PORTFOLIO-DRIVEN PERFORMANCE PLANVIEW INC.

THE SEVEN PROCESS AREAS THAT DRIVE

BUSINESS RESULTS

BACKGROUND

Organizations and the people who manage them have lots of issues to deal with today. The economy is unstable,
government regulations require unwavering compliance, competition is fierce, innovation is a must to stay ahead
of that competition and to just survive, and cutting costs and making a profit are more challenging than ever.
This struggle is made more difficult by the lack of a central location for decision making from the initial stages
of strategic and financial planning, through to work and cost management, and finally to the confirmation of
benefits realization.

By offering a clear path for communication and financial visibility throughout the organization, Planview has
identified seven business process areas that provide a transparent framework for better management of people,
money, and time to help organizations with major business issues—such as engaging in more innovative work—
to meet key business objectives.

This paper examines the seven business process areas and business issues, organizational problems, and strategies
that can help knowledge-driven industries manage change and respond to market dynamics.

CONTENTS

Introduction .......................................................................................................................2
Performance Management Framework .................................................................................2
Strategic Planning ..............................................................................................................3
Demand Management ........................................................................................................4
Capacity Management .......................................................................................................5
Funding and Budgeting ......................................................................................................6
Work and Resource Management ........................................................................................7
Cost Management .............................................................................................................8
Benefit Realization .............................................................................................................9
Summary ........................................................................................................................10
Process-Driven Portfolio Performance Management with Planview ..........................................10

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 PORTFOLIO-DRIVEN PERFORMANCE: THE SEVEN PROCESS AREAS THAT DRIVE BUSINESS RESULTS

INTRODUCTION
The collaborative aspects of change are the true challenge to knowledge worker organizations. Business evolution
is often defined by, accompanied with, or is the driver for, process change. Strategies, standards, methodologies,
governance, and practically everything else that defines how an organization operates is rendered actionable
through enabling business processes. Process areas are groupings of business functions within the conceptual
structure of the framework that help build mind-share and provide a level of iteration.

Organizations with undocumented or unstructured processes are burdened with ad hoc, siloed, and even
renegade processes that operate as if each instrument in an orchestra is playing its own piece of music and has
no idea what the other instruments are playing. Processes can not operate in a vacuum within an organization
because decisions made in one area impact what happens in another area. If an engineer or developer is allocated
to work on two projects and gets pulled off one of them, it affects the schedule of both projects. The organization
with siloed processes experiences cacophony—a lot of noise, but no harmony or fluidity.

Without a way for business processes to communicate and for information to flow, it is almost impossible for
organizations to get a snapshot at any point in time and over time of what resources they have, how they are
being used, where things are getting bogged down, how much all this is costing, and whether costs are staying
on track.

Truly forward-thinking organizations understand how essential a structured yet fluid framework is. A member
of the Executive Leadership Team doesn’t want to have to think about what software he needs to access to look
at strategic and financial data. This kind of transparent access to, interconnection, and high performance of
business processes is possible with a portfolio-driven approach to performance management. Programs, projects,
services, and incidents are all squeezed through the funnel of demand management to determine how to best
align processes to an organization’s objectives and capacity for change.

Any process is most effectively managed relative to how it interacts with and impacts the overall organizational
ecosystem. As the framework will illustrate, no single business process adds bottom line value as an independent
entity; like players in a symphony, each must work together with a minimum of friction to deliver benefit. Thus,
the objective of the process framework is to provide a mechanism for placing major enterprise or business unit
functions in context with each other. By doing this, organizations are afforded a comprehensive vantage point
to enable the entire business ecosystem to function as a dynamic entity.

PERFORMANCE MANAGEMENT FRAMEWORK

Putting in place structured business processes can drive change and lead to higher performance and innovation.
This is not an easy feat, though. It becomes even more complicated to make these processes visible within the
organization and to tie metrics to them.

Figure 1 below shows a performance management framework that links Strategic Planning, Demand Management,
Capacity Management, Funding and Budgeting, Work and Resource Management, Cost Management, and
Benefit Realization.

