Planning with Competencies
A UMT White Paper
Introduction
(Throughout this article, the term ‘Competencies’ applies to aggregated sets of skills.)
The quest to define IT’s relationship with the business has gained new momentum over the last few years, primarily
due to a more difficult economic climate driving the need for transparency in spending decisions. The momentum is
manifested in a fundamental awareness, developed since the technology hype of the late 90’s, that IT organizations
must be integrated more closely with the businesses they support. Management teams in many organizations are
focused on defining a better Business-Technology partnership, which is shining the spotlight on a new discipline --
Project Portfolio Management (PPM).
In fact, this is more than a mere reflection of the age-old discussion of IT’s purpose as a mission-critical, strategic, or
non-core, tactical productivity enhancing 'tool' -- it focuses on the debate of IT as an integrated part of the Governance
process of mainstream organizations. We are in the midst of the next evolutionary stride in the Business-IT
relationship: the development of an integrated Business and IT Governance model that utilizes commoditized, better
understood, more mature IT capabilities and decision making focused on business needs.
The Business IT Governance model based on PPM principles is a systemic solution to the problem of managing change.
It covers change dimensions from:
 Idea inception,
 Project creation,
 Portfolio prioritization and optimization,
 Resource Competencies Planning,
 Benefits management,
 Portfolio Tracking,
 Risk Management,
 Linkage between strategic KPIs (Key Performance Indicators) to project-level benefits.
The following discussion focuses on one dimension of the integrated Business and IT Governance model:
Resource Competencies Planning -- How can organizations with resource constraints and several competing initiatives
improve the value they provide while ensuring maximum support for the corporate strategy?

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The Problem
Allocating scarce resources among projects within a portfolio for planning purposes at the competency level is difficult.
When evaluating resource competencies in a technology organization, the logistics of understanding the portfolio
demand and supply can be daunting at best. How many DBAs will you need in 2004? What about Application Systems
Analysts? And QA Specialists? When will you need them during the year? Will they be available? Should you hire or
retrain to fill the gap, or use consulting resources?
Until recently, the main approach to resource allocation and planning focused on the term 'FTE' (Full Time Equivalent),
to describe both sides of the demand and supply equation. Industry analysts estimate that this 'catch all' term, which
provides very little insight into planning needs and the existing resource gap, contributes up to 40 percent of the
enormous waste associated with the capital budget of a portfolio of projects related to Project Portfolio
Implementation.
In the editor’s note of Information Week Magazine dated July 7th 2003, Stephanie Stahl responds to a recent survey on
IT failures:
"Some [respondents] were quick to point out that a 30% failure rate is nothing to be ashamed of..."
Her questions from June 23rd reveal a well-documented double standard:
"What if your human-resources department failed to hire the best employees 30% of the time? What if your finance
department failed to get its math right 30% of the time? What if your facilities department failed to fix broken things
30% of the time?"
"Hey, what's the worst that could happen? Maybe you end up working with an ex-convict, your paycheck is a few
hundred dollars less than normal, the value of your 401(K) plummets, and the air conditioning doesn't work on days the
mercury goes above 90. All of this would be unacceptable to most businesses. So, how can it be acceptable, then, that
three out of 10 IT projects still fail?....."
Waste is prevalent in IT Departments and a significant contributor has been poor competency planning.
Better Competency Planning is Needed
Historically, managers agreed to make planning decisions despite poor data due to the following reasons:
1. Few tool and methodology options: Lack of automated tools to view resource information at an aggregated
competency level. By definition, "competency" is an aggregation of skill types maintained by HR.
Competencies are used for yearly planning purposes and should be distinguished from project planning
2. Resource allocation: resource allocation that is focused on a specific resource (e.g., Jane Doe) assigned to a
specific task. The resulting demand and supply view of the organization enables planning at the portfolio level.
3. Organizational silos: Decentralized organizations with very small pools of resources and short-term projects
that could be managed by informal decision making. ‘Organization silos’ reduce the incentive of participants to
share information regarding surplus resources and further reduce the overall efficiency and flexibility to meet
business needs. This is demonstrated when IT Managers supplement their FTE for discretionary projects with
their FTE for non-discretionary projects. This reduces an organization’s overall staff utilization and ensures
future inconsistencies in discretionary project estimation.
4. No transparency: No urgency to increase governance transparency from the CEO level. IT was perceived as an
external entity to the firm and few senior executives cared to understand in detail what the ‘technicians’ were
implementing.

