What is Project Portfolio Management (PPM) software? How does it deliver value to a project-driven enterprise in a way that is different from enterprise project management (EPM) or even a good project-driven enterprise resource planning (ERP) application?

Does a manufacturer today even really need PPM software?

Ideally, PPM and EPM should be part and parcel of a single project-based ERP solution. Yet vendors still sell standalone PPM software, standalone EPM software and standalone ERP.

Each of these applications must then be integrated in some fashion through a complex, risky and extremely expensive development project in order to provide an enterprise computing environment suitable for an engineer-to-order manufacturer, engineering procurement and construction contractor or other project centric business.

So let's discuss the differences between PPM, EPM and Project ERP and the extent to which they can all be delivered by the same system, effectively eliminating the need for PPM software entirely.

After all, if a single application can fulfill the roles of three separate applications; this can mean huge savings in software licensing costs.

Alphabet Soup

The enterprise software industry is rife with three letter acronyms (TLAs). And PPM and EPM are only the tip of the iceberg. PPM can also stand for Program Portfolio Management or Product Portfolio Management. And EPM can also stand for Enterprise Program Management. These differently-named offerings are often sold by the same vendor!

This, to say the least, is confusing. So to help sort things out, we consulted ARC Advisory Group Senior Analyst Dick Slansky, an expert on project management and project management software.

In our recent podcast, Slansky suggested that the underlying PPM and EPM solutions are essentially the same thing, but vendors use different names for them depending on the industry to which they are trying to sell them.

"You've got all these different offerings that get turned around and relabeled probably based on what the product is and how they are trying to market it," Slansky said. "Another way to look at these definitions and how they are used is based on the industries that use them… Some companies are very program-driven and thus project-driven. So there would be elements of engineering organizations, and the projects that move through those engineering organizations. Whereas another company can be very ERP-centric, and their focus could be on the portfolio management at a higher level."

According to Slansky, certain terms and definitions are more often used in different verticals. An engineering, procurement and construction (EPC) company is very much project driven, and uses complex project management tools. Portfolio management may more often be associated with a manufacturing company that makes products. So they are managing a portfolio across the product lifecycle.

In my own experience, I see the most intense interest in portfolio management software among companies deliberately selling and managing discrete projects and those involved in managing portfolios of sizable and expensive capital assets.

An EPC contractor will have an obvious need to manage a current and future project portfolio. And a utility company or large process manufacturer will need to manage their investments across a portfolio of assets to ensure maximum return on capital.

These asset-intensive companies may be the most interested, today, in portfolio management. And among these companies, as Slansky suggests, there is no consistent terminology.

To my way of thinking, portfolio management, be it across products, projects or programs, really involves similar functionality aimed not at day-to-day project management of milestones, resources, people and deliverables. Rather, it is designed to handle the overarching project, program or product environment including current and future needs and demands on resources.