IT project resource planning with project portfolio management (PPM) solutions takes a long time to implement and only utilizes a small portion of PPM features—while often failing to deliver true cost accounting functionality.
Some IT leaders and project managers find combining a project financial planning (PFP) platform with a lightweight PPM solution (such as MS Project or Clarizen) is more appropriate for their needs
Why PPM may not be right for your business
PPM may take too long to implement and over-complicate financial processes for both project managers and IT finance struggling to manage the financial lifecycle of an organizations project portfolio.
PPM deployments are not easy—or quick. Any software deployment is prone to falling for hope over experience when scoping levels of effort, but the kicker (as if an elongated deployment time wasn’t bad enough) comes from the consequences of a long deployment — a typical 12-month implementation of PPM tempers employee engagement. Last year’s interest is this year’s indifference. According to Gartner, lengthy PPM implementations lead to underutilized functions and modules when the solution finally goes live. PPM capabilities in a statement of work are shelf-ware if they aren't operationalized in deployed software.
Thus, if you move forward with PPM, Gartner recommends right-sizing expectations, and starting with just “good enough.” Before the purchase of a selected PPM tool, IT leadership should identify organizational needs beforehand.
To determine how prepared your company is for PPM implementation, Gartner provides a checklist of recommendations. Due diligence on finding an appropriate solution, educating teams on the change, defining a business process that needs to be in place—and that’s to prepare for the implementation, not the deployment itself.
Project Portfolio Management without IT Project Financial Planning
PPM solutions often falter once the “build” phase of a project ends. The only reason to invest in a project portfolio is to deliver on-going value in the form of a project output—be it a new application or an expanded data center. Ignoring the lifecycle costs of that investment ignores the true size of project spend, fails to provide full IT project financial planning oversight, and undermines IT project resource planning.
In an Apptio survey, 53% of PMO management said that they couldn’t budget and forecast build costs accurately, and 67% were unable to plan their transitional and run costs accurately. Without something to facilitate constructive back-and-forth discussions between IT finance and the PMO, the budgeting process remains broken.
PPM solutions can be totally overkill. They drive financial complexity for both IT Finance and PMs, as they are not ‘true project cost accounting applications’ and require significant spreadsheet supplementation. Patrick Finkler Rego Consulting
IT leadership still must make decisions—even with poor project financial planning. They make decisions with the information they have not knowing how (or which) project initiatives will impact the operational budgets.
Without a line of sight into project run costs, IT Finance leans on overly-conservative budgets for air cover. (“Better to be safe than sorry.”) This is a safety-first tactic masquerading as a strategy. There is a material impact on the rest of your project portfolio (“Which project are we going to have to re-prioritize”) if a % of your budget is locked up in padding.
On the flip side, if the padding isn’t enough, finance teams are left with a painful reconciliation of operational budgets to claw back overspend. And everyone feels the pain of that scenario:
- For project managers, it’s a major challenge to assess the financial impact of project changes on operational budgets and undercuts IT project resource planning.
- For IT finance, a disconnect with the PMO results is a headache to track vendors, projects and service owners, making it even more difficult to forecast and plan accurately.
- For PMO leadership, the inability to plan a financial lifecycle of a project and execute projects with known resources leads to a lack of agility that’s required to navigate changing priorities.
- And for IT leadership, a lack of clear analysis on budget variance means that changing IT priorities cannot be accommodated, hence the real value of IT does not materialize.
How you can improve your IT project resource planning
Project financial planning tools, like Apptio Project Financial Planning, typically deploy within six weeks. Expansive out-of-the-box functionality eliminates the need for hefty and time-consuming customization.
True cost accounting aligns project initiatives with business priorities. Leading PMOs have found the following outcomes with a Project Financial Planning tool supplementation:
- Unify portfolio and operational IT budgeting/forecasting process.
- Remove finance-driven complexity from PPM and shift to easier processes within a project financial planning application.
- Track Business Impact with Robust Reports and Dashboard that utilize financial data to track project initiatives.
- Quickly intake and approve portfolio initiatives with a financial lens, before getting bogged down in the cumbersome details required to enter projects into a PPM system.
- Better collaborate with IT Finance to avoid unwieldy hand-offs that slow down initiatives.
- Gauge demand to capacity for all resources, including both labor + non-labor.
Combine a PFP solution with a lightweight PPM solution, and you may have the right set of tools with the right functionality to manage your complete project lifecycle.
This pairing of lightweight PPM with a project financial planning tool results in less cumbersome deployments, faster adoption, and stronger project financial governance throughout the complete lifecycle of project initiatives, empowering IT leaders to make portfolio decisions that not only improve project ROI but better align investments with grow-the-business aspirations.
»Download these eBooks to make smart decisions to plan, analyze, and optimize technology investments in pursuit of digital transformation:
- [Webinar] Six Ways Project Financial Planning Can Improve Your Portfolio Strategy
- Plan the full life-cycle of project build and run costs
- Five ways your project financial planning process can fail …and how you can fix it
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