Part 1: Why portfolio management trumps project management—and where there’s still room for improvement
Posted by Akhand Singh on November 18, 2019.
Evolving digital business and the rapidly changing business landscape requires organizations to continually adapt—a situation that relies heavily on the IT function. The need to stay relevant, keep up with industry requirements, and meet customer needs result in numerous IT projects in the pipeline simultaneously. Organizations typically follow one of two different philosophies to manage and oversee these projects—project management and portfolio management. Here’s what makes portfolio management the more masterful approach.
Following an IT project management philosophy relies on project-by-project management, giving each individual project the opportunity to demonstrate value while competing for resources with all other projects. In contrast, portfolio management relies on collective management of all IT projects, sharing resources, people, and stack space across all projects, giving the organization opportunities to manage the portfolio holistically.
In our 2016 survey on technology implementations, we assessed the benefits of managing IT programs at the portfolio level vs. the project level. We compared highly mature portfolio management organizations to all others to understand the benefits and challenges organizations face while moving their entire stacks to portfolio management.
What we learned:
1. Organizations moving toward portfolio management saw significant benefits in multiple areas compared to organizations operating at a project level.
Highly mature portfolio management organizations reaped key benefits in these areas:
2. While organizations are moving toward portfolio management approaches, the value across all success factors was not as significant as we originally anticipated.
As more and more organizations lean toward moving their stacks under one portfolio, they are realizing that their portfolios overall often fail to live up to expectations. Gaps in the organization’s portfolio management strategy may be the cause. Given the push toward digital business, the traditional style of portfolio management is often inadequate. The survey identified several specific portfolio management challenges:
- Synchronizing timelines and aligning deliverables
- Driving efficiency gains
- Minimizing scope creep
- Aligning leadership
- Reducing resource crunch
Broader challenges IT organizations leaning toward portfolio management may face include:
- Prioritizing effectively. Projects in the portfolio should be prioritized to support the organization’s overall business strategy. But too often that relationship and alignment aren’t understood, so IT ends up working on projects that don’t have as much strategic impact.
- Maintaining business as usual, both within and outside the portfolio.
- Pulling the plug. IT organizations often lack a mechanism to identify and stop projects that are performing poorly.
- Poor reporting, leading to poor decision-making. In a vicious circle, a lack of integrated portfolio management business tools results in inconsistent portfolio data across projects and business functions, which results in ineffective reporting, which is a core reason for bad decision-making.
The good news is these challenges associated with transitioning to IT portfolio management and building competency can be alleviated. Up next in Part 2 of this series, we’ll look at some of the ways leading portfolio managers increase the effectiveness of their portfolio approach and ease their digitalization journey.
Akhand Singh is a senior consultant in Deloitte Consulting LLP’s Digital & Cloud Enablement practice, advising global client across industries to help them activate their digital organizations and prepare them for digital transformations.