Portfolio Management. A Strategic Approach.
Organizations are rethinking their portfolio planning practices from annual, project-based planning to continuous product-oriented planning to drive toward desired business outcomes. In order to achieve this, PMO leaders must support their business partners to build fast-paced, integrated planning and delivery cycles and measure toward outcomes rather than deliverables. Explore these free resources and industry leading insights to discover what is required for strategic portfolio management in today' enterprise and how to make the transition to become a results-driven PMO.
What is driving organizations to improve strategic portfolio management?
Simply put, organizations aren’t consistently achieving the business success that they expect from their strategic investments. Executives are frustrated that their organizations continue to make the same mistakes as in previous business cycles – approving the wrong projects, failing to achieve expected outcomes, taking too long to change direction, and lacking visibility into what’s really happening. They’re looking for a better approach.
Strategic portfolio management is seen as the solution because it provides greater top-down control for all strategic work. That creates stronger connections between planning, outcomes and everything in between and helps to directly improve performance.
What is the next big thing that strategic portfolio management will offer organizations?
The easiest way that I can explain what the next big thing that strategic portfolio management will deliver to organizations is simply to say – flexibility! In today’s world, nothing stays the same. There’s emerging threats, opportunities, and a heck of a lot of noise that tries to disrupt the business if it can. Knowing how to seize those opportunities and how to ignore the rest is critical. When you make those decisions, you need to adjust and you need to do so quickly and with minimum amount of disruption. Strategic portfolio management gives you a business that can do that. It maintains everything from top to work delivery and everything between to benefits realization. When something needs to tweak/shift, then you can do that in whatever way you want in a way that’s effective, efficient, and inclusive of all of the stakeholders.
Why is strategic portfolio management important?
Strategic portfolio management is extremely important. If you don’t know what portfolios, program, and projects address your strategic mission, vision, goals, and objectives how can you determine which items should be prioritized. The ability to organize your portfolio based on your company strategies allows the business to make the appropriate decisions within the budgets they have allocated and avoid working on items that do not progress the company forward.
How would you recommend getting started with strategic portfolio management?
It’s important to recognize that strategic portfolio management is an evolution of traditional strategic planning and portfolio management, not a reimagining of it. Therefore, the adjustments needed are relatively small.
Moving to strategic portfolio management starts with changing how work is approved to contribute to the goals and objectives. Instead of asking departments and business areas to develop proposals, large scale investments should be defined, approved and funded by business executives. These are going to be things like major programs, new or improved products, new or improved value streams, etc.
The work carried out as part of those investments is defined later by the individual who is appointed to be the investment owner (also determined by leadership), but when executives define and fund those large investment vehicles they help ensure alignment throughout the process, which is the key to strategic portfolio management success.
What is the main goal of strategic portfolio management?
The main goal of strategic portfolio management. Is simply better performance. There isn’t an organization on this planet that thinks they do a good enough job on delivering on strategy. It doesn’t matter if you get 100% ROI every year. Why aren’t you getting 110%? You can always do better. Strategic portfolio management doesn’t guarantee that success, but it build an approach to delivering strategy that gives you the best chance at improving that performance and making that performance more consistent. It creates that alignment of that vision of the organization at the very start through the strategic priorities, the goals, the objectives, the work and benefits so that you can see at every stage of the process of how things are being delivered and how things are aligning and what’s helping the business grow. That’s the idea of strategic portfolio management – greater visibility, greater performance, and greater consistency!
What does a good strategic portfolio management framework look like?
A good strategic portfolio management framework includes a number of things. In a successful framework, you must identify objectives, results and measurements. Establish KPIs that make sense for the organization. Then, utilize an intake process using change management best practices. This means consolidating at the portfolio level to allow everything to be reviewed in one place for intake. Next, assess project value in a continuous feedback loop to ensure maximum value. This goes back to ensuring your KPIs are strategically aligned with the business and your portfolio is scored on delivering on those goals. The next thing to consider is scenario planning and robust forecasting to ensure you can deliver on the allocated projects that support the benefits you’re trying to achieve. Manage your backlog and use PMO governance to allow strategy to cascade into impactful change and actions. Monitor performance by velocity and value and ensure quick response to stakeholders in the language or data they that actually care about. Don’t forget to report on a regular basis to refine the prioritization efforts and deliver more data for insight-led decisions that drive business strategy and value. These key areas are something you should consider when setting up a good strategic portfolio management framework.
What does it look like for organizations that are seeing success with strategic portfolio management?
Organizations that are seeing success with strategic portfolio management are seeing success for their business. They are achieving greater returns on investment. They are able to deliver more with each of those individual investments and they are able to make more investments because each of those specific funding allocations is achieving more – better resource allocation, better return on investment, greater internal efficiencies. You’ve got the ability to use the budgets that are limited in all of these organizations more effectively and efficiently. When you put strategic portfolio management in place, you immediately increase your return, but you also give yourself more flexibility as you can do more investments, more range of investments and investing in more initiatives, achieve better return which gives you more funding and so on and so on. It’s really is a spiral of success.
How does the right approach to strategic portfolio management impact the business?
The right approach to strategic portfolio management can impact the business greatly. When everyone knows what direction they are rowing the business can work more collaboratively together, which enhances the focus and aligns all business areas to meet the overall company objectives.
How does strategic portfolio management need to be addressed differently for different levels of PMO maturity?
