EPM: Maximizing Project ROI across the Enterprise 
Strategic Value and Return on Investment Depends on Three Key Areas
Does your organization have an integrated business and IT strategy that successfully spans the enterprise to provide maximum ROI with each of the projects you undertake? Do you understand the differences between the key vehicles that could provide that integrated scenario — Program Management, Portfolio Management, and numerous related variations e.g. Project Management Office)? Take a look at your company’s efforts relative to globally managing resources and priorities. What really drives value creation across your enterprise? Do you have the right framework in place to help you manage and maximize the value you get from your mission-critical programs and projects?
Enterprise Project Management (EPM) is the strategic management of business and IT priorities, investments, and projects across the enterprise. The objective of EPM is to take full advantage of the synergies across your enterprise architecture, portfolio management, and project management office disciplines to get maximum strategic value and return on project investments.
EPM – The Headstrong Way
The Headstrong approach to Enterprise Project Management identifies three key areas (see Figure 1 - Enterprise Project Management) that are vital to the successful execution of an enterprise-wide investment strategy. These major areas are: Enterprise Architecture (EA), Portfolio Management (PfM), and Project Management Office (PMO). Enterprise Architecture is an actionable framework for managing change in the enterprise. Based on your business vision and strategy, baseline resources and capabilities, and targeted performance gaps, the EA can provide managed direction for aligning your business and IT strategy. Portfolio Management considers the range of possible changes in project investments that can better enable the enterprise to achieve its goals. Project Management Office is responsible for executing the changes determined by the Portfolio Management function.
Traditionally each has been thought of and implemented in isolation. Each, in fact, can be implemented and can exist on its own independently for significant realization of improvements in your Enterprise Project Management performance. However, when implemented and operated in concert — realizing the full functionality of the concepts and mechanisms designed specifically for each area – the result is maximum value and benefit to your organization.
If one were to 'start from scratch', perhaps with a new company, the logical sequence to address would be to establish EA, PfM, and then PMO. In reality, for existing organizations, any of these areas is a worthwhile starting point, even without significant immediate synergy with the other two. The reason is that each area has potential for major strategic and/or operational improvements which on their own can provide significant return on investment to for your organization.
Each of these three areas naturally share governance, data, and business processes. Links between them tend to evolve organically over time on an ad-hoc basis, with the end-result often adequately addressing tactical issues, but missing-out on the opportunity to address strategic priorities. When the three key areas are concurrently addressed and are operating in concert, the functional overlap, redundant processes, and duplicate project data stores can be eliminated. There is far less confusion and churning. Perhaps the greatest benefit of this EPM framework is the simplicity and understanding of governance that occurs.
Area 1: Enterprise Architecture
Enterprise Architecture (EA) is the holistic expression of the enterprise’s key business, information, application, and technology strategies and their impact on business functions and processes (Source: META Group, 2003). EA is both a conceptual model and an actionable process for managing change across the enterprise. It is a conceptual model outlining the linkages among the business mission, functional processes, organizations, data, systems and the supporting technology infrastructure. It is an actionable process for driving architecture-based decisions. This ensures that technology decisions are in line with current standards and the target infrastructure.
This requires that capital investments be prioritized against their ability to meet actual business outcomes. And this also provides for one common framework to effectively bridge the communication and capability gap between your business users’ needs and your technologists’ capacity to deliver.
Figure 2 - Headstrong EA Framework, illustrates the Headstrong EA service line’s major components and processes for development and maintenance of an organization’s Enterprise Architecture.
The nature of Enterprise Architecture is one of iteration. New business needs and technical advances drive change in the fabric of the enterprise. The enterprise responds to these by adapting its processes, information, and technologies to meet the new demands. Through the use of an integrated EA tool, the EA provides the roadmap to guide the business through the coordinated and simultaneous management of business (process), strategic (management), organizational and technical changes. This facilitates more rapid responses to changing business needs by providing assets to vet, test, and then integrate. The resulting changes can then be measured for results that directly support the prioritized needs of the business.
Area 2: Portfolio Management
Portfolio Management (PfM) is the strategic management of an organization’s investments and projects to blend IT investments with related business initiatives. Many executives are confused regarding the difference between Portfolio Management and Program Management. As illustrated in Figure 3 (Management Scope for Projects, Programs, and Portfolios), Project Management can be viewed as the basic capability to deliver assigned projects. Program Management then represents a shift from stand-alone IT project management to ‘business program’ management. Portfolio Management then represents a shift from free-for-all competition amongst projects to disciplined organization of projects into structured groupings selected by management to achieve defined business results2.