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 PORTFOLIO-DRIVEN PERFORMANCE: THE SEVEN PROCESS AREAS THAT DRIVE BUSINESS RESULTS

Figure 1. Framework for Process-Based Performance Management

The above framework serves as a meaningful way of structuring business processes. With one click, management
has access to a library of information in any of the seven process areas, with more specific information available
at the component level. Managers and executives can also get specific information on the organization’s current
performance in that area, helping them make better decisions and put in place the changes that will lead to
higher performance and innovation.

Visually, one can see from this framework that programs, projects, services, and incidents all place demands on
the organization that affect every process area. Let’s take a look at each area individually to get a sense of the
kind of information that is available for effecting change.

STRATEGIC PLANNING
Most organizations that have instituted portfolio management primarily use it for managing work, resources,
capacity, and costs. Forward-thinking organizations first put in place business processes to decide what projects
or products should even be done and what investments should be made.

Strategic Planning consists of those processes necessary to define and maintain the business plan, and involves
analyzing the current state compared to change influences (internal or external) and development of resulting
organizational missions, objectives, strategies, and tactics. This includes creation of potential investment and
product portfolios and selection of initiatives approved to proceed, along with top-line operations and capital
allocation decisions. Business planning and investment analysis are no longer separate functions, but are
linked.

The following can be accomplished by having establishing Strategic Planning business processes:

• Increase revenue by aligning work, programs, products, and services with strategies
• Mitigate risk by adjusting investment decisions in response to market conditions and operational
execution
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 PORTFOLIO-DRIVEN PERFORMANCE: THE SEVEN PROCESS AREAS THAT DRIVE BUSINESS RESULTS

• Respond with agility to market opportunity, competition, and regulatory changes

• Establish a product roadmap that delivers the optimal product portfolio
• Reduce expenses by consolidating applications, products, and services
• Reduce expenses by eliminating misaligned work, products, and services
• Increase revenue by optimizing the investment portfolio

Management has a single location to capture and analyze strategic and financial data, can respond quickly to
changes in priority or strategy as they arise, and can automatically create various investment portfolio scenarios,
as is seen in Figure 2 below.

Figure 2.
Strategic Investment
Priority Matrix

Beneficiaries of Strategic Planning process information include the following: PMO, EMPO, COO, VP of
Strategy, Strategic Steering Committee, VP of Product Development, VP of Product Management, Corporate
Finance, and the Executive Leadership Team. Each one of these functions can access the same up-to-date
information to help them make the best possible decisions for doing business planning and investment
analysis.

DEMAND MANAGEMENT
Demand can come from external sources such as consumers, customers, regulators, or shareholders or from
within an organization. Demand Management encompasses processes associated with demand intake and
dispatch of work. This includes the receipt of new ideas and initiatives plus requests for new and enhanced
programs, projects, products, services, or incidents.

Demand Management also includes functions that must occur between time of receipt and the decision to
proceed in fulfilling the request, including any additional information gathering necessary to effect a disposition
or assignment, backlog management, prioritization, initial planning and estimating, and handling of cancelled,
duplicate, or disapproved requests.

Demand Management serves as the process linkage between any strategic changes requested as part of capacity

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 PORTFOLIO-DRIVEN PERFORMANCE: THE SEVEN PROCESS AREAS THAT DRIVE BUSINESS RESULTS

management and strategic planning functions required to analyze and process those requests. Additionally, for
the service provider, Demand Management fulfills additional customer-facing responsibilities to communicate
receipt and disposition back to the requestor.

With one place to go to view all demand within an organization, managers can do the following:

• Capture complete demand in a single location and eliminate costs of maintaining multiple systems
• Utilize a structured process to prioritize all demand to optimize business results
• Reduce costs by cutting redundant work and services that are currently underway

Having this single place to view demand gives management visibility into changing programs, new project or
product work, services, and operational requests. It also depicts how time, resources, and money are utilized
by incoming demand, and facilitates making intelligent trade-offs. Figure 3 shows the ability to drill down on
dispatched requests to get more information.

Figure 3.
Dispatched Requests
Portlet with Drill-Down
On-Demand Report

People within an organization who can benefit from having Demand Management information available from
a single console include the following: Resource Manager, Project Manager, LOB representatives, Product
Manager, Portfolio Manager, PMO, Strategic Steering Committee, VP of Product Development, and VP of
Product Management. Each one of these functions can access the same up-to-date information to help them
make the best possible decisions for capturing and responding to demand.

