Managing Complex Environments Requires Portfolio Management

By:  Chris De Francisci, PMP, CPP, CGEIT, SMP, Center for Connected Government – MITRE, Enterprise Strategy & Transformation Practice, Business Strategy- T871
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Organizations and businesses today are faced with increasingly complex management situations and a massive amount of data to parse in making decisions that affect the Mission, Vision, Goals Objectives and Strategy (MVGOS). Deciding where to invest the organization’s funds and allocate resources for maximum benefit and realize the strategic objectives of the organization requires consistent oversight and accurate information. Successful organizations realize that there is a proven technique that leads to effective decision making and strategic allocation of funds and resources.

Enterprise Portfolio Planning (EPP) or Portfolio Management (PfM) brings in information from multiple portfolio components (e.g., programs, projects, systems), and views portfolios as logically grouped collections of investments to be managed for an optimal return. Some characteristics of EPP are:

      1. The coordinated management of portfolio components to achieve specific organizational objectives.
      2. Providing information to a governing body facilitating decisions that control or influence the direction of a group of components (e.g., sub-portfolios, programs, projects) to achieve specific outcomes.
      3. A business process, that decides which projects, programs, and other initiatives will be undertaken over a given period of time; the criteria for selecting those initiatives, and the active management of the initiatives through their life cycles to ensure that benefits will be realized, including their termination.
      4. A collection of projects or programs and other work that are grouped together to facilitate effective management of that work to meet strategic business objectives. Projects or programs in a portfolio may not be interdependent or directly related.

The overall portfolio reflects investments made or planned by an organization. It represents the work that’s selected to be done, but not necessarily work that should be done. It is therefore important to look at an organization’s investments and determine if the investments align with the organization’s MVGOs . If work does not align with the organization’s strategy, then it is incumbent upon the organization to question why the work is being done, review the investments, and re-prioritize the work.

EPP or PfM brings together critical areas of organizational management:

      • Strategy
      • Governance
      • Performance Management
      • Risk Management

The main question asked by management is not “are we doing things right” but “are we doing the right things?”. EPP provides organizations with structured methods for selecting, evaluating, and managing investments that best support their strategic outcomes and achieve optimal value. EPP provides the opportunity for agency leaders to make decisions that control or influence the direction of investment components as they work to achieve specific outcomes.

Implementation of EPP takes time and requires a cultural shift in the organization to a data-driven mindset. A focus on optimizing the portfolio results in the organization delivering greater business value, maximizing resources and using an evidence-based strategy for choosing investments. As experience with the EPP methodology is gained, senior managers become more proficient in dealing with the complexities and challenges of today’s increasingly dynamic business environment. The ability to exercise, in concert, strategic planning, governance, program and project selection, performance management, and risk management, better enables the organization to achieve it’s MVGOS.

1Dictionary of Project Management Terms – Third Edition, J. LeRoy Ward.
2The Standard for Portfolio Management – Second Edition. PMI Global Congress, 2008.