The future of Project Portfolio Management

Does your business face the prospect of major transformation? As you embark on making the necessary change happen, you need to prioritise and fund initiatives that will bring the greatest business value in the context of constraints such as time, scope and budget. You need to get your project portfolio management up to speed.

Business success doesn’t happen by chance, especially when major transformation is needed to survive and flourish. Elevating your portfolio governance will give your organisation a competitive edge and help you execute the right projects and programmes to deliver your strategy.

But volatile, uncertain, complex, ambiguous and rapidly changing environments are making it harder to successfully manage project portfolios, especially when it comes to aligning a complex blend of traditional and more agile approaches.

Download white paper

Project portfolio management challenges

If you’re not reaping maximum benefit from your initiatives, you’ll often find that it’s down to a failure to link your strategy to execution through portfolio management. The challenges preventing organisations from doing so typically lie in strategic alignment, financing, managing stakeholders and applying the right governance, balancing innovation with process, managing risks and performance, and having the right mix of resources available.

Your organisational strategy and the underlying projects in the portfolio are not integrated end to end. The usual three to five-year planning strategies and yearly planning cycles may not be able to accommodate the unpredictable changes that projects, particularly those from the development area, are subject.

Your current approach to budgeting for projects is not dynamic enough to make sure that the resources allocated are adjusted in line with the highest value at the time, making it difficult to prioritise efforts and finances. Allocated budgets often fail to deliver the promised outcomes.

There is lack of alignment between the views of those running as opposed to changing the business. With opinions differing on value-adding activities, there may be a lack of commitment to parts of the portfolio. The result is that stakeholder expectations may not be met.

Your organisation struggles to apply a consistent approach at the portfolio level that could effectively sequence and balance portfolio components to keep budget, time and scope constraints within agreed tolerance levels.

There’s a failure to align the allocation of capacity and capabilities of the resources deployed within the portfolio, with portfolio plans lacking a baseline to reconcile them to a target operating model or organisation roadmap.

Your performance metrics are prone to overemphasise short-term results and fail to take account of cumulative performance in terms of time, cost and quality, leading you to overlook internal spend and linking KPIs too rigidly to cost centres.

The future of Project Portfolio Management

Hybrid, lean, and value-driven

Download paper

The remedy: factors to consider

The key to overcoming these challenges lies in a hybrid portfolio management function that’s value-driven and incorporates lean portfolio principles through dynamic budgeting. Implementing a more strategic portfolio approach will enable better portfolio alignment, ongoing portfolio flexibility and more value-driven decision-making.

So far, very few companies have actually put effective strategic portfolio management in place. Doing so can potentially give your organisation a crucial competitive edge. In the course of helping clients take this step, we’ve distilled the main factors to be considered down to six key areas:

Vision and strategic goal-setting: This will enable your decision-making process to attain tangible results through initiatives by translating your long-term ambition into strategic themes with objectives and key results.
Organising around value generation shifts the perspective from a pure cost-centre view to end-to-end value generation with investment horizons, innovating through value streams.
Categorising your portfolio based on requirements will enable you to prioritise the components for the portfolio roadmap with a view to the highest business value.
Budgeting and approval: Financial steering is done with lean budgets involving semi-annual and participatory budgeting processes and holistic resource allocation to account for dynamics in development.
Executing the deliverables within your portfolio entails a workflow structured along kanban system lines.
Measurement and steering: Your portfolio governance measures and steers the outcomes of the portfolio with key performance indicators linked to development, change and innovation activities.

Summary

The rewards of implementing these steps to create a hybrid, lean and value-driven portfolio management function are substantial: greater stakeholder satisfaction, more senior leadership commitment and lower the risk of failed projects and product developments.

In fact, effective portfolio management can reduce project and product development spend by 20% to 30% without negative implications for the business.

We’re helping clients achieve these improvements in practice. To find out more, check out our latest white paper and reach out to us to talk about the challenges you’re facing and how to resolve them.