Aarni Heiskanen, LJK
Project portfolio management (PPM) is becoming mainstream in corporate governance. While the benefits of PPM are evident the question arises whether the same concept could be used in management at large.
Portfolio thinking has a proven versatility in the industry of management consulting and PPM tool development. The same guiding principles that make PPM so effective work in evaluating ideas and managing strategic assets.
Some years ago, when our company outlined our philosophy of portfolio management, we summarized it in the following diagram:
There are three strategic portfolios and three questions that transform the business strategy into operational reality:
- Idea portfolio—What ideas make us successful in the future?
- Project portfolio—Are we doing the right projects?
- Assets portfolio—Do our assets make our strategy possible?
All three portfolios are interconnected. Ideas turn into projects that create assets. Asset development needs generate ideas or projects. Projects can induce ideas.
Incorporating the three-portfolio model in decision-making and management processes has many benefits:
- It helps align internal development with corporate strategy.
- It creates a traceable path from the present situation into the desired state.
- It improves development efficiency by focusing on the right issues and reducing overlapping development initiatives.
- It promotes open communication about important issues.
If the company is already familiar with PPM, implementing the three-portfolio model is not necessarily a huge effort. Some of our clients have already started managing their IT assets as a portfolio that uses partly the same criteria as their projects. I believe that in the future we will see more companies moving in the same direction.
Read Aarni Heiskanen’s recent Journal article:
“Project Portfolio Management,” ISACA Journal, volume 3, 2012