The Project and Portfolio Management Landscape

The Project and Portfolio Management Landscape 2016 Presented by ABOUT THE REPORT | The Project and Portfolio Management Landscape, 2016 Edition ...
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The Project and Portfolio Management Landscape 2016

Presented by

ABOUT THE REPORT

| The Project and Portfolio Management Landscape, 2016 Edition

This 2016 edition of the report represents the third annual online survey conducted by Innotas, a leading provider of cloud portfolio management solutions, and on behalf of Innotas through affiliates between February 1, 2016 to April 15, 2016. The 2015 survey results were released publicly in a consolidated report (pdf) and will be referenced throughout this report for comparison and trend identification purposes. A total of 140 respondents completed the survey and for the purposes of this report, these respondents will be termed “organization”. The respondents and survey results represent the responses of project and portfolio management functions across a variety of enterprises, including project managers, program managers, the PMO, IT management, and the CIO. The online survey was not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For more questions please contact Innotas at [email protected].

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Executive Summary In 2016, we see much of the project and portfolio management landscape has not changed – organizations do not have enough resources to keep up with incoming demand, significant portion of projects are “not well aligned” with the business, and project failure rates are unacceptable. We live in a digital world where social, cloud, mobile, and big data are changing how we plan, prioritize, and execute key business initiatives. Project Management Offices (PMOs) must learn to adapt to these changes by shifting their view of project success from on-time and on-budget delivery – business value must be at the center of every conversation. Project management professionals, IT leaders and CIOs must look at increasing efficiency of resources, improving the PMO’s effectiveness on the business, and introducing project success criteria that better aligns with desired business outcomes. In this year’s study, several noteworthy trends and statistics emerged: • Over 70% of organizations report they do not have enough resources to meet incoming project demand • Over 50% of organizations believe their projects and resources are not well or very well aligned with strategic business goals

• 55% have experienced a failed project in the past 12 months • 53% of organizations still do not have a portfolio management system Our goal is to help facilitate and encourage healthy conversations between project delivery teams and key stakeholders within your organization. This report should help benchmark your organization, provide insight into common PMO challenges, and uncover best practices in the field of project and portfolio management.

The Project and Portfolio Management Landscape, 2016 Edition |

• 46% of organizations say resourcing is their top challenge

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The State of the Project Management Office (PMO) DOES YOUR ORGANIZATION HAVE A PMO?

PMOs are Taking Center Stage

| The Project and Portfolio Management Landscape, 2016 Edition

Most organizations would agree that their Project Management Office (PMO) is critical for planning and executing projects and key initiatives. PMOs are typically chartered with driving efficiency and governance of project management standards. It would only make sense that we would expect to see an increase in PMO adoption in more competitive times.

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As compared to 2015, organizations who have a formalized PMO saw a significant jump, increasing from 64% to 75%. For 2016, the ITPMO is the most popular PMO type among surveyed organizations, increasing its adoption to 34%. This represents an increase from 28% in 2015 and 13% in 2014. This increase is most likely attributed to the C-suite’s understanding that CIOs and IT can be strong forces in driving positive business outcomes. EPMO adoption also increased to 29% (up from 17% in 2015 and 6% in 2014). The sharp increase in enterprisewide PMO adoption implies organizations are seeing increased value from centralized decision-making and governance. This trend may be directly related to the popularity of agile and lean methodology adoption; it may be inferred that the continued increase in EPMO adoption is an effort to increase standardization of the project delivery process across the enterprise – implying a strong desire for control.

12% 29%

YES (GENERAL PMO)

YES (EPMO)

34%

YES (ITPMO)

25%

NONE

What is an EPMO?

What is an ITPMO?

A PMO chartered to successfully plan, execute, and deliver key initiatives and projects that span across the enterprise. Typical focus is on delivering business value in a uniform and consistent approach across all facets of an organization.

A PMO that is primarily responsible for planning, executing, and successfully delivering IT initiatives and projects. Projects are typically technology driven and directly related to the CIO’s charter.

OVER THE YEARS: PERCENTAGE OF RESPONDENTS WHO HAVE A FORMALIZED PMO:

2014

64% 2015

75% 2016

The Project and Portfolio Management Landscape, 2016 Edition |

61%

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PMOs Focused on Delivery – Not Creating Business Value While organizations seem to have evolved away from focusing their PMOs on cutting costs, 50% are still focused on on-time and on-budget project delivery. Project management professionals have been conditioned to deliver under any and all circumstances, naturally focusing on the output (getting the project to completion), rather than focusing on the outcome (business impact or value) of what is being delivered.

