Portfolio-Driven Performance: The Seven Process Areas that Drive Business Results

Planview

Organizations and the people who manage them deal with many weighty issues today, like economic changes, government regulations, competition, and demands for innovation, cost-cutting and increasing profit. For most executives, this struggle is made more difficult by the lack of a central location for decision-making from the initial stages of strategic and financial planning, through to work and cost management, and finally to the confirmation of benefits realization.

By offering a clear path for communication and financial visibility throughout the organization, Planview has identified seven business process areas that provide a transparent framework for better management of people, money, and time to help organizations with major business issues - such as engaging in more innovative work - to meet key business objectives.

This article examines the seven business process areas that can help knowledge-driven industries manage change and respond to market dynamics.

Strategic Planning

Strategic Planning consists of those processes necessary to define and maintain the business plan, and involves analyzing the current state compared to change influences (internal or external) and development of resulting organizational missions, objectives, strategies, and tactics. This includes creation of potential investment and product portfolios and selection of initiatives approved to proceed, along with top-line operations and capital allocation decisions. Business planning and investment analysis are no longer separate functions, but are linked.

The following can be accomplished by having establishing Strategic Planning business processes:

• Increase revenue by aligning work, programs, products, and services with strategies
• Mitigate risk by adjusting investment decisions in response to market conditions and operational execution
• Respond with agility to market opportunity, competition, and regulatory changes
• Establish a product roadmap that delivers the optimal product portfolio
• Reduce expenses by consolidating applications, products, and services
• Reduce expenses by eliminating misaligned work, products, and services
• Increase revenue by optimizing the investment portfolio

Management has a single location to capture and analyze strategic and financial data, can respond quickly to changes in priority or strategy as they arise, and can automatically create various investment portfolio scenarios.

Demand Management

Demand can come from external sources such as consumers, customers, regulators, or shareholders or from within an organization. Demand Management encompasses processes associated with demand intake and dispatch of work. This includes the receipt of new ideas and initiatives plus requests for new and enhanced programs, projects, products, services, or incidents.

It also includes functions that must occur between time of receipt and the decision to proceed in fulfilling the request, and serves as the process linkage between any strategic changes requested as part of capacity management and strategic planning functions required to analyze and process those requests. Additionally, for the service provider, Demand Management fulfills additional customer-facing responsibilities to communicate receipt and disposition back to the requestor.

With one place to go to view all demand within an organization, managers can do the following:

• Capture complete demand in a single location and eliminate costs of maintaining multiple systems
• Utilize a structured process to prioritize all demand to optimize business results
• Reduce costs by cutting redundant work and services that are currently underway

Having this single place to view demand gives management visibility into changing programs, new project or product work, services, and operational requests. It also depicts how time, resources, and money are utilized by incoming demand, and facilitates making intelligent trade-offs.

Capacity Management

Demand requires some kind of capacity to fulfill it. Capacity Management refers to those functions necessary to plan and manage assets on a macro level. Any resulting requests for strategic changes in capacity are routed through strategic planning for decisions. Change can be in the form of demand for new products or services or it can impact capacity directly.

Balancing internal and external demands with available resources is a challenge that every manager faces and is even more daunting when management does not have a complete view of capacity with drill-down capabilities.

This is possible within a process framework, which enables management to:

• Improve overall planning and decision making to connect resource capacity to the business objectives of the company
• Optimize the labor profile of FTEs versus contractors globally
• Accelerate time to market and improve competitive advantage to meet business objectives
• Offer more comprehensive products and services at lower costs
• Understand the available infrastructure capacity to support new work and services and minimize risk

Having a singular view also helps management determine if they have the right people at the right place at the right time, respond to competitive pressures by making better decisions, and capture and communicate the total cost of a business service or product.

Funding and Budgeting

Capacity always has a cost. Business management consists, at a fundamental level, of making demand versus capacity trade-off decisions, and ensuring a sufficient cost-benefit ratio to further stated goals and objectives. The Funding and Budgeting process usually begins with an annual proposed dream budget that includes things each department would like to do to be truly innovative and exceed expectations.

A central platform is needed so that all managers with financial responsibility can build out budgets within the context of the strategic plan and understand the true financial impact of delivering programs, projects, products, and services - and any changes that are made to these. This is possible when Funding and Budgeting are included within the process framework. When they are, management can do the following:

• Increase efficiency of the budgeting process by using a central platform for defining all financial, product, and resource demands
• Drive business results by aligning the budget with the strategic plan
• Mitigate financial and operational risk associated with changing priorities, regulatory requirements, and/or strategy
• Improve financial governance with clear transparency into the costs of projects, programs, products, and services
• Maximize effectiveness of utilization of and accountability for the budget

Other benefits are that management gets visibility into the overall strategic value of the work and services when defining the budget, they can quickly respond to changing priorities and/or requirements, and it aids management in handling periodic impacts of changes to strategic or business plans.

