Software tools can help put your agency's IT investments in order

Portfolio management is fast becoming a necessary evil as federal agencies struggle to meet onerous reporting, budgeting and IT investment directives.

Luckily, specialized portfolio management software has risen to the challenge.

Industry analysts disagree on category definitions and boundaries, but they do agree that two types of software must interact to form a top-to-bottom portfolio management system that efficiently ties business goals with ground-level implementation:
  • High-level enterprise portfolio analysis'also called project portfolio management'provides the financial calculations, surveys, scorecards and benchmarks executives need to help them decide what to invest in, plus workflow and groupware support for collaboration. They are the link between projects and strategic goals, and let managers explore what-if scenarios to find the best mix of programs, projects and other investments.

  • Traditional tools that departmental managers use to oversee projects and enterprise project management software that provides similar, but enterprisewide, control over multiple projects.

The first group'abbreviated as PfM by Meta Group Inc., a Stamford, Conn., research firm that encourages use of such tools'can typically extract financial and resource management data from spreadsheets, databases, project management software and other sources to provide a meaningful overview of projects.

Managers can use the resulting charts, tables and diagrams to analyze alternative scenarios, project the success of projects and perform risk management.

Even better, an increasing number of PfM products now support federal compliance documents, such as the Office of Management and Budget's Exhibit 300 business cases and capital planning and investment control inventories.

Federal Enterprise Architecture reference models also are linked directly to some tools. The typical start-up cost, said two PfM vendors, is $250,000.

Ford rephrased

Knowing whether to invest in a project, or to stop a potentially unprofitable one, is often the most critical decision.

'The greatest waste in business'and government, too'is doing the wrong thing well,' said John Cimral, chief executive officer of ProSight Inc. paraphrasing Henry Ford.

Portfolio management software incorporates features of other management tools, such as project management and business intelligence, reflecting a lot of overlapping among many of these programs.

PfM vendors are sanguine about their products' limitations and admit that in-house applications, spreadsheets and other homemade tools can all provide similar analyses of projects and IT portfolios.

But they usually can't do it for hundreds of projects, or without an inordinate amount of development effort.

Although a handful of companies such as ProSight Inc. and Business Engine emphasize portfolio management, many PfM products are sold by traditional project management vendors.

Artemis International Solutions Corp. and PlanView Inc. have added PfM modules to their basic tools, or built or acquired separate applications, such as when Primavera Systems Inc. bought Evolve.

What about other software, such as so-called business-intelligence tools, that work in similar ways? These tools extract information and trends from past data, rather than plan new projects, though they can help project future results. PfM experts say agencies can use business intelligence software to build the same kinds of analytical tools that come prepackaged in PfM products.

Another related category, executive dashboards, provides management-level views and analysis of multiple data sources but generally lack portfolio analysis tools. Dashboards are, in fact, a feature of many PfM programs.

Pat Durbin, PlanView's chief executive officer, said the trend in PfM has been to use Web portals as the user interface. 'People are saying, 'I don't want it five clicks away'I want it on the screen,' ' Durbin said.

Another related category, application portfolio management, differs from PfM in focusing on managing existing software applications, said Dale Vecchio, a research director at Gartner Inc. of Stamford, Conn. Asset portfolio management, in contrast, provides a financial level view of IT assets, typically hardware.

Vecchio said he's skeptical about the ability of high-level PfM tools to quantify business value. 'The majority of these tools fundamentally depend on survey-based responses and a human view of things,' he said. 'At the end of the day, it's a big questionnaire.'

Vecchio recommended striving to objectify the information that goes into a PfM application so it doesn't devolve into an 'opinion roundup.'

Seemingly everyone expects vendors in the different categories to continue invading each other's turf. Project management vendors are likely to continue their move upward, possibly into the more analytical areas occupied by PfM.

The move could be an economic necessity. 'The project management market is basically owned by Microsoft Corp.,' said Doug Lynn, a vice president and research analyst at Meta Group who compared six PfA vendors in a January report.

'The only direction the pure project management applications can go is to offer some portfolio analysis applications,' he said.

PfM vendors, meanwhile, have been moving down the chain. In recent years, most added support for the server version of Microsoft Project, and they claim to integrate with low-level project management software from major vendors.

High-end PfM vendors will also bring more project-level information directly into their tools, rather than relying solely on integration with third-party project management, Vecchio predicted.

With or against?

Vendors of business intelligence tools and document management software have also been adding PfM features. Enterprise resource planning tools, such as those from SAP America Inc. of Newton Square, Pa., are naturally in 'co-opetition' with pure PfM tools because they are designed to provide an enterprisewide view of processes and resources.

They, too, have recently added portfolio analysis features, and ERP vendors have entered partnerships'including a recent one between PeopleSoft Inc. of and ProSight'to integrate their software with PfM products. PfM has no industry standards per se, although directives from OMB and other government offices provide direction at the federal level.

If there's a lingua franca, it's the Extensible Markup Language, the Internet's increasingly popular format for data and document exchange, a variant of which OMB has mandated for fiscal 2005 budget submissions.

XML makes it possible to collect data in PfM software and transmit it in standard documents that other departments, vendors and agencies can read. The major PfM vendors widely support it.

When asked for advice on getting the most from PfM tools, these experts voiced the oft-repeated'but still worthwhile'advice to get executive buy-in for the software, especially since C-level managers will be prominent users.

'It's a top-down process,' PlanView's Durbin said. Also, because program managers may feel threatened, it's important to make PfM as friendly and participatory as possible.
Durbin also recommended that agencies strive for early successes to help prove the value of PfM.

Nancy Allen, a vice president at Primavera, said short-term success is exactly what the software excels at because it can, for example, identify duplicate efforts that can be cut to improve bottom lines.

The project management side, by comparison, becomes more important over time as agencies strive to execute projects with longer returns on investment.

Be prepared to spend time and money on outside or vendor consulting as well as staff training; vendors say both are necessary to get full value from the tools, which enable processes but won't solve anything by themselves.

'This is a process, not a point-in-time activity,' Vecchio said. 'You have to buy into the fact that I'm going to do this on a continuous basis as part of my management.'

Doug Clark, CEO of M'tier Ltd., said managers should remember the old 'garbage in, garbage out' adage to avoid getting beautiful charts 'and really bad performance.'

Lynn offered similar sentiments, advising buyers not to look for the perfect tool.

'Realize that the value is in the people and the processes,' he said. 'Understand what you're trying to accomplish with portfolio management as a discipline.'

David Essex is a free-lance technology writer based in Antrim, N.H.

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