Corporate Performance Management: Strategic Planning

In an earlier post I describe corporate performance management (CPM) as the monitoring and analysis of a company’s performance goals.  In that post I describe CPM as a step-by-step approach that involves core functions such as strategic planning, benchmarking, budgets and the Balanced Scorecard.  I’d like to delve further into the first step in the CPM process: strategic planning. 

Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy.  It provides guidance regarding what an organization needs to do throughout its operations. 

Planning is the first activity that management must undertake when making the critical decisions that will affect the future.  A company’s plan serves as a guide or compass for the activities and decisions made by individuals throughout the entire organization.  It defines the company’s goals and objectives, and sets the stage for prioritizing how to develop, communicate and accomplish those goals and objectives.

Strategic planning is the formal consideration of an organization's future course. All strategic planning deals with at least one of three key questions: "What do we do?"  "For whom do we do it?"  "How do we excel?"

Once a company has defined its strategy by answering these questions, the next step is to strive towards meeting those strategic goals and objectives.  Company’s use a combination of project, programs and portfolios to implement their corporate strategy, and then use benchmarks and budgets to measure their performance against their strategic objectives. 

Strategic planning is not a one-time effort, however.  While strategic planning may be used to effectively plot a company's longer-term direction, one cannot use it to reliably forecast how the market will evolve and what issues will surface in the immediate future. Therefore, strategic innovation and tinkering with the "strategic plan" have to be a cornerstone strategy for an organization to survive the turbulent business climate.

Project Management: Knowledge Areas

Project management is the application of knowledge, skills, tools and techniques applied to project activities used to meet project requirements. A previous post of mine described the processes that go into managing a project. Those processes outline the flow of essential tools and techniques needed to manage the project effort. However, a project manager cannot effectively employ these processes without having the requisite knowledge and skill set. The project management knowledge areas describe the project management skill sets that all project managers must have.

Project Integration Management
If each part of the project is a tree, then project integration management is the entire forest. It describes the activities needed to unify and coordinate the various processes and management activities across the whole project. It involves managing the interdependencies among all the project management knowledge areas and process groups.

Project Scope Management

Projects must deliver on all the work required, and only the work required, to meet the projects objectives. Project scope management is concerned with defining and controlling what is and is not included in the project. The goal of scope management is to define the project needs, set the project expectations, deliver on those expectations, all the while managing those changes and minimizing surprises during the project.

Project Time Management

The very nature of a project means that there is a defined beginning and end to the project work. Project time management is concerned with defining that beginning and end, and scheduling the work in between. The goal is to build a project schedule that estimates the sequencing and duration of project activities.

Project Cost Management

Money is a finite resource. Project cost management includes the processes involved in estimating, budgeting and controlling costs so that the project can be completed within the approved budget.

Project Quality Management

Projects may very well deliver on time and on budget, but a project is never successful if it does not deliver on the requirement expectations of a projects stakeholders. Project quality management includes the system of processes and activities used to satisfy the needs for which it was undertaken.

Project Human Resource Management

All projects are comprised of people with assigned roles and responsibilities for completing project activities. Project human resource management is the skill set used to organize and lead the project team. It also involves assigning staff, assessing performance of project team members, and overall management of the project team. The project manager is the “Boss” of the project and Human Resource Management is essentially the knowledge area of running the project in relations to the resources assigned to the project.

Project Communications Management

Since projects typically involve multiple stakeholders and resources, it is vitally important that all those people stay informed on project activities. Project communication management is the mixture of formal and informal, written and verbal dissemination of information about the projects progress. It includes the timely and appropriate generation, collection, distribution, storage and retrieval of project information.

Project Risk Management

Any project endeavor involves some level of risk. Project Risk Management involves planning how to handle those risks. Risks must be identified, analyzed and monitored over the life of the project, and a plan must be in place for to respond to both planned and unplanned risks.

Project Procurement Management

In a perfect world, a company will have all the resources required “in house” to complete a project successfully. However, this is often not the case. Companies must look outside the organization to obtain the goods and services needed to complement the existing in house resources. Project procurement management includes includes preparing procurement documents, requesting vendor responses, selecting the vendors, and creating and administering contracts with each outside vendor.

What are requirements?

As project managers and business analysts, we know that above all we are ultimately tasked with defining, managing and delivering upon accurate requirements as requested by the stakeholder group.  This begs the question: what is a requirement?

A requirement  is:

1. A condition or capability needed by a stakeholder to solve a problem or achieve an objective
2. A condition or capability that must be met or possessed by a solution or solution component to satisfy a contract, standard, specification, or other formally imposed documents
3. A documented representation of a condition or capability as in (1) or (2)

A requirement may be unstated, implied by or derived from other requirements, or directly stated and managed. A requirement may describe the current or the future state of any aspect of the enterprise.

One of the key objectives of requirements gathering is to ensure that requirements are visible to, and understood by, all stakeholders.  It is vital that a “requirement” be understood in the broadest possible sense. Requirements include, but are not limited to...

