With every large-scale business comes a complex portfolio of projects, each with a variety of requirements. Enterprises must have an optimal portfolio management strategy in place to find success in today’s dynamic business environment, as businesses must work with less, and accomplish more, as resources and funding are more limited than ever. Large organizations with multiple business units often struggle with balancing varying priorities while providing visibility to their stakeholders. A typical portfolio management process has the following phases: intake of ideas, prioritization, initiation, execution, close-out, and monitoring. An optimal portfolio management strategy includes processes for prioritizing projects, financial management, benefits management, resource management, governance, as well as a reporting dashboard.
Components of an Effective Portfolio Management Strategy
An effective portfolio management strategy aligns the needs of the business with the strategic goals of an organization to maximize benefits of the investments. Organizations with optimized portfolio management integrate both financial and benefits realization management into their processes. Finance departments need more than continual visibility into the financials of an investment; from ensuring that financial metrics are measured from the day ideas are submitted, all the way to ensuring the benefits of the investment are monitored after the project is closed out. A benefits-realization process forces the organization to review the goals and objectives of each investment against strategy and provides a baseline to monitor the benefits long after the project is closed out.
A well-managed portfolio gives leadership the ability to see how resources are allocated and leveled for the various projects. Given that most complex organizations have multiple business units, it becomes increasingly important to have a process in place to see how resources are managed, end-to-end. Better visibility not only allows for optimizing allocations, but provides leadership insight into improving training and communication to their employees.
A strong portfolio management process would not be complete without a robust governance process. Governance processes ensure that investments meet strategic initiatives, measurement criteria, and that issues can be escalated to key stakeholders.
Benefits of an Effective Portfolio Management Process
Organizations with a strong portfolio management process find that they have increased alignment to strategic goals and project cost targets, improved assigning resources to capacity, and reduced administrative activities. An estimated 10% of projects are either low-value add or redundant, according to Forrester Reports. Additionally, well organized portfolio management processes allow for complete, concise reporting to leadership and management across multiple business units.
Other benefits include:
- Increased visibility to investment and project status
- Uniform business case analysis
- Improved cross-functional collaboration
- Improved resource management
Indeed, the risks for a weak portfolio management process include misalignment to strategic initiatives, redundancies in the organization, and misplacement of resources. When time, people, and capital are limited, wouldn’t it be better to ensure investments across your organization are meeting your strategic needs?
Benefits to Your Organization
In today’s ever-changing business environment, organizations that are efficient and limit wastes can focus on growth. Ensuring that a portfolio management process is in place, and has the components your leadership needs to make decisions is imperative to success.