INTRODUCTION TO PORTFOLIO MANAGEMENT: CORRELATION OF PPM MATURITY MODEL AND BUSINESS LIFE CYCLE
Using the concept of PPM Maturity Model can help business executives realize the full potential of portfolio management and software solutions to enhance visibility, flexibility, and efficiency within the company. To use this framework, however, it is very important to understand the connection of PPM maturity level and Business life cycle. To understand the correlation between the two, it is necessary to get acquainted with what “business process lifecycle” stands for these days.
A classic Business Life Cycle includes, but is not limited to, the following elements:
Strategic Planning – the process of defining its long-term intentions, goals, key performance metrics and strategy. The higher level of planning involves even making plans on how to allocate the company’s both financial and personnel resources to follow the strategy.
Strategic Executive Oversight is basically the measure of cohesion between the strategy of the enterprise and the practical execution of work. This is not “one shop stop” deal; it’s rather a day-to-day job for executives and management to track and guide both workflows in the same direction. Sadly throughout most organizations there exists a serious disconnect between what executives plan for and what practitioners do. The main reasons for that are lack of cohesive oversight due to non-integrated, disconnected portfolio and project metadata. We all should remember Thomas Edison’s bright quote “Vision without execution is a hallucination.”
Products, Departments, Stakeholders – the larger your business get, the more likely your enterprises get divided – by geography, by stakeholders, and even by project objectives. Thus, every individual project’s result and the responsibilities of the team working with that project is being divided into departments or other “organizational units.” This divide can shift the focus and postpone the results. Prioritization in portfolio management corresponds with diligent work oversight in the business lifecycle to ensure the alignment, to keep the business strategy intact.
Project Delivery (Release) – using matrix structures, where employees with specific skills are involved for projects, with no regards to their initial departmental designation. In such cases, the overall efficiency grows, but structural issues may rise overtime. So, it is imperative to understand the internal structure of the company before attempting to deploy a portfolio management approach. Such organizational change factors can be addressed with ease within the PPM maturity model to facilitate the necessary cultural change. This is not something executives and managers have the luxury to overlook. It is important to keep in mind that although the decision making and business objectives are the main responsibility of , the work is completed by the project team. If the teams do not follow the same procedures when working, the results will vary, and usually in a negative way.
Portfolio management is the art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk against performance. The more mature the organization, the more portfolio selection matter. Executives and PMOs can construct portfolios to optimize or maximize expected return, and shorten the lifecycle of every process, by eliminating “extra steps”. Portfolio management theory suggests that it is possible to construct an “efficient frontier” of optimal portfolios, offering the maximum possible expected return for a given level of enterprise maturity. It suggests that it is not enough to look at the expected risk and return of one project or portfolio. By investing time in defining your level of maturity and continue the process with the help of maturity model, one can escape multiple issues faced and dealt with before by many predecessors.
The future of project and portfolio management
Historically, “work” as an organic way to strive for progress – it has always been identified and managed naturally. However, the spread of “gaps” and “pains” that business can experience have developed over time, as companies can grow to humongous sizes, spread departmentally across the globe, etc. So even if portfolio management, standardization, and formalization of work, like calling work – “tasks,” employees – “human resources” can seem a bit synthetic and inhumane at first it is most necessary to keep the order within intact. Besides, there are still activities and informational metadata not yet formally categorized by the industry. And unidentified work elements are becoming more critical. More importantly, without portfolio visibility, time and effort applied to those “non-captured work elements” belittles the resource capacity and progress of those, who does the “identified” kinds of work.
The workforce continues to evolve, and as this evolution picks up steam, the use of appropriate tools and technology also must evolve. The concept of “status perspective” within the growth strategy and planning, should be taken as a given by business owners, executives, and management. Some tools nowadays provide businesses with build in features to implement practices such as lean management and value stream mapping. These features become ways to identify demand “constraints” that are increasing the load on all kinds of your organization’s resources. So, to influence the development of your business, it is imperative to adopt new tools, approaches, initiatives, and practices to capture work-related demand and go straight to success with plans and goals based on capacity.
Modern Portfolio Management really stands for determining strengths, weaknesses, opportunities and threats in the choice of project to partake. It evolved to decisions on the scale of “growth vs. safety”,” domestic vs. international”, and many other trade-offs you might meet on the way to maximizing return at a given moment. More recently it have adopted multiple dimensions by considering many variables against the same resources, not mixing and matching your schedules with last month’s expenditure vs. profit spreadsheets. With current technology options and the ability to apply multiple practices at once, while still having a way to track the results in one dashboard, organizations of any size can schedule and complete work at an enterprise level.