Logistics – IT – Consulting

Your support for business analysis, process- & project management

Category: Project Portfolio Management

  • IT Project Portfolio Meets IT Service Portfolio

    Summary

    This article outlines the distinctions and interrelationships between IT operations, IT service management, and IT project management.

    While IT operations are ongoing and repetitive, projects are temporary and unique.

    IT Service Management (ITSM) operates as a strategic layer over IT operations, often divided into technical operations and user-facing services, and includes functions like Service Catalogue Management.

    Service Portfolio Management aligns IT services with strategic objectives, like Project Portfolio Management, by evaluating benefits, risks, budgets, and resource requirements.

    The traditional Plan–Build–Run paradigm separates project execution from service operations but struggles in complex, agile environments.

    Alternatively, the Demand–Supply–Execute paradigm integrates project and service management, recognizing shared resources and the need for adaptive execution. The text emphasizes the blurred lines between incidents, service requests, and projects, noting that both services and projects rely heavily on human resources (80% of spend) and increasingly overlap in execution.

    The overall message advocates for integrated, flexible approaches to IT delivery, resource allocation, and value creation.

    IT Project- & IT Service Management Map

    IT Service Delivery  / IT Operations

    In contrast to projects, IT operations are ongoing and repetitive (like running a factory or providing customer service).

    Projects (which are a one-time endeavor) and operations (which are repeatable) can be considered as two different domains.

    IT Service management

    This is the management layer above the IT operations. Some company split it into technically focused operation management and customer/user orientated service management. IT Service Management includes IT Service Catalogue Management.

    IT Service Portfolio Management

    The Service Portfolio Management could be seen as a pendant to the Project Portfolio Management. According to the strategic objectives the offered IT services are selected.

    IT Project Portfolio Meets IT Service Portfolio

    The management and an IT project and an IT service portfolio is very similar.

    Both deal with portfolio items and decide based on the organization’s strategy which items should be moved to the next stage.

    The criteria are, among others

    • Expected benefit (monetary & nonmonetary)
    • Budget requirements / availability
    • Resource requirements / availability
    • Risks (threads & opportunities)
    • Expected availability date

    Resource Constraints Are Impacting Services & Projects

    An example of the resource requirements of projects and service delivery is shown above. The orange bars show the resources assigned to service delivery (keep the lights on). The bars above the blue dotted line shows the resource requirements of project.

    In month 9 the total required resources exceeds the resource capacity limit.

    Resource conflicts lead to

    • Overburden & multitasking
    • Poor quality
    • Significant delays in project delivery
    • Breaches of service level agreements

    Plan Build Run Vs. Demand Supply Execute

    The following content is based on presentation from Charles T. Betz. Unfortunately I do not have the link to the source.

    It’s all just work

    Incident / Service Request) Tickets become projects and projects become tickets.
    A project could impact application- & infrastructure services.
    Services could be seen as open ended “projects” for time being.
    Services require provisioning which could be handled as a project.
    Services and projects compete against the same resources!
    Projects deliver output, services transform output into outcome which is visible as delivered IT value.
    Distinction between incidents, problems, changes, and user stories become increasingly arbitrary when it is the same team that needs to respond to any.
    80% of spend is people.

    Plan Build Run

    The Plan–Build–Run paradigm separates the world of “projects” (plan & build) from the world of “services” (run). It encourages waterfall thinking. Results in systems are built in isolation from one another. Plan build run works fine for a single system but encounters difficulties in complex service environments with overlapping service-, application-, technology-, and asset life cycles. It is difficult to cope with ongoing improvement, accelerating delivery cycles, agile service delivery processes.

    Demand Supply Execute

    The Demand–Supply–Execute paradigm reconciliates the IT project portfolio items with the IT service portfolio items, both compete for the same resources. It sees time and resource management as a critical success factor. The execute stage supports multiple projects as well as multiple dynamically evolving services.

    IT Portfolio Management Based On The Demand Supply Paradigm

    The following figure visualizes the concept of an integrated IT portfolio management. Incoming demands are evaluated and will be shifted to execution if they can be “married” with the required supply items (resources, …). IT portfolio management selects valuable items based on known criteria.

  • Setup Project Portfolio Management

    Summary

    A project is a temporary endeavor undertaken to deliver a unique outcome, constrained by time, budget, and resources. Effective project management requires not only executing individual projects efficiently but also ensuring that the right projects are selected and prioritized.

    Project Portfolio Management (PPM) plays a critical role in aligning projects with strategic objectives, optimizing resource use, balancing risks, and maximizing business value.

    Supporting functions such as program management, resource management, and demand management are essential to assess feasibility, manage capacity, and translate business needs into actionable initiatives. Due to limited resources and conflicting priorities, organizations must make benefit-driven decisions, continuously reassessing project value and alignment.

    PRINCE2 provides a structured approach with clear roles and emphasizes continuous business justification.

    Ultimately, successful project execution depends on the integration of governance, strategic alignment, and informed decision-making across all levels of the portfolio.

    Project Portfolio Management Vs. Project Management

    It is generally accepted that a project is a temporary effort undertaken to create a unique product, service, or result. It has a clear beginning and end, and it’s usually constrained by time, budget, scope, and resources.

