Project demand management is an Achilles heel for most IT organizations. IT leaders are challenged to assess and vet, prioritize, and schedule projects at the front end of the portfolio funnel. While some have a strong vetting process, the reality is most IT organizations can’t say no to project requests, which perpetuates a cycle of overwhelming demand and under-performing delivery.
Digital transformation is adding to the challenge. Twenty-eight percent of projects in IT’s pipeline are primarily associated with digital transformation, according to the recent poll, Taming Project Demand,” by The Hackett Group. Projects are more complex, with digital tools and platforms requiring integration with legacy systems. Technologies are new, up-to-date skill sets are in short supply, and stakeholders expect results faster than ever. Consequently, it’s not surprising that average IT organization performance is not strong across the key stages of the portfolio lifecycle (below).
IT’s effectiveness in demand management stages of project pipelines
How do we fix this? The solution to effective demand management is rooted in the earliest stages of the portfolio lifecycle. One of the largest gaps in effectiveness between top performers in portfolio lifecycle management and the peer group occurs in the project vetting stage. Digging deeper, we find that top performers are able to throttle back the percentage of project requests that are approved, funded and launched into IT’s pipeline by 44% compared to the peer group. Using streamlined but inclusive governance, up-to-date business case templates and transparent project request logs and tracking, top performing respondents have green-lighted an average of 38% of project requests over the past two years, compared with 68% for peers.
This up-front discipline has had a cumulative effect: For top performers, growth in project volume over the past two years has averaged 19%, compared with 39% for the peer group. Resources required to service that demand have risen only 5% for top performers, versus 19% for others. Project delivery outcomes are better for top performers as well; these organizations delivered 66% of IT projects on time last year, versus 45% for the peer group.
Extrapolating on the impact of project vetting, IT organizations should expand and extend their engagement even earlier in the lifecycle, to the ideation stage. Twice as many top performers report effective engagement in the ideation stage of the portfolio, compared with the peer group. By participating in opportunity identification, sandboxing and proofs of concept, IT leaders can pre-vet ideas and exert a greater influence on the determination of which projects merit funding.
So, although historically demand management focused on resource planning and portfolio maintenance, it’s future seems to lie in the earliest stages of the lifecycle. Now that IT teams have the skills and credibility to partner with stakeholders on idea generation, proofs of concept and iterative, fail-quick piloting, demand management is moving upcycle.