when things might go wrong—this is also a powerful proactive way and you can actually track, you can actually anticipate where things might go wrong.

Prioritize resources based upon return—again, this is very critical for organizations in terms of their skills.

Maintain continual control—so if you do a regular quarterly update, a monthly update, you will have control on what the portfolio projects are doing.

Another is attempting too many projects simultaneously, which is very powerful. Driving sponsorship and accountability.

Now, the other is promote continual learning—this is important as we go to between [inaudible] and sustaining portfolio, we recommend very strongly to make sure that whatever the first round of portfolio, the learning should go into the next round of portfolios. Again, the power here is actually questioning—we have actually a coach, a senior executive in terms of when they do the portfolio review to ask the right question—because if they don’t ask the right questions, you will have problems. So asking the right questions is important—so that’s part of the learning process in getting the executive to read more.

And making sure that there is the best practices is embedded at every opportunity.


Why Build a Business Case?

Putting this slide in is important because on the front end of the portfolio, it is—when you capture all the projects coming in with a good business case—I know there’s sliders like Easy-Slide but the essence here in key bullet points, which is that:

Business Case is a key decision support document—I’m sure a lot of all of you will be aware of it—and normally used to approve investment in a project or program.

The Business Case must encompass what, how does it support a driver that has been selected: it also must include the benefit metrics that are in. So the benefits that maybe are dealing with the organization in the project and dealing with the success of it, that is really a key part of the document and related to the health, to the life of that project.

Some of the projects and the benefit of change—for example is a project, it’s a large let’s say [inaudible] from summation project, like a CRM project. After implementation, only you can see the benefits coming on. So, there may be some changes after the program goes to light. So again, there could be some changes that could happen.

The other part of the Business Case you should be most familiar with in terms of making sure lists are [inaudible] in final business case is importantly a building consensus and consistent business case creation allows easier comparison for prioritization of initiatives.

Now, one of the things that I’ve realized is not every project needs a Business Case—one of the company that I supported in the portfolio deployment was—business cases only ask for project which is above certain value.

there is a possibility that you can work that way.

[RW]- Dr. Shan, this is Rich.

[Dr. SR]- Ok, Rich.

[RW]- We got a question here, “Are you able to compare and contrast how a business case aligns with a project charter?”

[Dr. SR]- How it aligns with a project charter, yes um, I’m sorry the question is, I’m sorry can you repeat the question again?

[RW]- I’ll try a different way. “Is the business case and a project charter the same thing?”

[Dr. SR]- Ha-ha. No. A project charter can be created out of a business case; it’s not that business case and project charter are the same. Does that make sense? A business case is looking forward—why do you need this particular project to be it? So it’s building a case—why do you want this project to be it?

So if I look at this case as a Business Case Structure:

What is strategic fit? What is the achievability of you doing this project? What are the alternatives appraisal that have been done? What is affordability and commercial aspects?

Some element of the business case will be part of the project charter but I wouldn’t say a business case and a project charter are the same.

[RW]- And any suggestions as to where an individual might be able to find a template for a business case?

[Dr. SR]- Oh there are plenty in the market, actually. There are plenty in the market. You can customize it to your needs. There are quite standard templates available. I am sure GMI will have some of it; APM in the UK will have some available, off the shelf you can take and you can modify or you can contact any one of [inaudible] that will have some latest templates for different industries—but basically, there are structural column is five elements that is part of the business case.

[RW]- And Don is tossing us a comment across that he leverages his six Sigma tools to develop a business case—so if anyone has that in their arsenal. And then also another comment coming across that it is possible that one business case can actually result in multiple projects or multiple project charters.

[Dr. SR]- One business case, yes, possible. Especially where there is a large program with multiple projects in, yes.

[RW]- So we do have a few other questions from Feizel (?), Anthony and Don. Hey guys. You’re asking process and tool questions and those answers are coming up. So Dr. Shan, I think you can carry on.


Value Activities in Portfolio Management

Some of the value activities in portfolio management—deployment of whole portfolio is ideally would be from start to end but sometimes I will come across organizations who wants one part of it—like a business driver and prioritization, there’s one part of that they want to do or they will do what they do, called as a proof of concept and deliver to test. You can do that as a visual driver prioritization.

Normally, they do business driver prioritization. They then—portfolio optimization is a key part of their next steps. Again, one of the key parts in portfolio optimization we’ll do is actually how you are optimizing the resource: getting a hit list of all the inventory of the projects you have. And the other is also creating multiple scenarios—so it’s also the capability to create multiple scenarios with respect to cut in the investment budget, for example, or even some resources that are in and out. So the optimization will be able to provide that flexibility in terms of when a project is in and when a project are out and create multiple scenarios.

