Project Portfolio Management

Abstract

Project Portfolio Management practices have presently been integrated into organizations’ Information System departments as a way of improving project selection and thus, contributingp towards the achievement of organizations’ strategic mandates. Particularly, this paper expounds on the existing literature on Information System Project Portfolio Management, thereby, expounding on the integration issues and the difficulties that organizations face when engaging in project portfolio management, with interfaces and linkages with the strategic information management systems. In this regard, it provides an overview of the IS project portfolio management, which is followed by various issues that relate to integration and the difficulties, which organizations face. Notably, this paper recommends on the significance of the provision of additional training, risk planning, as well as financial management to organizations that provide IS project portfolio management. Additionally, is then need of recognizing the existing relationship associated with change management, owing to the changing technological environment, and also the benefits of using performance metrics. As IS project portfolio management continues to evolve and also integrate in many organizations, it is then the requirement of organizational leaders to make sound project decisions, which would support the goals of organizations and also demonstrate significant fiscal responsibility.

Introduction

Many organizations have purposed to adopt best practices in Project Portfolio Management (PPM), and this has been discussed in the recent decades. However, it is evident that continued research on Strategic Information Systems Management has gained more recent attention. Project Portfolio Management refers to the collective projects, programs, operations, as well as sub-portfolios that are managed centrally, with the aim of achieving the overall strategic objectives in an organization (Teller & Kock, 2013). In this regard, project portfolio of strategic information systems (SIS) would include various IS projects, operations, and even programs that aim towards the achievement of an organization’s strategic mandate. Notably, project portfolio management assists organizations through the enhancement of systematic review of various projects and programs, especially when it comes to allocation of resources and also ensuring that the portfolio aligns with the general strategy of the organization. However, it is evident that there are often many challenges, which organizations experience, which at times, may hinder the effectiveness of the portfolio, if significant and effective action is not taken (Project Management Institute, 2013). This paper purposes to purposes to discuss the integration issues, as well as the difficulties that organizations face when engaged in PPM and in particular, it will focus on the interfaces, and the linkages with strategic information systems management.

An overview of the strategic IS project portfolio management system

According to the study that Badewi (2015) conducted, he identified that 90% of chief information officers comprehend the significance of SIS project portfolio management system, wherefore 50% had the belief that IS project portfolio management system offered an important value to organizations. However, only 18 per cent of them capitalized on the actual value of an IS project portfolio management system. Notably, the model that the participants discusses was referred to as the IS project portfolio management system and it had 4 strategic categories, which included the ad hoc, defined, managed and also synchronized. Significant to note, at the ad hoc, it is evident that organizations do lack a clear process whilst making project decisions, as well as follow-through (Durbin & Doerscher, 2010). As such, it becomes significant for organizations to have a realization that decision making poses as a significant process that requires control, as well as planning. Significant to note also, as organizations work through the defined, and the managed stage, they integrate a synchronized stage, which reflects on the ability of aligning investment portfolios, with the business strategies. In this regard, organizations utilize the evolving metrics in ensuring that a project attains its value throughout its life cycle. As such, they regularly weed out various underperforming initiatives and whilst purposing to increase the aggregate value of there is investments, they purpose to assess the risks in the project, and the portfolio risk (Cooper, 2013). Essentially, the entire process is founded on a two-fold continuum, which is that projects are regularly evaluated against the organization’s corporate strategy and the second is the enhancement of consistent communication across the team of executives.

Integration issues within an IS Portfolio Management System

Before integrating an IS portfolio management process, the program and the portfolio managers ensure that they abide by a significant synchronous model. Firstly, they ensure that the project decisions connect with the associated values and risks, wherefore they should ensure low risks and higher values are the topmost priorities. Secondly, they should ensure that the characteristics of the IS portfolio management system are assessed via the use of the scorecards, and that they align with the IS strategy. Thirdly, they should necessitate the tracking of the benefits associated with the project throughout to the completion of the project. Finally, they need to constantly hold review sessions, in order to monitor the performance of the IS project. Once the process of synchronization has been developed, the integration of the IS portfolio management process thus begins (Caruso, 2007).

