Pragmatic Portfolio Management25 Sept 2012

Martin Samphire and David Dunning, on behalf of the APM Portfolio Management (PfM) SIG

APM Portfolio Management (PfM) SIGAPM Thames Valley Branch

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APM Presenters

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Martin SamphireMIOD

Chairman of APM Governance SIG

Owner and MD – 3pmxl Ltd

Sectors – FS, police, defence, energy

David DunningCMC

APMG Registered MoP™ and

P3O® Consultant

CPS Director

(APM Portfiolio Mgmt SIG Committee Members)

Agenda

� Introducing the PfM SIG and PfM background

� Portfolio Management concepts

� How to introduce / improve PfM

� PfM survey – some results and insight

� Group discussions – key insights from survey

� Q&A

� Summary and close3

PfM SIG and background

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PfM SIG – some committee faces

Our passion - "To develop and promote the professional discipline of Portfolio

Management for the public benefit.“

…..Promoting, Influencing, Communicating, and Sharing best practice……

Achilleas Mavrellis

Defra(SIG Secretary)

Christine Rigby

AstraZeneca

StephenParrett

Right Change Consulting(SIG Chairperson)

Nigel BellHP

Martin Samphire3pmxl Ltd

DavidDunning

CPS

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Rebecca WestCity of London

Corporation

Change Management

AssurancePeople

GovernanceProgramme

Management

Benefits Management

PMO

Portfolio Management

(PfM)

PfM SIG - interfaces with other SIGs

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Directing Change

2nd edition 2011

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Co-Directing Change

2007

Sponsoring Change

2009

Free to APM members at www.apm.org.uk/memberdownloads

PfM – strong link to governanceGovSIG – Publications to date

APM PfM SIG focus for 2012

� Survey – update, analyse and provide

insights (more later)

� Enhance relationship with external bodies

to influence business leaders

� Spread good practice to APM members

and beyond – events, papers, website,

case studies

PfM SIG – Join the Debate....� Come and join us to find out more!

– Link to PfM SIG area on APM website

� Become one of our Bloggers online...

� Do you have some interesting PfM learning, tools, techniques or a case study to share through a written article or presentation?

� Please do complete the survey at

www.surveymonkey.com/s/LB93F9C

� PfM “Fest” on 2 October

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PfM – some key concepts

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Which world do you live in?

� Business as unusual?

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� Business as usual?

Inconvenient

period of change

Current steady

state

Future steady

state

The Black Death, PM and PfM

The Black Death has a parallel with project management….the signs of something going

wrong were well known and yet the same medicine was applied – Project March 2012

� Heavy investment in PM and change delivery framework, tools and skills

� Success rate for projects not improved

� Need new “medicine”

� Could that be more focus on Portfolio Management?

� Successful Portfolio Management leading to better Benefits Delivery?

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Change in context

Mission

Strategy & Objectives

Portfolio Mgmt –

Definition &

Monitoring

Operational

Planning & Mgmt

Programme and Project

Mgmt of authorised

P&Ps

Operational Mgmt

of on-going operations

(BAU)

Organisational and External Resources delivering tasks

Vision Portfolio Management

“Doing the right

projects”

Programme & Project

Management

“Doing the projects right”

Projects

Programmes

Portfolio

Specific business benefits

Outputs

Achieve Strategic Outcomes

Portfolio Management ensures

“right projects and optimises

investment in change”

Positioning PfM

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Positioning PfM – Definitions

Making the right investment choices and effectively optimising scarce resources

(money – technology – infrastructure - people)

APM

The prioritisation,

selection and

management of an

organisation’s

projects and

programmes in line

with its strategic

objectives and

business priorities,

taking into account

its capacity to

deliver them.

OGC

PfM is a

coordinated

collection of

strategic

processes and

decisions that

together enable a

more effective

balance of

organisational

change and BAU

National Audit

Office

Prioritisation of all

an organisation’s

projects and

programmes in

line with business

objectives and

matched to its

capacity to deliver

them.

Cranfield &

Open University

Managing a

diverse range of

projects and

programmes to

achieve the

maximum

organisational

value within

resource and

funding

constraints.

