PPM Software Spreads Its Wings

Project portfolio management (PPM) software is not just about Gantt charts and billing sheets anymore. A spate of consolidation in the sector in 2006 left a handful of the more powerful players capable of offering -- in addition to the traditional resource, time, and cost management systems -- a broad range of IT management capabilities, including what-if scenarios for portfolio modeling, dashboards, and analytic tools for work performance measurement, and risk management functionality.

According to Gartner Inc., total software revenue for this market is growing at approximately 10 percent per year and will exceed $1 billion in 2009. The drivers are easy enough to identify: More and more companies are realizing that superior IT financial management practices can provide a competitive edge. Research from The Hackett Group, which we reported here,
reveals that companies that excel in managing the business value of IT tend to outperform their industry peers on a number of metrics, including net profitability and return on equity.

In an April Business Finance online poll, we asked IT and finance executives to describe their role in developing an IT financial management plan within their organization. A healthy 57 percent of respondents said that they are part of the team that develops the plan, and another 14 percent reported that they are responsible for developing and implementing the plan. Only 21 percent said they had no involvement at all.

Surprisingly, though, about 7 percent of participants said that their organization currently doesn't have an IT financial management plan.

Companies that fail to get a grip on IT financial management may face gaps in their ability to support a range of critical business imperatives. "You don't have to look very far to realize that most business process improvement and innovation is IT-enabled in this day and age," notes Erik Dorr, senior business director with The Hackett Group. "I'd be hard pressed to find any example of a major process or product innovation that doesn't have an IT-enablement component to it."

PPM software providers have their eyes on those IT-enabled initiatives, and they see a huge opportunity to extend the discipline of portfolio management enterprisewide. They're aware that many of their customers have already adapted PPM tools to manage projects and resources in business areas outside of IT. Finance and IT managers, armed with a track record of PPM success, are bringing greater clarity to operational and R&D projects. PPM is rapidly evolving into enterprise portfolio management -- and that can only be good news for organizations still struggling to align resources with business demands.