Keynote speaker and coach Peter is the author of the number 1 bestselling project management book ‘The Lazy Project Manager,’ along with many other books. He has built and led some of the largest PMOs in the world with organizations such as Siemens, IBM, UKG, and now Dayforce, where he is the VP Global PMO. He has also delivered over 500 lectures worldwide in 26 countries and has been described as ‘perhaps the most entertaining and inspiring speaker in the project management world today.’
Simply put, project management is about doing the project right. Following this approach, a program is about doing all projects in the correct order. And further, portfolio management is about implementing and completing the right projects for your organization—that is, the projects that support the business strategy. While true, this oversimplifies the actual value of strategic portfolio management.
Strategic portfolio management (SPM) means identifying the right projects for the organization while also understanding and managing the interdependencies and interactions of discrete projects.
What is Strategic Portfolio Management
Strategic portfolio management is the process project-based organizations use to select and prioritize project investments.
All projects contain risks and should provide benefits that outweigh the risks. However, assessing risks and identifying benefits requires a portfolio view.
In addition, once projects have been approved, controlling the resources within that portfolio of programs and projects is essential to meet the strategic goals and objectives.
Portfolio management in strategic planning is vital for delivering insight and understanding and is a platform for key decision-making.
No organization operates on an infinite-capacity model. Resources are limited, and priority decisions must be made. Without strategic project portfolio management, this is impossible when there are many ongoing projects.
The Value of Strategic Portfolio Management
You cannot manage what you don’t measure, nor can you manage what you do not understand.
The combination of project portfolio management and strategic planning allows for informed and improved decision-making through a transparent view of the entire portfolio suite.
While portfolio views must be in place, they must also be connected. Suppose small groups of people are overseeing small collectives of change but are ignorant of the impact on the other groups. In that case, the results can include low-quality projects, confused resources, high escalations, and deep executive-level frustration.
Other risks of failing to align strategically and collectively include:
- Wasted and confused resources are being aggressively competed for.
- Missed opportunities for economies of scale and cross-project benefits.
- Overloading the organization with change.
- Burnout of key project players.
- Bad decisions through lack of clear and accurate data.
The bigger the portfolio, the higher the problem levels and, therefore, the consequences.
The solution is to create an overarching portfolio view and instigate a cross-business project business case approval driven by a far more holistic viewpoint of the business.
Learn About Strategic Portfolio Management
Efficiency improvements through removing duplication of efforts and lowering administrative efforts (and costs) are good reasons to invest in portfolio management strategic planning skills.
So, too, is the ability to have increased confidence when making decisions, knowing those decisions are the best for your organization.
Understanding SPM will increasingly become a career differentiator as the volume of project-based activity and the associated criticality of these investments grow.
As project-based business complexity rises, mastering strategic portfolio management will be a key skill for professionals today and into the future.
It’s Also About Technology
The complexity of projects increases exponentially as organizations sanction more and more projects simultaneously. Running many projects at once is hard enough, but as these projects become more interconnected, the need to know more and to make rapid good decisions increases.
Manually managing this efficiently becomes very challenging. This is where strategic portfolio management software brings real value.
Strategic portfolio management tools are designed to absorb all of this information, to understand the connectivity and cross-project impact, and to provide objective insights and alerts.
SPM technology can help organizations improve decision-making by providing a comprehensive view of projects and resources. SPM tools can also help organizations identify risks early, dynamically align projects with strategic goals, and offer a simulation capability to assess decisions and outcomes.
Conclusion
Strategic portfolio management is essential for directly or indirectly aligning projects to strategic goals and optimizing the resources working on these initiatives. It is also key to managing interdependencies in today’s dynamic business world.
We have seen that any significant number of projects rapidly makes the need for accurate and fast insights into the overall portfolio essential. And we must factor in, as well, that most organizations are constantly adding to or changing that strategic focus. Gone are the days of static long-range plans.
Therefore, holistic visibility enables better decision-making, offers fewer inefficiencies, and delivers fewer consequential risks, making strategic portfolio management essential for many organizations.