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APM and PPM Can Work Together to Produce Results

John McCormack September 2007

In many circles, codependency is frowned upon. But when it comes to IT implementations at insurance companies, codependency may be a good thing.

That's the philosophy behind the IT success at Selective Insurance Group Inc., a Branchville, N.J.-based holding company for seven property/casualty insurance companies.

"Our business projects and IT projects are codependent. We have joint business and IT managers who work on every project," says Jeff Kamrowski, senior vice president of business services. "To be successful, there has to be a direct connection between the business and IT. The two have to work hand-in-hand. As a result, we are implementing information technology that makes sense and meets the business requirements."

With the synergies between the business side and IT side of the insurance house acknowledged, more insurance company leaders are realizing that IT application portfolio management (APM) and project portfolio management (PPM) can no longer operate in separate silos.

APM enables company leaders to assess the applications in the portfolio, evaluate potential changes and understand the risks and impact of these changes. APM is a discipline and a tool set CIOs can use to respond to the pressures of managing an application portfolio.

PPM enables company leaders to organize a series of projects into a single portfolio that will provide reports based on the various project objectives, costs, resources and risks. APM and PPM software is available to facilitate both of these functions.

Although stand-alone APM and PPM initiatives have garnered results for many years, when these initiatives are melded together and tied to overall company goals, the positive returns multiply.

Why, in this case, is it a good idea to create dependencies and links between the two disciplines? Consider the following: Recent industry studies show that 40% of capital investments are wasted mainly due to lack of alignment with business strategy, according to "The Seven Habits of Highly Effective Portfolio Management Implementations," a whitepaper from UMT Consulting, a New York portfolio management consulting company. As a result, there is a need for a more holistic view that enables organizations to connect projects to overall business objectives and, thereby, more successfully utilize their resources.

According to the whitepaper, the advantage of analyzing both applications and projects through a portfolio lens is becoming clearer as the industry matures. Company leaders must examine and manage the synergies between applications and project portfolios.

For example, in order to understand what new projects to invest in, it is essential to understand existing applications and what areas of the business need future support. A holistic view of both APM and PPM can help uncover redundancies, address gaps and reduce waste within an organization's IT portfolio, according to Gil Makleff, a consultant with UMT and the author of the whitepaper.

To create this synergy, insurers should establish and prioritize seven to 10 objectives related to various aspects of their operations, such as finance and human resources, Makleff says.

"Then, look at the IT projects you have and ask how they are supporting the objectives. First, you choose the right projects. Then, you start to implement plans to make sure you are implementing them efficiently," he advises.

To measure how closely IT projects support business objectives, leaders should develop impact definitions, employ key performance indicators or use a balanced scorecard. By tapping into these tools and taking a broader perspective, project management efforts take on a whole new meaning in today's environment, Makleff adds.

"Project management used to be a technical tool that allowed managers to get into the nitty-gritty and focus on how technology would be implemented," Makleff says. "Today, it has become more collaborative and actually helps to drive innovation."

The integrated approach is becoming more prevalent and even more useful as insurers realize that they can no longer simply add technology for technology's sake, as was frequently the case during the 1980s and 1990s, says Julian Dobbins, director of product management at MicroFocus, a Newbury, England-based software developer.

"There is a greater pragmatism now. In the U.K., there is a movement called 'sweating the assets,'" Dobbins says.

With this in mind, companies are taking a more conservative view. "The conversation today is how to maximize the value of what we already have on the table," Dobbins says. To support such efforts, MicroFocus offers enterprise application modernization and management software, which enables organizational business applications to respond to market changes and embrace modern architectures with reduced cost and risk.

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