Going Global using EPM to optimise strategic execution

Transcription

1 Going Global using EPM to optimise strategic execution R.J. Loader Project Change Consulting, Melbourne, Victoria, Australia Biography Rob has worked globally for 25 years in operational, consulting and project and portfolio roles spanning retail banking and lending, shared services and operations, wealth management, insurance, retail and utilities. His career has included key roles in customer service, lending and project management roles with NAB and ANZ, a Big 4 and private management consultant, Manager of the Enterprise PMO and Business Portfolio Manager for AXA Australia, Head of Project Management and Strategy for AXA New Zealand and most recently as Head of the Strategic Initiatives Office for AIA Australia. He is a Fellow of Finance and Securities Institute, holds Certified Practicing Project Director (CPPD) and Project Management Professional (PMP) qualifications and has written an Enterprise Project Management thesis. Rob is a regular presenter at national and international project management conferences. Abstract This paper discusses Enterprise Project Management (EPM) and Project Portfolio Management (PPM) as essential elements in building modern, flexible project organisations with strong strategic execution and benefits realisation capability and resilience. Realisation of strategic intent and target performance are the critical measures of sustained success. In this age of turbulence with ever-changing environment/demands, it is essential that organisations are equipped for continuous strategy evolution and exhibit flexibility and responsiveness in its execution. These pressures dramatically increase the role and importance of EPM and PPM in integrating a strategy to execution lifecycle, instilling execution disciplines, and optimising the value of strategic investments. The paper is based on a global literature review, the author s experience developing organisational project capability and his EPM thesis. The research found EPM improves execution maturity and performance, thereby improving strategic change delivery, However, improving project delivery through PPM and EPM requires deliberate ongoing investment in project management infrastructure, tools, processes and competencies. Keywords: Enterprise Project Management; Strategic Execution; Project Portfolio Management 1 Increased Reliance on Project Management Organisations are increasingly turning to project management competency to deliver organisational change and meet strategy goals. Interthink Consulting s Organisational Project Management Baseline [1], showed increasing reliance on projects, with 69% of organisations rating projects as extremely high or high value to organisations goals and performance. Whilst Field and Keller [2] propose the key driver is executive management s

2 growing understanding of the contribution structured and controlled change makes to realisation of strategic goals. In either case Enterprise Project Management (EPM) is rapidly evolving as organisations drive for more effective project delivery to support organisational competitiveness. EPM disciplines and infrastructure are critical to combating high project failure rates inherent in coordinating organisational change, whilst providing a platform to continuously improve execution capability. 2 Continuing Prevalence of Project Failure Despite growing understanding and recognition of the strategic importance of project management disciplines, projects continue to under-perform. The Standish Group CHAOS Chronicles 2004 [3] show despite good improvement in success rates, two thirds of projects continue to face outright failure or incur significant average cost and time overruns. The Centre for Business Practices [4] and PA Consulting [5] identified that failure is influenced by organisational and strategic factors including inconsistent project approaches, poor resource allocation and project selection/prioritisation, and unsupportive organisational change environments. This reinforces that project delivery in many instances falls well short of organisations desired return on investment and that underlying factors relate to structural and organisational project competency and infrastructure deficiencies. 3 The Role of Project Management Maturity Project management maturity represents the level of sophistication of an organisation's project practices and processes. Maturity is a barometer of organisations ability to execute projects consistently well. In more mature project organisations higher project management competency supports greater delivery consistency and project success. Zubrow [6] cites Carnegie-Mellon University indicating organisations that improve project maturity experience cost savings, defect reductions; more schedule predictability; and improved delivery quality. These improvements contribute to improved return on investment and customer satisfaction. Figure 1. Relationship of Project Maturity and Performance Average Performance Level Level of M aturity

