The operating environment for organisations is undergoing constant and accelerating change. As a result of these dynamics, the traditional project list has become a bottleneck. It merely lists what is being done, but fails to answer management’s critical questions. How do projects support the strategy? Where are resources actually being allocated? And how can we change direction quickly? 

In this crossfire of pressures, portfolio management – which often begins with a project portfolio – can help. A project portfolio helps to establish common terminology, processes and structures, which increase transparency and serve as a means of communication throughout the organisation. 

Although a project portfolio significantly improves management capabilities, true strategic steering can only be achieved in a multi-portfolio environment. In such an environment, multiple portfolios are managed as a single entity – linking projects, ongoing investments, applications and the associated risks directly to strategic objectives. 

Full visibility from projects right through to strategy 

When all activities are measurable and linked to strategy, decision-making becomes reliable and manageable. The quickest and most significant business benefit is the monitoring and optimisation of resources and finances. 

Portfolio management ensures that the right people are doing the right things at the right time. At the same time, it improves cost control. For example, data on the application portfolio reveals which applications the organisation uses and which ones can be phased out. 

“This prevents duplicate purchases and reduces maintenance costs. The data generated by the portfolio measures not only euros, but also improvements in operational efficiency,” saysAsko Pulkkinen, Product Manager at Hypergene. 

As every project leads towards something new, change management is inevitably linked to portfolio management. Portfolio management ensures that project choices are directly linked to the strategy and makes it easier to prioritise them. 

“When operations are measurable, reportable and manageable, the organisation gains a new level of insight into its decisions. Data-driven decision-making gives management the confidence that limited resources are being channelled towards generating the greatest benefit,” explainsMarita Tuoma, Sales Lead Finland at Hypergene. 

Four steps from Excel silos to strategic data management 

Realising the benefits of portfolio management requires clear ownership. Generally, the executive team has the final say on strategic decisions, but it is worth clarifying who owns which portfolios. For example, the application portfolio typically falls under the remit of the Chief Information Officer, whilst the investment portfolio falls under that of the Chief Financial Officer. 

“Portfolio management is a bit like a flock of migratory birds. When one leads the way, the others follow. It requires leadership and a shared direction,” explains Tuoma. 

The transition to portfolio management is a four-stage development process. Initially, projects operate in decentralised silos. The next stage involves standardisation, during which common templates and a systematic monitoring process are established. In the third stage, true portfolio management is achieved: management is balanced and projects are continuously prioritised in line with strategy within a changing environment. 

The fourth stage is the multi-portfolio environment and strategic integration. At this stage, portfolio management expands to cover other portfolios as well, such as application, risk and strategy portfolios. As a result, the organisation optimises its entire operations. “The maturity of portfolio management grows in stages. Initially, it involves monitoring and reporting, but ultimately it is managed on the basis of data,” says Pulkkinen. 

When a portfolio is managed on the basis of data, it makes senior management’s work easier. Standardised and visualised reporting provides a clear overview of project progress and enables a faster response to external risks or changing circumstances.