Demonstrating the ROI of project management

Guess which color is the maturity rating and which is cost/revenue...

Re: demonstrating tangible value — comments on the first results of the Value of PM study — earlier posts (here and here), the study’s preview PDF (here) and a 90 minute presentation by the lead authors (embedded here).

Only half of the case study organizations could demonstrate tangible value from their project management efforts and initiatives. The study had several observations about these two groups, the first applies directly to our PMO: “Organizations That Could Calculate ROI… those that deliver projects for customers”

The fact that we support units responsible for customers, revenues, and profit made a huge difference in our ability to measure ROI.  In no small measure, SAP’s increased margins over the past four years have come from our ability to better bid, monitor, and control projects. 

And we have nice data series and graphs that track increased global maturity vs. SAP margins and SAP troubled project expenses.  That’s not to say we didn’t run into the challenges the study noted:

However, even where ROI could be calculated… It isn’t.  The data isn’t being collected [and] the answer isn’t considered meaningful.

Early on, PM skeptics challenged our claims. The data was considered unreliable and at first we couldn’t show a direct impact from our efforts. 

But the fix was simple: rather than giving up, we highlighted global and regional initiatives that created or improved key processes that all acknowledged were margin levers. Even better, we used that original graph to map those initiatives to inflection points in our performance.

Funny how the skeptics disappeared after seeing the updated graph for the first time.