Project Portfolio Management for Service Organizations: Bridging the Gap between Project Management and Operations

Introduction

In the last couple of years, the enterprise resource planning (ERP) industry has changed the landscape of the project portfolio management (PPM) marketplace. ERP vendors, such as SAP, Oracle, and Microsoft, have recognized the value of developing and delivering services to professional services organizations (PSO). Faced with this new reality, the best-of-breed vendors that once dominated the PPM marketplace must either shift their focus or defend their market share from the ERP giants now entering the market. As a result, the PPM industry is divided into two major camps:

1. Vendors servicing PSOs
2. Vendors servicing internal information technology (IT) departments

This article will examine PPM for PSOs and the vendors that service this market segment.

The Operations Side of PPM

The PPM industry's mixed messages are due in large part to the idiosyncrasies that separate PSOs from internal IT departments. Although most PPM vendors offer functionality for both types of organizations, most PPM solutions do not address both sets of needs in their entirety. Consequently, a number of vendors competent in portfolio management and project management have repackaged themselves for internal IT departments, while numerous vendors that originated in the billing and financials software market have focused their efforts on the billable services sector, where they can provide ERP functionality to meet the unique needs of PSOs.

PSOs want complete PPM solutions that address their business as a whole. For service organizations, efficiently capturing time, billing, and expense data is a key component to bridging projects and operations. Thus, PSOs look to PPM vendors to provide either complete solutions or niche applications that will manage and distribute data across the entire organization. In fact, Peoplesoft (acquired by Oracle) and Epicor have adopted the label "enterprise services automation (ESA)" to more accurately describe the technological needs of PSOs. ESA focuses on the operational needs of billable services organizations and on the management of the internal and external resources that deliver service contracts.

PPM Components for Service Organizations

Beyond the core components of managing portfolios, projects, and resources, PPM solutions for PSOs have extended functionality to manage the bid-to-bill cycle, external resources, and client demands. Major ERP players entering this space are swapping their manufacturing and distribution components for portfolio and project management functionality in order to stake their place in the PPM market. In response, the niche players that continue to service this PPM market segment target small and medium businesses (SMB) by proposing more affordable PPM solutions that tightly integrate with an organization's existing IT infrastructure (ERP, customer relationship management [CRM], human resource [HR], and financials systems). In either case, PSOs demand the following core components.

• Portfolio management. This functionality allows service organizations to monitor the health and profitability of projects. For service firms, portfolio management is critical to maximizing revenue streams by leveraging the best resources for the most profitable projects. On the other hand, service organizations do not demand the same detailed level of analysis as internal IT departments, and can forego extensive risk management and earned value management capabilities.
  
  
• Project management. This is the engine that runs a PSO. Service firms are project-centric by nature. The successful delivery of services is dependent on the project management methodologies and tools adopted. Key project management features include project scheduling, task management, and budget management. Bi-directional integration with Microsoft (MS) Project is also highly recommended, since approximately 80 percent of the project management world still uses it as the standard tool of choice.
  
  
• Resource management. Resource management is another core component for services organizations. PSOs need to be able to manage internal resources and contractors across multiple projects and portfolios. Contractor management, recruitment management, and resource planning, scheduling, and utilization are key features of this component.
  
  
• Time and expense tracking. This bridges project management and operations. It ensures that an end user's work details, captured by the time and expense module, will update the status of work completed in projects, as well as the billing information in accounting. For many service organizations, the ability to remotely submit time and expense details (via the Web, off-line, and wireless devices) is critical for efficiently capturing and accurately tracking the delivery and execution of services.
  
  
• Project cost and billing. Service firms require flexible project cost and billing options. The tracking of billable and non-billable information, and the generation of customizable invoices are key features. Moreover, the integration of project costing and billing with accounting is necessary to provide the integrated solution that PSOs need.
  
  
• CRM. This is extensively employed by professional services firms. Service organizations require complete customer support, demand management, and pipeline and opportunity management capabilities to capture and analyze client and contract details prior to a project engagement. CRM functionality also allows organizations to prioritize opportunities and to forecast pipelines.
  
