A PPM tool without the ability to measure is like a day without sunshine

Recently, I met with a CIO from a Global 50 company. When I discussed with him the importance of IT performance management, he admitted that none of his vendors ever talk to him about IT performance management. I was amazed. He went onto say that having a performance management system would ensure that he gets real business transformation and ROI out of his IT investments. “What I need is best-practice KPIs to measure along the journey,” he said. Given this, how should performance management be used alongside a project and portfolio management tool and what should it measure?

What objectives do customers have for purchasing project and portfolio management software?

To help here, I asked some savvy PPM customers why they purchased a PPM tool in the first place.  Here is what they told me:

1)      To drive the cost and implementation of projects to on-time and on-budget

2)      To reduce the costs and burdens to the organization through an industry-standard approach

3)      To add the ROI piece of the puzzle—having projects report back six to twelve months later about how well return on investment goals were met

These are great objectives, and a balanced scorecard can demonstrate that you are achieving these benefits. Clearly, a PPM scorecard should be based upon the business goals set for the purchase. For purposes of this blog, we will use the three objectives mentioned above.

What would go into a PPM Scorecard?

If we follow the four-perspective model established by Robert S. Kaplan and David P. Norton in The Balanced Scorecard: Translating Strategy into Action, what key performance indicators (KPIs) should be in the scorecard for the PPM purchase? The first perspective in the scorecard focuses on IT value. Given this, I recommend a series of KPIs that include the percentage of projects at budget risk and the percentage of change in project costs. Together, these KPIs tell whether IT is being a good steward of the money from the business and whether IT has the potential to deliver the expected value from the PPM implementation and related projects. I would also look at other indicators for early insight into ROI. I would look at percentage of projects associated with business objectives (this tells if the investment is focused upon business goals), and the percentage of time invested on strategic projects (this tells whether IT is going for big business wins or tactical improvements to existing systems that may drive cost reduction but will not necessarily foster business improvement/transformation).

Moving to the customer perspective, I want to see support for goals number two and three above. KPIs that make sense would look at the quality of the project management in responding to customer needs. Here I would include the average time to evaluate a proposal, the average project initiation time, the average time to evaluate a scope change, the average time to initiate new products, and customer satisfaction.

For the operational excellence perspective, many KPIs make sense to track change. Specifically, we want to measure the quality of project management processes and the improvement made to them.  These include things such as  percentage of project tasks on time, percentage of projects on time, percentage of projects with unresolved urgent issues, deviation of planned work hours, percentage of healthy projects, time to resolve project scope changes, and number of open issues. Taken together, these provide a sense of project management process improvement. These should be showing month over month improvement from the PPM investment.

In future orientation, we want KPIs that measure prior and post employee satisfaction from the business process change. As well, the percentage of project employees meeting training goals should be measured as well. Clearly, if the training is not taking place, employee frustration and sentiment could go up and down respectively. These two measures provide a view of the success of the project management implementation. Other areas important to measure should include percentage of staff with completed professional development plans, retention/turnover by performance level, percentage of the IT budget allocated to innovation, number of training days per FTE, and number of hours of “idea time”/FTE. These together show if an innovative, future-oriented IT organization is being created.

I would like to hear back from you. What measures would you put in a project portfolio management success scorecard? What do you think is missing from the above list?

Related links:

Feature:  Peak performance demands precision control

Solution page:  IT Performance Management

Twitter: @MylesSuer





Article source: HP PPM Blog

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