G00152002

Employ a Team Approach to Keep the Portfolio

and Resource Capacity in Alignment
Published: 20 December 2007

Analyst(s): Donna Fitzgerald

A good program and portfolio management (PPM) process requires

structure, but that structure need not be dependent on software tools or
fully deployed project management processes. By taking a scalable
approach to PPM, various levels of management within an organization can
concentrate on making appropriate decisions based on the elements of the
PPM process where they have maximum visibility. Examples include
strategy at the executive level and resource capacity at the line manager
level.

Key Findings

Most companies approve more projects than they have the resources to deliver. While this
might be appropriate for a first pass, organizations lack a communication mechanism to work
out what can be delivered based on capacity and then lack a mechanism to dynamically reprioritize.

Total resource capacity is often not the issue. Many organizations are bottlenecked by the lack
of just a few skills and yet become overwhelmed trying to map all the resources rather than just
the handful that matter.

Recommendations

Executive management should take responsibility for evaluating projects, determining the level
of risk for their organizations, and then either prioritizing the initial portfolio or apportioning
funds to various programs and functions.

Line managers should provide a "reality check" on executive-level decisions regarding project
priorities to confirm that resources are available and check on cross-project dependencies.

Organizations should determine whether communities of practice or centers of excellence

would help train more resources to eliminate known bottlenecks with regard to specific skills.

Analysis
Overview
Prioritizing projects in the IT portfolio and matching planned projects to resource capacity are the
two issues that seem to trouble PPM leaders the most. We believe that a significant part of this
problem is a mistaken belief that addressing resourcing is an issue that is too detailed to be
included as an effective part of the portfolio process.
Failure to find a middle ground and ensure that the planned portfolio is at least roughly "rightsized"
given available resources leaves the organization in a negative-feedback loop, with project
managers jumping from project to project, putting out fires and responding to "squeaky wheel"
priorities (by robbing one project to staff another) until virtually none of the projects have sufficient
resources and focus to complete in a timely or cost-effective manner.
One good practice, we have found, is to take a scalable approach to PPM, with each level of the
organization from executive and line management to project management working to
encourage an enterprisewide visibility into the progress of projects and the flexibility to anticipate
and respond to project needs before they reach a critical point.

Balancing Executive Responsibilities for Maximum Effect

One school of thought holds that PPM can be done more efficiently if detailed resource information
is available to executive decision makers. However, we believe that it's a waste of time to ask
executives to make decisions that are better made at lower levels. Generic PPM practices can work
at any level of the organization, and applying the concept of scalable PPM distributes the decision
making to the level where it can be most effective. Executives look at strategic needs and goals,
and line managers refine the details, based on their closer proximity to and awareness of the
resources available, aided by the nitty-gritty input from the actual "doers" the project managers.
Naturally, scalable PPM works best when communication flows freely and accurately in both
directions, enabling a focus on both top-down and bottom-up processes.
Beginning with the top-down process, executive management must take responsibility for the
following activities:

Evaluating the list of projects

Confirm alignment with enterprise objectives

Determine the acceptable level of risk for the portfolio as a whole (amount of money that
should be allocated to more-risky and innovative projects)

Define the value threshold

Confirm timing

Review the estimated portfolio based on high-level resource capacity (which should be
provided by either line managers or the PMO)

Page 2 of 6

Gartner, Inc. | G00152002

Prioritizing projects

Bucket projects by line of business (LOB), product or function

Eliminating the bottom tier based on whatever factors are deemed appropriate (such as
performance, return or risk)

Cut, cancel and kill projects

Once a review of projects is completed, the prioritized lists segmented by line-of-business

product or function - are communicated to the next level of management for review. Segmenting
the portfolio by function or LOB has several advantages:

Most companies segment their IT resources by one of these categories. Therefore, even if
resources appear to be available from an executive level, the reality might not be quite as it
appears, and line management will recognize this.

Segmentation also ensures that the responsibility for successful implementation rests with the
people on the front lines.

