Unlike our Business Optimization blog, here we’ll be talking about our business – new products, development challenges and successes, what we’re doing, and where we’re headed. We’ll also be floating ideas for new products and features to get your feedback. And we’ll let you know about new additions to our website.

If you’re looking for our back story, check out the links on the left of this page.

Our experience using Optsee^® in the IT Strategy course taught by Tom Oser, Ph.D. in the Executive Management of Technology Masters (EMTM) program received a nice write-up in the August 2010 issue of Decision Analysis Today: The Newsletter of the INFORMS Decision Analysis Society.

The EMTM program is a 20-year old executive Masters of Science program co-sponsored by Penn Engineering and the Wharton School. It was the first of its kind to offer a blend of courses in modern management and emerging technologies, so offering an IT Strategy module that gave students a “hands on” experience applying modern simulation and optimization technology using Optsee^® to model an IT project portfolio management problem was a natural fit.

I keep seeing discussion threads in various project portfolio management and PMO forums that discuss the “how” of project prioritization but not the “why.”

Ultimately, the usefulness of a prioritized project list is to determine which set of projects that you’re going to execute and which you’re going to reject or delay. If you’re going to execute all of your projects, then project prioritization is a meaningless exercise, since it really has no impact on any business decision.

So for portfolios of any substantial size, you need to have a rigorous and defensible way to select the set of projects that will give you an optimized return from your financial and resource constraints.

Why?

Consider that for a portfolio of 20 projects, there are over 1 million possible sub-sets of projects to choose from. For a portfolio of 40 projects, there are more than 1 trillion possible sub-sets of projects to choose from. So trying to choose the right set that will deliver the highest value manually using spreadsheets is virtually impossible.

That’s why I say that prioritization without optimization is like soup without water.

And the best optimization system in the world is meaningless without a sound, rigorous and defensible project ranking system. In other words, just having water doesn’t guarantee good soup – all of the ingredients have to be good.

So if you’re going to rank your projects using a particular methodology, be sure that you know how your results are ultimately going to fit into a project selection or portfolio optimization process.

Remember that a sound optimization system won’t compensate for a poor project prioritization system and a good project prioritization loses much of its value if the project selection/optimization methodology is poor.

I discuss this in more detail with a demonstration of our integrated portfolio prioritization-optimization tool in my webinar Project Ranking and Prioritization on Steroids! You can see a two-minute preview by clicking here.

Our project portfolio management tool Optsee^® was recently used in a graduate IT Strategy Course in the Executive Management of Technology Masters program (EMTM) program at the University of Pennsylvania, co-sponsored by Penn College of Engineering and the Wharton School of Business.

For some background information on this project, I blogged about it here when it was getting started.

Five teams of students were each given an IT project portfolio management business case study and were asked to prioritize all the projects based on the strategic goals of the company. Next, they were asked to develop a three-year plan that maximized portfolio value to the firm while also meeting budget and resource constraints. They first created and presented their initial portfolio “manually” using spreadsheets and then by using Optsee^®.

Each student downloaded free fully-functional version of of Optsee^® desktop pre-loaded with the projects, a full-tutorial, and a detailed step-by-step guide to completing the assignment. Optsee is compatiable with both Windows and Mac computers, and requires no speadsheets or programing to run Monte Carlo simulations and portfolio optimizations.

The learning goals of the assignment included:

• Understanding the challenges of building a 3-year IT portfolio to support business objectives under fluctuating money, resource, and time constraints
• Learning how to translate business strategy into a portfolio model, including evaluating and ranking the attributes to match business strategy
• Understanding how uncertainty in business data and the decision model can effect portfolio outcomes
• Having an experience of modeling a project portfolio using both Monte Carlo simulations and optimizations

All of these objectives were met. Each team’s presentation and portfolio were different, and yet each team did an excellent job of developing and defending their ultimate project portfolio management decisions.

Some of the key process learnings expressed by the students after completing the assignment:

• The framework provided by Optsee^® made it much easier and faster for the teams to compare different portfolios and constraints than doing it with spreadsheets
• In the spreadsheet approach, the focus was on individual projects whereas with Optsee^® the focus was on the relative importance of the project attributes and constraints in relationship to business strategy
• Each team found the software-assisted project portfolio easier to explain and justify than the spreadsheet project portfolio

Some keys to success of the module:

• Having a “with software” and “without software” experience for each team showed them the benefits of using a project portfolio management tool
• Providing a clear, visual, step-by-step software guide for each team to use (so the software learning curve was short)
• Using a single application that was designed for PPM with built-in prioritizers and optimizers so they did not have to learn or use multiple tools
• Providing an interesting business case study that required strategic thinking to meet the assignment requirements

If you’re a professor who might be interested in using this in your class, please e-mail or call me. I’d be happy to discuss it with you.

We have a lot going on…

We’ve moved! Our new offices are at 12 Penns Way in New Castle, Delaware 19720. We’ve joined the Emerging Enterprise Center (EEC) sponsored by the New Castle County Delaware Chamber of Commerce. The EEC is a business incubator for emerging companies that have been identified as having high growth potential. Even though Data Machines, Inc. is ten years old, we were selected as one of the companies in recognition of the growth of Optsee® as a desktop application and to support the launch of our Optsee® CS enterprise client-server project portfolio management application.

Speaking of our client-server version, Optsee® CS is in “Master Candidate” stage and we’re looking to start shipping in September. In addition to the great analytics already included in Optsee® desktop, Optsee® CS will include a bunch of new features including simultaneous simulation-optimization on the whole portfolio. What this means is that you will be able to see the best case, worst case, and most-likely outcomes for your entire project portfolio based on thousands of tests, including the associated distribution. And it will continue to reflect our commitment to providing our customers with the great analytics in an easy-to-use application.

