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1
Excelling in Economic Tsunami
- Project Portfolio Management as catalyst
Saji Madapat MBA, CSSMBB, PMP
21 November 2010
2
12/1/2010
Presentation Outline
• Present Scenario
• Why PPM?
• What is in PPM for my organization?
• SO What is a Portfolio?
• Organizational Context of Portfolio Management
• Cross-COMPANY Portfolio Management Process Relationships
• Project & Portfolio Attributes
• Case Study
4
“En”visioning Tomorrow
“The corporation as we know it,
which is now 120 years old,
Is not likely to Survive the
next 25 years.
Legally & Financially, Yes,
But not Structurally & Economically.”
-Peter Drucker
5
Immediate Past
-“Irrational Exuberance”
In the era of economic boom:
• Exciting new investments and acquisitions!
• BIG PERKS!
• ―Creative Accounting‖ (book cooking)
7
12/1/2010
Consequences…
Annual IT application development statistics:
• $250 Billion on 175,000 Projects
• 31% will be cancelled
• 53% will cost 189% of original estimates.
• only 52% of required features and functions.
• Time overruns 82%
• $55 Billion dollars total project waste
Source: The Standish Group CHAOS Report 2003
11
Sell strategic unitsLayoffs
Cut projects
Strategic budget cuts
Inefficiencies
The Corporate Ship: Busted!
Credit
12
DUMP???
• Strategic Projects
• Core Assets
• Strategic initiatives (R&D)
• Vendors
• Knowledge Capital -Employees
OR . . .
13
STRATEGIC INVESTMENTS
Project Portfolio Management
Inefficiencies
The Corporate Ship: High and Dry
Credit
A downturn is a terrible thing to waste.
It's easier for everyone to understand the need for the change
when things are tough and the risks are lower.‖
- Frank Blake, CEO HomeDepot
"This is not the time for tech companies to be cutting back…
this is the time to be hitting the accelerator.”
– Peter Thiel,
Facebook board member
14
PMI conducted 5 Global studies:
involving 30,000+ practitioners
including C level executives
In their business environment:
•Desired project results were seldom achieved
•Project evaluation often not linked to business value
•Despite selection criteria, & processes in place to align projects to strategy, projects still failed
Why PPM?
15
12/1/2010
Why PPM?
Significant findings:
• Only 25% achieved well-balanced project portfolios.
• 75% do not believe their organizations are delivering the projects
necessary to achieve organizational strategies!
16
12/1/2010
OrganizationalStrategy
Successful Projects
PPM
• Most Organizations have a Strategy Planning Process
• PPM Bridges the gap between Organizational Strategy & Successful Projects
• The PMBOK® Guide enables you to successfully accomplish projects
17
Operational Excellence
to Management Excellence
Presentation Title
Operational Excellence
(for Example Project Management)
Strategic Excellence
(For Example Portfolio Management)
Time
C
o
m
p
e
t
i
t
i
v
e
A
d
v
a
n
t
a
g
e
18
12/1/2010
SO What is a Portfolio?
Portfolio
Sub Portfolio Projects Programs
Programs
Projects
ProjectsProjects
Maintenance JobsPrograms
Projects
A portfolio is a collection of Projects and/or programs
(even sub portfolio’s) and other work (ex. maintenance)
that are grouped together to facilitate the effective
management of that work to meet strategic business
objectives.
