Strategic Portfolio Management: A step up from PPM

Strategic Portfolio Management
Peter Kestenholz
Founder - Projectum

PPM has long been the name of the game, encompassing the way organizations select and drive projects.

However, as modern organizations evolve it has become clear that there is a potential to evolve.

For a long time, PPM has been focusing on maximizing the return of investment, aligning processes, and streamlining information flows.

However, most organizations are a hybrid organization, that is they don't run a common methodology or utilize the same tools and software. Rather, half the organization may be agile while another part is creating products or manufacturing with strigt deadlines, and others are running maintenance or delivering continuously in a way that clashes with other parts of the organization.

That’s where SPM comes in.

What is Strategic Portfolio Management?

Strategic Portfolio Management puts strategy first: aligning the portfolio according to strategy and practicing decision-making that brings the portfolio closer to the overall goal.

But this doesn’t mean that your efforts have been wasted. But you can still gain a lot from shifting your focus from project execution to strategy execution.

The difference between SPM and PPM

A lot of elements of PPM are also part of SPM. Both involve managing portfolios and getting good results; however, their focus can vary somewhat.

In short, the key differences can be summed up like this:

PPM drives projects. SPM drives strategy.

So, where PPM often keeps the focus on project execution, SPM keeps long-term organization strategy in mind.

Where PPM ensures efficient execution, SPM aims to align projects with the strategic goal so projects are feasible as well as contributing to your company vision, both now and in the future.

Where PPM decisions often revolve around project feasibility, risk management, and resource management, SPM takes it a step further and includes the strategic relevance of projects, how they impact the business, and the overall portfolio balance.

Strategic Portfolio Management is not just about the projects. It’s about making the parts fit together in a way that drives strategy forward.

PMO by Design

No matter what methodology and technology your organizations uses, we not only support it, we understand it.

How to get started Strategic Portfolio Management

SPM is the obvious evolution from PPM.

Strategic Portfolio takes things a step further, moving away from just doing projects well and getting results but also taking the overall timeline into consideration, ensuring that the right projects deliver the right value at the right time.

SPM can be difficult to master as it requires doing all the aspects of PPM and more. However, with SPM, you get a more cohesive organization that is aligned in moving forward toward a common vision.

The best way to begin SPM, is to get clear on your strategy. Using tools like OKRs has been popular for SPM organizations as it gives an efficient way to visualize and communicate the strategy – on all levels of projects and portfolios. Read our guide to OKRs here.

The next step is finding a tool that can manage projects and initiatives according to that strategy.

The right Strategic Portfolio Management Solution

Sounds great, right? Well, according to Gartner, “Only 16% of organizations are highly effective at all three key attributes of strategic portfolio management: portfolio alignment, ongoing portfolio flexibility, and value-driven decision making.”(Gartner)

A lot of that is down to not having the right solution that can manage those elements.

The right SPM solution can

  • Improve Portfolio planning and prioritization
    • Defining metrics and comparing projects that make up a portfolio is key in creating portfolios that align with strategy and deliver results. The right portfolio management solution can evaluate and compare projects and investments based on strategic objectives, resources capacity, and potential value.
  • Resource Management
    • Efficient allocation and management of resources are what make an organization and its projects run smoothly. With an overall strategic overview, the focus shifts from just having resources to complete a project to having the right resources and managing depencies between projects that can, ultimately, benefit the execution.
  • Monitoring Performance and Reporting.
    • tracking progress and performance of portfolios and projects against strategic goals is what keeps you on track. Using OKRs or KPIs can help you communicate alignment in the organization while still measuring against tangible progress.
  • Support integration and collaboration
    • Seamless integration with project management tools will help improve data collection and collaboration across teams and departments. This is enables you to manage portfolios and measure, in real-time, the progress of strategic objectives against project execution.

SPM in Projectum

In Projectum, we've updated Power PPM to handle SPM objectives. Built on more than 20 years of experience, Power PPM includes strategic elements, like OKRs, so the execution of projects can be tracked according to strategy. Furthermore, we’ve added the What If module that lets you simulate on strategy with your own data to see, in real-time, the strategic consequences of your portfolio.All these elements set you up for succeeding with SPM and thereby succeeding with your strategy, so you can create results.The right results.

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Peter Kestenholz
Founder - Projectum

Peter Kestenholz is a successful entrepreneur and business leader with 20 years of experience from founding and growing the company Projectum. Peter is a recognized Microsoft MVP for 13 years straight, Fast Track Architect for the second year in a row the second year and a member of the Forbes Technology Council.

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