CAPACITY MANAGEMENT
Demand requires some kind of capacity to fulfill it. Capacity Management refers to those functions necessary
to plan and manage assets on a macro level. Any resulting requests for strategic changes in capacity are routed
through strategic planning for decisions. Change can be in the form of demand for new products or services or
it can impact capacity directly.

Balancing internal and external demands with available resources is a challenge that every manager faces and is
even more daunting when management does not have a complete view of capacity with drill-down capabilities.
This is possible within a process framework, which enables management to:

• Improve overall planning and decision making to connect resource capacity to the business objectives
of the company

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 PORTFOLIO-DRIVEN PERFORMANCE: THE SEVEN PROCESS AREAS THAT DRIVE BUSINESS RESULTS

• Optimize the labor profile of FTEs versus contractors globally

• Accelerate time to market and improve competitive advantage to meet business objectives
• Offer more comprehensive products and services at lower costs
• Understand the available infrastructure capacity to support new work and services and minimize risk

Having a singular view also helps management determine if they have the right people at the right place at the
right time, respond to competitive pressures by making better decisions, and capture and communicate the total
cost of a business service or product. Figure 4 shows one drill-down capability—capacity breakdown by month
and by levels of effort.

Figure 4.
Capacity
Breakdown
Portlet

Beneficiaries of Capacity Management information include: Program Manager, Project Manager, Resource
Manager, VP of Strategy, VP of Operations, LOB Executive, PMO, EPMO, VP of Product Development, and
the Strategic Steering Committee. These functions all have responsibility for managing the valuable resources
of the organization to meet demand and can benefit from being able to drill down on current information and
business issues.

FUNDING AND BUDGETING

Capacity always has a cost. Business management consists, at a fundamental level, of making demand versus
capacity trade-off decisions, and ensuring a sufficient cost-benefit ratio to further stated goals and objectives.

The Funding and Budgeting process usually begins with an annual proposed dream budget that includes things
each department would like to do to be truly innovative and exceed expectations. The Executive Leadership
Team and VP of Finance rank investments, similar to what is shown in Figure 5, and create a proposed
investment portfolio. After negotiations and multiple iterations, funding is approved for capital investments
and an actual operational budget, which can be broken down to departmental, program, project, products, and
services budgets.

A central platform is needed so that all managers with financial responsibility can build out budgets within
the context of the strategic plan and understand the true financial impact of delivering programs, projects,
products, and services—and any changes that are made to these. This is possible when Funding and Budgeting
are included within the process framework. When they are, management can do the following:

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 PORTFOLIO-DRIVEN PERFORMANCE: THE SEVEN PROCESS AREAS THAT DRIVE BUSINESS RESULTS

• Increase efficiency of the budgeting process by using a central platform for defining all financial,
product, and resource demands
• Drive business results by aligning the budget with the strategic plan
• Mitigate financial and operational risk associated with changing priorities, regulatory requirements,
and/or strategy
• Improve financial governance with clear transparency into the costs of projects, programs, products,
and services
• Maximize effectiveness of utilization of and accountability for the budget
Other benefits are that management gets visibility into the overall strategic value of the work and services
when defining the budget, they can quickly respond to changing priorities and/or requirements, and it aids
management in handling periodic impacts of changes to strategic or business plans.

Figure 5. Rank Investments

Beneficiaries of Funding and Budgeting information include: Portfolio Manager, Executive Leadership Team,
Strategic Steering Committee, VP of Finance, LOB Executives, CIO, COO, VP of Product Development, VP
of Product Management, Controller, and the CFO.

WORK AND RESOURCE MANAGEMENT

The level of approved funding directly impacts what resources are available and what work can get done. Work
and Resource Management facilitate effective planning, managing, and controlling work and resources. Using
the portfolio-driven performance management framework can help determine resource availability, if the right
person is being assigned to the job, project performance, effective work prioritization, operational bottlenecks
that are affecting productivity, and whether projects, programs, products, and services are supporting overall
business objectives.