1912/1/2010
Organizational Context of Portfolio
Management
Organizational
Strategy &
Objectives
Mission
Vision
Project Portfolio
Planning &
Management
Management of On-
Going Operations
(Recurring activities
- Producing Value)
Management of
Authorized Programs
and Projects
(Projectized Activities
- increasing value
production capability)
Organizational Resources
High Level
Operations
Planning &
Management
2012/1/2010
Cross-COMPANY Portfolio Management Process RelationshipsP
roje
ct &
Pro
gra
m
Ma
na
ge
me
nt
Pro
ject
&
Pro
gra
m
Ma
na
ge
me
nt
Op
era
tio
ns
Ma
na
ge
me
nt
Op
era
tio
ns
Ma
na
ge
me
nt
Po
rtfo
lio M
an
ag
em
en
tP
ort
folio
Ma
na
ge
me
nt
Exe
cu
tive
Ma
na
ge
me
nt
Exe
cu
tive
Ma
na
ge
me
nt
Vision MissionStrategic
Plan
Balance
Score Card
Program
Project
Management
Performance
Measurements
Authorized
Component
Operations
Prioritization
SelectionEvaluationCategorizationIdentification
Program
Project
Closeout
AuthorizationPortfolio
Balancing
Governance
2112/1/2010
Attributes Project Portfolio
Scope Narrow & Specific Business
Change Minimum Broad
Success Budget, Time,
Specification
Business
Performance
Leadership Tactical Strategic
Management Project Team Proj, Prog& Exec
Competencies Process Insight & Synthesis
Planning Detailed Aggregate
Benefit Reduce Risk Optimize Scarce
Resources
2212/1/2010
The P’s
PMO
Crosses the IT boundary.
Federated Model
Portfolio Management
Cross Organizations.
Getting Right things
done
Project Management
Focused.
Getting things done
Right
Program Management
Unity in diversity
Tactica
l F
ocus
Str
ate
gic
Fo
cu
s
Investment Centric
Performance Centric
23
12/1/2010
Current state of PMO’s
• Most PMO’s are:
– Laboriously Built
– Painfully Maintained
– Almost NEVER used
24
12/1/2010
• Bridges - organizational strategy and projects.
• Credibility and visibility of PM profession.
• Understand organizational project management maturity.
• Analyze maturity of different parts of the organization
• PPM is a balancing act. Balancing resources against organizational needs - operations (on-going efforts to ―keep the lights on), tactical and strategic needs.
What is in PPM for my organization?
27
Dedicated to
Father of Knowledge Management
(Robert (Bob) H. Buckman)
“Communications is human nature;
Knowledge sharing is human nurture!”*
28
Who is. . . Buckman Laboratories?
• Provides specialty chemicals and solutions
• Employs 1300 loyal associates
• Global operations
(90+ countries)
• Speaks more
than 15 languages!
29
Clouds in the horizon
• Recession in 2002
• Paper Industry Consolidation
• Commoditization of Specialty Chemicals
• Raw Material Price hikes
• Transportation Costs hikes
• Global Competition
• Regulatory Requirements
• Inability to meet the existing Business System Platforms
30
State of Historic Systems and Projects
Many Historic System’s were:
– Laboriously Built
– 48 Systems cannot talk each other
– Inadequately Equipped/Handicapped
– Painfully Maintained
– Almost NEVER used
31
Historic Projects:
• Run by a group of feudal Autonomous Managers.
• Each Organization sets its own objectives and
business processes, using its own System.
RESULT:
• Fragmented data, lack of visibility, impossible to co-
ordinate Organization as a whole.
32
“Global Vision” – by Executive Leadership
• One Flexible Global Business System
• One Global Core Knowledge Project Team
• One Global Infrastructure
• Project Portfolio Management & Outsourcing
non-core Business Processes.
33
5.2 GAP Analysis
Reality Want to be
Enterprise Business System (BS) Islands One Global
Project Team Islands One Global
Enterprise BS Infrastructure Islands One Global
BS Risk Management ??? One Global
Integration and
Consolidation Hell One BS
34
Global Business System
• One Business System for one organization!
• Global Buckman BS Model through ERP – BaaN
• In Sixteen nations around the globe
• Global Consolidation & Business Performance Reporting
(Hyperion)
35
Global Core Knowledge Enterprise Team
• Based in Memphis
• Supports the worldwide Buckman organization.
• Responsible for:
– developing a Global Enterprise Business Model
– implementation,
– support and optimization
36
Global Enterprise Infrastructure
• Business System server based in Memphis & take the
advantage of Time Zone differences by sharing:
– Concurrent Licenses
– Support Infrastructure
– Specialized Professionals.
37
Buckman’s Global Business System
Global BS Enterprise Team, Solution & Infrastructure
Buckman Laboratories, Inc.Memphis, Tennessee, U.S.A.
Buckman Laboratories, Inc.Cadet, Missouri, U.S.A.
