Microsoft's EPM; It’s Not Just for Projects Anymore

The art and science of applying financial portfolio management principles

Through growing acceptance of the advantages of a projectized approach to most all aspects of business, the benefits of a disciplined application of program and project portfolio management (PPM) disciplines have become apparent and are being widely employed in IT, energy, manufacturing, transportation other industries.  

Microsoft’s Enterprise Project Management  (EPM)

Microsoft’s Enterprise Project Management (EPM) suite 2010, comprised of MS Project Server and SharePoint 2010, with its integrated portfolio management and optimization module has been an important new factor in driving the wider practice and adoption of PPM. 

Growing past PPM to APM

Now, as companies advance along the PPM maturity curve, the potential benefit of applying the same principles to the management of software systems and applications is also moving with growing awareness as Application Portfolio Management (APM).   Gartner estimates that by the end of 2012, more than a quarter of the Global 1000 corporations will be implementing some form of Application Portfolio Management, indicating both the growing importance of the APM market as well as its relative immaturity.  The EPM Suite has a role to play in addressing this burgeoning demand, especially for mid-sized companies and organizations.

The problem of explosive growth of software in companies is universal.  Firms both large and small have lost all oversight and control over the number of software applications and systems that are deployed and functioning at varying levels throughout their organizations.  Often requiring expensive annual licensing or maintenance support contracts,  many of these systems provide redundant functionality, are either under-utilized or no longer utilized at all.  And often times, their sole reason for being is the protection afforded by a single champion in the organization.   

The Challenges of APM

Large corporations and organizations have been struggling with the application management problem for a long time.  With explosive growth and ubiquity of IT, the issue is now universal among organizations of all sizes.   To begin to address the problem, the practice of Application Portfolio Management (APM) has slowly developed and evolved over the past 20 or so years, driven by large companies like IBM and HP who have designed and currently market specially designed systems to manage APM problems. These solutions are generally considered to be complicated, expensive and fairly inflexible, and not the best fit for most corporations.

In fact, firms that have developed the infrastructure to implement and support a PPM system have travelled more than half-way toward the development of an APM system. Boiled down to the essence, application portfolio and project portfolio management are two sides of the same coin, grounded most importantly in a management commitment to develop, implement, and maintain a governance structure that aligns decision-making with  a prioritized set of business goals and drivers, costs and benefits, and resource requirements and constraints.  

Effective PPM structures provide a rational, quantitatively-based framework for the allocation of capital budgets to a selected portfolio of projects, mitigating the effect and influence of organizational stove-pipes, turf protection, and, at time, the overpowering decision authority of the  HIPPO or the highest paid person’s opinion.  This policy and procedural scaffolding is as important for PPM as it is for APM.

Common elements in PPM and APM

In both PPM and APM worlds, the ability to create prioritized portfolios of projects or applications using an objective set of weighted and prioritized criteria that are constrained by budget or other financial variables, resource requirements, risks, performance metrics or other factors provides an invaluable, cost-saving, and time-saving tool and the opportunity for organizations to make more data-driven and fewer politically driven decisions.  

In the case of Microsoft’s approach, the core element of its Microsoft’s portfolio management approach is the existence of a published list of project schedules, the data fields of which form the basis of the data processed and analyzed to form optimized portfolio alternatives.  In the same way, a projectized approach to APM also provides tremendous potential for organizations to visualize, compare and analyze the performance and contribution of various applications and software systems to an organization’s strategic priorities. 

By representing applications in a standard project schedule, it is possible to visually portray an integration of the entire lifecycle of the software application system:  its total costs (acquisition and recurring), its resource requirements, its deployment and upgrade time-phasing, and other factors.  Grouped in a portfolio and displayed in an integrated and collaborative tool suite like EPM, system, planners and executives are provided an “apples to apples” comparison of where a software application or system is in its lifecycle, how much has been spent by who, for what, and when, what is planned for the future, and more.

Building on this rich dataset, EPM, which includes both SharePoint and SharePoint Business Intelligence reporting, provides the ability to create an unlimited number of custom data fields for a project or project portfolio that can carry other important information elements on the performance, value, user base, utility and other metrics or attributes of software application or system identified as relevant to a portfolio assessment.  Linked with a robust reporting system, like SharePoint Business Intelligence (also integral to EPM), organizations have the ability to create detailed analytical reports, graphics and dashboards that report against the drivers and selected data fields 

The third and final prong in this potent trident is the SharePoint-based Project Workspaces that can be generated and linked to each published MS Project schedule in EPM.  These familiar SharePoint sites can serve as repositories for documents, artifacts, communications, explanatory notes, or other information that may be relevant in tracking past, current, and future developments regarding an individual application.   With its familiar SharePoint user interface, the Project Workspace can serve as the common point of reference for ideas, decisions, and discussions for a given application or software system.

Demand for APM is here and is growing.  Companies now using Excel spreadsheets to inventory, track and categorize their various software applications and systems may be well served to check out their ongoing PPM initiatives to see how these disciplines, tools, and techniques can be employed to craft tailored APM solutions that will, once and for all, help clean out and organize their application junk drawers.

Pinnacle has guided many of our clients through the transition from informal processes and the use of Excel to the implementation of Industry Best Practices for PPM and APM. 

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