Critical reflection on Project Portfolio Management software

Abstract

More and more senior managers have turned to the use of complex and sophisticated Project portfolio management (PPM) software, to help their business to survive and grow in an increasingly competitive environment. It is key that senior managers are able to manage their project pipeline effectively; so that it provides the business, the highest possible value at the lowest level of risk and at the same time fit the business strategy.

PPM Software developers such as Intel, Microsoft, Siemens and many others brand their PPM software as a leading solution and a Best practice tool able to solve almost any PPM management issue. However, after the implementation of such software systems many mangers fail to see the promised results emerge in their organization.

Articles such as (Cooper et al 2001) argues that the businesses that yields the best result from PPM, is the ones that focus their decisions on the strategic fit method. This is in deep contrast to the methods used by most PPM software. They rely solely on non-transparent algorithms designed optimize the financial benefits at a certain level of risk. This article will reflect on the difficult question, if all portfolio management decisions should or can be taken solely by PPM software or if important management aspects are forgotten in the process.

What is PPM software

In the recent years more and more companies is moving towards project based organisational structures [1] This makes it increasingly important to do projects right and to do the right projects [2]. PPM has to do with the latter. Project evaluation criteria is typically reliant on financial methods, taking into account risk assessment and resource based analysis [3]. Such evaluations requires extensive data analysis which can be time consuming and complex for busy managers. The result is software developers and vendors rushing to the market to assist managers in the complex process. Such software typically include the elements [4] • Project selection tools • Project and resource overview tools • Task management tools • Project portfolio optimization • Data collection and analysis tools

It is here such systems underlying algorithms for optimization and data analysis become useful (Something here)

Vendors of the software rely on beautiful charts and printouts to impress its users and providing them with an easy and professional way of communication.

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Many large companies have already adapted such offerings and more plan to do so in the future [5]

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Business drivers for PPM software

Cooper R and Edgett S, states that gut feeling is one of the worst portfolio practices and argues that even a poorly made system is better than no system [6]. The business driver for managers to implement decision making tools in their PPM is mainly to make them capable to make decisions, based on an analytical approach, and hereby remove elements such as gut feeling from the process. The decision making process is complex and several factors must be considered [7].

1) Multiple and conflicting objectives

2. Some of the objectives may be qualitative while others are not

3. Uncertainty and risk

4. Tradeoffs between important factors, such as risk and time to completion

5. Interdependencies

6. The number of feasible projects may exceed the organizations resources.

A company capable of integrating all of these elements into their decision making will benefit in several ways. Financially, by maximizing the return of the portfolio, maintain a competitive position on the market, by choosing the right projects and reduce cost by allocating resources right. Minimize the risk in the portfolio and hereby increase the project success rate [6].