Business today remain under tremendous pressure to innovate, improve top line growth, reduce bottom-line costs, and grow by successfully executing their business strategies. As businesses gear up for growth, many find they are hobbled by inadequate portfolio management practices and resources.
So, what are the typical portfolio challenges?
- Business continue to maintain old legacy systems with maintenance costs super-ceding benefits with little to no agility
- Business continue to invest in year long projects that do not align well with overall business or corporate objectives.
- Many organizations require lot of upfront effort to justify business need for project (which is good) but once the project takes off, they are unable to assess their overall portfolio (benefits measurement is lacking after projects go-live).
- Lack of common framework to prioritize portfolio of projects, especially for organizations spread across geographies and executing projects across geographies
Enter “Portfolio Management”…..
It is much more than managing programs or projects, rather it is management of entire project portfolio to maximize the business value to organization.
Portfolio Management is a strategic framework and dynamic decision-making process to assess value, prioritize projects and allocate resources to meet key business objectives.
Organizations with strong portfolio management capability tend to achieve greater project success (per PMI).
Please note that portfolio management does not involve executing projects, rather choosing which projects to funds, best ways to execute and continuous evaluation of projects that are live to determine if they are still adding value and taking appropriate measures.
Framework for Portfolio Management
Although there is no set framework for portfolio management, many large organizations follow a high-level 3 step process as below.
- 1: Investment Management– Strategic visioning, planning and identifying where to invest be evaluating several factors like risks, benefits achieved, alignment with business objectives, competitors offerings, etc. (Doing Right Things). This is basically selections of projects/initiatives.
- 2: Project Portfolio Management – Build and implement identified portfolio of projects using well-defined program/project best practices, rigorous planning and following standard development methodologies, etc. (Doing Things Right). Constitutes Program Management and Project Management — focused on delivery of business benefits.
- 3: Application Portfolio Management – Maintenance of projects after go-live. Inventory applications, analyze along business, tech, financial, operational and risk perspectives, conduct cost-benefit analysis, evaluate tech risks and develop a management strategy for continued investments to maximize value over applications lifetime (Application Rationalization)
Although I have indicated a few sub-processes within each step, note that these may vary depending on organization standards.
This framework is not just for IT projects, it is equally applicable for projects across marketing, creative, branding and such.
It is not just enough to have Portfolio Management process in place, organizations need strong sponsorship, leadership, support and a good governance model for success. The portfolio management process is typically executed every quarter.
How does Portfolio Management help Executives?
- Provides better visibility on project portfolio
- Align investments with business objectives
- Help prioritize which projects to execute first over another
- Helps optimize application portfolio (e.g. eliminate applications or systems that are no longer adding value to business)
At the end of the day, a well managed portfolio helps organizations successful execute it’s strategy and deliver shareholder value.