The complexity of large projects makes successful project management a challenge for most companies. Poor project management means projects finish past due dates, over-budget, and with a lower-than-predicted return on investment (ROI). To overcome these challenges, businesses often rely on project management software, which mitigates risk by identifying failing aspects of a project.
Project management software can help streamline your company’s processes and create a successful PM framework. But as your project management process matures and you’re able to take on more projects, it becomes difficult to oversee multiple endeavors.
For example, when there are fifty projects in progress, how do you decide where to invest your organization’s time, budget, and staff? Which product, service, or new idea is top priority? How can you monitor a variety of important projects to ensure you maximize their chances of success?
Decision making in an ever changing climate demands a central platform to manage overall project efforts. Project portfolio management (PPM) software provides visibility, oversight, and tools to help companies prioritize and manage current projects and resources as well as future needs and demands.
According to Upland Software, there are at least five major benefits of using project portfolio management software:
In short, a quality PPM tool provides project managers and executives in large, project-driven organizations with a way to manage investments across a portfolio of assets to ensure maximum return on capital. Market research from Reportlinker suggests the PPM market size will grow from $4 billion in 2019 to $5.6 billion in 2024—a compound annual growth rate of 6.9 percent.
If you already use project management software—or even a good project-driven ERP system—then it’s natural to question whether or not you actually need project portfolio management software. To add to the confusion, some vendors sell each of these systems as separate applications, while others offer an all-in-one product. But can one platform really do the same job as three different systems, all while saving you software licensing costs?
Let’s examine the difference between these systems and sort out which software is best for your business.
Project management software involves functionality aimed at day-to-day project planning, tracking, and monitoring. A project manager is interested in immediate priorities: who’s supposed to do what activity by when. These tools help teams collaborate and increase transparency through features such as milestones, Gantt charts, budgeting, calendars, and timesheets.
Enterprise project management software also facilitates day-to-day project delivery and management but on a larger scale. Since enterprises work on multiple projects at the same time, an EPM solution helps to manage, monitor, and assess the activities, schedules, and work breakdown structures for the company’s existing set of projects across all departments.
Project portfolio management software is designed to handle overarching projects, programs, or products. Having a PPM tool will help show performance and resource demands of current projects, as well as projects that are being bid, sold, or will start at a future date. PPM systems show the dependencies between projects and the rest of the enterprise, so project managers and executives have a global view of where skills and resources are invested. PPM software generally aggregates project data from PM, EPM, or ERP systems to create portfolios (organized per budget size, calendar year, budget year, business line, etc.) of existing and future projects for evaluation.
Since PPM products provide a zoomed-out view of projects, some vendors may lack the tools needed to manage the granular aspects of an individual project or sub-project. Additionally, as technology rapidly advances, many ERP vendors are capable of delivering the functionality of PPM, EPM, or both—which further complicates the buying process.
Now, some PPM and EPM solutions are essentially the same products but with different labels, depending on the industry.
Don’t judge a system by its acronym. Instead, focus on pinpointing the goals and needs of your business, then evaluate and choose a project portfolio management software vendor that meets your specific needs.
It’s easy to get overwhelmed when you’re comparing PPM products. All PPM systems are essentially designed to do the same job, so differentiating between platforms is tough. Some PPM mega-vendors also offer PM suites, EPM suites, and full ERP systems, while others only offer standalone PPM software that extracts data from your existing project management software. Some vendors also offer niche systems custom-tailored to your market or industry.
Ultimately, the best software for your business depends on the overall functionality and integrations you need. To understand how a PPM tool might satisfy your objectives, it’s important to understand the core functionality each one provides. PPM software typically includes the following key management capabilities.
Sometimes called pipeline assessment and analysis, this feature helps managers determine whether a project or a set of projects can be finished with the time and resources on hand. A constant, real-time overview of projects and resources allows you to assess which endeavors contribute to business objectives and determine the best way to invest accordingly.
With a 10,000 foot view of your project pipeline, you can efficiently allocate company resources to projects as needed. Sometimes called demand or resource management, this allows you to manage and distribute financial, inventory, technical, and human resource. In addition to offering resource allocation on an individual project basis, many systems allow you to model what-if scenarios and apply them across the entire portfolio.