Project management, work management, service management, resource management, scope management, and
time reporting are all included in this process area. Functions also include detailed work planning, HR resource
development and skills management, help desk, and project execution. All work requests can be captured,
reviewed, and expedited from a single location. Performance can be measured in real time to mitigate risks and
manage change.
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Managers who apply this discipline to Work and Resource Management are better able to do the following:

• Eliminate cost overruns on work

• Eliminate manual efforts to generate management reports
• Improve operational execution by putting the right people on the work at the right time
• Drive efficiency by eliminating different systems to manage projects, products, people, and skills
• Better plan and execute work for on-time delivery and to meet other business objectives
• Establish repeatable and more predictable execution and delivery

Having a view into the current state of work performance and resources makes it possible for schedules to be
predictable (see Figure 6 below), products to get out on time, and time spent on programs, projects, products,
and services to be measurable and auditable.

Figure 6.
Gantt Chart in
Portfolio Manager

Beneficiaries of a Work and Resource Management process include: PMO, Portfolio Manager, Program Manager,
Project Manager, R&D Manager, CIO, LOB Representatives, Resource Manager, and the Strategic Steering
Committee. The improved visibility they get with this framework yields project transparency and enhances
decision making.

COST MANAGEMENT
Managing work and resources necessitates good Cost Management. It is essential to know the actual costs of
direct labor, external labor, and non-labor as well as the variance to what was budgeted. Often there can be
hidden costs that cause this variance. Once a Cost Management process is added to the portfolio management
framework, it allows management to see what the total cost of ownership of an application, product, program,
project, or service is, where there are redundancies and costs can be reduced, how to optimize the costs of
sustaining operations, how to meet Service Level Agreements (SLAs), how to improve customer satisfaction, and
how to manage chargebacks.

Services, programs, products, and projects can be linked with related assets, labor, and applications to reveal the
true costs to the business (see Figure 7). With this information, it is possible to determine the true value, identify
and eliminate inefficiencies, accurately invoice business units, and gain control of spending. Hidden value can
be revealed by reducing maintenance costs and delivering business services and products more efficiently.
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 PORTFOLIO-DRIVEN PERFORMANCE: THE SEVEN PROCESS AREAS THAT DRIVE BUSINESS RESULTS

Managers who deploy a portfolio process approach to Cost Management are able to:

• Manage costs by tracking planned versus actual costs

• Reduce costs through the rationalization of the application portfolio
• Evaluate services outsourcing alternatives
• Control costs by understanding the true cost of all work performed
• Capture Total Cost of Development of products from ideation to retirement
The ability to view and track costs helps eliminate high operational spend, consolidate all work (labor and non-
labor) costs in a central place, and understand the costs of projects, programs, products, and services.

Figure 7.
Service
Topology
View

Beneficiaries of Cost Management include Portfolio Manager, Product Manager, Development Manager,
Executive Leadership Team, Strategic Steering Committee, VP of Finance, LOB Executives, CIO, COO,
Controller, and CFO. By getting up-to-the minute analytics of all costs, management can do reforecasting,
shuffle resources, and spend as things change.

BENEFIT REALIZATION
After putting in place Strategic Planning, Demand Management, Capacity Management, Funding and
Budgeting, Work and Resource Management, and Cost Management processes, it is important that a Benefit
Realization process be added to measure the benefits and see the Return on Investment (ROI). Implementing,
adhering to, and keeping current with structured portfolio management processes can bring additional profits
and/or capacity to the organization. By including Benefit Realization as a process in the portfolio management
framework, managers can:

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 PORTFOLIO-DRIVEN PERFORMANCE: THE SEVEN PROCESS AREAS THAT DRIVE BUSINESS RESULTS

• Quantify benefits and establish governance against forecasted versus actual returns
• Drive efficiencies by becoming a learning organization
• Deliver more innovative, market-responsive, and cost-efficient products, programs, and services
Business benefits can be quantified and the organization can see where it has a good return on the investments
it made in people, programs, projects, products, and services, and where it made choices that resulted in a
negative or no return. Also, when benefits are realized, there needs to be a process to re-integrate these benefits
into Strategic Planning and thus come full circle in the whole process.