Portfolio Management recognizes that the value of each program changes over time. The benefits to be realized from a program will change in relative value to other programs in the portfolio as each program is better understood, internal and external factors change, etc. These changes can potentially be understood through the use of enterprise architecture to identify and map the internal and external factors of change, performance gaps, and fluctuations in business strategies.
Organizations have to manage their program investments like a stock portfolio. This involves determining the desired mix of investments, and monitoring the investments based on changing returns and ‘market’ conditions3.
Portfolio Management can be delivered via a ‘balanced scorecard’ approach to setting, measuring, and evaluating project priorities and performance. A balanced scorecard is a measuring tool that clarifies an organization’s vision through measurable goals and outcomes. This enables the vision to drive the projects that take place within the organization, aligns them to the organization’s overarching business strategy, and correlates their outcomes.
Besides the usual schedule/quality/budget perspective, the balanced scorecard looks at four key business aspects that reflect how valuable these projects (investments) are to the organization: Financial; Customer; Internal Business Processes (Core Competencies); and Learning and Innovation. Figures 4 (Headstrong Portfolio Management Framework) and 5 (Balanced Scorecard Candidates) identify candidate areas and examples to be included on scorecard design for each perspective4.
Area 3: Project Management Office
The responsibilities of a Project Management Office (PMO) are varied and evolving. A PMO generally provides centralized processes, tools, and tracking for a set of IT projects. This generally helps with status monitoring, prioritization, resource management, support, control, and evaluation of these projects.
As reported in Computerworld5, “poor project planning and management are to blame for companies scrapping almost a third of new software projects for a loss of $80 billion annually. One out of two projects run more than 180% over budget for another $59 billion in losses, according to META Group, Inc.” The article goes on to say that the solution to the problem is to have a central program management office staffed with experts who have proven methods, tools, and experience.
As shown in Figure 6 (PMO Core Competencies), the PMO service line is based on methods, tools, and training for Program Management, Project Management, and System Development Lifecycles (SDLC).
PMO’s can be categorized into four primary types as illustrated in Figure 7 (Headstrong PMO Framework). Each type generally involves a different scope and requires a different approach and set of strategies. The four types are:
A ‘Program Office’ or ‘PMO’ can also be a mixture of these types (e.g. usually some aspect of the fourth type is needed and/or included). Often it is not clear exactly what type, scope, and extent is expected for the PMO until an assessment is made and a Program (or PMO) Management Plan is agreed upon.
For each type of PMO, Headstrong has approaches or techniques to assess needs, and tools available for reuse, as shown in the table in Figure 8 (Summary of PMO Assessment Approaches and Tools). The Headstrong PMO service line leverages Headstrong’s (formerly James Martin + Company) heritage and depth in methods, tools, and program/project management experience.
EPM Interrelationships
Each of the three Enterprise Project Management areas has important dependencies as shown in Figure 9 (Enterprise Project Management Key Interrelationships).
The Business Strategy from the executive suite provides the business drivers for both the development of the Enterprise Architecture (and IT Strategic Plan), as well as the implementation of the Portfolio Management strategy, the selection of projects and investments, and the design of the period’s balanced scorecards. Portfolio Management essentially implements the project-based business and IT strategies for the organization. Feedback and adjustments are made to these strategies based on program and project performance.
The Project Management Office is organized to control, support, and evaluate the projects that are implementing the strategies and priorities for the organization. The PMO also collects the metrics (at the project level) that roll-up to the program-area balanced scorecards. Input from the business (sponsor) side of the organization is important for many of the scorecard factors.
Conclusion
The EPM framework provides a basis for successfully managing and maximizing the value an organization achieves from its project investments. It is a strategic framework that enables an organization to successfully select and implement the right projects with decreased risk, improved schedule and cost performance, and a clearer view of the quality, value, and return of investments.
The EPM framework also eliminates redundancies in governance, data, and business processes for EA, PfM, and PMO. Likewise, the EPM framework provides simplification and a clearer understanding of enterprise-wide project governance.
1"Designing an Enterprise Project Management Office to Improve Organizational Project Management Efficiency". Margo Visitacion, Giga Information Group, August 9, 2002
2The Information Paradox
– Realizing Business Benefits of Information Technology,
John Thorp and DMR’s Center for Strategic Leadership,
McGraw-Hill, ©1998, pps 40-43.
3Ibid, pg 44.
4Balanced Scorecard for Projects, Project Management
Journal, March 2001, pps 38-39, 45.
5Computerworld, September 22, 1997, pg. 6.