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Positioning PfM – Some SIG Perspectives

‘Portfolio Management ensures the ‘right’ projects & programmes

are selected and managed for success….’Portfolio Management SIG 2011

‘All Projects

Succeed’APM Vision 2012

Supports timely decision making

and re-orientation of in-flight projects &

programmes so that strategic benefits

are optimised

Avoids projects being seen as the province of a specific department –

decisions based upon business not ‘local’

criteria

Identification of Projects & Programme that are

strategically alignedand add value Those not strategically aligned

are not started or cancelled as early as

possible

Ensures visibility of all projects & programmes

and their interdependence and enables tracking and

focus to ensure success. Provides better

engagement with staff

Supports effective and optimised allocation of

resources to better enable the highest priority ‘right’

projects and programmes to succeed

Ensures management of risk at the collective

level increasing success of the ‘right’

projects & programmes and a link to business

risk management\

Supports robust governance of change

across the whole landscape of change / projects

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Positioning PfM – Integrated Cycles

UnderstandStrategic fit

PlanPortfolio strategy

& delivery…The baseline…

BalanceE.g. Overall risk,

return, coverage etc

PrioritiseRanking criteria

CategoriseFor easier

decision making

Organisational

Energy &

Willingness

Definition Delivery

InputResults:

Influencing Strategy

Outputdelivering Strategic Outcomes

Performance(Verify – Clarify –

Check – Respond)Diagram based on the Portfolio

Management cycles in OGC

Management of Portfolios (MoP™)

Benefits MgmtMaximise Portfolio

performance

Financial MgmtAlignment with financial

business cycles

Risk MgmtMitigation …& opportunity…

Stakeholder

EngagementMaintaining

support for delivery

Resource

Mgmt

Management

ControlTemplates, Assurance

GovernanceClarity for decision

making

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Demand Management Process

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3pm

Project Lifecycle

Performance KPIs

Portfolio definition – categorise

Identify alignment with strategic objectives – segment where possible into categories of similar type

Strategic

Investments which are

critical to sustaining

future business strategy

High Potential

Key Operational Support

With tailored investment criteria

Investments which may be

important to achieving

future success

Investments on which the

organisation currently

depends for success

Investments which are

valuable but not critical to

success

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Portfolio “filter”

Portfolio Plan

BAU Work

Vision

Current State

Programmes and Projects

StrategyMission

Consensus?

Poorly understood

Priorities agreed?

Poor control

processes

ResourcesNot Integrated

Not what expected

Positioning PfM - where can it go wrong?

Business Strategy Changes

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Business

Performance

Benefits

Key principles for success

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� Senior management commitment– Senior champion and clear roles / accountabilities

– Active engagement - Fast decision making

– Rewards and recognition alignment

� Alignment with governance framework– Portfolio direction group / Investment Committee

– Portfolio Progress Group / Change Management Committee

– PPM Forum – project progress

� Alignment with strategic objectives– Portfolio segmentation

– Prioritising (weighting, rating, pair-wise comparisons, decision conferencing

– Link benefits to strategic objectives – value led

� Use of a portfolio office– Process and standards, support, challenge, assurance, reporting, lessons

– Evidence

� Energised culture– Collaborative working, proactive communications, learning and improving

Adapted from OGC MOP

Positioning PfM – The Benefits of PfM

� More “right” programmes / projects

� Removal of redundant, duplicate, poorly performing projects

� More effective implementation of programmes / projects –consistent approaches and improved dependency management

� Better resource utilisation and collaborative working (both projectrs and bau)

� Holistic risk management

� Enhanced transparency, accountability and governance

� Improved engagement and communication between senior management and staff

� Greater benefits realised (and that support strategic objectives)

Reference: MoP™ Office of Government Commerce, 201122

PfM – how to introduce and improve

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Vision…What is our expected future state?

Requirement…How does it piece together?

Readiness…Have we checked we can do this?

Approach…Opening, mid & end game?

Roadmap…How do we get there?

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Problem Outcome Benefit

Resource management – unsuitable model for

managing going forwards

• Central place – for resources, skills,

plans.

• Process for long term planning and resource allocation.

• Update cycle to control allocations for plans ‘in flight’

• More efficient use of resource pool.

• Ability to be more agile • Reduce the cost of managing issues resulting from

ineffective resource management. • Increase delivery certainty from greater timescale

predictability

Lack of visibility of work in flight / approaching

and lack of visibility of timescales.

• Central place for plans and other

project controls. • Common reporting portal. • Replace current manual reports with

more automated / on demand report solutions.

• Reduce cost of reporting• Increase predictability for the business leading to less

time spent introducing changes• Improve reputation with the business

Incomplete approach to forecasting the forward load, unsatisfactory transition from possible to real plan

• Provide a portal through which work requests can be registered.

