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SmartAdvice: Taking Project-Management Efficiency To The Next Level

It's possible to leverage many project-management efficiencies without starting a formal office, The Advisory Council says. Also, align goals when trying to reduce product costs with collaborative commerce.

Editor's Note: Welcome to SmartAdvice, a weekly column by The Advisory Council (TAC), an advisory service firm. The feature answers two questions of core interest to you, ranging from leadership advice to enterprise strategies to how to deal with vendors. Submit questions directly to

Question A: Many large companies have a project management office responsible for portfolio and program management. When does a PMO make business sense?

Our advice: As more IT shops apply project-management methodologies to their projects, companies are starting to see tangible implementation improvements. Once IT projects are consistently delivered on time, within budget, and with the promised usable functionality, often managers look for new approaches to take project-management efficiency to the next higher level. By taking a cautious approach to a PMO and project/program management organization, you can often leverage the knowledge gained during project execution, while minimizing the risk of wasting resources on an inappropriate (and expensive) office.

Related Links

Project Management Institute

Project Portfolio Management Knowledge Base

Organizational Project Management Maturity Model (OPM3)

After a few successes, many organizations are eager to jump ahead to a more mature project-management methodology to improve management of other individual projects, or as part of a "portfolio" of interrelated projects. Gaining a better understanding of the advantages and disadvantages of each approach will help you decide which mix of practices is best for your company's needs, since the different approaches are related but can be put into practice independently.

Portfolio/Program Management
Portfolio/program management is the art and methodology of managing several related projects simultaneously. This means making sure that all projects within the portfolio are meeting their baseline goals, much the same way an individual project is integrated with a goal for delivery. In many organizations, portfolio/program management is the PMO's responsibility -- the thinking being that the PMO has the expertise and cross-organizational view to handle the function. It's possible, and often more desirable, for each individual area to do their own portfolio/program management, and rely on the PMO for guidance and support only.

The Project Management Office
Although PMOs are entrenched in the telecom, aerospace, and defense industries where multimillion dollar projects have long been the norm, many IT professionals were first introduced to the concept during Y2K remediation efforts. Ideally the PMO functions as a central office, coordinating the various project efforts throughout the organization. The PMO is responsible for developing and maintaining project management best practices, templates for critical project-management deliverables (charters, work-breakdown structures, change-control processes, etc.), and coordinating projects throughout the company. With its pool of expertise, the office can provide expert support to individual project managers, and only on occasion, project-management staffing.

Before investing in a formal PMO for your business, it's best to assess how well your organization is using existing project-management methodologies. It makes no sense to establish a PMO or portfolio/program-management process if your organization is just starting to employ project-management tools, and hasn't developed a history or comfort level with the methodologies. If your organization has a proven track record using project-management methodologies, then you can decide if and how to introduce a PMO and/or portfolio/program-management organization. Does it make sense to have one PMO and methodology for the whole enterprise, or should each individual business unit (IT, marketing, etc.) have its own PMO and portfolio/program management? Much will depend on specific industry practices and your basic organizational business model.

-- Sue-Rae Rosenfeld

Question B: How can we implement a system to use end-to-end quality data to reduce product cost?

Our advice: The key is aligning the goals of the very diverse constituencies that participate in the full product life cycle. The goals of product development, production, and after-sale service are different. Similarly, the goals of the multitude of suppliers and subcontractors will vary. Quality improvements and cost reduction don't occur in practice until goals get aligned, and mutual benefits are identified. To realize the substantial benefits of collaborative commerce, you must create real incentives for organizations to collaborate.

It's critically important to understand information asymmetries, process disconnects, and timing lags across the product life cycle. Also, since it's impossible to devote resources to all of them, you definitely need a process-analysis methodology that helps you identify the high leverage points. I recommend a methodology like Design for Six Sigma to guide your efforts. There are two benefits to this methodology. First, it's good for analyzing complex business systems. Second, it's widely accepted for improving the design of products and components, so a common language can be used for multiple levels of problem solving.

Related Links

Agile Product Lifecycle Management

Adaptive RFID

Even with sound analysis, this is the type of problem where recent developments in technology really matter. With the growth of communication over the Internet, it's now economically feasible to employ consistent information definitions across dispersed business networks. Consider the case of new technology for product-life-cycle management and item auto-identification.

PLM software includes functionality to create an enterprise product record (suitable to support multiple processes), make certain common functionality (i.e., applications) available over a network, and provide workflow capabilities. PLM provides the tools to allow people to collaborate efficiently.

The second technology you should consider is RFID for unique item auto-identification. RFID can be used to augment the PLM system and make unique item serialization practical at reasonable costs. When complex component assemblies perform abnormally, it's very difficult to pinpoint root causes. Part of this problem is that there are frequently multiple suppliers for many of the low-level components. Improving traceability by unique item serialization eliminates ambiguity as to whose parts are the root cause of complex problems.

Reducing product cost is hard work. The good news is that it's eminently practical to capture the product and process performance data you need to get the job done. Remember to start with aligning goals and mutual benefits. When all is said and done, it's about "the money."

-- Walt DuLaney

Sue-Rae Rosenfeld, TAC Expert, has more than 20 years experience as an IT project manager and business analyst, primarily in the financial industry. She has special expertise in data analysis, data modeling, and converting systems into new platforms, including mainframe to Internet/intranet server environments. In addition she trains IT professionals in project-management fundamentals and Project Management Professional exam prep. She's an active member and volunteer in the PMI New York City chapter.

Walt DuLaney, TAC Thought Leader, has more than 30 years of experience developing IT strategies, and developing new IT management practices for Fortune 300 companies. He consults extensively on strategy-alignment, project-management, and performance-measurement methods to assure that strategic initiatives are delivered successfully and operating results are verifiably improved. He is the CEO of Adaptive RFID, a software-services company.

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