The other is benefits management, which is a key part, we will take a bit longer—though we do not cover in detail in the next three sessions of benefit though the high level that I cover. And the other is tracking the portfolio delivery management in terms of where does—how do you track and what are the dash button you use to track your portfolio and what are the performance metrics you are to put in place. So it comes into a kind of end-to-end process to look at.

Now, more and more companies are doing what we call setting up a portfolio management office—[inaudible] a large government department are looking into a portfolio management office to be set up and another large space company, sorry, a space agency company wants a portfolio management office to be set up also.

Companies which are having a larger size in their portfolio is recommend quite strongly to set up a portfolio management office to manage those portfolio activities and putting it is part and parcel of your business process. That’s key. And then inculcating the knowledge, coaching, mentoring, training—making sure all the templates are up and easy for them to use in their selection of the portfolios.


Capabilities Required for Portfolio Management


So what are the capabilities that are needed or required for one to set up a portfolio management office and to—able to do portfolio management and deployment of portfolio management? Now, this doesn’t mean you must have all these set of skills. Please understand that. What it looks at is that people is the key part of it here—[****] and the question came in earlier, I think, I really appreciate that because people is the most important part. [****]

In people, they need to have some understanding of what is projects and program management experience. They also need business change experience. This is transformation and ability to change management experience needed. The next is also structured decision making—they need to have an aptitude to understand decision making, how does senior executive decision because out of the portfolio, there is a structured way of making a decision. So as a result, that will be a useful mindset. Then there is the proven delivery experience, which is good because then it’s easier for them to interact with the rest of the communities. One key importance is actually the stakeholder management skills, understand who are the key stakeholders, how do you interact with them and that is a key skillset required—because you need to communicate well, you need to interface in some of the key stakeholders: for buy-in, for ability to sell to them well. Because if you are hating a portfolio management office and you are deploying a portfolio management process in your company, you can rest assured you will face some challenges unless you are able to manage relationship, able to manage a stakeholder’s expectation well, you’re going to hit your head against wall. You can rest assured of that. Benefits realization—that is still up and coming. And professional PMO experience, this is again part of the portfolio management office they’re looking at for [inaudible]. In fact, in my book, one of the chapters the [inaudible] portfolio management office in my new book on portfolio management, “How to Innovate a New Business Successful Projects.”

Next is on the Processes

You will need these on your journey—though all may not be necessary. You can look at the list and then you can see.

Business case development in understanding one’s specific drivers and analyzing them—your ability to go into the project inventory cases creations. Risk provides the key part, constant identification and important part of it.

Interdependencies Identification- This is really key as we go to and start to realize—interdependencies are key part of portfolio. Because sometimes, we will have a project which is out but actually is a dependent part of an interdependency—part of a larger program. You will have a problem if you do not—what you call—understand the relationship there.

Portfolio Optimization and Portfolio Management Maturity Review- This is another key understanding—again, there are, now there’s [inaudible] becomes a very scalable process, so a lot of portfolio maturity has been done. So you can understand where you are in relation to the level of our portfolio maturity. [Inaudible]. We will cover portfolio maturity this session, so very quickly—to give you a perspective on what is a scalable to—what is a scalable maturity in portfolio.

We will be looking at Resource Management and the other will be, what we call Portfolio Health Check, which are things that are useful to know for perspective and in the process.

What are the Tools?

These bases need to be covered: Again, Optimization, Benefits and Delivery Service.

Quite a lot of tools and we will walk through review in the projects [53 inaudible- 1:40:12-1:40:15] 2010 and how it supports tools. Please bear in mind number one—there’s all these people. Processing tools are much easier to manage.

Reasons Why Portfolio Management is Important—“Top of Mind” Comments

There was a study done by Cooper, Edgett and Elko (Survey: Dr. Robert G. Cooper, Dr. Scott J. Edgett and Dr. Elko J. Kleinschmidt {Results of Industry Practices Study 2006-2007}). I mean these are brilliant correctors; I know Robert Cooper personally but he was one of the pioneers in thinking of portfolio from a product perspective.

And one of the things that he highlighted: why portfolio management is important, top of mind comment—is very interesting, and then they found that one of the top reasons why portfolio tends to become very important was financial reasons: make money and maximize returns. That was a top reason. And again, for senior executive viewpoint: do I have the, am I investing in the project the way that it will give me the maximum returns. That’s it. Then the product releases in the market and it captures the market shares. As long as it makes money, that’s a financial reason that’s a top reason.

Secondly was the strategy: expression of strategy and how it supports the strategy for the portfolio. Communicate vertically to create visibility so then they can see what is happening within the organization. Communicate horizontally, increase objectivity, to increase sales and market share and to achieve focus: these are the top reasons that they, in their research, that they found.

