In Part 1 of our series exploring IT portfolio management, we looked at why managing IT projects as a portfolio vs. managing projects individually is a preferred approach. We also looked at some of the challenges that can keep organizations from realizing the full potential of portfolio management. Today we look at what leading portfolio managers do to overcome these challenges and progress on their digitalization journey .
1. Take improvement opportunities to heart.
While the organizations we surveyed that managed all IT programs as a portfolio saw process improvements and better scope management, even the most mature companies only exceeded expectations 60 percent of the time. That said, the data suggest that portfolio is an evolving capability, given the history of project-by-project management, and will likely improve as organizations become more mature in their capability. Some improvement opportunities are:
- Managing expectations: Stakeholder management was a benefit of portfolio management approaches, so organizations moving to portfolio approaches need to leverage improving credibility to manage scope expectations.
- Improving processes: As organizations implement portfolio management techniques, assessing various process improvements will help them measure ongoing value and eliminate ineffective processes.
- Assessing progress: Organizations should establish achievable KPIs and process improvements portfolio-wide, rather than just simply reviewing individual projects.
2. Implement better practices for better effectiveness.
Organizations should consider creating an action plan to increase their portfolio management effectiveness by engaging staff to review internal practices and identifying small, practical steps for improvements. Here are some leading practices:
1. Prioritize initiatives/investments based on customer needs. Customers’ expectations constantly increase—at a faster pace than ever in today’s digital age. Since customers are considered the soul of any business model, it makes sense to prioritize initiatives based on customer demands while keeping the initiative strategy in sync with the organization’s overall strategy and mission. Keep in mind one of the most important activities is to clearly define who your customers are so you’re working toward meeting the right needs of the right people.
2. Review and remediate risks.Organizations should continually assess and identify interdependency risk between project governance and project solutions within a portfolio. This means going beyond conducting one-off assessments and instead looking to continuously identify portfolio optimization and improvement opportunities. The information gathered from risk assessments gives a deep-dive understanding of all the risk associated with managing multiple projects within the portfolio. Organizations can then use this feedback to take corrective actions on troubled projects and focus their energy on the risks that matter the most—large, complex, and risky projects should receive the most attention. Key to this activity is to proactively identify risks and act on them.
3. Practice flexible and non-linear resource allocation. Portfolio managers should continually identify opportunities to assign the right level of resources to the right project. This often means doing away with the traditional way of allocating resources at a project level or to individual initiatives. Instead, organizations should create a pool of resources and an environment that optimizes devoted teams based on each project’s requirements at a given time.
4. Manage change holistically by establishing organizational change management (OCM) capabilities. Digital transformation is greatly increasing the number of changes in an organization’s business and technology landscape. As organizations look to build capabilities to adapt to these changes, it’s important to integrate formal learning and change management within portfolios. In our survey, while the data did not show a huge impact on change efforts, we noticed that as the organizations evolve portfolio capabilities, they usually embed OCM efforts only after the process improvement efforts are set.
Enabling and equipping users to adopt a change can sometimes have unplanned results, so it’s critical that organizations plan ahead of time to avoid or mitigate the risks. Planning and managing initiatives can lead to faster adoption and an increased appetite for further change. Embrace agility in planning to accept change and recognize that there will be some initial dips in productivity before it becomes comfortable.
5. Embed tools, data, and collaboration in the portfolio. Inconsistent portfolio data across projects within a portfolio results in ineffective reporting and data aggregation, which can lead to poor decision-making. While business tools have their own specific audiences, bringing together relevant business tools and technology data to gather insights can result in a portfolio ecosystem that enables both collaborative planning and decentralized decision-making among users as well as providing continuous feedback on portfolio status.
An investment in your digital future
While some of these leading practices may seem like obvious steps, many organizations do not document key details in one place and often go off track. Portfolio management can seem like a great initiative that is exciting to begin, but is sometimes executed in a completely undisciplined manner. Investing in portfolio management can have a tremendous impact on organizations’ overall digital transformation mission, simultaneously demonstrating short-term, immediate impact and positioning an organization to respond to future disruption. Key to this, however, is managing the portfolio in a disciplined way that balances risk and return.