• Introduce planning standards for long terms and near term work.

• Review priority model to require alignment to strategy

• More predictability of project starts from greater visibility of resource demands now and into the future leading to more efficient use of resources

• Less management time spent resolving issues which could have been avoided.

• Enables more effective prioritisation – more if the important work is done.

Ineffective collaboration on project controls and no central configuration management approach for document

• Project Collaboration environment. • Document Library, common project

controls.• Cross project issue, risk, lesson

learned reports

• Less time managing documents, less issues resulting.• Less storage space needed. • One place to look for documents, less time searching

for the right version. • Better learning. • Less time spent assembling cross project reports

Ineffective Performance measurement and management

• Common progress cycle from common plan structures, supporting common metrics

• Less time spent capturing status. • Less time spent starting up plans and project controls. • More reliable planning leading to less issues to

manage. • Increased predictability leading to reputation benefits

and business time saving.

Base CapabilityTools – planning tools, collaboration environments, reporting platforms, user capability. Architecture, installation, performance assurance, trained users following basic procedures for use, simple quality assurance checks.

Data – Databases and data stored, reporting data sources, basic quality assurance. Base data model defined, access controls, data aggregation and integration facilities in place.

In addition to the data and tools, basic usage guidelines and support will need to be provided.

People & Process Controls – definition of the right information needed at the appropriate moment of processes. The right management information, commonly used, and relied upon by the business. For example, business case documents, change registers, risk logs, etc.

Operation – execution of the appropriate processes and roles to deliver work. Common, joined up procedures carried out by people, where capability is not an issue.

Insight & ManagementReporting – definition of common reports delivered from common process using common tools & data.

Integration - Progress from manual data through to integrated reports linking related data stores (like planning and finance data), to snapshotting and data capture / trend analysis.

Collaboration – Common ways of sharing all kinds of information (Risk, Issue, etc.), linking of unstructured information.

Organisation & LeadershipOrganisation - The ecosystem which delivers projects and programmes. Tools and processes owned, support and governance in place, scrutiny and oversight of the portfolio active.

Leadership - Initial link between strategy & delivery visible, capability hiring approach in place, executive level use of information for decision making, strategy drives delivery and delivery of benefits informs strategy.

� Recommend not to take on too much change at once. Enable ���� Improve ����Change

� Choose a sensible scope in each of the areas of Base Capability, People & Process, Insight & Management and Organisation.

� (Also - We might not need to do everything)

INSIGHT &

MANAGEMENT

ORGANISATION

PEOPLE & PROCESS

BASE CAPABILITY

Hig

her

ord

er

engagem

ent w

ith t

he

org

anis

ation

CHANGE – improvements possible with fundamental organisation changes

IMPROVE – capability benefits derived from basic building blocks

ENABLE – basic capability building blocks

in place

Fro

m c

urr

ent sta

te to

ultim

ate

solu

tion

SOLUTION COMPONENTS

TRANSFORMATION

• Consider the problem statements and the desired outcomes against each of the solution components.

• Do we need to consider tactical en-route to strategic solutions.

• Will the solution offered really help achieve the benefit expectation.

Capability / Maturity enabled building blocks

• Depending on the circumstances, there are changes that it is sensible to make first,

and changes it is sensible to delay.

• It may be sensible to introduce some changes only after others have settled into

business as usual. For example, resource planning before resource management.

• It may well be that: • there are bandwidth constraints which will limit what can be led or absorbed by staff.• we cannot reach or influence the stakeholders until they have seen initial benefits.

• It is sensible therefore to plot out a sequence of change respecting these constrains:

