From Steve Rollins book "Portfolio Best Practices and Governance: Maximzing Business Results"
Over time, the ability to govern the assets and resources for optimum utilization and/or continued growth has been the focus for everyone seeking to gain value. How to process governance best is the challenge for those who are responsible for results from governance. To understand how to protect from a loss of value, we must understand what we must protect from to prevent loss of value from these same levels of assets and resources we own and/or manage. what it is we must prevent from occurring. We must understand the probabilities of possible certain events to determine a path (choice) that will hopefully yield favorable outcomes. Thus governance is all about risk management. Risk management is concerned with detecting and preventing bad outcomes from occurring while at the same time detecting and acquiring good outcomes to leverage good outcomes that result in added value.
As we look around at our work environment to understand how work decisions are made (governance), we often are left with the feeling that the surrounding environment is out-of-control. This makes us nervous. Especially if the impact of this feeling is heading our way. Achieving best practice governance is driven by role-level accountability practiced well by all necessary role-levels tangent to you. Accountability is enabled best when the line-of-sight is sufficient for proper and timely action by those who are accountable. Thus, improving transparency will only add to the improved governance. We are all accountable and thus we all practice governance even if this managing just our work assignments.
Governance value for portfolio management is also viewed as proper risk management as a means to monitor life-cycle risk for investments contained within the portfolio. Additional side benefits exist as well. Executing essential governance for all role levels (scaled governance) can improve accountability for the same role levels. Achieving a holistic state whether everyone is performing at a satisfactory level regarding their governance accountability is difficult to achieve at the same consistency across the workforce without systemic portfolio management help. There are many factors for this. The primary contributor to unbalanced governance in an organization is poor transparency in any contributing group relationship model such as 1-1, 1-many, many-1, or many-many. When we consider the essential governance required for these group relationship models, the ability to assure everyone is maintaining at least the essential accountability at every work step grows increasingly more complex and thus difficult. When work progress is made transparent ( to a similar degree) to all members of the relationship group working a joint effort, the complexity reduces because all workers in the group have special knowledge about what is next and how what they do impacts the progress of the work of that group. If opportunity exists for the transparency to increase within the relationship group, the cause and effect of improved transparency will improve the worker line-of-sight (if needed and useful). This will position the work group to improve their recognition of potential early delivery opportunities and/or potential delivery threats.
In portfolio management governance there are two basic governance models for managing outcomes. These are cost containment management and throughput management. In cost containment management the objective is to spend the budget allocated for the work being funded. In theory, optimum management performance is achieved when completed work is represented by a zero funds remaining in the budget. The throughput management objective is to complete as much work as possible without incurring additional cost and time in doing so. The more work completed in a planned time frame than was expected, the better this is for the business as this potentially creates a pool of unused budget funds left over from completed work that finished early. Measuring the improvement gained from improved transparency on a work group in how they govern themselves in a throughput management model is wasted effort as we know that an improved line-of-sight enables better choices and thus by default better valued outcomes. Therefore, we are left with seeking opportunities to improve transparency wherever possible.
An argument can be made that cost containment management and throughput management can be blended for the business situations that need both. This can be problematic for the work force as they must be clear about their accountability objective related to governance on their part. Is their effort to be budget driven or time-driven for best results? Mixing these two notions between work groups adds behavioral complexity that is unnecessary and causes work completion risk to be more negative. The outcome will result in tighter management controls to ensure outcomes are positive. This choice should only occur in tightly regulated environments.
Let us consider the following at what all of this means regarding the value of governance as it applies to the vitality of the business.
In the cost containment management model we know that budget consumption is the objective variable. Thus when we consider what is essential “Governance” in the cost containment management model, we know that work must be completed and that the work item budget must not be a negative number (or over-budget) at work completion. If the work to be completed happens to be completed early, there would be remaining budget (likely) and thus this would be considered as a less than expected result in Governance. The real value earned by the outcome of the completed work item then would be subordinated to cost of work. Is this what we are after as a business or team? Can we understand that in the strictest sense of value, managing for best results using a cost containment management model will most likely yield the least amount of intrinsic work value overall?
In the throughput management model, we know that completing the most amount of multiple (and possibly unrelated) work items in the measured time period for which a certain and less quantity of work and related cost was expected, is the objective variable. In this approach, throughput is constrained by time and money and enabled by capability of the worker to recognize acceleration opportunities and/or future threat events to begin avoiding as they attempt to complete work as best as they can without eroding the expected outcome value. The role of “Governance” within the throughput management model focuses on maximizing the least effort in time without exceeding budget in order to complete work. This leads aggregately to acquiring more unused planned time to work the work that had not been planned or budgeted. Completing projects, programs, products or services that were not planned for (expected) in the time period measured by a portfolio can lead to adding to the competitive business advantage of the business within its business sector.
