The Benefits of Portfolio Management
Portfolio management solutions help your business ensure that money and people are employed in the best possible way, to create the most value for the organization.
The best portfolio management tools give you the ability to see all the work being carried out in the business at any one time. That information itself is often difficult for companies to pull together without committing to a portfolio management approach.
Once you’ve got that information in a single place, you can start to use your portfolio management tools to shape business decisions and stakeholder communication. Sounds great, doesn’t it? It gets even better! In this article we’ll discuss five benefits of portfolio management.
1. Create strategic alignment
There are loads of reasons why portfolio management is an important solution for your business, but the most commonly identified benefit is the strategic alignment it offers.
You have a corporate strategy. But are your projects and programs supporting the delivery of that? It’s common for businesses to find that they are investing time and resources into work that doesn’t deliver the strategy. They might be worthwhile projects, but they aren’t specifically focused on ensuring that fancy PowerPoint strategy presentation gets implemented.
Portfolio management processes enable you to prioritize investments and projects to ensure strategy makes it to the top of the corporate To Do list. You can make informed decisions about what to work on when because there is visibility about how the portfolio is aligned to strategic goals.
2. Establish realistic operational budgets
Portfolio management gives you a complete view of the strategic and tactical work planned for the business. That makes it a lot easier to prepare realistic operational budgets, because you know what changes are coming.
Often, departments are excellent at preparing their own operational budget for the ‘everyday’ work, but less good at foreseeing the impact of project work on the team. That’s generally because they don’t have visibility of the upcoming project work or when their resources will be needed. There might also be projects that do not need resource from that team but will have an impact on them, for example, the work of the sales team will increase once a popular new product is launched.
Another aspect to budgeting using portfolio management data is the ability to better manage risk. All projects come with some element of risk as you are changing the way the business works or delivering something new. When you’ve got visibility across all the changes, you can assess the riskiness of the portfolio as a whole. That helps shape decisions about what new projects get started – if the project is considered risky, it might be better to wait until the current risky projects are delivered. Then the business can take the risk on new work.
Budgets to manage project risk can be built in, lowering the overall cost of starting new work and increasing visibility about potential project costs.
Portfolio management makes all of that transparent so executives and managers can plan their team’s work and make better budget decisions.
3. Shift resources to where they are needed
Projects don’t always go to plan, and often, it’s an external event that causes a project to stall. Perhaps a supplier has difficulty sourcing a component due to a global shortage, or world events mean that it’s prudent to put a project on hold for a while. Sometimes, business strategy shifts due to a change in leadership and a project is postponed or cancelled entirely.
When that happens, portfolio management tools can help you identify how to reallocate resources. With all the information at your fingertips, you can choose whether to place individuals on existing priority projects or use them to start something new.
This helps businesses be agile in their portfolio management.
4. Monitor investments
Portfolio management tools manage work and resource planning and also have financial and performance modules to help monitor investment.
You’ll be able to see how projects are doing and identify when it’s necessary to step in to provide performance management. You’ll be able to compare programs against each other and track progress towards your strategic goals.
This information is helpful for ensuring work is being carried out according to plan and that the business overall is on target to hit the objectives set – and it’s useful even for small companies.
5. Establish standard procedures
Standard procedures help streamline the way work is done. Portfolio management tools give you a standard approach to initiating projects, tracking the work and reviewing the whole portfolio.
Your approaches to corporate governance are reinforced when there are standard control procedures in place. You can easily set up standard reporting and dashboards with information tailored to different decision-making committees. Regardless of who is looking at the data, the information is always the same so everyone has a transparent view of what is going on.
Establishing standard procedures across the PMO is a core goal of portfolio management and that can really improve project management maturity levels across the organization.
We all want business benefits from our investments in projects, and portfolio management is one of the ways you can increase your project success rates. By taking a portfolio approach, you’ll be focusing on the right projects at the right time and can make data-based decisions to drive your business forward.
In our experience, the best approach for moving towards a permanent, comprehensive view of all the business change happening in the organization, is with portfolio management. We support the view that focusing on the strategy and letting that cascade down the investment portfolio gives exec teams the information they need without having to rely on gathering data from lots of project schedules. It’s a practical, objective, and time-efficient way of setting up your project portfolio management system. Does your business work like that?