Portfolio Optimization – Avoid Wasting Millions and Drive Strategic Priorities
Background
This is the second in a series of posts exploring findings and financial benefits identified in the Hexagon-commissioned Total Economic Impact™ (TEI) study conducted by Forrester Consulting. The study examines the potential return on investment (ROI) organizations can realize by implementing EcoSys™. EcoSys is an Enterprise Project Performance (EPP) solution that supports the success of all projects within an organization by consolidating enterprise-wide project data, across the full lifecycle, into one management platform.
Forrester interviewed four organizations with experience working with Hexagon’s EcoSys. From their discussions with decision-makers, Forrester was able to quantify some of the primary benefits of utilizing EPP software. These benefits were consolidated into 5 key findings:
- EcoSys Reduces Project Cost Overruns
- EcoSys Allows You to Pivot Capital Spending
- EcoSys Improved Project Controller Productivity
- EcoSys Enhanced Collaboration
- EcoSys Allows you to Decommission Legacy Systems
In this blog post, we’ll explore how EcoSys allows users to pivot capital spending by clearly showing which projects align best with an organization’s business goals.
Key Challenge: Inability to Determine Which Projects Are Worth Pursuit
There is nothing more detrimental to a project-driven business than putting effort into projects that don’t deliver expected business outcomes. This often happens because the project in question does not match the business’s goals. But what causes an organization to select the wrong projects?
Lack of Visibility
The organizations interviewed for the TEI study noted that, prior to implementing an EPP solution, they lacked visibility across their entire project portfolio. Without a complete, singular view of projects across the organization it was difficult to compare opportunities. There was a lack of standardized approaches to evaluate potential projects resulting in decisions that were too subjective. Similarly, it was difficult to access performance data once projects began to understand where the portfolio was headed and how to address changes if needed. This lack of visibility kept the organizations from identifying the highest value projects within the organization.
Management Systems Lacked Functionality
Further, the organizations interviewed were relying on a fractured web of project and portfolio management tools that not only prevented complete visibility but also lacked a great deal of functionality. For example, there was no way to autonomously track project performance data. This functionality would have allowed project professionals to easily pinpoint the common characteristics of historically successful projects. It would have also allowed them to see when projects weren’t performing as expected, allowing them to take remedial action.
These issues caused our interviewees to select projects to pursue without knowing for certain that they would deliver necessary business outcomes or warrant the investments being made. This inconsistent and non-standard selection method kept the business from selecting the most profitable projects and resulted in sub-optimal returns on projects
The Solution: House the Entire Project Portfolio in a Single, Automated Platform with Built-In Tracking & Scoring Functions
The customer organizations could no longer afford to base the critical decision of project selection on subjective measures, unspoken goals and stakeholder pet projects. Action had to be taken to ensure project performance data was visible and presented in a way that allowed for easy comparison.
To achieve this, interviewees turned to an EPP solution. The solution provided them with one system to house and manage all project portfolios from a single location. This allowed the organizations to create a scoring system that scored projects based on how well their benefits matched the overall business strategy. As a part of the scoring functionality, the interviewees were able to score projects based on their ability to meet the specific goals of the company. These goals were unique to each business and could include anything from profitability, safety, sustainability, and more.
The solution also autonomously connected the high-level portfolio and capital decisions to all project performance data. When unexpected shocks occur, the companies have visibility into the impact of possible changes and allow executives to confidently decide how to alter the portfolio of projects to meet these challenges.
The Result: EPP Users Were Able to Quickly Pivot Resources to Maximize Project ROI
By utilizing the project tracking & scoring capabilities of an EPP solution, project professionals and business leaders alike were empowered to choose projects that were more successful than those selected prior. As a result, the overall profit brought in by the project portfolio grew substantially and business goals were reached more easily.
“We compared the projects that we were actually working on versus the ones that the goals and targets said we should be, and there was a difference. There were a bunch of projects that we were working on that we probably should not have been. We changed what projects we were working on and made better decisions to select projects that were better aligned with where our business strategy wanted to go.”
Project Manager, Manufacturing Industry
Supported by the almost-immediate access to shifts in project data provided by data tracking, organizations were able to navigate hurdles more nimbly, acting quickly when projects inevitably faced change. Being able to quickly refocus efforts in a few days and pivot completely within a few weeks allowed organizations to reallocate resources and prevent waste.
“The earlier we have the [project] information, the better we can make good decisions early.”
Director of Cost Control, Energy Industry
Forrester Consulting found that the composite, representative organization it modeled saved $2.2M in the first three 3 years of using EcoSys by being able to quickly pivot capital spending. Empowered by enhanced visibility and autonomous tracking & scoring functionality, the composite organization was able to make well-informed decisions at the right time. This ensured not only project success but also maximized financial returns.