Work and Resource Management

The level of approved funding directly impacts what resources are available and what work can get done. Work and Resource Management facilitate effective planning, managing, and controlling work and resources. Using the portfolio-driven performance management framework can help determine resource availability, if the right person is being assigned to the job, project performance, effective work prioritization, operational bottlenecks that are affecting productivity, and whether projects, programs, products, and services are supporting overall business objectives.

Managers who apply this discipline to Work and Resource Management are better able to do the following:

• Eliminate cost overruns on work
• Eliminate manual efforts to generate management reports
• Improve operational execution by putting the right people on the work at the right time
• Drive efficiency by eliminating different systems to manage projects, products, people, and skills
• Better plan and execute work for on-time delivery and to meet other business objectives
• Establish repeatable and more predictable execution and delivery

Having a view into the current state of work performance and resources makes it possible for schedules to be predictable, products to get out on time, and time spent on programs, projects, products, and services to be measurable and auditable.

Cost Management

Managing work and resources necessitates good Cost Management. It is essential to know the actual costs of direct labor, external labor, and non-labor as well as the variance to what was budgeted. Often there can be hidden costs that cause this variance. Once a Cost Management process is added to the portfolio management framework, it allows management to see what the total cost of ownership of an application, product, program, project, or service is, where there are redundancies and costs can be reduced, how to optimize the costs of sustaining operations, how to meet Service Level Agreements (SLAs), how to improve customer satisfaction, and how to manage chargebacks.

Services, programs, products, and projects can be linked with related assets, labor, and applications to reveal the true costs to the business. With this information, it is possible to determine the true value, identify and eliminate inefficiencies, accurately invoice business units, and gain control of spending. Hidden value can be revealed by reducing maintenance costs and delivering business services and products more efficiently.

Managers who deploy a portfolio process approach to Cost Management are able to:

• Manage costs by tracking planned versus actual costs
• Reduce costs through the rationalization of the application portfolio
• Evaluate services outsourcing alternatives
• Control costs by understanding the true cost of all work performed
• Capture Total Cost of Development of products from ideation to retirement

The ability to view and track costs helps eliminate high operational spend, consolidate all work (labor and nonlabor) costs in a central place, and understand the costs of projects, programs, products, and services.

Benefit Realization

After putting in place Strategic Planning, Demand Management, Capacity Management, Funding and Budgeting, Work and Resource Management, and Cost Management processes, it is important that a Benefit Realization process be added to measure the benefits and see the ROI. Implementing, adhering to, and keeping current with structured portfolio management processes can bring additional profits and/or capacity to the organization. By including Benefit Realization as a process in the portfolio management framework, managers can:

• Quantify benefits and establish governance against forecasted versus actual returns
• Drive efficiencies by becoming a learning organization
• Deliver more innovative, market-responsive, and cost-efficient products, programs, and services

Business benefits can be quantified and the organization can see where it has a good return on the investments it made in people, programs, projects, products, and services, and where it made choices that resulted in a negative or no return. Also, when benefits are realized, there needs to be a process to re-integrate these benefits into Strategic Planning and thus come full circle in the whole process.

Process-Driven Portfolio Performance Management with Planview Enterprise
In order to maximize resources and be market leaders, forward-thinking organizations have to put in place processes that introduce change. Over nearly two decades, Planview has amassed considerable expertise by partnering with these organizations and developing a wealth of information to give them an advantage. This library - Planview PRISMS^® - is automated and integrated with Planview Enterprise^®, and includes business process expertise and over 200 best practices in seven core areas to help with process change. The process framework discussed in this paper is the foundation for Planview Enterprise. Planview Enterprise is a comprehensive decision-making platform that drives performance by delivering unprecedented transparency into the trade-off s involved in key business decisions across the enterprise.

Planview Enterprise combines comprehensive demand management with real-time portfolio analytics, best-of-breed resource management, and action-driven processes. Working together, these capabilities give customers improved visibility, fewer redundancies, increased efficiency, and the ability to focus limited resources on higher-value work. By integrating analytics with root-cause analysis, Planview Enterprise enables true optimization, yielding even greater efficiency and productivity. The result is a powerful, proven-effective way to:

• Fully align strategies, resource capacities, and funding
• Gain better control of projects, programs, products, services, and resource assignments
• Capture and manage the total cost of delivering projects, programs, products, and services
• Deliver effective governance

The Planview Enterprise portfolio management solution suite has empowered hundreds of organizations to make better business decisions through a structured framework for optimizing financial and human resources on investments, projects, programs, products, and services.

Planview provides a range of versatile and effective programs that create a path to value that ensures effective adoption, customized organizational enablement, early benefits, and a decisioning and process solution that is scalable, integrated, and aligned to the organization's objectives and capacity for change.

This article is an excerpt of the Planview whitepaper, Portfolio-Driven Performance: The Seven Process Areas that Drive Business Results. Download the paper at www.planview.com/JustSayNo.

© 2008 Planview, Inc. All rights reserved.