WHAT DOES PORTFOLIO FROM PROJECT PORTFOLIO MANAGEMENT STAND FOR AND WHY YOU DESPERATELY NEED IT ASAP?
Project portfolio management system provides the ability to plan efficient use of resources. Many large enterprises and organizations have made and continue to make attempts to introduce corporate PPM strategies to enhance productivity and efficiency within the organization.
If a Project is a purposeful activity of a temporary nature, designed to create a unique product or service, it is a one-time event, limited in time, budget and resources.
Than Project Portfolio is a set of projects that are combined or interconnected for ease of management.
If projects are the main investment object, then these investments are managed at the level of the organization’s project portfolio. Each separate project relates to other projects of the organization through common resources, and in some cases, they are united by a common goal. As part of portfolio management, establishing relationships between several projects of the same program is fundamental.
The project portfolio is formed from programs and projects that support one or another higher-level company strategic initiative. Small organizations tend to have one portfolio that combines all the projects and programs of the organization. However, for larger organizations, it can be beneficial to form several portfolios for different purposes, like a product line, a geographic region, a technology unit, etc.
There are three main types of organization project portfolios:
- Value-creating projects are company-scale projects and strategic projects.
- Operational are projects that meet the basic needs of functional departments, leading to increased efficiency of the company
- Compliance projects are necessary to maintain internal standards and regulations.
In large companies, an independent group is responsible for managing portfolios. This is a team of professionals that control projects portfolios, so they are aligned with strategic goals of the organization.
The process of managing portfolios
Two groups represent portfolio management processes:
- Alignment Process Group – includes elements of portfolio management attributable to categories and those components that are assessed for inclusion/exclusion into the portfolio;
- Monitoring and Control group – includes processes based on performance indicators, with the help of which portfolio components are periodically aligned concerning strategic goals.
Establishing links between portfolios and the organization’s strategy has great importance. The ability to track the achievement of goals through the processes reveals the relationship between finance, marketing, corporate communications, personnel management. You can scale the guidelines down to basic phases:
- Defining project portfolios for specific strategic objectives of the company
- Formation of directories of categories of projects
- Prioritization and reprioritizations (add/delete/change importance).
- Selection of new projects required for inclusion in the portfolio
- Formation of the main project schedule
- Formation of a corporate resource pool
- Using project management processes, supporting tools and systems, approve, plan and manage all projects and programs
- Fully managing the priorities of the company’s portfolio projects, allocating resources among projects, revising project schedules, managing changes and developing strategic guidelines.
Why organizations should add portfolio management capabilities
The answer is ingrained in the idea of a well-rounded businesses strategy. Portfolio management helps organizations to stay focused and aligned with enterprise objectives/goals and ensures that you will get there. PMIs research asked respondents why their organization adopted portfolio management. There were lots of reasons, but the top 5 reasons must resonate with most businesses.
- Customer Satisfaction is the top reason for adopting portfolio management. Over 70% of survey respondents citing this as a major reason for taking a portfolio approach, keeping customers happy is a critical driver! Portfolio management lets you see an overview of all the organization’s work, so if you want to focus on projects for one customer segment or one product’s user group, you can. Better management and governance enable project teams to deliver more effectively which typically means more on time, budget and scope.
- Cost Reduction. Nearly 60% of respondents reported that reducing costs was an important reason for adopting portfolio management. A portfolio shows you the overall cost of project and program work taking place in the business. You can use the financial metrics to ensure that investment dollars are being spent wisely and, in the areas, where they can generate the best benefits for the company.
- Revenue Growth was the reason given by 58% of respondents. This might seem strange, but it shows that it’s important to focus on the right projects at the right times – in other words, the projects that will help the company hit its financial targets. Projects that won’t contribute to revenue growth can be managed.
- Improved ROI. Again, this financial driver was behind the top 4 results, with 45% of portfolio managers reporting that this was essential for their business. When you’ve got the financial metrics of all projects at your fingertips, it’s an easy job to see which ones have the best enterprise benefits.
- Improved Development Costs. There is a cost to doing any project, so getting the best for your outlay is something that preoccupies a lot of project, program and portfolio managers. With 40% of portfolio managers saying that managing development costs is important, you can see why it ranks so highly on the list of portfolio benefits.
The common thing about all the reasons listed above is increased visibility of financial metrics within your enterprise makes a big difference to business performance. When you have access to data on an enterprise level, decision-making is easy. What’s right for your business, as for any business is always available internal data you can use in an informed way to structure the work plans for teams to get the result that’s best for you. The decision to switch to portfolio level, as well as the transition is better with a complete PPM toolbox at hand. In short, portfolio management tools give you a big-picture view. With it, aligning business plans and strategies with projects at hand is an easy step.
PPM Express is a SaaS platform that enables an organization with a full portfolio and project visibility by aggregating project-related information across groups, portfolios, and systems. PPM Express is a lightweight portfolio management tool, that suits the immediate needs of teams and business entities starting with 20 people, to the extent of large companies of hundreds to thousands of employees. It makes sure that everything your teams are working on contributes to achieving your goals. That’s got to be a great reason for starting the journey towards portfolio management armed with a great toolkit from the very start!