    PRINCE2 differentiates 3 layers:

    • Directing a project
      The Project Board provides overall direction and decision-making throughout the project.
    • Managing a project
      The Project Manager runs the day-to-day management of the project.
    • Delivering a project
      This is the actual creation of deliverables under the direction of the Project Manager

    Projects are related to:

    • Project Portfolio Management
      Project portfolio management is the strategic management of a group of projects and programs (owned by an organization) to ensure they collectively achieve an organization’s objectives, optimize resource use, and balance risks and returns.
    • Project Management Office
      The project management office is a supporting function for project management.
    • Program Management
      Program management is the coordinated management of multiple related projects (dependencies), aligned to achieve strategic objectives and deliver benefits that wouldn’t be realized if the projects were conducted separately.

    Not every project can be realized

    • Resource and budget limitations mean we cannot execute all proposed projects.
      We must place our limited amount of chips on the right squares!
    • Trade-offs are necessary.

    Projects may have conflicting objectives.

    • Some projects support different or even opposing strategic goals.
    • Alignment with overall business priorities is key.

    Projects vary in value and urgency.

    • Certain projects are critical and must be delivered to ensure business continuity.
    • Others are less urgent or can be postponed

    Decision-Making should be benefit-driven.

    • Each project’s expected value should be weighed against its
    • Risks (threats and opportunities)
    • Required resources
    • Duration
    • Budget impact

    It’s about making smart choices

    • We must accept that we can’t satisfy every demand.
    • Our limited resources must be allocated where they create the most impact.

    Process Context

    Project management, project portfolio management, resource management, and demand management are interconnected, each playing a distinct role in ensuring successful project execution and strategic alignment.
    Demand Management is responsible to capturing, evaluate, and (pre-) prioritize business needs and transform them into specified demands. It relies on resource management to validate capacity to meet new demands. it feeds into project portfolio management , which decides which demands should become active projects.
    Resource Management ensures the allocation and optimization of people (tools, materials) across projects. It depends on project portfolio management for prioritized project lists. It relies on demand management to anticipate future resource needs. It depends on project management for resource assignments and usage feedback.
    Project Portfolio Management selects, prioritize, and oversees a portfolio of projects to align it with business goals. It depends on demand management to identify potential projects. It relies on resource management to assess feasibility and resource capacity. It requires project management to provide delivery updates and ensure execution aligns with strategy.
    Project Management focuses on the execution of individual projects. It relies on resource availability (provided by resource management)and project prioritization (provided by portfolio management).

    Functions / Purpose

    Project Portfolio Management helps organizations “do the right projects” rather than just “do projects right.” It ensures that the collective efforts of all projects drive organizational success. The purpose is:
    Strategic Alignment ensures that projects support the organization’s long-term goals and priorities (by selecting the right projects).
    Resource Optimization helps allocate resources (people, budget, time) effectively across multiple projects.
    Risk Management identifies and balances risks across the portfolio, not just within individual projects.
    Performance Monitoring tracks project performance and progress at a portfolio level to ensure expected benefits are being realized.
    Informed Decision-Making provides executives and stakeholders with data and insights to prioritize or terminate projects based on value, cost, risk, and strategic fit.
    Maximizing Business Value focuses investment on projects that offer the highest return on investment and overall value to the organization.
    Governance and Control establishes clear processes, standards, and accountability for project selection, funding, and execution.

    Introduction Of Project Portfolio Items

    To setup a Project Portfolio Management you can choose project portfolio items. A project portfolio item is one of the following

    • Specified Demand
    • Project Brief
    • Project Initiation Document
    • Stage Plan (request to release next stage)

    For each of items above the project portfolio manager takes one of the following decisions:

    • Reject
    • Approve (= continue with project)
    • Set on hold (= stop project, resume project later)
    • Close regularly
    • Close prematurely

    The decisions are normally taken in the project portfolio board. Among others the decisions are taken based on the following criteria:

    • existing constraints like available budget and available capacity of human resources
    • expected benefits (monetary / nonmonetary)
    • risk evaluation (threads / opportunities)
    • fit to strategic needs

    The Resource Capacity Constraint

    The graph below shows an example of the resource capacity constraints.

    In month 9 the total required resources exceeds the resource capacity limit.

    Resource conflicts lead to

    • overburden & multitasking
    • poor quality
    • Delays in project delivery

    Portfolio management need to consider resource constraints when new projects are release (same applies to budget and timeline constraints).

    Resource management needs to be implemented to a suitable maturity level
    0 – nothing
    1 – planning only
    2 – planning & allocation
    3 – planning, allocation, and tracking
    4 – …on cost unit or work package level
    5 – forecasting

    A similar approach can be used to identify budget constraints.

    Interface Project Management & Project Portfolio Management

    When arriving a stage gate the portfolio management is involved to select the “right” portfolio items to maximize the business value.

    Following parameters are considered:

    • Scope
    • Quality
    • Timeline
    • Resources
    • Cost (Purchases)
    • Benefit
    • Risks / Issues