Project management is ingrained in many businesses now, but portfolio management is still taking hold. Many companies appreciate the idea of a well-rounded, holistic view of all the company’s work, but don’t make the link between that and portfolio management! A portfolio approach can help you see where the company is going and how projects are helping you get there.
PMI has done some research into this, and asked respondents why their organization adopted portfolio management. There were, as you would expect, lots of reasons why businesses choose to see everything they are working on through the lens of portfolio management, but the top 5 reasons must resonate with the majority of businesses. Let’s take a look at what the survey uncovered.
#1: Customer Satisfaction
The top reason for adopting portfolio management was customer satisfaction. With over 70% of survey respondents citing this as a major reason for taking a portfolio approach, keeping customers happy is obviously 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 in general also enables project teams to deliver more effectively which typically means more on time, on budget projects that achieve completion of all their scope elements – which is something that customers tend to like!
#2: 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.
You can also spot projects that are failing more quickly than you could otherwise. A failing project is costing money, so it’s beneficial to be able to identify these, either to stop them completely or to work with the project team to get them back on track.
#3: Revenue Growth
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 accordingly – maybe at a slower pace or in the background if the target is to increase revenue as quickly as possible. Of course, you need to be able to identify which projects will increase revenue and the financial measures as part of a portfolio management system will let you do just that.
#4: Improved ROI
Again, this financial driver was behind the top 4 result, with 45% of portfolio managers reporting that this was an 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. You can ensure that project resources get diverted to those projects, which will generate the best return on investment. You don’t necessarily have to stop those projects that don’t have a high ROI, but you can prioritize accordingly.
#5: 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.
It’s another financial measure that helps keep the portfolio in balance. When you can clearly see where your development costs are going, you can make sure that you’re investing in the right places. It also helps portfolio managers to make savings by ‘joining up’ work. With a big-picture overview of all the work that is going on in the business you can see where similar projects are taking place and link them to provide synergies and cost savings. Without a wide view of everything, these little overlaps go unnoticed and often end up costing a lot of money in duplicate effort or rework.
The common theme running throughout these top five reasons is that increased visibility of financial metrics 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 isn’t going to be right for the business down the road, but at least the data is available to you and you can use this in an informed way to structure the work plans for teams to get the result that’s best for you.
In short, portfolio management gives you a big-picture view. With this, it’s an easy step to align business projects with business goals. Portfolio management 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!