Buckman Laboratories, S.A. DE C.V.Cuernavaca, Mexico
Buckman Laboratories LTDACampinas, Brazil
Laboratories Buckman S.A.Buenos Aires, Argentina
Buckman Laboratories (PTY.) LTD.Hammarsdale, South Africa
Buckman Laboratories PTE LTDSingapore
Buckman Laboratories,K.K.Tokyo, Japan
Buckman Laboratories PTY. LTD.Wagga Wagga, Australia
Buckman Laboratories,LTD.Auckland, New Zealand
Buckman Laboratories Italiana,S.r.l., LTD.Milano, ItalyBuckman Laboratories Quimica, LDA
Parede, Portugal
Buckman Laboratories, S.A.M.Principaute de Monaco
Buckman Laboratories, IbericaBarcelona, Spain
Buckman Laboratories, S.A.Ghent, Belgium
Buckman Laboratories,GesellschaftVienna, Austria
Buckman Laboratories GmbhBad Homburg v.d.H.,Germany
BaaN & Hyperion
Buckman Laboratories,.Shanghai, China
5.4 Scope
38
- Business System Project Scenario
5.5 Business Case
Scenario Pre PPM(USA - 1999) Post PPMCost of Capital (Fed Rt)
Consultancy Expenses
Hardware/software
Project Duration
Support, Maint., Optimization
Implementation Team
Customization
Percent of Business Practices in
Business System post-impl
Bonus Systems
Business Continuity Plans
Probability of Success pre-impl
Global Business System
Global Consolidation & Reporting
7-8%
+$3 M
+$0.5 M
1.5 Years
Consultants Heaven
Inexperienced
Heavy
70%
Nil
Nil
20-40%
48 systems*
No
>1-3%
Nil
Nil
4 months
Internal resources
Experts
Minimal
95%
Hyperion etc.*
Fully equipped
99%
One system*
Yes
39
If you can believe. . . .• When Economy going South, company’s
strategy has paid off!• Revenue Doubled in its 60 year history -
from about $300 Million to $550Million between 1999 to 2008
• Cost of IT expenditure reduced from over 8% to ~2%
• Six Consecutive—Most Admired Knowledge
Enterprise – ahead of other Global Hall of
Fame members - GE, British Petroleum, HP,
and Xerox.
41
12/1/2010
Saji K. MadapatCPIM, CIPPM, PMP, CSSMBBhttp://www.linkedin.com/in/goodtogreat - [email protected] Mobile: 001-214-454-7254
At Ernst & Young, Saji is responsible for the Enterprise Performance Improvement projects for its
various clients. As an Advisor- Project Portfolio Management Office, Saji played a key role in the
Project Portfolio Management Office initiative of $5.5B FedEx Freight for its IT & Business Projects.
Earlier he had the techno-functional and project portfolio responsibility for Global Business
Performance Systems (PPM & Hyperion BI) in 20 countries of Buckman Labs (a globally Most
Admired Knowledge EntPPMrise -6 time MAKE award winner). He also worked with leading
consulting firms including Bearing Point (KPMG), Ernst & Young (Cap Gemini), Arthur Anderson,
BaaN (Vanenburg) Business System and CroweChizek on various high-profile PPM and Business
Performance Management projects in the US.
Saji is a graduate of Executive Global leadership Masters Program from PMI’s Leadership Institute.
He served three terms as VP, Finance & nominated for President (2006) of the award-winning
Project Management Institute (PMI) Memphis TN Chapter. Currently he is serving as a member of
PMI Code of Ethics Implementation Advisory Committee (CIAC) and earlier as PMI ambassador
(Component Mentor – 2006 & 2007) to its most crucial region - Asia. Saji Authored and presented
over 30 papers at various Global Leadership Conferences. He is also active in PMI committees and
global activities, which includes judge of PMI's 2004, 2005 & 2007 Project of the Year (POY) Award
applications, mentoring initiatives and contribution to PMI’s strategic initiative on OPM3
(Organizational Project Management Maturity Model), PPMS (Program Portfolio Management
Standards) and PMCD (Project Manager Competency) Standard Framework.