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As highlighted in our recent article on 2020 portfolio management trends, the field of Portfolio Management, specifically Project Portfolio Management, has changed a lot in the past eight years. And then again it hasn’t. To learn more, Jami Anderson, MIGSO-PCUBED Marketing Manager, caught up with our very own Rich Weller, to look at what it takes to be a successful portfolio manager (PfM) in the field of project management today.
Rich Weller: The primary aspects of the role of the portfolio manager is to provide oversight into the overall portfolio management process. This involves ensuring that each potential initiative completes a business case. It also means guiding the respective teams through the process of estimating and forecasting each initiative, and appropriately allocating budget to each initiative. Additionally, it includes monitoring the performance of each of the initiatives and communicating the status of the portfolio with all of the organizational stakeholders.
Portfolio Management is different today than it was just a few years ago. The pace of change for businesses is coming faster than ever before. Agile principles, processes, and techniques have infiltrated our portfolio management world. These changes were needed to allow organizations to deliver more innovative solutions at an even faster pace. By applying agile principles, processes, and techniques, organizations are able to change or pivot quickly to redefine their business strategy. The Portfolio Manager today needs to understand how to apply these principles, processes and techniques within any given organization and adapt existing processes to fit with the new ways of working.
For example, one of the biggest changes in recent years is to move away from funding projects and focus on the higher-level initiatives aligned to business strategy. These are the Programs, Value Streams, or ARTs (Agile Release Trains), depending upon the terminology in your organization. This approach removes overhead, delays, and micro-management, and extends that responsibility to the self-managing program team.
Another agile technique revolves around flow. We have learned how to leverage Kanban boards to visualize our work as well as limit the amount of work in process. By introducing the Portfolio Kanban and Portfolio Flow, we can control the amount of change that we are introducing into the organization as well as the impact to costs and resources.
I feel a successful portfolio manager is made of the same kind of material as senior executives. You need strong people management skills, a respect for processes, and an understanding of financial data. Remember, the overall objective is to allocate the right investments to build the right things. The ability to keep the organization’s strategic direction in the forefront of decision-making is absolutely essential.
"You have to know, where does that organization want to go? When it looks into the future, what does it want to have achieved?"
Also, I feel you need to be able to think strategically, yet deploy tactically. You first need to understand what the portfolio is trying to achieve right now, and then you need to understand the strategic direction in which the organization is headed. This is the desired future state.
As a portfolio manager, your responsibility is to ensure that your portfolio is aligned to the business strategy and you have a plan to continuously evolve the organization to that desired future state. A tool within the portfolio managers arsenal to help cascade the intent of that future desired state is a Portfolio Vision. So that is the strategic angle.
To deploy tactically, you need a plan. You’ll need an alternative solution that will allow you to plan at a high level and yet is still flexible enough to adapt to changing objectives. Another tool within the portfolio managers toolbox is the Portfolio Roadmap which can be used to document that plan and to meet those needs.
So, to help facilitate the best possible investment decisions, a good portfolio manager needs to be supported by a rock-solid grasp of the process of idea generation itself. As I talked about earlier, the Portfolio Manager is responsible for evaluating at a high level the business case. Even in today’s agile state, your business case is key. You need to ask your teams these questions:
As. Dr. Shan Rajegopal highlighted in the original article, you need a framework in place to capture all the innovative ideas and then to evaluate which ideas to pursue.
"You need to make sure you capture all the new ideas and improvements that come in - knowing how to handle all that innovation and demand is an important part of being a portfolio manager. Then you need to use a framework to optimize the projects to ensure they're all aligned with the organization's strategy."
We did just that for a previous client. We put together a framework for accelerated innovation to identify new initiatives, prioritize the select few that we would progress, and ultimately build for test. Over a few short weeks, we held four workshops at the client site and generated over 230 ideas. The team then prioritized down to the top six ideas to explore.
In addition to ideation, a strong Portfolio Manager needs to understand the best practices surrounding Optimization (or the selection process), Portfolio Governance, Execution, and Portfolio Benefits Measurement.
The ability to successfully optimize a portfolio in light of an organization’s strategic objectives is absolutely central. You need to be able to take the list of projects and sequence them based on their strategic fit, given the current organization’s constraints in terms of dollars and resources. There is always more work to do than we can achieve. And everyone always has their special projects. So we need a methodology to decide which projects to pursue, best aligned to the current strategy and then sequence those in a way that is achievable. Maybe we can only do a dozen this year, but then we could do another set next year.
At MIGSO-PCUBED, we used to use the analytical hierarchy process in calculating the strategic value of the projects. Originally, we did this in Excel, but today’s PPM Solutions, like Microsoft Project and Planisware, allow you to easily prioritize, optimize, and create multiple scenarios within the Enterprise Portfolio Management tool itself.
So, say, for example, you have a $200 million budget or a certain number of resources. You can then demonstrate how the portfolio would be affected differently if you had to cut it by 10 percent or 20 percent, and show which projects would be forced out depending on the level of cut.
After the project has been kicked off, in the execution phase, it is vitally important to track the benefits. Projects are agreed on and invested in to deliver the benefits as identified in that business case.
You need to keep your finger on the pulse of the portfolio by using your tools and visualizing your data. At any time executives want to be able to see what stage the project is in. What is the health of the portfolio? What is the expected value or outcome from this initiative and am I on track?
However, a lot of organizations are challenged by this. They have a brilliant business case initially, but then after that, no one is following up on the value. If they don’t put the right metric in place to track the benefits, it’s actually a lost investment. A successful portfolio manager ultimately needs to be able to provide that visibility into how the different projects in the portfolio are performing.
My first suggestion is of course to take a training class, or two, or ten. Be a lifelong learner! Never stop trying to learn more.
Second, get certified. If you want to move to the next level, consider working towards certifications. One is the Portfolio Management Professional (PfMP) through PMI. As there are only 625 people with PfMP certifications worldwide, this is a great way to stand out.
Better yet, third, just make it known that you have a desire to become a portfolio manager. Portfolio management as I have hopefully showcased is all about networking. Showing the interconnections of the various projects and there influence on the business. So reach out to both your management team and other Portfolio Managers within your organization to find the right opportunities to be involved with. Learn how they currently operate and offer to assist. Nothing is more valuable than on-the-job training.
This article features excerpts from an earlier article published on www.pcubed.com with Rich Weller and Dr. Shan Rajegopal.
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