THE PRIMARY GOAL OF THE PMO

CREATE BUSINESS VALUE COST CUTTING

| The Project and Portfolio Management Landscape, 2016 Edition

0%

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PRODUCT DEVELOPMENT

9%

31%

DELIVER PROJECTS ON-TIME & ON-BUDGET

50%

OTHER

10%

Although organizations are focused on project delivery, project failures are all too common. Over the past 12 months, 55% of respondents reported experiencing a failed project. At first glance, this may seem surprising considering most focus on delivering projects on-time and on-budget as the primary goal of their PMO. However, there is a disconnect between PMO goals and the metrics used to measure success.

IN THE PAST 12 MONTHS, HAVE YOU HAD A PROJECT FAIL?

45% NO 55% YES WHAT KEY METRICS ARE USED TO MEASURE PROJECT SUCCESS? (MULTIPLE ANSWERS ALLOWED)

68%

63%

61%

61%

19%

16%

Meeting Stakeholder Expectations

On-budget

Meeting Business Outcomes

On-time

Other KPIs

General Consensus

RECOMMENDATION: Organizations must also consider measuring PMOs based on outcomes (business impact), not just outputs (on-time or on-budget delivery). Combining project portfolio management (PPM) software with processes can help PMOs create more value for their organizations.

The Project and Portfolio Management Landscape, 2016 Edition |

Almost 2/3 of respondents reported measuring project success with on-time and/or on-budget metrics – this is in line with the primary goal of most PMOs – but the most important measure of project success was reported as meeting stakeholder expectations (68%). Alternatively, meeting business outcomes was also in the top three for 2016, tying with on-time metrics, with a 61% response rate – implying that outcomes are equally important and measured as commonly as outputs. The disconnects between how PMOs are measured and their primary charter could play a significant factor in reported project failure rates. This represents a missed opportunity for PMOs and organizations should consider redirecting focus towards project impact and not just project completion.

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It’s All About Resources…Still Resourcing #1 Challenge – Three Years Running WHAT IS YOUR BIGGEST CHALLENGE?

RESOURCING

2014

50%

BENEFITS REALIZIATION

17%

PRIORITIZATION

| The Project and Portfolio Management Landscape, 2016 Edition

14%

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In 2016, organizations reported resourcing as their #1 challenge – topping the list for three straight years. Meanwhile, alignment has been dropped as one of the top three challenges, coming in at 9%. Organizations reporting prioritization as a top challenge in 2016 has dropped by 10% as compared to 2015, but still the second most common. This data implies maturity of project and portfolio management teams, with respect to resource allocation and prioritization of increasing project demand, however most still struggle with having enough resources to get all of this work executed.

2015 RESOURCING

37% PRIORITIZATION

26%

ALIGNMENT

14%

2016 RESOURCING

46% PRIORITIZATION

16%

BENEFIT REALIZIATION

16%

Organizations Anticipate Increased Challenges with Resource Capacity A staggering 71% of organizations say they lack the proper resource capacity to meet project demands. This is an increase from 2015, where 61% of organizations responded as not having enough resources to accomplish their desired work. This increase could be attributed to concerns of

economic stability heading into an election year, turbulent public markets coming off several years of the bull, or simply organizations tightening up their hiring in anticipation of an economic slowdown or downturn.

71% OF ORGANIZATIONS DO NOT HAVE ENOUGH RESOURCES TO MANAGE PROJECT DEMAND

With an increase of organizations struggling with finding enough resources and resourcing being reported as the top challenge, PMOs must place an emphasis on optimizing available resources to ensure project portfolios deliver maximum business benefit and value. This will require organizations

to investigate investment in project portfolio and resource management software that leverages predictive analytics, what-if scenario planning, and resource optimization capabilities. Ultimately, PMOs must be confident their resources are working on the right projects at the right time.

Proper Allocation of Resources is Critical ORGANIZATIONS SHARING COMMON RESOURCES FOR STRATEGIC PROJECTS AND OPERATIONAL WORK

73%

72%

89%

2014

2015

2016

The Project and Portfolio Management Landscape, 2016 Edition |

Of the organizations surveyed, 89% reported leveraging the same resource pool for strategic projects and operational work – a significant increase from 73% and 72% in 2014 and 2015, respectively. Separating resource allocation between innovation or growth projects from the maintenance or keeping the lights on (KTLO) work naturally forces resource prioritization – enabling your organization to focus resources on the highest-impact projects – and helps alleviate the pressure of constrained resource pools.

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Strategic Planning and Prioritization Alignment to Strategic Business Goals Needs Improvement HOW WELL ALIGNED ARE YOUR PROJECTS AND RESOURCES TO STRATEGIC BUSINESS GOALS?

