3 reasons why to buy a PPM solution, but also what should be in a PPM scorecard. from Myles Suer’s blog
Recently, I met with the CIO of a Global 50 company. When I discussed with him the importance of IT performance management, this CIO said that no one talks to him about IT performance management. He went on to say that having a performance management system would ensure he gets the business transformation and ROI out of the IT toolset purchases that he makes. “What I need are best practice KPIs to measure along the journey,” he said. Given this, I will turn my attention in this blog to project and portfolio management (PPM) software and what measures matter for this tool and its related activities.
What objectives do customers have for purchasing project and portfolio management software?
This week I asked some of my most knowledgeable customers what their typical reasons are for purchasing a PPM tool. Here is what they told me:
1) Driving the cost and implementation of projects to be on-budget and on-time
2) Reducing the cost and burdens to the organization through an industry standard approach
3) The big kicker is adding the ROI piece and having projects report back 6-12 months later on how well they achieved the ROI that they anticipated
These are great objectives. And a balanced scorecard can demonstrate that IT is achieving these benefits. Clearly, such a 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?
So if we follow the four-quadrant model by Norton Kaplan, what key performance indicators (KPIs) should be in the scorecard for the PPM purchase?
The first quadrant – IT value
The first quadrant in the scorecard focuses on IT value. Given this, I recommend a series of KPIs here. These include the percent of projects at budget risk and the percent of change in project costs. These together tell whether IT is being a good steward of the money provided it by the business. Just as important, does IT have the potential to deliver the expected value from the PPM implementation and from the projects managed through it. I would, also, look at other indicators that would provide early insight into ROI. For these, I would look at percent projects associated with business objectives (this tells if the investment is focused upon business goals) and the percent 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 business improvement or transformation).
The second quadrant- customer satisfaction
Moving to the customer quadrant, I want to see support for goals number two and three above. Given this, KPIs that make sense 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 evaluate a scope change, the average time to initiate new products, and customer satisfaction. For those that remember, this measure is an important for the Service Management Scorecard as well. Taken together, these customer satisfaction and responses time measures show how good IT is in responding to its customers.
The third quadrant- operational excellence
For the operational excellence quadrant, many KPIs make sense to track change. Specifically, you want to measure the quality of project management processes and the improvement made to them. These include things such as: percent project tasks on time, percentage projects on time, percent projects with unresolved urgent issues, deviation of planned work hours, percent 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.
The fourth quadrant – future orientation
In future orientation, use KPIs that, among other things, measure prior and post employee satisfaction from the business process change perspective. As well, the percent of employees meeting training goals should be measured. 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 percent of staff with completed professional development plans, retention/turnover by performance level, percent 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.
With this said, I would like to hear back from you. What measures would you put on a project portfolio management success scorecard? What do you think is missing something from the above list?
Article source: HP PPM Blog