The sequential integration steps include the following. First, the process group is first initiated and at this stage, the IS project chosen, which is based on high value, and low risk results into a clear depiction of the project benefits, as well as financial frameworks. Secondly, the process group then leads to the second stage, which is the planning stage. This stage aims at delivering the required results, which include the development of the program infrastructure, schedule, monthly communication with various stakeholders, goals and objectives, financial plan, audit frequency, as well as quality control, (These are the areas of consideration in this stage) (Barsh & Capozzi, 2008). Thirdly, is the execution stage, which involves the integrative process within the IS project management. At this stage, the IS program management and the entire team fully invest their efforts and the team members, project leaders, as well are resources are significantly grouped in order to execute the plan as it has already been discussed in the previous stage. Fourthly, is the monitoring, as well as the controlling process, wherefore, at this stage, there is regular communication with various project stakeholders, as well as executive members (De Reyck et al., 2005). Furthermore, there is always the need of interpreting the IS project’s metrics, and this bottom line remains, determining it through answering two significant questions, which are: does the IS project still continue to provide high value and does it align with the project’s strategy and goals? Finally, the closing stage purposes to ensure that the IS program/project has finally come to an ultimate end and thus, has been accepted to be a significant service, product or even benefit.

Integration of Financial Management and Controls within an IS Project Portfolio Management

IS portfolio management having been explored from a financial perspective, thus, provides the definition of financial management as a process of maximizing an organization’s money (Elonen & Artto, 2003). Historically, correct, and also detailed financial management of the IS initiatives have been noted to have a significant challenge, which needs to be addressed. Notably, the concern lies in the opinion that most organizations gave many IS projects, which need attention than the funds available to meet such kind of support. However, organizations have been able to combat this problem, and in many organization, savings have been realized in the IS costs from 2 per cent to 5 per cent, thus reaching a 50% productivity improvements, as well as reallocation of 10 per cent to 15 per cent of the IS budget into the strategic projects within an organization. In other words, It is worth noting that IS project portfolio management system is beneficial in increasing productivity and also empowering the organization’s executives with the appropriate information that lessen costs (Martinsuo & Lehtonen, 2007). However, lack of financial skills amongst the IS staff often causes barriers on the implementation of the project.

In the study conducted by Caruso (2007), about 6 out of 10 executives acknowledged that lack of financial skills among IS staff posed as the major reason as to why IS project portfolio management was not integrated. Furthermore, 8 out of 10 of them believed that lack of financial knowledge caused various problems in regards to tracking IS investment’s value. Notably, without clear financial metrics, IS project portfolio management is bent on failing. In fact, it can be argued that pursuing IS project portfolio management without working financial skills results into redundancy in practice, owing to the fact that portfolio management is significant for many reasons, but most importantly, it offers flexibility in terms of the application of financial valuation techniques and also allows the alignment of IS investments against the general organizational strategy (Willcocks, 2013). In this regard, when there is need of maximizing the organizational strategy through IS project portfolio management, it is thus recommended that the IS department should be formally trained regarding financial knowledge. Notably, even prior to the initiation of the portfolio system in an organization, the IS program management ought to ensure that the IS staff have been imparted with proper training, as well as skills, in order for them to better management the project, as well as the programs. Finally, through the facilitation of the awareness of financial skills, the IS department in an organization can significantly identify various project risks, and also investigate on the projects that need prioritization versus termination (Drake & Byrd, 2006).

