The only sure way to understand where your company is headed is to figure out where your project portfolio is taking you. Is your portfolio aligned with your strategic goals? According to the Project Management Institute, businesses in the U.S. today spend $2.3 trillion, or fully a quarter, of the country's gross domestic product on projectswhich I define as any organizational activity with a clearly defined beginning, middle and end, and an agreed-upon set of deliverables. This includes all projects, programs, initiatives and similar efforts that, collectively as a portfolio, serve as the organizational engine of evolution, innovation and growth.
Unfortunately, the proliferation ofand increased spending onprojects has grown faster than most companies' ability to manage them. During the past 20 years alone, the average number of projects in any given organization has grown more than 40-fold, while, seemingly in unison, the complexity of such projects has significantly increased.
Consider the world of IT. According to Forrester Research Inc., technology investment has more than doubled since 1992. Today's "technology spend" in the U.S. is now about half of all capital expenditures, estimates Morgan Stanley. But the problem isn't just the money involved; it's the uncoordinated, even haphazard methods used by too many companies to decide what to spend all that money on. A recent study by Gartner Inc. revealed that more than 80 percent of IT projects are conceived of and funded in a fragmented manner, with little in the way of overall planning. And fully 90 percent of companies do not employ a portfolio management strategy. The result: close to $1 trillion in underperforming corporate investment in the U.S. alone during the past five years. (Ouch!)
Both classes of related investmentstechnology spending and investments in projectsare well-meaning efforts by companies to prepare themselves for the future. So it stands to reason that CIOs and their colleagues in senior management should direct greater attention to the projects they invest in. Although project execution may be tactical, investments in projects and their outcomes are anything but a matter of tactics. The project portfolio is your organization's futurethe truest measure of organizational intent.
Why? Simply put, a company's project portfolio is where corporate objectives are translated into reality. It is the manifestation of what a company is doing and where it is going. It's where investments are made and resources are allocated. It has the full attention of management. And at the end of the day, the project portfolio is a significantindeed, perhaps the most criticalagent of organizational change.
Key to accomplishing this is to analyze how your projects sync up with your strategic intentions. Sounds simple, right? In practice, as most CIOs know all too well, alignment is hard and continuous work.
Given that a company's project portfolio must closely mirror its intentionsthe first requirement of alignmentit's critical to examine just how closely your portfolio really reflects the strategy of your organization. A warning: Your findings may be alarming. Although studies vary, it's conservative to state that, at best, no more than 15 percent to 30 percent of project investments actually align with what a company is trying to achieve.