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5. Increased spending: Technology departments were hiring resources with varying degrees of skill and
performance capacity due to a continuous demand from the business to ‘do more’ by initiating new
technology efforts regardless of efficiency during a period of strong market growth.
6. Vendors had little experience in PPM: There were very few vendors that could provide a process,
methodology and toolset to implement key PPM principles such as Competency Planning.
7. Weak Project Management: Typically immature governance process and PMO disciplines.
What Has Changed?
1. THE TOOLS ARE AVAILABLE -- There are a number of tools that allow the review of resources over a planning
period at the competency level. The trick is to get both the supply and the demand into the same environment.
2. CENTRALIZED SPENDING BUDGETS -- Many organizations have shifted to centralized budgets and resource
pools that can have multiple technological competencies. Although system and product specialization are still
important, times are changing and technology resources are more fungible.
3. CEOs ARE DEMANDING TRANSPARENCY -- In order to satisfy Sarbanes Oxley and Klinger Cohen regulations, as
well as shareholder requirements.
4. THE MARKET IS DRIVING EFFICIENCY -- Spending and headcount have been slashed over the last 24 months in
some organizations by as much as 50 percent, forcing executives to leverage the most out of limited resources.
5. SOME FIRMS HAVE DEEP EXPERIENCE -- Software and consulting firms with at least a decade of experience
have seen repetitive patterns and can provide potential customers with expert knowledge and consistent and
timely value when implementing PPM.
6. PROJECT SPENDING IS BEING SCRUTINIZED AT EACH LIFECYCLE STAGE, NOT ONLY AT INCEPTION -- More
companies are asking ongoing questions about the right of projects to exist. The old way is out, and in the new
environment, it’s acceptable to stop a project if it cannot provide higher potential benefits to the organization
than other projects.
Achieving Results Requires Proficiency
Despite the availability of tools that allow scenario analysis to improve resource allocation and planning, it is still a
difficult undertaking for numerous reasons.
1. DEVELOPING SCENARIOS -- Despite the available data, the ability to translate it into actionable
"information" (derived data) that improves strategic decision-making is still a complex process.
2. IDENTIFYING THE RIGHT SET OF COMPETENCIES -- Proper identification for yearly planning can be challenging.
Competencies are high-level groups of skills based on the HR definitions. In many cases resources have multiple
capabilities that need to be delineated in the supply pool.
3. IDENTIFYING FUNGIBLE RESOURCES -- Those that can be applied to different tasks require an in-depth
understanding of both the projects to be executed and the type of skill required.
4. CONSISTENT METHODOLOGY OF EVALUATING PROJECT DEMAND -- It’s critical to evaluate project human
resource needs consistently across the portfolio. Without standard processes and estimation methods, managers
commonly ask for more people than required to staff their projects.
5. CONTINUOUSLY CHANGING SUPPLY & DEMAND -- The Demand and Supply map continually shifts, furthering
the importance of ongoing resource planning. New technology competencies drive demand while the supply
typically consists of resources that have gained proficiency in older technologies.

Following is an example of an effective resource planning tool that shows the projects demanding skilled
competencies, the schedule of when projects will be implemented, and the resource surplus or gap each month.
Why You Should Consider Resource Planning?
Harnessing the results of resource allocation and planning enables organizations to be more effective and efficient
by:
 IMPLEMENTING MORE PROJECTS -- Providing the ability to implement more projects with the available set of
resource competencies.
 ACHIEVING MORE STRATEGIC VALUE -- Strategic Value is the measure of a portfolio’s ability to maximize
objectives for a specific planning period. Significantly achieving more Strategic Value is possible by leveraging the
available set of competencies across the organization.
 REDUCING THE COST OF RESOURCE SURPLUS* -- Resource allocation, planning tools and methods enable
organizations to significantly reduce surplus costs.
 ASSESSING IMPLEMENTATION ALTERNATIVES -- Resource allocation tools provide a decision support
mechanism to better understand when to hire contractors over permanent employees. Planning teams are then
able to select the appropriate projects to outsource while maximizing staff utilization and minimizing their
troughs and peaks.
 PRODUCING A TRAINING ROADMAP -- Enables planning teams to produce a training roadmap (i.e., cross
training of permanent resources) in line with the project portfolio’s resource requirements.
 IMPROVING STAFF UTILIZATION -- Increases staff utilization to make better usage of planning troughs and peaks.
* Resource surplus is defined as the competency types not requested by the portfolio demand projections.
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