Integration of Risk Management within an IS Project Portfolio Management

The essence of an IS portfolio management is primarily to acquire a significant and balanced approach towards risk whilst maximizing on the value derived from the IS portfolio outcomes. Notably, when risk management has been significantly integrated into the portfolio, projects are in a position of receiving correct resources. The risk element certainly exists within the IS portfolio management system. However, the value associated with quantifying the risks associated are pinnacle. An example of a significant approach that has been utilized in the quantification of risks in IS is referred to as the Applied Information Economics (Drake & Byrd, 2006). This method purposes to quantify variables that are associated with risks in terms of low-user adoptions, delayed ender-user benefits, as well as project cancellation. Two applications, which manage IS payback periods, and also assesses various risks that are involved are ‘Giga’s total economy Impact’ and ‘Gartner’s total value of opportunity.’ The benefit associated with the ‘total economy impact’ is that the risk is adjusted, in accordance with the costs, benefits, as well as flexibility, whereas the ‘total value of opportunity’ system purposes to adjust risks, in accordance with the business performance, as well as potential (Bardhan et al., 2004). The necessity associated with the management of risks according to PPM system highlights areas, which ought to be considered, and they include financial risk, talent risk, operational risk, and political risks. In this regard, when they are applied to the IS portfolio management, they require the IS program managers to manage them effectively, in order to meet the set objectives of the project.

Integration of Change Management and Control within an IS project portfolio management system

The realization of significant change with in the IS is constant throughout the entire process. By 2013, it was suggested that the role of the chief information officer would be absorbed into a different role, or even marked as an executive leader in the management of business change. However, it is evident that retaining the chief information officers’ positions in organizations have continued. Notably, portfolio management has been absorbed into IS functions, either intentionally or unintentionally. Portfolio management can control change events. In other words, IS project portfolio management has presently become a significant change driver within organizations, wherefore, the application of enterprise architecture have purposed to permeate IS to unleash change management through the collaborations of team members. However, the change can be determined only whether the corporate culture has the ability of facilitating the change (Teller et al., 2012).

Monitoring Performance Metrics of an IS Project portfolio Management System

Metrics’ intentions are to measure the extent of success. However, they also have a potential of slowing the rate of innovation. It is thus imperative managing the portfolio performance through various appropriate tools, as well as techniques, and particularly through linking of strategy. Notably, this technique establishing an enterprise of various projects, in accordance with the organizational mission. In simple terms, program managers purpose to first identify the mission statement of an organization. Thereafter, they can create a series of goals, which support the mission statement (Teller et al., 2012). Next, there will be the usage of strategies, which support each goal, and lastly, each strategy would be significantly fulfilled via the usage of project hosts. However, it should be noted that each project is often chosen, in accordance with a project’s evaluation criteria. In this regard, the criteria of the author scores the project, based on areas like the strategic alignment compliance, risks and even the net present value.

Of importance noting is that the success of a project ought to be evaluated, based on whether the outcomes have a positive effect of the achievement of the organization’s strategic objectives. Through continued evaluation, they could be quickly terminated if they are performing poorly (Drake & Byrd, 2006). As such, organizations need to be wise when they need to apply their performance tools, as well as techniques to their portfolio management. There are six performance tools, which are available. The first is the project portfolio management system, which poses as an information highway existing between various components of the IS portfolio. Notably, this technique purposes to ensure that there is not replication of various projects, as well as redundancies within a given portfolio. The second is the financial reporting system, where system managers utilize significant financial data in understanding whether components need to be realigned, removed or even re-prioritized (Bardhan et al., 2004).

Conclusion

This paper has examined the existing literature, which shapes the field of IS project portfolio management, more specifically, the facets associated with IS project portfolio management in organizations. The discussion identifies various issues such as financial management, control of projects, approaches to risk management, planning, the significance of change management on the field of dynamic IS, as well as the need for applying performance metrics to projects in organizations, whilst putting into considerations, the IS project portfolio management. Notably, three recommendations can significantly be attributed to this study. The first is the need for collecting primary data from organizations, which have integrated project portfolio management processes into there is departments. Collection of data on the measurement of fiscal returns, improvement of various communication processes, and the manner in which IS project portfolio management adds value to the accomplishment of strategic goals in organizations would significantly bode well for the acquirement of clarity on IS project portfolio management best practices in organizations.

References

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