• Past, present, and future conditions or capabilities in an enterprise and
• Descriptions of organizational structures, roles, processes, policies, rules, and information systems.

Furthermore, requirements can be broken down into distinct categories:

1. Business Requirements are higher-level statements of the goals, objectives, or needs of the enterprise. They describe the reasons why a project has been initiated, the objectives that the project will achieve, and the metrics that will be used to measure its success. Business requirements describe needs of the organization as a whole, and not groups or stakeholders within it.
2. Stakeholder Requirements are statements of the needs of a particular stakeholder or class of stakeholders. They describe the needs that a given stakeholder has and how that stakeholder will interact with a solution. Stakeholder requirements serve as a bridge between business requirements and the various classes of solution requirements.
3. Solution Requirements describe the characteristics of a solution that meet business requirements and stakeholder requirements. They are frequently divided into sub-categories, particularly when the requirements describe a software solution:
• Functional Requirements describe the behavior and information that the solution will manage. They describe capabilities the system will be able to perform in terms of behaviors or operations—specific information technology application actions or responses.
• Non-functional Requirements capture conditions that do not directly relate to the behavior or functionality of the solution, but rather describe environmental conditions under which the solution must remain effective or qualities that the systems must have. They are also known as quality or supplementary requirements. These can include requirements related to capacity, speed, security, availability and the information architecture and presentation of the user interface.
4. Transition Requirements describe capabilities that the solution must have in order to facilitate transition from the current state of the enterprise to a desired future state, but that will not be needed once that transition is complete. They are differentiated from other requirements types because they are always temporary in nature and because they cannot be developed until both an existing and new solution are defined. They typically cover data conversion from existing systems, skill gaps that must be addressed, and other related changes to reach the desired future state.

Project Management: Process Groups

A process is a set of interrelated actions and activities performed to achieve a pre-selected product, result or service. Each process is characterized by its inputs, the tools and techniques that can be applied, and the resulting outputs.

In order for a project to be successful, a project team, lead by the project management, must:

• Select appropriate processes required to meet the project objectives
• Use a defined approach that can be adopted to meet the requirements
• Meet stakeholder needs and expectations
• Balance competing triple constraint demands to produce the specified product, service or result

The project processes that are performed by the project team generally fall into 2 categories:

1. Product oriented processes – specifies and creates the projects product, service or result (i.e. how the physical characteristics of the product/service are put together to make it a useable product/service) 
2. Project management processes – specifies the effective execution, implementation and management of the project (i.e. how the various resources – time, money, human capital – are managed to achieve the desired result) 

Project management processes apply globally and across industry groups. They can and should be used regardless of the resulting product of the project. For any given project, the project manager is always responsible in determining which of the following processes are appropriate for the specific project they are managing.

• The Initiating Process Group – this group defines those process that are performed at the start of a project and are used to obtain the authorization to start the project
• The Planning Process Group – this group defines those processes used to establish the scope of the project and define the course of action required to attain the objectives of the project 
• The Executing Process Group - this group defines those processes used to complete the work of the project (i.e. deliver the projects product, service or result) 
• The Monitoring and Controlling Process Group – this group defines those processes used to track, review and regulate the progress and performance of the project 
• The Closing Process Group – this group defines those processes used to finalize all activities and formally close the project 

In future posts I’ll delve into the specific sub-process used by each major process group.

Projects, Programs and Portfolio's

Those of us that live and breathe in the world of project management and business analysis often hear terms like project management, program management and portfolio management being tossed around the project management office.  And certainly anyone tasked with identifying the strategic decision making of an organization are involved with certain aspects of an organizations portfolio of projects and programs.   Projects, programs and portfolio’s all strive for a common purpose -- to deliver benefits to their sponsor organizations by enhancing current capabilities or developing new capabilities for the organization to use.  For those of you who are unfamiliar with these terms or just need a refresher on the exact differences between a project, program or portfolio, feel free to read my brief summary below.

What defines a project?

A project is temporary endeavor undertaken to create a unique product, service or result.  This temporary nature indicates a definite beginning and end.  Every project creates a unique product, service or result.

What defines a program?

A program is a group of related projects managed in a coordinated way to obtain benefits and control not obtained by managing them individually.  All projects within a program are related through a common goal.  If projects have separate goals and are only related by common funding, technology, resources and stakeholders, then these efforts are better managed as a portfolio, rather than a program.

What defines a portfolio?

A portfolio is a collection of projects or programs (and other work) that are grouped together to facilitate effective management of that work to meet strategic objectives.  A portfolio exists within in an organization and consists of a set of current and planned initiatives, linked to strategic goals and objectives, used to address a unique area of the business.  Therefore, portfolios are ongoing in nature and not temporary like projects and programs are. 

An example of a portfolio would be the development of various product offerings by Apple.  Apple could very well have separate portfolio managers for iPhone, iPod, and iMac product lines, as each of these product lines strive to meet specific strategic objectives for the company.  As we dive deeper into each of these product lines, Apple may develop individual programs for the development of each major release of the iPhone.  Each iPhone product release would consist of individual projects, used to address specific functionality required by that product offering.