Organizations that they have to realize that there is no one size fits all for strategic portfolio management. We need a different approach for different levels of PMO maturity and that starts with understanding that there are a lot of different stakeholders involved – from the chief executive officer through to the individual work team. The only way you’re going to be able to get consistency is to centralize everything through one body that manages the entire process – the PMO. If the PMO doesn’t have those relationships in place, if it doesn’t understand how the different parts of the business are connected, they are never going to have that complete end-to-end approach. For less mature PMOs, start with the basics. Start with engaging with the executive stakeholders. Make sure strategy is defined appropriately and make sure goals and objectives are defined. Then shift to top down investment funding and maybe that’s all you do in year one. But that’s enough to help understand how things are changing. As the PMO gets stronger relationships and more maturity for itself then you can start addressing more as you go forward.
What is the role of the PMO in strategic portfolio management improvement?
When it comes to strategic portfolio management improvement, the PMO is absolutely essential. It has that breadth of visibility. It sees everything that happens from strategic portfolio management – from the executive level to benefits realization and everything in between. It sees which investments are being well managed and which investments are struggling a little bit more. It sees how benefits are being achieved and where the gaps are. It sees how quickly organizational departments can adapt and where there is a little bit more inertia that needs to be overcome. That allows it to see what the best practices are and what’s working and what’s not and share that across the rest of the organization so everyone can improve to move the entire organization forward. If you don’t have a PMO in that function that has breadth of visibility and the ability to identify what’s working and what’s there, you’re going to be much slower to evolve and you’re not going to be able to improve your strategic portfolio management approach anywhere near as quickly.
How can a PPM tool improve overall strategic portfolio management?
I often get asked how a PPM tool can improve overall strategic portfolio management and I always say you can’t manage a strategic portfolio management approach in a spreadsheet. People often laugh awkwardly because many people are trying to do exactly that. You rely on spreadsheets to try and track the benefits, the investments, you don’t have integrations to the important parts of the business. Strategic portfolio management is all about streamlining that strategic process – from the start to the execution of benefits realization process and repeating that cycle again. If you want to have an integrated approach to business, you’ve got to have an integrated approach to managing the data you need around that business, which means you need a PPM solution that is integrated with everything else in your technology and infrastructure – the finance data, the HR data, the reporting tool. This allows you to focus on your efforts on managing the business, not managing the data around the business because that’s not effective and in today’s world it not necessary.
How to get internal buy-in for proper strategic portfolio management?
Getting buy-in for proper strategic portfolio management for an organization really shouldn’t be that difficult. All you have to do is show people what’s not working right now. Look at the last 12 months in your own organization. How many projects failed? How many projects didn’t achieve their business outcomes? How many projects got abandoned half way through? How many times did you experience resource bottlenecks? How many times did you have people over worked or under worked? How many times did you know that you suddenly needed resources for one in particular request? How many times did you change what you wanted to achieve? How many times did you experience a massive disruption while trying to make that change? The answers to those questions is what should be driving the internal buy-in for a proper strategic portfolio management approach. It won’t eliminate it overnight, but it will allow you to adjust much more quickly, much more effectively and much more efficiently.
How to Build Your Strategic Portfolio Management Maturity
Understand where your strategic portfolio management maturity stands today and learn how to build it to be more strategic
Watch this on-demand webinar featuring Forrester analyst, Margo Visitacion, as she covers how strategic portfolio management practices enable an organization to identify and select necessary investments needed to deliver high value products and services to its customers. SPM is more than an administrative exercise. It helps organizations identify clear vision and goals that provides the focus for value driven prioritization and smart capacity management. PMO leaders must work closely with their technology and business peers to build practices to create data driven process that supports end to end planning and delivery.
This webinar explores:
- How to identify where your organization sits on the maturity curve
- How to move from disconnected project portfolio management to integrated product portfolio management
- The PMO’s role in supporting that transformation
Best Practices for Strategic Portfolio Management
Explore the trends that driving the need for continuous planning and benefits of adopting a continuous planning model and discover why agility is a prerequisite for firms to continuously execute on their digital strategy.
Featured Use Case
The Link between Corporate Strategy and Portfolio Management
Learn how Ossur successfully aligned Corporate Strategy and Portfolio Management
Learn how Ossur successfully aligned Corporate Strategy and IT Portfolio Management. As a global leader in orthopaedics, Ossur manages diversified operations in the Americas, Europe and Asia. Svavar G. Svavarsson, Director of IT Project Office, will discuss the important challenges his organization faced and successes accomplished for the Executive, Portfolio Management, Program Management and Project Management levels.
This webinar is an update of our highly attended session at the recent Gartner PPM Summit in London. Per attendee feedback from that session, this is an event you won’t want to miss. Watch the recording of the event now.
Strategic Portfolio Management Articles
Digital business requirements are transforming how we measure success in the high-performance portfolio. Where we once were only customer-aware, we have now become customer-led. This means that we use customer requirements as the centre of everything our portfolio is trying to accomplish. Explore these strategic portfolio management articles to learn how to structure and execute your portfolios for the highest strategic value.
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Four Ways to Create Strategic Value With Portfolio Planning
Poor project performance is often directly linked to bad strategic planning. Even well-performing projects can lead to poor profit margins for the enterprise. But if aligning projects across the enterprise against a strategic plan is critically important, why isn’t it happening? There are many fundamental challenges with traditional planning methods including the fact that most organizations plan annually and iterate quarterly or monthly. Explore this article to discover 4 best practices to unlock your strategic planning potnetial.Read More
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