One major reason many projects fail is because new requirements, features, operational constraints, regulatory demands, or technical alterations crop up mid-project. These fluctuations in project details often force projects to go over budget or past deadlines. To overcome this, a good PPM tool provides a central repository for various change requests. This allows you to quickly assess inquiries as they arise, and match available resources to overall demand. Additionally, change management allows you to monitor project timelines and budgets in real-time.
Your financial manager needs to accurately estimate and manage the financial resources and anticipated outcome from company projects. Most PPM systems can demonstrate the anticipated financial value of projects in relation to strategic objectives and organizational priorities. Financial management capabilities let you see updated financial progress as it happens, which allows you to more accurately predict if a project will fail to meet financial objectives before it’s over. When you can determine when projects will fall short of financial expectations, you can change the parameters or cease investment before incurring losses.
PPM software allows you to analyze how risky each existing and potential project is so that you can determine confidence levels across the portfolio. By grouping projects together, you can evaluate confidence levels on a categorical basis and assist financial and resource allocation decisions. Sometimes referred to as “portfolio change and risk management,” the benefit of this feature is the ability to determine which projects—or even which facets of individual projects—are too risky. Using risk regulation modules prior to launching a project can help your organization avoid poor investments.
At the core of a PPM system, the above features are made possible by company-wide analysis capabilities. A self-service reporting dashboard provides a top-level view of projects, resources, budgets, requirements, and timelines. Analysis, predictive functionality, and what-if scenarios provide cohesive insights across investments to help leadership determine which efforts have the best prospects for high returns, assess the impact of changes to the portfolio, and reveal potential interdependencies. Project performance metrics from real-time data aggregation increase transparency.
In addition to analytics, other important PPM aspects to consider are:
Though it’s primarily adopted by enterprises, small and medium-sized businesses (SMBs) also use project portfolio management software. SMBs should focus on adopting a standard PM process and centralizing all project data before looking to leverage PPM software.
Most software markets are divided into tiers based on company size, but when choosing a PPM tool, functionality mostly varies with use case. Depending on your industry and goals, your priorities will vary. Below are a few common PPM applications that may require an industry-specific vendor.
Gaining buy-in from executives is a critical success factor for software approval and implementation. In order to get your software purchase approved, you’ll need to include data that shows stakeholders what kind of return on investment they can expect. To do this, you can use the benefits provided in the introduction of this guide and present industry research.
Additionally, consider tailoring your appeal to address the concerns of each member of the C-suite. Here are some talking points to get you started.
Your IT department ensures the technology needs of the organizations are met. It’s important to consult your chief technology officer early in the buying process so they can share their expertise and help you make an informed decision. Since IT is constantly changing, there are many advantages to adopting modern PPM software. In the case of cloud deployment, IT can save costs on infrastructure, as well as reduce the burden on IT resources. Since the managers and stakeholders can use self-service PPM to monitor projects, the time IT spends on running reports is reduced. The IT department will be concerned with hidden costs (such as customer service bills) and security. Consulting IT early will ensure you have the support you need and a contender list that meets their rigorous requirements.
The leader of your organization sets the strategic goals and understands how projects align with those goals. Project portfolio management software can give them a data-driven way to monitor, evaluate, and predict project success, which helps your company identify what’s working and what’s not. It also provides an overview of your entire portfolio of projects, so leadership doesn’t have to wait for a report to know where everything stands. This leads to improved resource utilization and faster project completion, which is important for maintaining a competitive edge.
Your chief financial officer ensures resources that are allocated to projects align with the organization’s priorities. Since projects are often a large capital investment and sometimes uncertain, CFOs understand the importance of project success. They will want to know the funding requirements for a new technology investment, and how it will generate revenue. Be sure to highlight reduction in budget overruns for successful projects and avoidance of low value projects possible with PPM software. Case studies featuring companies similar to yours can help CFOs understand the financial benefits of investing in this technology.
At TechnologyAdvice, our goal is to help businesses connect with the technology that best meets their needs. We’ve compiled product information, reviews, case studies, feature lists, video walkthroughs, and research articles on hundreds of leading IT solutions, all to make the buying process more straightforward for decision makers like you.
If you’re curious about any of the project portfolio management products or features listed in this guide, we’d love to talk to you. Call us today for a free consultation, or use the Project Portfolio Management Product Selection Tool on our website to get a personalized recommendation.