3%

VERY WELL

7%

3%

39%

WELL NEUTRAL

17%

NOT VERY WELL

31%

MISALIGNED

| The Project and Portfolio Management Landscape, 2016 Edition

DON’T KNOW

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54% of organizations believe

their projects and resources are not well aligned with strategic business goals.

Scoring based on business objectives continues to be the most popular method amongst organizations who have a formal methodology for aligning and prioritizing projects. This is largely unchanged from 2015, where 49% of organizations reported scoring as their methodology of choice. Organizations that are not using any formal methodology to rank their projects decreased to 17% from 24% in 2015 and 29% in 2014, representing overall increase in maturity and usage of best practices amongst polled respondents.

HOW DO YOU ALIGN AND PRIORITIZE YOUR PROJECTS?

17% No Formal

Methodology

21%

High/Medium/Low

51% Scoring Based on

Over 50% of organizations use scoring for projects

Business Objectives

Other

The Project and Portfolio Management Landscape, 2016 Edition |

11%

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Organizational maturity for aligning and prioritizing projects is increasing. This is seen by the decrease of organizations reporting they have “no formal methodology” for scoring projects from 2014 to 2016.

2014 - 29%

NO FORMAL SCORING METHODOLOGY

2015 - 24% 2016 - 17%

One of the biggest points of contention between stakeholders and a PMO is the careful balance between strategic projects driving business goals and operational projects keeping the lights on (KTLO), as seen above with respect to allocating resources. Every organization has experienced this balancing act as the expectation is that PMOs will do what is required to ensure business operations keep running and simultaneously support the business’ strategic initiatives. In this year’s survey,

47% of respondents equally categorize their project work between strategic and operational work. Additionally, 36% categorize their PMO projects as strategic and only 17% as operational. The overall healthy split between strategic and operational work implies organizations recognize PMOs as more than just execution entities (“cost centers”) and more as strategic drivers (“value centers”) for the business.

HOW DO YOU CATEGORIZE YOUR PROJECTS?”

| The Project and Portfolio Management Landscape, 2016 Edition

OPERATIONAL

12

STRATEGIC

17%

EQUALLY BETWEEN STRATEGIC AND OPERATIONAL

47%

36%

Having a careful portfolio balance between strategic work being requested by the business and required maintenance work will move the organization forward without impacting the business with suboptimal operations or poor quality of service from day-to-day applications, systems, or infrastructure.

A natural benefit of proper portfolio balancing is increased resource optimization as resources will be allocated based on the desired split by activity type – helping relieve the resource capacity challenge that continues to plague a majority of organizations today.

Moving Forward: Improving PMO Performance Investing in Portfolio Management This year’s survey revealed the continued challenge with resourcing, aligning projects with business objectives, and connecting success metrics with PMO goals – resulting in failed projects. Organizations have the opportunity to improve their PMO’s performance with the proper process adjustments and an investment in a project portfolio management (PPM) solution. Although the proper implementation of a PPM solution has been proven to increase resource efficiency, business alignment, and a PMO’s value contribution, a staggering 44% of respondents do not have a solution in place. While this number may seem high, it is an improvement from 2015, where 55% of respondents reported not having a PPM system in place. This is a positive trend and should encourage organizations of all maturities to strongly consider

making an investment in PPM, as this could result in an improved ability in measuring, monitoring, and having a system of accountability across the project portfolio. DO YOU HAVE A PROJECT PORTFOLIO MANAGEMENT (PPM) SYSTEM?

9% 44%

NO, BUT PLAN TO

NO

47%

What is Project Portfolio Management (PPM)? Centralized management of processes, methods, and technology to manage current and proposed projects from a planning and execution perspective. Best of breed PPM solutions will focus on taking a top-down approach with emphasis on resource management.

47% of organizations have

a portfolio management solution to assist in improving their overall PMO performance

The Project and Portfolio Management Landscape, 2016 Edition |

YES

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About Innotas Innotas, the leading provider of Cloud Project Portfolio Management (PPM) solutions, delivers a seamless way to manage projects, resources and applications across the enterprise. Innotas solves the challenge of visibility and tracking the portfolio of IT and Product Development projects. The solution aligns effort and budgets to meet company goals, while enabling prioritization and agility for planning resource capacity. The result is a standardization of work execution across silos of project management teams. Innotas’ solutions include Project Portfolio Management (PPM), Predictive Portfolio Analysis™ (PPA), Application Portfolio Management (APM), Resource Management, Agile Portfolio Management, and the Innotas Integration Platform. Founded in 2006, Innotas is headquartered in San Francisco.  www.innotas.com



Call 866-692-7362

[email protected]

www.innotas.com | 866-692-7362 | [email protected] | ©2016 Innotas. All rights reserved.