When a portfolio is managed effectively, it delivers the right initiatives at the right time to achieve the expected outcomes. Project and portfolio (PPM) leaders can keep up with digital business demands by choosing the right portfolio management style and having a crisp action plan in place.
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“The push to digital business means that the traditional style of portfolio management may now be inadequate,” says Anthony Henderson, Senior Director Analyst, Gartner. “Siloed portfolios can’t work in isolation to provide the organization with a true picture of performance. It helps to optimize the value of all major initiatives in the organization — and that requires integrated portfolio management.”
Here are the six practices for effective portfolio management:
No 1: Ensure visibility into work and constraints
For improving a portfolio’s performance, it’s essential to proactively identify and remove constraints. It can happen if there are no silos and the product teams operate in an environment that provides clear visibility into who is doing what, and what is getting delivered when.
With that insight, PPM leaders can easily determine the interdependencies and risks. They can transparently prioritize and allocate the work so that there are no negative impacts to the portfolio.
No 2: Prioritize around customers’ expectations
Digitalization has led to ever-growing customer expectations. The increased dynamics encourage organizations to implement new ideas and initiatives. Given the budgetary constraints, prioritization becomes all the more important. Without a well-thought-out portfolio prioritization approach focused on customer objectives, organizations may end up investing in less-promising initiatives.
Defining internal and external customers is paramount. They may have mutually exclusive or overlapping goals or demands across various lines of business. From this mix, it is important to identify the initiatives that matter most to them.
Stakeholders from different functions can form an investment committee to zero in on the most valuable ideas. Having a cross-functional understanding can help them make unbiased investment decisions that align with strategic goals and optimize limited resources.
No. 3: Apply adaptive resource management
The increasing use of agile methodologies in conjunction with other waterfall and hybrid approaches presents a significant challenge for resource management.
Digital business runs on flexibility, not rigid planning practices. An adaptive approach focuses on allocating resources as per market shifts and changing customer needs. It’s about creating an environment where resources can seamlessly switch between initiatives to deliver optimum value. For this to happen, it is essential to:
- Recognize and manage the interdependent risks
- Negotiate the competing priorities
- Identify impediments to strategic coordination across groups
No. 4: Deliver value continuously
Every portfolio promises value, and therefore, engaging sponsors consistently and effectively becomes critical to assess whether that promise is being delivered or the portfolio is becoming irrelevant.
For a dynamic digital business, it’s a good practice to have weekly meetings at which product managers and sponsors can discuss the previous week’s deliverables, ongoing tasks, resource availability, and existing risks or roadblocks.
This way, the involved parties can keep track of the portfolio’s health and realign it with value, if required.
Read More: Extending the Project and Product Ecosystem to Lean Portfolio Management
No. 5: Create a change-enabled culture
Digital transformation leads to increased changes in business and technology processes, which can have unintended consequences and affect the experience of customers and employees.
It’s essential, then, to know how to handle change productively and how much change is too much change.
The key components of a change-enabled culture are:
- Feedback and communication channels involving business leaders, managers and end users
- Engagement with change champions at multiple levels
- Executive confirmed roadmap for change
No. 6: Realize benefits continuously
As digital business evolves, effective portfolio management and measuring results are more crucial than ever. Organizations expect faster results and benefits must be viewed as incremental units of value delivered in a continuous stream. A dedicated owner should be in place to track the actual benefits realized.
Organizations will get better at portfolio management by making informed future decisions based on prior mistakes. If they fail to realize the expected benefits, then they can revisit business assumptions and ask these questions:
- Did they understand customer needs?
- Did the market conditions change?
- Did they overestimate value?
- Did they know the risks and complexities involved?