Are you looking for ways that you can improve your portfolio management approaches? PMI has recently done some research that will help. It’s Pulse of the Profession: Portfolio Management report highlights three ways to differentiate your PMO and step up your portfolio management.
The researchers identified three best practices in use by highly effective organizations based on interviewing over 440 experienced portfolio managers from around the world. Let’s look at those best practices and how you can implement these ideas in your business.
#1: Get strategic
Does your senior management team really understand what this portfolio management business is all about? In organizations that report having minimally effective portfolio management practices, only 25% of senior executives have a clue about what that means day to day. Compare that to 89% of executives in highly effective organizations and you’ll see that top level support is critical for portfolio success.
When mid-level managers focus on their departmental objectives and lose sight of the bigger picture performance drops significantly. Portfolio management gives your managers the tool to fit their departmental work into the larger, strategic vision, but they need to be able to understand it to do that.
Simply put, portfolio management helps align investment with business strategy and ensures that any funds and resources committed go to the initiatives most likely to generate the best returns. If that situation changes, a strategic view lets your portfolio management team and the C-suite reorganize the priorities to ensure everything stays aligned.
Do it yourself: Make sure that your executives understand what portfolio management is. This will help ensure that projects and programs are linked to strategic organizational objectives and you’ll increase the chance of being able to deliver on corporate strategy.
#2: Build a portfolio culture
You’d think this goes without saying, but if portfolio management is to be a success, everyone needs to buy into the idea. If you simply see portfolio management as an admin process, your business will probably fall into the 53% of companies deemed ‘minimally effective’ and we’re sure you don’t want to be in that group.
Building a portfolio culture means making sure there is sufficient investment in portfolio management tools, software, processes and in the team too through training and adequate resourcing. That also means putting in place an adequate feedback loop. Too often businesses don’t explain why project decisions have been made and why one business case is approved and another rejected. Sharing the results of the investment decisions and project selection processes helps everyone focus on what’s important (and decreases the likelihood of ridiculous projects being proposed – if executives know what’s getting approved and why they may stop putting forward ideas that won’t meet those criteria).
‘Spend more money on portfolio management’ might seem like a pretty basic point but the results are clear. In organizations where managers think strategically as well as spending time focusing on their departmental objectives, 70% of projects meet or exceed their ROI targets. If you compare that to businesses where managers don’t have a portfolio mindset and don’t think about the bigger picture only 50% of their projects hit their forecasted ROI. So there’s a strong link between portfolio management approaches and project success.
Do it yourself: Using portfolio management techniques to run the business should be part of the day to day operations. If you can make it ‘the way we work around here’ then you’ll see more projects succeed and effectiveness rates increase, although that does mean investing in training, resources and tools.
#3: Implement appropriate tools
Formal prioritization tools can make you five times more likely to be effective and 14% more likely to deliver the predicted ROI on projects. Portfolio management software is an investment, but you can build these increased project success rates into the business case and measure success on an ongoing basis. Software saves a lot of the manual processing that your portfolio managers would have to do so you’ll also see manpower savings or at least a more effective team if they are adequately supported with the right tools. For example, reallocating resources to higher priority projects is easy when you have the complete organizational view, but much more difficult if you have to go to each project manager and ask for a resource report.
Tools aren’t the only thing that you need for good portfolio management. A set of standardized processes can also help. This improves success rates because it ensures everyone is performing in a similar way and it speeds things up as individual project managers don’t have to reinvent the wheel every time they need a new template or report. Standard processes ensure that the right senior managers are involved in decision making and improve project controls.
Do it yourself: Standardize your practices and invest in enterprise tools to help you manage your portfolio effectively. Remember that your needs as a business will be very different to another organization’s so take the time to choose the right solutions for you.
The PMI study concludes that good portfolio management increases ROI and reduces business risk which gives organizations the opportunity to operate effectively and deliver value. Who doesn’t want that?