Organizational Factors
At the line management level, there is usually a strong possibility that the organization's resource
capacity will be artificially constrained, because the "best" resources may not reside in the
organization with the designated highest-priority projects. One organizational change that will
facilitate good PPM is to establish a shared resource group, where resources are available to move
across functional lines.
Some companies centralize their more highly skilled resources into a formal center of excellence
(COE) and then match the resource to various projects' needs and priorities. The danger of this
approach is that it can lead to a sense of false elitism, and the COE can, over time, become bloated
and inefficient. This type of organization is best limited to a few exceptional "mentor" or "guru"
types whose presence on a project can elevate the performance of the entire team.
Other companies solve this problem differently. Rather than centralize resources organizationally,
they create a virtual labor pool through a policy of frequent transfers. This calls for an annual
ranking and rating of all employees to ensure that highly ranked individuals are moved from group
to group every year or two to meet the organization's changing needs:

Another factor to consider: People resources are not the same as financial resources or material
resources. People cannot always simply be "plugged in" to a situation. The more closely that
people and projects are matched, the higher the probability of success. Under some
circumstances, a team of 100 people might be a recipe for failure, whereas a team of the right
15 people may be able to succeed against all odds.

Gartner, Inc. | G00152002

Page 3 of 6

Line Managers Evaluate and Provide a Reality Check

Assuming that the organization has established a flexible staffing policy, the prioritized list of
projects should then be handed to the next level of management for implementation.
Responsibilities at the line manager level include:

Re-evaluating the list of projects

Confirm resource availability

Confirm cross-project dependencies

Evaluating maintenance and enhancement (M&E) efforts

Establishing monitoring procedures such as project steering groups and health checks

Re-evaluating projects at this level is not intended to give line management veto power. Rather, it
recognizes that executive decisions made at the 50,000-foot level now need a reality check from the
5,000-foot level. Focusing specifically on resources, this is where managers begin the people-toproject matching process discussed earlier. This is also the level at which the organizational impact
of M&E activities needs to be accounted for, because most PPM methods exclude these activities
from executive review.
At this level, the first steps toward aligning resource capacity and projects more tightly include:

Mapping all enhancement activities into a product road map/application strategic plan. A
product road map offers increased visibility to everyone in the organization, and that will allow
for the prioritization of enhancements (which cannot happen if the ongoing enhancements are
received on a piecemeal basis).

Committing to schedule the work according to a product release plan. For vendors'
commercial off-the-shelf (COTS) systems, these steps make it easier to avoid duplicating
enhancements that the software vendor is intending to provide.

The second way to control the resources consumed by maintenance and enhancement is to
embrace a more agile form of software development. Frequent product releases and continuous
testing can significantly decrease the number of post-implementation bugs and required
enhancements. The fewer the bugs, the fewer the people needed to support past projects, freeing
more people to work on new projects.

Project-Level Responsibilities: Up Close and Personal

If the right decisions have been made at the executive level, and line management has done a
proper reality check and has implemented the right organizational and support systems, the final
element of the resource capacity issue lies with project managers or immediate department
managers.
It is the project managers' responsibility to know what's going on with their staff. When individual
team members are overwhelmed with work, the problem must be addressed on a one-to-one basis.
However, if the problem crops up again and again, and half the department is complaining, it clearly
Page 4 of 6

Gartner, Inc. | G00152002

is a structural problem. At this point, individual solutions are inefficient at best, and at worst can set
the stage for sending the entire organization back into a negative-feedback, squeaky-wheel mode.
When a structural problem is identified at this level, it needs to move back up the organization until
it can be solved. Here's where the concept of scalable PPM comes into play. As noted earlier,
scalable PPM works best when communication flows freely and accurately in both directions,
enabling a focus on both top-down and bottom-up processes. Achieving this depends heavily on
the culture of the organization, the tone of which is inevitably set by the uppermost levels. The most
expensive PPM software in the world even if coupled with the best project management
processes won't help if the organization continues to approve too many new projects and fails to
support those already under way.

Recommended Reading
"Achieving Agility: Plan for Workforce Reconfiguration, Expect Resistance"
"Project and Portfolio Management Is a Business Process"

Gartner, Inc. | G00152002

Page 5 of 6

GARTNER HEADQUARTERS
Corporate Headquarters
56 Top Gallant Road
Stamford, CT 06902-7700
USA
+1 203 964 0096
Regional Headquarters
AUSTRALIA
BRAZIL
JAPAN
UNITED KINGDOM

For a complete list of worldwide locations,

visit http://www.gartner.com/technology/about.jsp

2007 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This
publication may not be reproduced or distributed in any form without Gartners prior written permission. If you are authorized to access
this publication, your use of it is subject to the Usage Guidelines for Gartner Services posted on gartner.com. The information contained
in this publication has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy,
completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. This
publication consists of the opinions of Gartners research organization and should not be construed as statements of fact. The opinions
expressed herein are subject to change without notice. Although Gartner research may include a discussion of related legal issues,
Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company,
and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartners Board of
Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization
without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner
research, see Guiding Principles on Independence and Objectivity.

Page 6 of 6

Gartner, Inc. | G00152002