PnP Portfolio Management – Motivations

The introduction can be found here.

This is the second installment of our series on Product and Project (PnP) Portfolio Management. The intent of the series is to provide a simplified look of some essential concepts and their relationships to each other. The audience is for organizations considering Portfolio Management as a tool to support their business objectives and decision making therein.

In this installment we will take a look at the motivations that drive organizations to incorporate PnP Portfolio Management as a discipline and tool.

"In the beginning was nothing… and then there was light. There was still nothing but now you could see it!"

Company Driven

A company driven initiative is where C-Level management is motivated to lead the company in the right direction in a more effective and efficient way. They recognize that a portfolio management approach can be applied  across any business line, product group or functional area. A reasonable communication from the CEO may start out with, “To align our efforts, assets, costs and funding to ensure focus on our strategy, bottom line,…”. Of course the words may change but the message supports the intent to gain insight and utilize that information in investment decision making.

Positive signals:

• The decision to embrace Portfolio Management was preceded by open and continuous communication during the ideation and initiative development
• C-Level backing and visibility
• Realistic expectations with clear lines of accountability
• Iterative Start (e.g. Resource Management, Budget Planning, Strategy Planning)
• Follow through!

Warning signs:

• The “Surprise, we’re doing this” message when news of Portfolio Management direction comes in the form of water cooler discussions or organizational charts with "TBD" in leadership positions
• Portfolio Management appears as part of your yearly performance review or bonus objectives
• No plans and/or schedules and no indication when to expect them, from whom and how you are expected to participate
• Change in management

IT Driven

Until recently, IT Project Portfolio Management (PPM) had led the charge utilizing the techniques as a management and planning tool. Initially leveraged with a project-centric bias, its use has expanded to areas of application maintenance, service and support. This history also explains why most IT shops leave PPM ownership in the inappropriate PMO, not exactly the ideal home.

Advanced usage by IT shops leverage the information in budget cycle analysis and product/project/feature prioritization, looking at historic plan versus actual information across numerous variables such as resource, expense, capital and support spend.

Positive Signals:

• Key data input such as time accounting, expense and capital spend, service indicators and project performance metrics are standard operating procedure (SOP)
• Information is being evaluated on project health, business value, duplication of effort, assets management and control
• The classification and categorization of the knowledge model that evolves with the business

Warning Signs:

• Ownership in PMO, Development or Operations
• Critical data missing from the model, for example: non-discretionary versus discretionary budget allocation, projects plan versus actual, strategic versus tactical asset spend, etc.
• The CIO thinks your talking about day-trading when discussions of portfolio management are at the table

Grass Roots Driven

Believe it or not, the transition to IT and/or Company embraced portfolio management can occur from the bottom up. Many functional areas (e.g. procurement) have their own portfolio/inventory tracking mechanisms (e.g. spreadsheets) and utilize this information on a regular basis (i.e. analytics).

Unknown or forgotten by senior management, these are the linchpins from day to day and year to year successful operations and cost management. It would be important for upper management to do an inventory of what groups have asset or performance information littered throughout the organization. This may reduce the cost of initial data setup, although it may be at the expense of integrating as-is content.

Summary

This concludes our second entry in the topic of Product and Project Portfolio Management... our next post will focus on key data and supporting relationships that are critical to successful IT Portfolio Management implementations.

Until next time sportsfans...

Product and Project Portfolio Management

Introduction

Axiom:1 has provided consulting services for Portfolio Management to a number of clients. We have found that a many of them had the best intentions of creating a Portfolio Management discipline, or approach, in their business but lacked some essential understanding that would have avoided tremendous overspend, false starts or failed attempts.

Our posit is that most, if not all, decisions made in an organization can be greatly enhanced by utilizing Portfolio Management disciplines that produce various insights about their product and service offerings investments.

This is the first in our series on Product and Project (PnP) Portfolio Management. The intent of the series is to provide a simplified look of some essential concepts and their relationships to each other. The audience is for organizations considering Portfolio Management as a tool to support their business objectives and decision making therein.

In this first part of the series we begin with some introductory ideas used as the foundation for future posts.

Terminologies and Concepts

A Portfolio is the appropriate mix of investments (e.g. products, projects, resources, services) held by an organization and grouped together in such a way as to facilitate effective management.

Portfolio Management is the combination of disciplines, techniques and practices used to provide insight into the state of the portfolio, through careful assessments, as it relates to the strategic goals of the organization (e.g. increase revenue, open new markets, increase productivity, etc.).

The main concepts to provide today are:

• Product
• Project
• Resources
• Lifecycle

Product

A Product is anything that can be offered to a market that might satisfy a want or need. In general usage, product may refer to a single item or unit, a group of equivalent products, a grouping of goods or services, or an industrial classification for the goods or services. Some industry examples include Insurance Policies, Payroll, Landscaping, Tax Preparation or Stock Trading.

A product, in its lifetime, will have multiple projects associated to it and will consume resources in various ways that enable, sustain, progress or fix the product. A product has resource allocations both directly to the product or temporarily in supporting projects.

Project

There are many written definitions of a project, however, for those looking for a formal definition of a project the Project Management Body of Knowledge (PMBOK) defines a project as a temporary endeavor undertaken to create a unique product, service or result. The temporary nature of projects indicates a definite beginning and end. The end is reached when the project’s objectives have been achieved or when the project is terminated because its objectives will not or cannot be met, or when the need for the project no longer exists.

Projects require various forms of resource and said resources may be allocated in whole, or in part, throughout the project lifecycle.

Resources

Resources are those things (tangible and intangible) that can be combined to produce products and services. Two main characteristics of resources are utility and quantity (often in terms of availability), therefore the scarcity of resources may cause supply shocks. Common resources of focus in PnP Portfolio Management are people, capital and expense budgets, hardware, software and other consumable artifacts.

Lifecycle

A lifecycle describes the progression of something from conception (ideation) until it no longer has any value (decommissioned). In PnP Portfolio Management typical lifecycle ranges used for measurement intervals are weeks, months and years.

Summary

This concludes our first entry and introduction to the topic of Product and Project Portfolio Management... our next post will focus on the various motivations of PnP Portfolio Management.

Until next time sport fans.....