Project portfolio management software refers to a class of systems that provide support for organizations managing complex and often concurrent projects, i.e., a portfolio.
These systems help increase project awareness and visibility, allowing managers to allocate resources to current and future projects more effectively.
Over time, project portfolio management software offers a wealth of performance data. Decision-makers can better analyze the risk versus reward for different types of project initiatives. This allows leaders to make more informed decisions on the types of projects they choose to fund.
It can be difficult to know when, if ever, your organization should graduate to portfolio management from traditional project management. Adding to the confusion, many vendors straddle the divide and offer solutions that serve both needs.
While the benefits are many, project portfolio management systems are more advanced than traditional project tools. They require a significant investment of time and resources to implement and manage.
This buyer’s guide will help you better understand the differences between project portfolio management and project management. This way, you can make a more informed purchase decision about which is the right software to support your needs.
Here’s what we’ll cover:
Project portfolio management (PPM) refers to a collective effort by an organization to centralize and coordinate project efforts across a portfolio of work. PPM software helps automate processes, streamlining the planning, managing and delivery of each project.
While traditional project tools are designed to support teams at a project or department level, PPM software is designed to support project processes at an organizational level.
This means that while each system will have similar capabilities, such as project planning, PPM software will offer additional capabilities beyond what’s available in traditional PM tools.
For example, traditional planning allow managers to map out a project’s critical path and identify task dependencies and constraints. PPM software does this and more, allowing decision-makers to map out the dependencies and constraints between projects and identify potential scheduling issues, budget conflicts and overlapping objectives.
Ultimately, this allows leaders to better weigh one initiative against another so the business can eliminate waste and execute on the projects that deliver the greatest value.
According to Gartner, businesses follow a natural, progressive development of project management processes and strategy referred to as "project and portfolio management (PPM) maturity."
There are five levels, with level one being the least mature and level five being the most mature. Organizations gradually develop and refine their PM processes, moving away from manual PM methods and investing in tools to support their workflows. By doing this, their PPM maturity advances.
At a level one PPM maturity, businesses may be using basic scheduling and task management tools on a one-off project basis. As they move into level two, most businesses have invested in PM software that they consistently use as a centralized and collaborative project space.
It’s not until businesses reach a level three PPM maturity that they should consider investing in PPM software.
SMBs at a level three PPM maturity have most likely established a project management office (PMO) to help them oversee and institute PM processes at an organizational level. The PMO acts as a governing unit that evaluates project initiatives to ensure they align with organizational goals and strategy.
Prior to investing in PPM software, your organization should evaluate whether it has followed portfolio management best practices:
Following these steps, in this order, helps ensure structured processes are in place before implementing a solution and that there is a governing body in place to oversee the implementation. This gives your business the best chance of successfully adopting portfolio management and implementing PPM software.
As you evaluate PPM solutions, look for the following critical capabilities to ensure your organization has the portfolio support it needs:
|Project life cycle management||Manage projects from initial concept to final delivery. Create risk-return profiles to compare initiatives so that all the projects within a portfolio align with strategic goals and deliver business value.|
|Risk management||Identify known risks, assign to staff for evaluation and monitoring and create risk management plans. Establish issue/change management protocols to deal with change requests and new issues that arise during project execution.|
|Advanced resource management||Assess employee skill levels and allocate resources across multiple projects based on skill sets and availability. Practice resource capacity planning and ensure that high-priority projects are staffed first.|
|Dashboards||Track project and portfolio progress against criteria such as budget, timeline and progress toward milestones and achievement of business objectives. Customize views according to specific user needs, e.g., executive, manager and/or customer.|
|Reporting and analytics||Monitor key performance indicators and export data for a snapshot of current standing. Analyze data, and compare with previous reports to better understand organizational performance.|
Not every small business will progress to a level of PPM maturity or project complexity that warrants an investment in PPM software. These tools are designed for organizations that need to effectively allocate and manage resources across multiple concurrent projects. These businesses will have portfolio management processes already in place.
In short, if your small business is still running one-off projects and has not thought strategically about instituting portfolio management processes, you probably do not need PPM software. Instead, you’re likely better off with a traditional project management solution that can help you streamline workflows and project processes at a project or department level.
Out of the thousands of software buyers who contact us each year, the following are the types of buyers who most often need more advanced PPM software:
Industry-specific, speciality buyers: Small and midsize businesses (SMBs) in fast-paced fields can break from the traditional PPM maturity-mold when it comes to PPM software. These buyers struggle to match limited resources with high project demand and as such, PPM solutions can help them streamline their efforts.
Industries that often require more advanced PPM solutions include information technology (IT) services, software/technology and related fields, as well as marketing firms, professional services organizations, construction and engineering.
Small and midsized businesses (SMBs): SMBs at a level three PPM maturity can use PPM software to help coordinate project efforts across the portfolio. This can provide the level of visibility and oversight needed to successfully manage projects from conception to completion. At this stage, businesses might consider PPM solutions such as Mavenlink or Microsoft Project.
Growing SMBs and enterprise organizations: Growing SMBs and larger enterprise organizations are likely at a level three PPM maturity or higher. The size and complexity of their projects makes them good candidates for PPM software. PPM solutions to consider include Clarizen and Workfront.
Organizations needing support for their project portfolio can benefit from investing in PPM software in several ways. The following are a few examples of ways PPM software might help:
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