Making Sense of PPM Software - Page 1

May 17, 2005

Jeff Monteforte

If you've read some of my previous articles, then you know that I'm a strong proponent of introducing project portfolio management (PPM) into your organization without the assistance of PPM software.

My argument stems from the fact that each of the software vendors infuses their preferences and business rules for performing PPM into their software products. In other words, if you start by selecting a PPM software product then you inherently are choosing a specific PPM methodology.

As a quick refresher before we go any further, remember PPM is the management of the IT projects portfolio undertaken to maximize the contribution of business value of projects to the company.

PPM is not the management of individual projects. Although related, that is the responsibility of project management (PM) and there are numerous software tools available to automate the administration and management project management tasks.

Form Follows Function

I believe a company's PPM practice must be a nearly perfect fit with regards to the organization's culture and priorities.

This belief is based on the understanding that PPM is as much an exercise in changing the attitudes and behaviors of senior executives towards the prioritization and funding of IT projects, as it is the deployment of a new business process.

That being said, once a company has deployed a PPM process specific to their organizational environment they then have a strong understanding of the precise requirements that a software package must support.

It is only at this point in the process of deploying your PPM methodology that you should evaluate a software tool for purchase.

You may be asking, "How many companies are ready to purchase a PPM software tool?" Well, according to a Forrester research survey of 269 IT decision makers, 83% said they are in the process of adopting PPM as the way to meet today's challenge of business/IT alignment.

If this is true for most of the buying market, and you are in that group, then you are at the point where you need to begin evaluating PPM software tools.

The PPM Market

The current PPM software market is comprised of over two dozen software vendors and products. Most of the companies are small, but this is changing as consolidation and the entrance of products from the big vendors (e.g. SAP, Oracle/PeopleSoft, etc.) continues to reshape this market.

About a third of the vendors have a strong project management heritage, about one-half of the products are solely focused on PPM, and the remaining vendors and products offer deep infrastructure asset management, financial analysis or vertical specialization.

With such a large class of vendors and products to choose from the decision of selecting an appropriate tool for your company can be confusing and overwhelming.

Before making an investment, you should ensure that the functionality you're looking for is not already available in current releases of project management software licenses that you may already have.

If you determine that purchasing a PPM tool is the best course of action, then your evaluation criteria must include functionality and templates, underlying technology, pricing, and vertical specialization.

Functionality & Templates. The primary pillars of PPM software functionality should include project alignment, risk assessment, demand forecasting, portfolio analysis and reporting, resource management, financial analysis, "what-if" analysis, benefits measurement, and incorporation of project management disciplines (e.g. scheduling, timing, tracking, budget management, etc.).

Technology Considerations. Your first decision is to determine if you want to purchase, internally install, and maintain the PPM application in-house or pursue a hosted solution. Typically, a hosted software approach is cheaper and is, therefore, the option most often preferred by smaller enterprises.

If you do decide to bring the PPM software in-house then your evaluation criteria should include the operating systems, databases, and programming languages (e.g. Java, JavaScript, XML, VBScript, etc.) supported by the product and vendor.

This information should play a critical role in the evaluation process if your intent is to integrate the PPM solution with a third-party project management tool, such as Microsoft Project Server.

Vertical Specialization. While a majority of the products on the market position themselves as supporting most vertical markets, the truth is, those products are designed in a "common denominator" fashion, i.e., using generic benefits categories such as increased revenue, cost saving, etc. and financial measures.

The tools that are explicitly built for a small segment of industries, such as Portfolio System from Enrich Consulting build their methodology around the business processes, customer segments, and benefit categories specific to that industry.

A banking PPM tool, for example, may try to identify a benefit such as "reduced deposit run-off", or an insurance benefit category may include "reduced premium leakage."

Pricing. In general, PPM solutions are not an inexpensive proposition. The costs of a typical solution starts around $200,000 and can easily grow to over $1,000,000 based on the size of your company, the number of users, and the level of implementation services required.

This is just another reason why I promote building and maintaining a manual process first to maximize the success of a selected PPM product.

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