ITScore Overview for Program and Portfolio Management


Archived Published: 04 September 2014 ID: G00270008

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Summary

The Program and Portfolio Management Maturity Model is an effective tool for organizations to decide quickly what PPM improvements they should make to enhance their organization's ability to optimize investments, execute big changes and deliver value.

Overview

Key Findings

  • Real project, program and portfolio management, when operating at the level of well-integrated practices, is the key enabler that allows organizations to identify and execute strategic change.

  • Any meaningful undertakings to enhance or evolve the program and portfolio management (PPM) function must pay more than lip service to organizational structure, business model and culture to have any chance of success.

  • Competitive pressures and changing market conditions are forcing organizations toward Level 3, and most organizations still aren't ready to make the leap.

Recommendations

  • At any level of PPM maturity, focus first on helping the organization make well-informed investment choices. This will improve the odds of project success more than any other factor.

  • For organizations that require enterprisewide change and capabilities, it is worth the effort to pursue Level 4, where enterprise PPM practices are built.

  • Identify objectives for your enterprise, and use them to identify the most salient improvement opportunities for your enterprise.

  • Meticulously manage the change involved in maturing/improving your PPM capabilities.

Analysis

Project/program/portfolio management office (PMO) leaders, program managers and portfolio managers are frequently challenged by ineffective processes, lack of stakeholder engagement and difficult-to-quantify value. 1 Part of the problem is failure to match their processes, people and technology approaches to the maturity level of their organizations. 2

The Gartner Program and Portfolio Management (PPM) Maturity Model assessment is designed to help PPM leaders understand best practices around large project management, as well as PPM to handle delivery of strategic value. This model assumes that organizations progress through a maturity curve and that each level of organizational maturity directly affects the level of investment and types of PPM approaches organizations choose to adopt. 3

The PPM Maturity Model

Gartner's PPM Maturity Model has five levels of increasing maturity. The levels can be applied to any business function, but the dimensions listed in Figure 1 are unique to PPM.

Each level is defined by the sophistication or maturity of specific dimensions that are relevant to PPM activities. Each dimension has its own maturity scale and builds cumulatively on the maturity from the previous level.

Figure 1. Five Progressive Levels of the Maturity Model
Research image courtesy of Gartner, Inc.

Source: Gartner (September 2014)

Within this maturity model, five interdependent core dimensions are of critical importance in PPM:

  1. People: The interdependencies among people in terms of their availability, their skills, their contribution to the work that needs to be done and their career aspirations are of critical importance. At higher levels of maturity, the leadership ability of the individuals involved in supporting PPM activities becomes essential.

  2. PPM practices and processes: These include disciplines such as portfolio management, as well as program management and classic project management processes, such as risk and resource management. One of the most common activities also included in this dimension is the establishment of a PMO, be it a project management office, program office or portfolio management office.

  3. Value and financial management: Systems that might be adequate at Level 1 (when projects are paid for as part of a lump sum) can be totally inadequate when forced to support a more-detailed look at multiple projects and programs. This dimension focuses on understanding how to ensure that projects and programs offer value for the money spent.

  4. Technology: The requirements for technology support tend to evolve in sync with the overall maturity of the approach to PPM. This dimension is designed to help organizations know which technology will yield the greatest return at a particular maturity level.

  5. Relationships: PPM fundamentally is focused on teams of people working to create a specific outcome. This dimension offers appropriate guidance on the necessary touchpoints, including identifying who needs to be informed, who needs to be consulted and whose help is mandatory to achieve the desired outcome.

Level 1: Reactive: It's a Mad Scramble to Stay on Top of Daily Demands

At Level 1, the organization is more reactive than proactive when dealing with projects. One of the hallmarks of this level is a mad scramble to get things done, often with too few resources and very little time. The PPM role is nonexistent or just emerging, usually because someone on staff brought the knowledge into the organization. Personal relationships form the foundations of informal "adhocracies." Consequently, processes and projects tend to revolve around specific individuals who are generally viewed as heroes or super achievers.

Internal processes are centered on managing critical projects, so priority projects get staffing support, but all else is on the first-available schedule. Larger projects, when they are absolutely necessary, are contracted out to vendors. Projects may have budgetary estimates, but quite often, the project work is simply funded out of the IT or other departmental budget. Technology tools for projects are generally limited to spreadsheets and, occasionally, a project-scheduling tool used by an individual project manager (PM).

Generally, it takes some external event, such as rapid growth, a change in market conditions or a merger/acquisition, to prod an organization to lumber — like a bear awakening from hibernation — from its reactive cave into a Level 2 state where standards for projects and programs begin to emerge.

Level 2: Emerging Discipline: Where Too Much or Too Little Control Always Leaves You Stuck

At Level 2 — at least in IT — most organizations begin labeling almost any unit of work as a project. 4 Depending on how long an organization stayed at Level 1, and depending on its culture, Level 2 can be a massive swing from a "just get it done" environment to a process-driven organization.

The classic Level 2 approach to process is to "focus on repeatable process" (borrowing a term from Capability Maturity Model Integration [CMMI]), which has been under fire with the progressive mainstreaming of agile approaches to software development. 5 As part of a natural migration (rather than a terminal destination), Level 2 organizations require only the bare minimum of process to ensure that project oversight is effective and that the right decisions can be made about a project (see Figure 1).