Rational Focal Point PPM and Rational Focal Point for Project Management have this “Governance” capability inherent within its capability given that governance is a process more so than a coded software module. The flexibility gained from the Rational suite of products enabled through the JAZZ platform greatly enables the best possible governance methods to be applied and with great ease because the data layer provided by Rational JAZZ platform creates unlimited extensibility that any Rational product that is plugged into the data layer will have dynamic transparency for any data element seen by any other Rational product also plugged into the same data layer supported through the same Rational JAZZ platform. This cause and effect on governance through increased transparency is revolutionary to the PPM space when considered in a throughput management model for best business value. Cost containment management places no value on the improved transparency. Business customers utilizing the benefits of Rational PPM processes can easily improve transparency for all work through as much of the workforce as deemed necessary. Over time and as management sees fit, additional Rational products can be added that will contribute to incremental transparency.
So why is this so important? So what that you can see your work better and the choices that you have to make are so clear that additional transparency is not necessary for you?
Guess what? The same ray of transparency that is shining on you that gives you sufficient comfort is most likely the same ray of transparency that is shining on others in your work team. These people could now know that you need additional information that only they have so you can make the right work choices instead of the choices you were about to make. This is also a compelling reason as to why teams make better decisions on choices than individuals do. Particularly if they are enjoying an extended line-of-sight for these upcoming choices that must be made. As we look at how governance is performed today in your organization, can we not now understand how the lack of transparency is influencing the lack of proper accountability and therefore constraining the outcomes of governance that you and others want to perform but cannot because you are dependent on governance choices from other peoples work outcomes? Seeking to help people become more accountable through direct communication may be confrontation? Why not help them to make better choices by helping to improve their line of sight so that you will benefit from their transparency?
Consider the impact on Project Portfolio Management Governance given the following three scenarios using the following governance structure:
Executive Governance Team
Program Management Office
Line of Business Governance Team
Scenario 1: Unplanned project change request
Scenario 2: Change in business conditions
Scenario 3: Unmanaged sense of urgency
In Scenario 1, an unplanned project change request is submitted that extends the date of a specific strategic project due to resource availability delays. The PPM governance objective is to protect the planned overall PPM achievement date for all approved and active projects. The Executive Governance Team is pushing for this project to be completed because of its business value and is leaning towards accepting the unplanned change request for this reason. However, if their line-of-sight was sufficient they would easily learn the trade-offs of accepting this unplanned change. Accepting the change request would result in backing-up the backlog of work awaiting activation thereby increasing the probability of not completing the portfolio plan for the fiscal year. Most likely, this team would not accept this change. Yet too often in many businesses, accepting change does occur because the people accountable cannot see the potential impact.
In Scenario 2, an economic event occurs in business thereby negating a strategic ($10 for a gallon of gas) objective for the business. How does this become communicated to the workforce while re-planning the project portfolio? We can expect that previous assignments and accountabilities will be changed and most likely changed with noticeable impact on the business. How fast will (can) this occur? Competing in the marketplace means that those businesses (armies) that can adjust timely (agility) to changing conditions while the competitive battle continues for market share, will impact the future of that impacted business and those that work for that business. Performing proper governance now creates a new value for the employee (soldier). If the business suffers (loses the battle) does not the soldier lose too? No longer is having a job all about the person. Because of the economic pressures at hand, the business vitality is now as important to the employee (if not more so) than ever. They can contribute more if they can make better choices in their work. Can we not see this coming?
In Scenario 3, a significant number of resources are engaged in completing a key critical strategic project. The project schedule has been tightly managed by all key contributing resource groups involved with the project. Things always seem to change when projects near completion and a change event occurs that causes the project to enter into a “crash” mode. Communicating the change in urgency is left to the resource groups management. Several people within these groups are out on vacation and miss out on the news. When they return, they fail to learn the new urgency and continue performing their work duties as before. Time passes by a few days until they independently begin to learn that their work is due by that Friday and it is now Thursday. Now what? If they had only known? Now because they will be late, work waiting to start for other subsequent tasks and resources cannot start and the project cannot end on time. This leads to other pended portfolio work being pushed backed into the calendar thus causing the entire portfolio spending plan for the year to become “Red” and the expected overall portfolio achievement date to extend. The business (army) is losing the battle!
All things mentioned about transparency and its effect on governance and related results is why what IBM has accomplished with Rational PPM is so revolutionary. Improving transparency leads to improving the quality of the decision data for people to make choices about the work they are performing. This improved transparency condition can reduce risk for the decision maker.
Can we not understand that improving transparency by simply adding more capability in function i.e. Rational products, is an easy approach to incrementally moving your business and the related work force toward the higher end of productivity? No other PPM product on the market today has a similar capability to scale the management function to the depth and breath business to any role level. Thus, IBM continues to be a “difference maker” for gaining value in business prosperity in the PPM and Governance process space.
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