Visions for a balanced project portfolio

Nearly all institutions in the financial services sector have a huge demand for adjustments both on the organizational and the IT side. Various regulatory or accounting requirements are not the only drivers for change. IT modernizations, which are necessary for reducing operational risks and for ensuring the ability to act, create even more pressure to act. However, market orientation must not be lost out of sight in this jungle of urgent issues to do in order to safeguard competitive advantages or to further enhance the market position. Thus, complex project portfolios with significant IT participation and a myriad of dependencies are developed, that push the institutions to the limit of feasibility.

Acting at the limit

These ambitious implementation projects often encounter organizational structures that are too regimented to be able to provide extensive experience in implementing large-scale projects. Moreover, capacities are often exclusively allocated to day-to-day operations, which makes the independent implementation of the upcoming project portfolio nearly impossible. Therefore, external service providers are utilized on a large scale and they assume the lion’s share of project tasks. Although performance peaks can be prevented in this way, this form of leverage also has its limits: securing one’s own manageability is decisive for sustainably ensuring the quality of results and thus safeguarding the interests of the client during implementation. The approach of selling the risk to the service providers by means of comprehensive work contracts has proven to have failed—here as well, the client has to maintain sufficient transparency about the project progress and result quality, as otherwise significant change requests impend or implementation plans must be canceled. Apart from restrictions of staffing, financial feasibility has also to be taken into account when designing the project portfolio, as the specified annual change budget usually must not be exceeded.

Is the journey the reward?

Against the backdrop of the resources and budget feasibility of the project portfolio to be guaranteed, banks are leading intensive prioritization discussions, which are dominated by the aforementioned mandatory issues. When taking a closer look at the creation of project portfolios, one will realize that they are usually created in a decentralized way and that the individual departments of the bank contribute their ideas. Sometimes portfolios are created within a strategic joint initiative, that is initially implemented within a very tight schedule. Both approaches create a collection of plans which then have to be continuously prioritized by the project portfolio management. Thus, the changes of the bank significantly depend on the prioritization of topics—the target image is only created over the course and applies to the priorities set during the discussions. Thus, interaction with the corporate strategy and the medium-term development goals cannot be sustainably ensured, although actually it would be essential. In order to achieve this, firstly, medium-term and long-term target images have to be developed, which are derived from the corporate strategy and consistently cover both the technical (process-related) and IT perspective. Based on this target and the current situation, the further approach can then be determined.

Promap for the project portfolio

Rather than a reactive project portfolio management that focuses on prioritization, target images enable proactive and integrated planning of initiatives and the transfer to a master plan, that in return ensures an implementation of the business policy goals. In order to implement this approach, zeb has developed a method for Proactive Master Planning (proMAP), which is built on three major elements:

Element 1: Continous architecture management

A continuous architecture management is the core, which enables the integrated development of a consistent target image, incl. intermediate steps through an interaction of single architectural levels. Above that, transparency is created in an architectural assessment through the actual performance of the architectural components and urgent fields of action. A customized visualization of the target architecture is indispensable, as it lays the foundation for a common discussion of future requirements between technical and IT experts.

Element 2: Regulatory roadmap

A first overview of the future requirements of the regulator and Accounting is essential. Single topics hereby often overlap in terms of their contents. Systematic grouping and working through topics tap into huge synergy potentials so that, for example, necessary systematic adjustments are pooled and double work is prevented.

Element 3: Sales and market perspective

As mentioned before, the market must not be lost out of sight despite the “regulatory tsunami” and a myriad of inherited waste. The requirements of the market have to be taken into account already during the development of a sustainable strategy. In addition, a sales strategy has to be differentiated during the operational implementation. Integrating external staff can be an advantage here, as they usually are well-informed about general market trends.

These elements build the foundation for the development of target images for all architectural levels while taking into consideration the strategic target requirements. Then the levels of expansion are developed in a common discussion of limiting factors (resources, budget) and merged into a master plan for the portfolio. This is a binding and balanced medium-term plan.

A joint success

When realizing the project portfolio, diverse stakeholders are involved: due to the comprehensive changes in all departments, the entire institution is affected. The implementation represents a huge effort for the employees and requires an active participation on all levels and a smooth cooperation between the project and the organizational structure. Projects often fail due to missing approval of target images and/or a management considered to be inconsistent or not authoritative enough. Consequently, a high level of insecurity quickly arises, which can result in promoting conservative forces. The master plan and target images as guidelines ensure a common understanding of the goals and create the necessary authority in order to align the team to the strenuous change phases. A comprehensible visualization of complex architectural coherence with emphasis on the benefits is a central tool for communication and change management activities, which are key for successful implementation.

Planning is half the battle

The first hurdle has been cleared thanks to a defined project portfolio: preferably a balanced and sustainable project portfolio. Successful implementation of complex projects sets high additional demands on the portfolio management in process (more information on this topic is provided here). Continuous quality assurance together with a regular evaluation of the strategy and target images ensures over the course of time a close interaction between the strategy and implementation, as well as a consistent pursuing of common goals.

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