Beneficiaries of Benefit Realization information are Executive Management and Shareholders. Ultimately, the
whole organization benefits by knowing whether their planning had positive results.

SUMMARY
Business processes are all ultimately inputs or outputs to each other and business operates as a continuous loop.
Change influences challenge the current state. If the change is more than a routine fluctuation, a transformation
occurs. This produces an evolved state, which becomes the new current state.

As change influences of any significance impact the current state, they have the potential to accelerate, disrupt, or
invalidate current strategies or cause adoption of new ones. Strategic response must be translated into actionable
work, often through the assessment of various possible options or approaches, usually in the form of new
programs, products, and services. The best approach is selected and funded. The change response is designed,
developed, and delivered, and the new program, product, or service causes a transformation into a new current
state. If all goes well, the change provides expected results and benefits to the organization.

If this change is not proactively managed and accommodated, it then becomes a disruptive force that creates
confusion and frustration throughout the organization. If the change is proactively managed through the form
of business processes, the organization accommodates the transformation cycle through innovation.

By offering a clear path for communication and financial and strategic visibility throughout the organization,
a transparent framework for better management of people, money, and time helps organizations respond to
change and meet key business objectives through innovation.

PROCESS-DRIVEN PORTFOLIO PERFORMANCE MANAGEMENT WITH PLANVIEW

In order to maximize resources and be market leaders, forward-thinking organizations have to put in place
processes that introduce change. Over nearly two decades, Planview has amassed considerable expertise by
partnering with these organizations and developing a wealth of information to give them an advantage. This
library—Planview PRISMS®— is automated and integrated with Planview Enterprise®, and includes business
process expertise and over 200 best practices in seven core areas to help with process change.

The process framework discussed in this paper is the foundation for Planview Enterprise. Planview Enterprise is
a comprehensive decision-making platform that drives performance by delivering unprecedented transparency
into the trade-offs involved in key business decisions across the enterprise.

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Planview Enterprise combines comprehensive demand management with real-time portfolio analytics, best-of-
breed resource management, and action-driven processes. Working together, these capabilities give customers
improved visibility, fewer redundancies, increased efficiency, and the ability to focus limited resources on higher-
value work. By integrating analytics with root-cause analysis, Planview Enterprise enables true optimization,
yielding even greater efficiency and productivity. The result is a powerful, proven-effective way to:

• Fully align strategies, resource capacities, and funding

• Gain better control of projects, programs, products, services, and resource assignments
• Capture and manage the total cost of delivering projects, programs, products, and services
• Deliver effective governance

The Planview Enterprise suite of portfolio management solutions has empowered hundreds of organizations to
make better business decisions through a structured framework for optimizing financial and human resources
on investments, projects, programs, products, and services.

Planview provides a range of versatile and effective programs that create a path to value that ensures effective
adoption, customized organizational enablement, early benefits, and a decisioning and process solution that is
scalable, integrated, and aligned to the organization’s objectives and capacity for change.

Since 1989, Planview® has been a market leader and trusted partner in providing comprehensive portfolio management solutions. Planview Enterprise®, the company’s leading
performance management platform, combines project and portfolio management software with adaptive best practices, Planview PRISMS®, to enable better decision making
and business accountability. Industry leaders such as Citi, BP, EDF, and the American Red Cross, partner with Planview to achieve their strategic business goals.

Planview Micro-Frame® Program Manager (MPM™) is the industry’s leading Earned Value Management solution. Planview MPM is the only complete solution for efficiently
managing the entire program lifecycle, from the proposal phase through program completion. Planview MPM is used by hundreds of organizations such as Northrop
Grumman, Raytheon, and L-3 Communications, and supports critical programs for the Department of Defense, Department of Energy, and NASA.

Headquartered in Austin, Texas, with offices across the U.S., Europe, and Asia-Pacific, Planview supports 550 customers in virtually every industry. Planview is privately held
and has been profitable for over a decade. For more information, visit www.planview.com.

© 2008 Planview, Inc. All rights reserved. Planview, Planview Enterprise, and Planview PRISMS are registered trademarks of Planview, Inc. All other trademarks are
acknowledged. Planview reserves the right to vary specifications and availability of these products and services without notice.

© 2008 Planview Inc. 11 www.planview.com