In addition to the new features, current users of Optsee® 2.0 desktop will see a significant speed increase after upgrading to Optsee® 2.1. The underlying database engine has been completely re-written by 4D, and the new engine has now been successfully rolled-out in thousands of applications around the world. Optsee® CS can also be customized to use SQL databases for integration with current enterprise databases. The update to Optsee® 2.1 desktop will be free to all our current customers.

Finally, when I started Data Machines 10 years ago, I had a companion with me at all times. Her name was Bonnie, and she was a sweet West Highland White Terrier who liked to park herself under my desk while I worked. She also liked to nudge my leg to remind me that life wasn’t all about work; and that it was also important to scratch somebody behind the ears more than occasionally. Sadly, Bonnie died quietly several weeks ago. I miss her.

“When every business is using the same technology in the same ways, nobody has a competitive advantage. I joined the program because I wanted to learn how companies could use technology to gain a competitive edge. I wanted to look outside of my own technical discipline and industry. And I also love learning for its own sake.”

George Huhn, profiled in “Why EMTM vs. a Traditional MBA” published on the Executive Masters in Technology Management (EMTM) website.

The EMTM program is an executive Masters of Science program from the Penn School of Engineering and Applied Science and the Wharton School.

We get requests from people that are looking for a fast way to do a quantitative ranking of a small group of projects or budget items and still use a defensible and robust methodology. If you’re one of those people or you’re curious about how a multi-attribute project ranking works, then we’ve created a free project portfolio managment tool for you.

This spreadsheet will compare and rank up to 25 projects using up to 20 different attributes. All of the spreadsheet logic and math is already built-in; all you need to do is fill-in the blanks:

1. Enter the Attribute Names that you’re going to use to compare your projects
2. Enter the data ranges for each Attribute such as lowest cost to highest cost
3. Enter the Attribute “Weights.” The weights indicate the relative importance of each attribute in the model, for example, an attribute with a weight of “2,000″ would be twice as important as an Attribute with a weight of “1,000.”
4. Enter your Projects and their Attribute values and the relative ranking for each project is calculated automatically!

This spreadsheet has the Multi-Attribute Utility Decision methodology built-in, so you don’t need to spend the time and energy doing it yourself. However, when it comes to Project Portfolio Management, spreadsheets are not nearly enough. Although this spreadsheet will give you an accurate ranking of your projects using a multi-attribute model when filled out correctly, spreadsheets are difficult to maintain, audit, and ensure accurate data. Plus, you don’t have simulation or easy to use optimization tools in a spreadsheet.

But for a quick ranking of a small portfolio of projects, this will get you started.

A few months ago, I wrote a blog post entitled “Teaching and Learning Project Portfolio Management: What’s Your Experience?” that discussed an idea for teaching project portfolio management to graduate business students in a way that introduced them to the concepts of strategic project prioritization and portfolio optimization against constraints. One of my former professors, Dr. Tom Oser, who teaches IT Strategy in the Executive Management of Technology Masters program (EMTM) at the University of Pennsylvania read it and was particularly intrigued by the potential of offering a module in IT portfolio management using our project portfolio management application Optsee^®.

The EMTM program is a 20-year old executive Masters of Science program co-sponsored by Penn Engineering and the Wharton School. It was the first of its kind to offer a blend of courses in modern management and emerging technologies, so offering an IT Strategy module that gave students a “hands on” experience applying modern simulation and optimization technology using Optsee^® to solve a vexing business problem was a natural fit.

We decided to use a two-part case study written by Professor Mark Jeffery and Lecturer Joseph Norton from the Kellog School of Management at Northwestern University called “MDCM, Inc. Strategic IT Portfolio Management” available from Harvard Business Publishing. The case describes the challenges that a large medical device contract manufacturer is facing in trying to improve their out-of-date and chaotic IT infrastructure. The case ends with the new CIO preparing to work with his IT staff to develop a presentation to the board around what projects they were going to recommend and why.

The case presents a small portfolio of 12 projects, each with great strategic importance to the firm, but since the case did not fully dimensionalize the projects, we created a set of 8 attributes and corresponding values around each one including:

• Net Present Value
• Probability of Success
• Total Cost
• Business Process Improvement
• Core Competency
• Customer Commitment/Need
• Employee Satisfaction
• Integration

Then we added a set of annual budget and resource constraints over a three-year period that force the teams to make the hard choices as to which projects they will and will not be able to execute.

Thus, based on their understanding of the case and working in teams, the students are asked to do the following:

• Determine the appropriate weight for each attribute that reflects MDCM’s IT strategy.
• Determine the appropriate value setting for all the attributes for each project based on their understanding of the case, except for “Net Present Value,” “Probability of Success,” “Total Cost,” and “Total Resource Requirements” (these were fixed).
• Prioritize the projects and optimize them to maximize value to MDCM.
• Develop a “Report to the Board” that recommends an optimal project delivery plan for the next three years.

Each student will get a free fully-functional version of Optsee^® desktop pre-loaded with the projects, a full-tutorial, and a detailed step-by-step guide to completing the assignment. Optsee is compatiable with both Windows and Mac computers, and requires no speadsheets or programing to run Monte Carlo simulations and portfolio optimizations.

If you’re a professor who might be interested in using this in your class, please e-mail or call me. I’d be happy to discuss it with you.