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Why Excel Could be the Most Expensive PMO Tool on the Market
Looking for an expensive PMO tool? Well, have you ever used a PMO tool that has been designed and built internally on Excel? In this blog, our in-house PMO expert David Walton highlights the serious limitations of relying on Excel as a PMO or PPM tool, and describes why you should advise against it wherever you can.
With the maturing of Portfolio Management Offices (PMOs) into value-adding PMOs there is a need for a tool that is a central repository of project and programme information.
Typically, an exercise is started to gather requirements with a view to select a tool. There are many PMO/PPM tools in the market and this marketplace has been maturing over the last few years. We at Bestoutcome have developed our own PPM/PMO tool, PM3.
Most organisations have a very sensible approach which is: buy not build. If there is a software marketplace that provides a solution, then why reinvent the wheel?
It is surprising that a number of organisations insist on building their own PMO/PPM application. Usually, the argument for this is that a tool from a software vendor is too expensive and we can build our own one more cheaply.
In a recent example, an employee of an organisation had spent 6 months developing a spreadsheet system to track resources, produce highlight reports, plan projects, manage programmes and portfolios, manage risks, control issues, measure benefits and savings etc. This option was chosen over a package that had been used at many clients successfully for years.
Because this choice is even being considered, I feel that I need to point out objectively, the benefits of an off-the-shelf package compared to a home-grown system, usually Excel.
The main disadvantages of an Excel PMO system
- If it is a complex application, it has to be maintained by an internal person(s). Often these internal applications are developed by one key individual who may go on holiday, sick leave or leave the organisation. If an important reporting date cannot be met because there is a problem with the system and the key developer is away, the application may not be able to be fixed. An external vendor is likely to have more than one support person who can fix any problems and ensure reporting schedules are met.
- To reproduce an off-the shelf application will cost a significant amount of effort and there is an opportunity cost for this effort
- An off-the-shelf-package will get input from its many customers and multiple customers effectively pay a small amount for future developments. If there is just one customer, which there is for an internal system, the single customer is effectively paying everything for each development
- Studies show that over 65% of spreadsheets have errors. The more complex the spreadsheet system the greater the probability of errors
- Spreadsheets are great at producing PMO reports for one project but when you start to try and manage programmes or portfolios it becomes costly and difficult to build and manage
- Spreadsheets are not very good at handling concurrent access to the same spreadsheet. They are not relational databases and are designed for a different purpose
I could go on. I would argue that just as it does not make sense to build your own ERP or accounts payable solution, so it does not make sense to build you own PPM Solution. There are many packages on the marketplace from the very simple to the very complex and there is no real business justification to build your own tool. To replicate an of-the-shelf package takes a considerable amount of effort, elapsed time and opportunity cost.
The PMO/PPM market is less mature than ERP and there is still this desire in some organisations to build their own PMO/PPM solution usually with Excel. The Excel solution is usually sold to the business as being the cheaper solution. On the contrary, if you compare apples with apples and add up the true cost of developing and maintaining an excel solution you will find the cost of this internal solution far outweighs the cost of an off-the-shelf solution.
If you are struggling to justify the ‘expensive’ off-the-shelf solution, download our white paper on ‘making the case for PPM ‘or contact us for our PPM ROI tool.
Don’t be fooled into thinking that a home-grown system is cheaper; it’s not!
About the author
David Walton - I am David Walton, Programme, Project and Portfolio Management specialist and director of Bestoutcome here in the UK. We make the PMO tools PM3, PM3time and PM3NHS, the only PMO tools designed by practitioners for practitioners.