Project Portfolio Management and ITIL®: What are the connections?

The Project Management Institute (PMI®) and Information Technology Infrastructure Library (ITIL®) provide widely accepted frameworks for generating value to the organization through the accomplishment of adequate services and projects. According to the 2013 PMI Pulse of the Profession®: PMO Frameworks, 28% of the functional reporting area of the PMO is IT organization or IT department. The understanding of both frameworks can leverage an IT organization the foundations for improving an existing PMO or starting a new PMO.

The Standard for Portfolio Management-Third Edition from PMI® explains the set of best practices that focuses on aligning projects, programs, and operations with the business strategy and generates value for the organization. The Project Portfolio Management (PPM) domains are: strategic alignment, governance, portfolio performance, portfolio risk management and communications management.

On the other hand, ITIL® is a set of practices for IT service management (ITSM) that focuses on aligning IT services with business needs and creating value for customers. ITIL® best practices are organized around a service lifecycle that has the following stages: service strategy, service design, service transition, service operation, and continual service improvement.

There are many connections that we can find between ITIL® and PPM. The benefits of both practices for an IT organization can be illustrated by examining the similarities between PMI® and ITIL® frameworks. I will base this analysis on the correlations between the ITIL® service strategy and PPM strategic alignment processes, which I summarize as follows:

Strategy alignment: PPM processes include the continuous activities necessary for aligning portfolio’s components with organizational strategic objectives, goals, and priorities. It is crucial to make sure that the organization is doing the right projects, addressing prioritization in the project selection. Likewise, the service strategy stage of the ITIL® defines an IT service strategy that operates effectively and with right priorities within its business context.

Value: In IT portfolios all efforts should be oriented towards the delivery of the expected value. PPM offers clear guidelines for organizations to ensure value generation in each transaction, service, and product created by the projects and programs in the portfolio. In a like manner, ITIL® establishes that an IT service provider must always guarantee that the cost of delivery is consistent with the value delivered to the customers. Both frameworks have a common goal: deliver value.

Business Alignment: ITIL® Service Strategy contains the implementation of service portfolio management that includes current business requirements, future needs and the development of service offerings. In PPM practice, portfolio’s components are selected and authorized based on prioritization analysis/criteria to create the portfolio road map. Both practices consider the prioritization and authorization processes to select an IT portfolio mix that contributes to the accomplishment of organizational strategies.

Robust processes: in ITIL® and PPM implementations, it is imperative to have strong processes that allow projects, programs, operations and services decisions to be based on quantifiable goals. Both frameworks focus on best practices to give solid foundations to execute the work.

Governance: ITIL® and PPM practices recommend well-defined processes and politics with clearly documented roles and accountability for each activity that IT organizations perform. The portfolio’s governance model establishes clearly the reasons to execute, to cancel or to postpone a project and determines openly who makes these decisions.

Supply and demand: To manage supply and demand is a process that the Standard for Portfolio Management includes within Portfolio Performance domain. ITIL® includes this process in the Strategic Service stage. In both cases, the process analyzes and optimizes the consolidated allocation of resources (e.g., people, systems, technology, facilities, financial) to determine the organization’s capacity to execute the portfolio roadmap and to ensure IT portfolio efficiency and effectiveness.

Metrics: PMP and ITIL encourage the use of consistent and repeatable metrics to better aim for correct delivery and overall effectiveness. Under ITIL® guidelines, services are designed to be measured. With proper metrics and monitoring in place, IT organizations can control service level agreements (SLAs), organization level agreements (OLAs), monitor operations, and track improvements and corrections as necessary. Similarly, PPM evaluates projects, operations, and programs with key performance indicators to capture whether the IT portfolio’s trending is in the positive or negative direction.

Capabilities: ITIL®’s service strategy should guarantee the IT capabilities and resources that the organization requires to successfully develop service offers. PPM also seeks to guarantee and develop the necessary capabilities to align with the competitive position, or with the operational effectiveness that the organization pursues to maximize through the portfolio.

Business Relation Management: ITIL® and PPM support the continuous communication with stakeholders and the understanding of their needs and expectations. Both practices recommend discussing the issues as they occur and to foster appropriate stakeholder engagement in IT portfolio decisions and activities. ITIL® emphasizes the need to establish and support a constructive relationship with the customer, formalize claims and guarantee customer satisfaction.

Organizations have demonstrated that they can adopt ITIL® and PPM and adapt both frameworks to their business needs. In my experience managing ERP portfolios and center of excellence, using both frameworks has been extremely advantageous. ITIL® and PPM can help any PMO to comprehend how to support IT functions and to offer a better connection between business strategy and IT organizations.

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