  
• Knowledge management. These capabilities serve as the hub of a PSO. Service firms demand collaboration and analysis of data by both internal parties (management and staff) and external parties (customers and partners). PSOs demand robust knowledge management capabilities that access all components of their business.

In addition to these core components, workflow capabilities and integration to back-office systems (HR and financials) are critical components of the complete PPM solution for PSOs.

Vendors: Best-of-breed versus Integrated Solutions

There are essentially two types of PPM vendor solutions for PSOs: best-of-breed solutions and integrated solutions (a more in-depth review of these solutions will be covered in future articles).

The majority of best-of-breed vendors offer hosted solutions to SMBs in the professional services sector. Small consulting firms can benefit from the quick deployment and affordable total cost of ownership proposed by these vendors. In addition, best-of-breed vendors provide strong out-of-the-box integrations with popular project management, accounting, HR, payroll, and CRM systems, thus easily adapting to an organization's current IT infrastructure. PSOs considering a best-of-breed solutions approach should bear in mind the PPM vendors below.

Compuware's Changepoint is a best-of-breed vendor that has competitive functionality for both professional services firms and internal IT departments. For service firms, Changepoint PSA offers a mature product that has been around since the early days of the professional services automation (PSA) market (referred to today as PPM). Since its acquisition by Compuware, Changepoint has shifted its focus to the IT governance market. Nevertheless, as a PPM vendor still catering to service firms, Changepoint provides a very mature best-of-breed solution with comprehensive CRM, engagement, and resource management features, as well as time, billing, expense, and invoice modules that tightly integrate with packages such as Great Plains, Oracle Financials, ADP Payroll, and MS Project.

Autotask provides a hosted option to SMB service organizations. Marketing itself as a PSA platform, it offers a modular solution that can be turned on and off according to an organization's business requirements. Specifically targeted to small organizations, Autotask provides a complete PPM solution including CRM, resource management, project management, and time and billing functionality for smaller organizations, along with basic integration with Quickbooks accounting.

Openair also provides a hosted solution. However, it positions itself as a middle-office (i.e., the group of employees in a company that manages risk, calculates profits and losses, and is generally in charge of IT) application that integrates front-office CRM with back-office functionalities. Currently, Openair offers out-of-the-box integrations with Salesforce.com and Quickbooks. Openair is a strong contender for small firms that demand wireless capabilities to remotely access data. The hosted option also ensures a quick deployment for smaller organizations with limited IT infrastructures.

Tenrox PPM solution for services organizations is built on Microsoft .NET technology. Targeting primarily the SMB sector, Tenrox offers complete time and billing functionality, and has developed solid out-of-the box integrations with Microsoft solutions, such as MS Project, MS Great Plains, and Sharepoint. In addition, Tenrox supports integrations with SAP, ACCPAC, and Quickbooks. For smaller service firms that do not necessarily want to host a solution, Tenrox also offers middle-office functionality supporting multiple databases and applications.

QuickArrow offers a hosted, on-demand PPM model specifically designed for billable services organizations. Positioned as a middle-office solution, QuickArrow provides out-of-the-box integration with Salesforce.com, MS Great Plains, and Quickbooks. QuickArrow delivers project planning, resource allocation, time tracking, and expense reporting functionalities, as well as billing functionality for multiple industry verticals offering billable services.

Unanet Technologies has carved out a niche in the government contractor sector. Unanet offers bi-directional integration with MS Project, as well as resource management, time and expense reporting, and workforce collaboration functionalities. Unanet also provides additional functionality for regulatory compliance. The areas of compliance covered include Defense Contracting Audit Agency (DCAA), Sarbanes-Oxley Act (SOX), Federal Deposit Insurance Corporation (FDIC), and Federal Drug Administration (FDA).

When it comes to integrated PPM solutions, many of them have emerged from the ERP space, providing the complete back-office systems (financials, HR, procurement, etc.) that many mid-sized and large PSOs prefer. PSOs looking at the integrated solution approach should consider the vendors below.

SAP provides PPM functionality to service firms through its xRPM offering, which supplies resource and portfolio management to large PSOs. Powered by SAP Netweaver, xRPM works with both SAP and non-SAP infrastructures. It provides time and billing, project costing, collaboration, and resource planning capabilities. xRPM is currently used by SAP's system integrators for time, billing, and collaboration.

