Portfolio Management Made Easy for Smart IT Investments

Project portfolio management (PPM) is an important driving success factor for any company juggling multiple projects. Leveraging the right project software supports PPM by providing the framework and best practice tools needed to manage competing projects. PPM also provides executives with a global view of the portfolio allowing them to make informed strategic decisions.

Portfolio management is an ideal best practice that all organizations should leverage. Although at first this discipline can seem complicated and cumbersome, by leveraging the right project management tools it can be made easy.

Before we dive into the essential steps of Portfolio Management, there is one question that must be understood; why define a portfolio? Organizations will always have projects, they will always have limited resources and they will always need to meet business objectives in order to remain a successful Enterprise. If you are not implementing the RIGHT projects and work to meet strategic objectives, the value you are bringing to the business may be much smaller than its potential. In today’s competitive marketplace, businesses must bring maximum value to survive.

Here are 10 critical steps for portfolio management success:

Step 1: Identify Portfolio Items

Determine what project/work you would like to implement. This is not an individual effortwork and projects will most likely be identified by many in the organization.

Step 2: Define Portfolio Items

For this pre-selection round you will need to define enough information to establish value of the given initiative. Description/business case, benefits, strategic alignment, and risk tolerance are all factors to be considered for this step. Keep in mind some of the key evaluation metrics that we discussed above.

Step 3: Evaluate Portfolio Items

Once all of your items are entered into the Portfolio, it is time to evaluate them. This can be done through a variety of methods. For example, you may leverage a formula for rating your items against each other to determine which item will bring the most value, the least amount of risk, align best with your resources and provide the best alignment with your organization’s strategic objectives. Rating and scoring is a common Portfolio Management practice for portfolio selection. You may also introduce What-if Modeling to view various models and conditions should you approve a given portfolio.

Step 4: Select your Portfolio

Based on the evaluation step you will determine which items bring the most value to your organization. Once your key portfolio items have been selected, you will be entering one last evaluation stage prior to approving your portfolio.

Step 5: Reassess Portfolio

In this stage it is common for more detailed information to be added to the portfolio/work items. This stage allows the portfolio team to re-evaluate the items based on additional information such as a high level cost plan and/or resource plan.

Step 6: Approve Portfolio

Once the portfolio selection team has had time to reassess the portfolio based on further portfolio information, the approval process can begin. The approved items then go into an execution stage and is handed off to the project team for execution.

Step 7: Portfolio Item Transition to Projects or Work Initiatives

The approved portfolio items are then promoted to projects or work initiatives and are moved to the execution phase. At this point a Project Manager will be assigned if one has not been assigned already.

Step 8: Portfolio Communication, Performance Tracking and Reporting

Portfolio Management does not end with portfolio selection and approval. It is now time to track the performance of your portfolio. Key Performance Indicators (KPIs) will be used to visualize status and track progress. For examples of useful Portfolio Management reports click here.

Step 9: Portfolio Change Management

At any point in the Portfolio Management life cycle, new project requests/portfolio items can be introduced. In addition to new requests, current approved items in execution can be affected by unexpected risks or unforeseen environmental factors leading to project cancellation. The change management step will be ongoing throughout the life cycle of your portfolio and is critical to its overall success.

Step 10: Begin at Step 1

As new portfolio items are introduced, start over at step 1.


Critical Success Factors to keep in mind:

  1. Keep it simple – keep processes uncomplicated
  2. Define simple initial analytics for tracking
  3. Keep focus on users
  4. Do not run before you can walk, too much tooling to quickly can result negatively
  5. Don’t over-optimize the portfolio – just because you try to squeeze a pot of gold out of a rainbow doesn’t mean it’s a good idea. Make smart, strategic decisions.