Most organizations at this level have invested or will soon invest in a basic PPM tool. The concept of disciplined teams working on a project is developed, and project collaboration and team workspaces are supported. Nevertheless, "stovepiped" systems and inconsistent data still bedevil business processes. Tools with reliable data for value/financial management are generally still rudimentary, with little or no capacity to provide a detailed look into multiple projects or programs, or to handle chargeback or allocation systems.

Relationships at this level tend to break down, and the term "the business" as opposed to "IT" begins to emerge. How severe this breakdown becomes (if it happens) and how long it takes to repair are different for every organization and dependent on a significant number of variables, including how much process IT chooses to adopt, how the rest of the company reacts to the process and, finally, at root, how IT is perceived within the entire organization (as a service provider or as a trusted partner).

Level 3: Initial Integration: We're All in This Together

This level is known as "initial integration," because there is a need for everything to begin to work in harmony. At this level, organizations begin to find a balance among the competing demands of the five dimensions of our model — people, practices, value, technology and relationships. Nothing is perfect, but it's good enough to keep everyone somewhat happy.

Level 3 organizations practice reasonable resource management, which means they are adequately staffed with talented and capable project managers. It also means they match their project demand to their resource capacity before starting a project.

Also at Level 3, organizations understand the difference between a project and a program. Therefore, they staff and manage a program when the scale, risk and complexity of the work justify it. Here, a good portfolio process ensures that the right projects and programs are approved. A project's benefits must be articulated at the beginning with a business case, rather than being desperately retrofitted at the conclusion of the project.

The most useful competency for a PPM function at Level 3 is holistic thinking — focusing on the whole, not the parts. This entails being able to understand how a change in one area will affect others, how changes should be made and in what order to achieve maximum results.

In a related development, joint decision making about projects and programs by the organization as a whole happens at Level 3. The goal is to provide a portfolio perspective so that the entire management structure of the organization can understand what investments are being made, what the outcomes and benefits are, and what the probability of success is.

This need for transparent decision making fuels a need for tools to provide visibility and support analysis. There is also a need for a reliable delivery mechanism and for some level of financial accountability.

Level 3 tends to lack sophistication, but there is a conscious focus on investing in the individual to improve performance so additional compliance activities aren't required, laying the groundwork for Level 4.

Level 4: Effective Integration: The Emergence of Enterprise Adaptability and Resilience

Linear progression stops at Level 3. Hard work and more process will not get an organization to Level 4. This is when the organization begins to focus on being project-capable. There evolves an expectation that projects and programs contribute business value. There is also a realization that the fastest, least expensive way to accomplish anything new and different is through the mechanism of setting up a project or program. Work that was started on the portfolio at Level 3 comes up a notch, and it's now possible to begin to talk about real strategy execution.

In line with this new integration, a network of PPM leaders exists companywide. Centers of competency (most of them virtual) help improve workload management, and capacity planning is in place and operating. Practices — such as lean in the process area — help shift the focus from the internal organizational workings to a more customer-centric perspective. The portfolio is modeled and appropriately optimized, factoring in risk. Value and benefit realization are being tracked. Because program management skills are being developed internally, most program managers are now being chosen from internal candidates, rather than from among outside consultants.

Very few companies have successfully reached Level 4, but we anticipate this number to begin to grow, because digital is changing everything. 6 While siloed organizations have always lacked the integration that defines Level 4, there has been little external pressure forcing organizations to change. The new digital economy, where competition can emerge from the dark corners of possibility, forces organizations to begin to work together as a matter of course, which supports PPM in attaining the level of initial integration.

Level 5: Effective Innovation: Constant Innovation Helps Us Stay on Top of Our Operations and Our Markets

The hallmarks of Level 5 from a PPM perspective have to do with a complete change in how organizations function. First, there is an expectation that IT has both strategic and tactical value and can potentially be used to redefine markets and industries. Second, innovation is no longer an afterthought, but rather a continuous process everywhere in the organization.

To accomplish this, the organization begins to split into two conjoined halves. Like the brain, the operational side of the organization begins to embrace fully the concept of "change operations" (see "Projects Today, 'Change Operations' Tomorrow" ), while the development side of the organization turns to more exploratory and classically innovative initiatives similar to what our research is showing for IT with the evolution of bimodal IT. 7

Program management will exist at Level 5 in much the same sense that it does at Level 4. There will always be large things that need to get done and that require talented leadership. Portfolios exist for all project work throughout the enterprise. An EPMO oversees strategy execution and value delivery. Other PMOs exist as necessary throughout the organization. Technology supports a robust knowledge management system, and resource management is enabled for all project resources. Team compositions change and adapt to each initiative, and work is structured and executed in a way that maximizes the odds of getting things done right.

Gartner Recommended Reading

Evidence

1 Reviews of research, publications and constructs, such as COBIT (including Val IT); CMMI; Organizational Project Management Maturity Model (OPM3); and Portfolio, Programme and Project Management Maturity Model (P3M3) constructs.

2 Continuous observation of PPM practices gained through more than 5,100 interactions conducted by the PPM research team from July 2012 through June 2014.

3 I. Adizes, "Corporate Lifecycles: How and Why Corporations Grow and Die and What to Do About It," Prentice Hall, 1988.

4 "Not Everything Is a Project"

5 Capability Maturity Model

6 "Get Ready for Digital Business With the Digital Business Development Path"

7 "Bimodal IT: How to Be Digitally Agile Without Making a Mess"

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