You can look into this in the study. I think there’s a later study that has been released in 2010, 2011—it’s interesting to see the shift occurring in terms of the importance of portfolio management for the top minds—their top minds means the senior executives.


Some Real Examples of Savings Calculated using Portfolio Optimization

These are our own personal examples for company that we have dealt with where the benefits [inaudible]. One organization—they have eliminated, avoided the misaligned projects with given advice and saved $20 million. Underperforming projects which were cancelled, the advice saved $10 million. Consolidation of redundant projects, advice saved $10 million. Avoidance of maintenance cost on redundant application projects, advice saved $2.5 million.

I mean, from the numbers, it may not be very clear to you in terms of it—but ultimately, I think what we’re trying to highlight is that we have given savings in several millions to companies depending on what kind of portfolio they are looking at.

The other way you can look at is, if I have a cut in budget of, say $20 million—what can I do—so it’s easier to look at it from that perspective but huge amount of companies have benefitted based on the—what do you call—the savings

Case Study: Financial Industry

Next is the case study on the financial industry. Clearly, it helped with the optimization of IT Infrastructure Maintenance Project Portfolio. And what we did was helped the organization to look into their new project ideas and in-flight projects and assessed and created the metrics and used a Portfolio tool to optimize their portfolio.

We are basically—the purpose was on their resource, and we achieved almost, between 27 percent savings on the resources and what we did was we embedded portfolio as an on-going part of the process.

Rich, can you hear me?

[RW]- Yeah, I can hear you ok now. There was a little background there but you sound to, you seem to be ok now, Dr. Shan.

[Dr. SR]- Good, because I saw some, the audio, there was this little disconnect for a minute? Ok. Good.


Case Study: Automotive Industry

This is another case study of the automotive industry that I was involved in the, make beautiful cars actually. They wanted to deploy the Enterprise wide Project Portfolio Management. So, for them, what we did was we conducted a portfolio maturity assessment. This one, we did both actually. We did an initial, the quantitative analysis using a tool and then we did an interview, cross-section of the key stakeholders. We did that and then we merged those two together results and then we give them where they stand and where they need to go—what other activities they need to do and we did it to gauge the effort much less the value and identify what we can do to get the least amount of effort to give them the maximum value, the maximum value of work—we brought them up as some metrics and showed it to a senior executive and they bought into that particular process. It’s a very powerful organization, huge amount of changes occurred.

One of the things I like about this particular organization was because we were talking to the CIO and he was very focused on necessities that all projects must be business enabled projects—any IP that must be business enabled, nothing to do with normal IP projects. So it was quite interesting the way he was pushing forward with what he called business relationship managers who interacted with the different of the functional group and organization.

We created an online business case template so that any projects which are business enabled will be—what do they call—have to be in the template and identify—what are the metrics, what are the measurements and as a result, what is the value proposition—before it can accept the project in.

Also, again, a huge amount of cultural change was involved because this organization was a highly controlled company and then it was brought over by another organization and then it became a totally entrepreneurial based company—so a huge cultural change was involved in this organization. We are very pleased to say they became highly successful and in fact, they are making a lot of money. We are involved with—I mean I have been involved with them for the last, over two years, working with their senior executive team. It has been a really powerful change and we have created a governance process and done a lot of resource planning and put into place.

Initial savings has been about, a small amount, of 20 percent from $152 million. What happened is that this process has now been applied across some of the R & D projects and across other sites around the world.

One of the key savings was the cut in stakeholder’s time in selecting projects—this was interesting because what initially they had was, I think they had about 180, 190 projects and what they do is they took one home there and haven’t been able to do the project, select the project —they had no clue what the projects were, how many projects and how they were related to concept.

After implementing the EPPM (Enterprise Project Portfolio Management) in place, key stakeholders can select a project within two hours, one hour depending on what they do to select the project. Because what they did was out of the 200 projects that they had, they easily know what projects were in and what projects were out. So only those projects in the gray area were used for the discussion to see whether they are willing and need investing or not. It cuts the stakeholder time in selecting projects phenomenally. In fact, the CIO came and said that was one of the most powerful outcome of the EPPM process which we put into place. The other one was the real time insight visibility into the projects and help with managing resources, cost and timing, which helped with revitalizing the overall strategy in how to support the execution to enable the business to be more successful. In fact, I’m also [inaudible] and so that has been good.


End Session 1

[Dr. SR]- We are coming to the end of the session. There is about ten minutes left if there are any other questions to ask.

