Strategic Portfolio Management
Align. Prioritize. Deliver.
Enabling firms to deliver balanced portfolios in line with strategy and maximizing value.
Enabling firms to deliver balanced portfolios in line with strategy and maximizing value.
A key challenge for senior management is to bridge the gap between strategy formulation and execution and be on top of it as strategy can change rapidly to achieve the mission of the organization. With strategic portfolio management organizations are enabled to define and to deliver their change portfolio. The key is to master the capability to constantly align your strategy, to prioritize and plan and finally to successfully deliver your project portfolio.
“By 2025, 70% of digital investments will fail to deliver the expected business outcomes in the absence of a strategic portfolio management approach.” Gartner, 2021
Companies struggling with streamlining their portfolio with organization goals frequently experience:
Too many projects | Too many projects are running at the same time all competing for the same available resources. This lead to internal resource competition and jeopardizing strategic focus.
Strategic disconnect | It is not clear for employees why they are working on certain projects leading to setting their own priorities.
Unbalanced portfolio | There is an imbalance in the projects as priorities are not clearly set or not in line with the strategy (often because the strategy has not been translated into measurable goals)
Suboptimal portfolio value | As a result, valuable resources are working hard but not on the best set of projects resulting in suboptimal added value
There are three focus areas that are equally important in Strategic Portfolio Management and solve the above challenges. Make sure your process takes into account all three to optimise the added value of your portfolio.
Make sure your strategy is translated into measurable goals to align projects on their strategic fit. There are several frameworks that help firms to do this exercise. Some of them are OGSM, OKR, Hoshin Kanri, and many more.
Prioritize your project portfolio and make sure planning takes into account any resource limitations (both financial as well as people related limitations). Think upfront about how a balanced portfolio should look like and make sure you capture relevant data for all your initiatives. With that information your decision making process is supported.
Have a portolio management control process in place to steer the delivery of your portfolio into the right direction. What is the status of your running projects, how is progress evolving, what about the impact on relations with other projects, are we still financially in control? Questions you need to have a clear anwer on as it impacts the success of your portfolio delivery and might lead to termination of running initiatives in favor of other projects bringing more added value.
When projects have been scored and evaluated on their strategic alignment, their role in the portfolio is clear. Companies with strong spm capabitliy are not faced with unknown or duplicated projects in their portfolio. The portfolio composition is clear, balanced and can be easily explained to any stakeholder why a certain project is executed.
Strategic Portfolio Management is only successful if the strategy is translated into clear and measurable goals. Then every initiative can be scored against these goals and a solid decision can be made. No more surprised how a certain project actually contributes to the overall strategy.
With a clear set of goals it is easy to re-evaluate a portfolio when new projects come in and running initiatives are performing below expectations. Organisations that are flexible in terminating projects to reallocate resources to more added value initiatives, are able to optimize portfolio value.