INSIGHT & MANAGEMENT

ORGANISATIONPEOPLE & PROCESSBASE CAPABILITY

Key Business Issues Demonstrable Business Benefits

CHANGE

IMPROVE

ENABLE

Phase 1 Phase 2 Phase 3Not in Scope

INSIGHT & MANAGEMENT ORGANISATIONPEOPLE & PROCESSBASE CAPABILITY

• Tools joined up with other tools

• Data integrity• IT strategy

alignment

• Interpretation not a gamble

• Processes relied upon by the

business• People capability

not an issue

• Flexible Insight to spot issues• Meaningful analysis on reliable

information from reliable process

• Supporting key business

processes

• Scrutiny and oversight of the

portfolio• Strategy drives

delivery and delivery informs strategy

• Future resource needs from strategy

CH

AN

GE

• Tools aggregate information easily

• People use tools & follow basic usage model

• Accuracy and reliability

• Common Information

• Processes joined up and operated

• People capable of following processes

• Common data schemes in different systems

• Common reports extended to integrated information

• Aggregated information for further collaboration

• Support and governance in place

• Exec level use of information for decision making

• Skill development / acquisitionIM

PR

OV

E

• Common planning & collaboration tools

• People have base tool capability

• Data Accuracy

• The right management information

• Common procedures

• Enough of the right people

• Common reports defined• Information sources

understood and manually worked together

• Common ways of collaborating around information

• Standard tools &processes owned

• Initial link between strategy & delivery visible

• Capability hiring approachE

NA

BL

E

Transformation

Phase 3 Vision = CHANGE – deliver benefits beyond what is possible with improvement alone.• Design• Change

Phase 1

EnablePhase 3

Change

Phase 2

Improve

Design Change

Realise Benefits

S

Design Change

Realise Benefits

Design Change

Realise Benefits

F

Assessment

Initiation

Define

Identify • Identify – the problems to be solved• Assess – what the implication is• Define – the solution and the roadmap

Phase 1 Vision = ENABLE• Assessment• Design• Change

Phase 2 Vision = IMPROVE – build upon the capability enabled.• Design• Change

PfM – survey and insights

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PfM Survey – Principles(*) Considered

� Proactive and visible senior management commitment

� Consistent and effective governance alignment

� Alignment of the Portfolio with strategic objectives

� Co-ordination through a Portfolio Office

� Energised change culture and associated behaviours

(*) Principles from: MoP™ - Office of Government Commerce, 2011

PfM Survey asked how each of these were perceived in organisations in terms of their Importance and Effectiveness

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Principle Importance Effectiveness

Alignment of the Portfolio with strategic objectives

63% 37%

Proactive and visible senior management commitment

57% 42%

Consistent and effective governance alignment 43% 27%

Shared change culture and associated

behaviours

29% 18%

Co-ordination through a Portfolio Office 28% 22%

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Reasonable

correlationSenior focus?

We don’t need PMOs? Poor show –

need to improve

Most important

No to culture change?

Principles(*) Rated

PfM Survey – Challenges Faced

1. Gaining Board buy-in to a single agreed view of business objectives

2. Developing an initial portfolio

3. Getting portfolio management started

4. Securing and sustaining business unit management commitment

5. Prioritising and balancing the portfolio

6. Dealing with tensions between Portfolio and BAU/Operational objectives

7. Securing and developing people with the right portfolio skills/capabilities

8. Putting in place the right tools & techniques to support PfM

9. Delivering overall portfolio benefits

10. Setting up, and gaining compliance with, portfolio management processes

11. Achieving the goals set for a portfolio management function

12. Applying lessons learnt from regular reviews of PfM performance

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Challenge Rated

High

Interest

Developing an initial portfolio 40% 15

Gaining Board buy-in to a single agreed view of business objectives 37% --

Getting portfolio management started 36% 42

Securing and sustaining business unit management commitment 20% 38

Prioritising and balancing the portfolio 20% 58

Delivering overall portfolio benefits 18% 58

Putting in place the right tools/techniques to support PfM 18% 61

Dealing with tensions between Portfolio and BAU/Operational objectives 17% 46

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All their fault?

Top 3

topics

Little correlation

A long way to go in many areas, but significant interest in more debate/learning about how to improve performance

Are Challenges being met?

Exercise – survey insights

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Exercise – objectives and process

� In groups

– Take a Portfolio Management Principle

– Discuss it’s importance

� Together

– Each group - Make a short ‘champion’ presentation

– Vote!

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Q&A and summary

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Summary

� Effective PfM is about delivering Strategic Objectives

� This implies:

– Executive ownership of the Portfolio

– Integrated governance and decision-making

– Commitment to the underpinning and active processes

� This requires:

– Objective > Problem > Outcome > Benefit mapping - value led

– Vision and roadmap

– Organisational will – active and fast decision making

– Change Programme to implement / improve

� Getting PfM right should result in:

– Clear links between strategy, plans and the change portfolio

– Optimisation of all change resources

– Better overall benefits delivery and strategic outcomes39

For follow-up contact

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Martin Samphiremsamphire@3pmxl.com+44 7798 700314

David DunningDavid.dunning@CPS.co.uk+44 7767 803540