3 4 Increasing Focus on Enterprise Project Management EPM has gained increasing recognition of its value in institutionalising project infrastructure and capability to improve execution maturity, thereby helping realise organisational strategic goals. Put simply by Dinsmore [7], EPM is management by projects involving an organisation-wide managerial philosophy based on the principle that company goals are achievable through a web of simultaneous projects. EPM s focus is to deploy project management as a broader business competency and philosophy. Most importantly its emphasis is on building enterprise-wide delivery capability as a critical link between the integrated development of corporate strategy, project selection and delivery and benefit realisation. It ensures organisation strategy is decomposed into an enterprise architecture view (an integrated model of structures, processes and systems) which describes how the organisation will look and operate when the strategy is delivered and acts as a filter through which the organisation defines and prioritises projects. Thus the strategic imperative for EPM is driven by the desire for insight and control of project activity, ensuring conformance with strategic priorities, and consistency of project performance and benefit realisation, which directly support achievement of the organisation s strategy and objectives. 5 The Value of EPM EPM can create competitive advantage by ensuring organisations select the right projects at the right time and direct sufficient attention and resources to ensure their successful delivery and realisation of business benefits. Success relies on coupling this with strong project delivery competency. More mature project competency across the enterprise supports high quality project delivery leading to improved success rates, thus protecting organisational capital through reduced project failure. EPM ensures greater visibility of project performance and returns on investment and increased certainty of their fit with organisation s strategy and priorities. This ensures organisations optimise project investment decisions and priorities to meet their strategic goals. Key benefits are: Ensuring project strategic alignment Improved change responsiveness Enhanced organisation commitment to change Improved organisation execution performance The Centre for Business Practices [4] Value of Project Management surveys indicated improved execution is derived from increased investment in infrastructure. The research showed average improvements of 8-27% in financial performance and customer and staff satisfaction, of 36% and 30% respectively. 6 EPM competency and organisational project infrastructure Organisational infrastructure needs to support the delivery of projects both technically and culturally by reinforcing behaviours that underpin successful delivery PA Consulting Group, [8]. Developing these competencies and behaviours requires creation of a projectised culture

4 inclusive of integrated strategy formulation, its decomposition into enterprise architecture views, roadmap development and prioritisation, strong project delivery and benefits realisation. EPM integrates five essential elements of organisational project infrastructure as shown in Diagram 1. They operate in a continuous loop with each element providing input to the next and through their iterative and integrated operation the end to end strategic intent is defined, designed, planned and executed. Diagram 1. Enterprise Project Management Elements and Feedback Loops Design & Goal Change Approach & Delivery Priority Setting Alignment & Approach STRATEGY DEFINITION & ALIGNMENT ARCHITECTURE & TARGET MODEL DESIGN BALANCED PORTFOLIO & ROADMAPPING EXECUTION & DELIVERY CAPABILITY Feasibility Capacity Do-ability Output Tracking & Value Measurement BENEFITS REALISATION Initiative Prioritisation Performance Measurement & Monitoring Through this continuous loop performance feedback is provided to inform realisation of the strategic intent and closure of the gaps between current and target operating models. This includes assessments on project do-ability, organisation resource and investment capacity, target architecture model feasibility and realisation of benefit outcomes and their contribution to strategic targets. Implementation of these EPM elements develops project management as an organisational strategic competency, enabling enables integration of strategy through to execution and optimisation of portfolio investment decisions, project delivery and benefit realisation. Creation of enterprise-wide project capability is reliant on systematic implementation of project management infrastructure which improves overall organisational project management maturity. 7 Summary and conclusions The value of project management in supporting delivery of organisational strategy is widely recognised and implementation of EPM institutionalises project management as a strategic competency, improving enterprise-wide execution, directly supporting achievement of organisational strategic goals. The benefits of consistent, structured and systematic project delivery aligned with corporate strategy intent and priorities are very meaningful in the organisational context and include: better investment decisions more proactive project risk management better planning increasing certainty of outcomes improved change commitment more efficient project execution and increased benefit realisation Perhaps more compelling are the costs of not adopting a structured project approach including extended and repeated delays, increased delivery costs and failures, resource wastage and reduced ability to deliver strategic change and realise the strategic objectives.

5 Successful establishment of EPM requires adoption of a strategy to execution model aided by institutionalised support, integrated systems, and pervasive corporate understanding and commitment. Organisations slow to develop this competency will be competitively disadvantaged relative to peers that do embrace the EPM philosophy and are able to realise its ambitions.

6 References 1. Interthink Consulting, Organizational Project Management Baseline Study 2002, in PM Network, April, Volume 17, Number 4, Project Management Institute, USA. 2 Field, M and Kellar, L. (2000), Project Management, Thompson Business Press, London. 3 Johnson, J, 2006, Interview: Jim Johnson of the Standish Group, on InfoQ website, Aug 25, 2006, found at: 4 Centre for Business Practices 2002, Value of project management organisations study, PM Network, January Volume 17, Number 4, Project Management Institute, USA. 5 PA Consulting Group, 2000, The art and science of project management: Projects Culture: the route to high performance, PA Consulting Group, London, UK 6. Zubrow, D, 2003, CMMI Appraisal Results SEPG 2003, Software Engineering Institute, Carnegie Mellon 7 Dinsmore, P.C, 1999, Winning in business with enterprise project management, AMACOM, American Management Association New York. 8 PA Consulting Group, 2000, The art and science of project management: Projects Culture UK Survey looking at the drivers of performance in project-based organisations, PA Consulting Group, London, UK.