Oracle offers a PPM solution that adheres to its "fusion" strategy, integrating PeopleSoft, JD Edwards, and Oracle Projects (all of which are currently under the Oracle banner). Oracle's Fusion middleware provides standards and protocols to ensure that its applications are seamlessly integrated. The Oracle Project suite of applications was originally adopted, and continues to be adopted, by large, project-centric organizations and departments that require project-intensive capabilities in project management, resource planning, CRM, and financials. With the acquisition of PeopleSoft, Oracle's stated application strategy is three-fold, as follows.

1. To protect customers' current investments in all Oracle and PeopleSoft products by offering support through to at least 2013 or for life, if they choose the lifetime support policy
   
   
2. To extend the customer value of these applications by continuing to release new product enhancements, such as Oracle Projects Family Pack M, which was released in May 2005, PeopleSoft ESA 8.9, which was released in August 2005, and JD Edwards version 8.11, released in October 2004. Work on the next versions of these products (Oracle release 12, PeopleSoft 9.0, and JD Edwards 8.12) continues.
   
   
3. To evolve the "best-of" functionality of all product lines into a new generation of business applications called Fusion

Oracle will continue to focus on key industries and market segments, including professional services, the public sector, engineering and construction, and internal IT.

Lawson Software provides an integrated PPM solution by combining its best-of-breed back-office functionality (offered in the ERP space) with its best-of-breed front-office functionality (gained through its acquisition of Account 4 in 2001). Though catering to a wide range of PSOs, Lawson primarily targets the mid-market with its Service Process Optimization (SPO) suite. SPO's features include resource management; time, billing, and expense management; portfolio management; and comprehensive workflow capabilities. In addition, Lawson provides complete back-office functionality and seamless two-way integration with MS Project.

Unit 4 Agresso (U4A) is a PPM vendor that primarily addresses the needs of service firms in the healthcare, education, and government sectors in Europe. U4A provides a modular product offering called Agresso Business World, which is focused on service delivery organizations. Project costing and billing are at the core of this PPM solution, while additional functionalities include financials and HR.

Epicor is a mid-market ERP vendor that offers its PPM solution under the Epicor ESA banner. Built on the Microsoft platform, Epicor's PPM product offers an end-to-end solution that covers everything from CRM and resource planning to engagement management, financial operations, and business analytics. Moreover, Epicor provides bi-directional integration with MS Project, and integrates with Sharepoint for collaboration.

Deltek is a mid-market ERP vendor that offers a PPM solution targeted primarily to small and medium PSOs. Deltek's flagship PPM product, Deltek Vision, offers a complete end-to-end PPM solution that provides CRM, time management, expense reporting, resource planning, project planning, financials, HR, payroll, and business intelligence (BI) functionalities. Deltek also offers additional modules to serve government contractors.

Microsoft has positioned Solomon as its flagship PPM solution for the SMB marketplace. Built on Microsoft technology, Solomon offers a combination of robust back-office functionality and tight integration with Sharepoint and MS Project. In addition, its user interface is familiar to those accustomed to working with MS Outlook.

User Recommendations

PSOs should evaluate PPM solutions based on their unique business requirements. For those who may have already implemented a solution from one of the major ERP vendors (for example, SAP or Oracle), selecting the same vendor for their PPM needs can potentially reduce their total cost of ownership in terms of training, implementation, and integration. In addition, an existing relationship with a vendor can be leveraged in the negotiation process.

For smaller PSOs that have multiple point solutions covering CRM, HR, and financials, the smaller, middle-office PPM solutions are worth considering. Smaller PSOs typically prefer to preserve their existing back-office systems, and many of these vendors can provide out-of-the-box integration to popular software packages, as well as software development kits (SDK) that help address a PSO's unique requirements through customization and integration. Acting as a hub that integrates and manages data for the bid-to-bill cycle, these best-of-breed solutions also provide Web-based capabilities that are effective, yet affordable by providing only an organization's missing PPM pieces. In addition, for those organizations with minimal IT resources, on-demand, hosted PPM solutions can significantly reduce the initial costs and the amount of support required to implement a PPM solution in-house.