[RW]- Sure. We’ve got a few more questions queued up here, one of which is coming from David, “Sometimes it’s difficult to kill a project due to the political nature within the organization. Can you give us some insight, some suggestion as to how portfolio management—either the process or the tools—can help us so we don’t get killed as the messenger?”

[Dr. SR]- Hahaha. Excellent. Yes. I think it’s important actually when you talk about killing the project—because if you are the messenger for something, for the portfolio manager, for example—corporate portfolio manager—you’re preparing the projects, what comes in and out. So if you have a good portfolio management process in place, which is actually brought in by the senior executive team—as you go through the process, you start to realize that you can’t have a good portfolio management project without the buy-in from the senior executives.

[56 inaudible]. So what we propose when we put forward the portfolio of projects—it means not projects in, it’s projects out—what you have to do is you have to also be politically astute, in my opinion. What do I mean by politically astute—in your proposition to the leadership team to do the projects, you need to put forward at least the project investment to be in business, strategic value based on the investment amount we have discussed. What you have to do is you create nearly multiple scenarios of cuts, for example: you have a 5 percent cut, 10 percent cut, 15 percent cut that you have—and then whether this project should be in or killed or should be in.

And then you create what is called an assumption and a recommendation, that’s what I would say—that these projects are, they need to be killed or need to be rescheduled—maybe don’t say the word killed, maybe used postponed or made as redundant. Use those kind of words to explain why it is to be based on different cuts. And then that decision will be made by the governance board, who will be comprised of the leadership team and not—they won’t be blaming you.

You’re not making the decision. The decision is based on the structure of the process and as a result, it’s them who are making the decision. So in that sense, I think you must not be afraid of the “killing the messenger.” But you must be very clear when making the proposition.

[RW]- And we’ve got another question coming across, “Can you give us the return on investment an organization might see if they undertook implementing this process, the portfolio management process and/or tool. What kind of return on investment might an organization experience?”

[Dr. SR]- That’s a good question, actually. Very good question. In fact, we have—in fact I have written an article on that actually, on creating a business case from original investment. Again uh, it’s very difficult to say how much and definitely that a huge amount of the original investment—what tangible amount, we can do a calculation for you, we have prepared a kind of a business case toolkit to help you to calculate with respect of when you deploy a portfolio management—where you are and where you want to go and we can actually calculate the frame of investment, you can have the original investment—we have that tool available. We can actually do a quick one for you.

Again, it’s probably—I can send the article that was written on that original investment and why a business case is useful for that.

[RW]- And on a similar topic, I know a number of folks have requested the slide-deck for this presentation. Absolutely, we’ll make that available. We’ll get that out to Kirk and then the rest of the organization. There was a question here with respect to, “Can PPM, portfolio management, be implemented within a particular department only without implementing it at the overall corporate level?”

[Dr. SR]- Yes, it can be done. Within the department, it can be done. Depending on the number of projects and the value they have, they can do it. But, it will be—that will be a good case to do. One of the companies that we did was actually, we did it—what do you call—we did it in a smaller department first and then we proved to them that it’s a very powerful process. And what happened as a result—they tend to shine and it started to cascade across the organization—and it created, very cleverly actually, the champion that I was working with, an idea actually—he had did what we called as a newsletter in the organization, saying that they introduced portfolios and how much of savings they’d done, how the selection was done and so on and so forth. And so he made himself well noted and later on, he was asked by the senior executive team to champion portfolio across his whole organization.

It can be a good stepping stone, actually, to be honest.

[RW]- A question also being asked is, “How does this portfolio management, how does the stuff that we’ve covered relate to Project Server 2010?” That’s probably one that’s good for me to field. All of the concepts and the terminology that’s been laid down here today—those are the foundations, that’s the building blocks. That’s like Bembock (?) or BMI’s terminology within Bembock. We have to have that common language to be able to talk and discuss things before we bring in a tool.

So what we’ve done today is cover some of the fundamental terminology, higher level process—and then in our next session, we’ll kind of hop into Project Server 2010 and take a look at how to institutionalize some of these processes, leveraging the tool.

So, let me see if there’s any, any final questions here. There is a question around portfolio management in higher education and I’ll have to do a little research into our archives to see if I can find that case study.

John, if you want to pick up my email address here, I believe it’s on one of the slides here, at the end. If you can send me an email, I can respond to you directly.

Kirk, I think uh—Dr. Shan, do you have any final comments?

[Dr. SR]- I like that portfolio and higher education—at the moment, we have three universities in the UK who are keen to use portfolio management and—in fact, I’m sitting on the board of one of those universities actually who are doing that. So yes, universities are now—higher education is now focusing on it. I’m sure in the US—I know of one or two universities who are already doing it also. With that, I thank everyone for listening in. I enjoyed myself and I hope you did too.


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