Strategic portfolio management (SPM) describes the processes and tools that businesses may use to align available resources to meet strategic goals.
Time, resources, people, tools, budgets, etc., are all limited. As such, decision makers often must select which projects, products, programmes, or initiatives (“investments”) to pursue, and which to abandon. Generally, these decisions are based on several factors, with perhaps the most important being how well these investments align with the organisation’s strategic goals. If the initiative in question does not support desired business outcome, then it may be a suitable candidate for elimination. On the other hand, initiatives that align well with strategic objectives should be prioritised.
SPM helps organisations better identify and support those investments that are best suited to meeting strategic objectives and desired outcomes that drive the most value.
Everything that an organisation does may be a part of the strategic portfolio. This includes change initiatives aimed at improving how the business interacts with customers, promotes products or services, improves employee productivity, and more.
Together, these components of the strategic portfolio help inform important business decisions about which actions should be pursued to positively impact the company and help it reach its goals.
Strategic portfolio management differs from traditional program and project management solutions, in that it is not primarily focused on how the projects, programmes, products or initiatives themselves are managed. Instead, the main concern within strategic portfolio management is aligning business strategy with work. This enables decision makers to plan, deliver, and track value across different methodologies and structures. In other words, it’s designed to ensure that the right activities are being completed to further business goals to align the organisation.
With this in mind, businesses may enjoy several valuable advantages from effective strategic portfolio management. These benefits include the following:
The tools that support strategic portfolio management help simplify project-vetting processes. Companies can easily identify profitable investments while avoiding wasting resources on those initiatives that are less likely to succeed or those not aligned to the organisation goals. This helps improve business efficiency by not only identifying and eliminating bad investments, but also by streamlining how organisations approach these investments in the first place. This enables the organisation to focus on the right things to achieve the right results.
Prioritising investments based on their potential for alignment with strategic goals is not a new concept—program portfolio management, agile financial management, strategy management, integrated IT portfolio analysis, and other disciplines all have a hand in achieving strategic results. Where SPM differs from more-traditional approaches is in its ability to bring these disciplines together. Instead of each task being performed by a different team, strategic portfolio management cohesively connects related disciplines together in such a way that any change is instantly visible, and immediately accounted for through every related activity.
The modern business world is one of unpredictable and continuous change as new technologies and regulations place even greater pressure on organisations to deliver—and fast. The need for organisational flexibility, competitiveness, innovation, and speed become driving factors that thwart disruption. To keep up with changes as they occur, companies need the agility to pivot their strategies at a moment’s notice. Strategic portfolio management empowers organisations to quickly define strategy, set objectives and key results (OKRs), align roadmaps, create budgets, and secure resources to account for new strategies as change occurs.
Finally, and most importantly, strategic portfolio management gives teams a complete picture of their available resources, maintaining focus on long-term strategy and vital objectives even when faced with emergent situations. SPM helps ensure that businesses can operate distraction free, aligning every process and team in such a way that it supports the overall goals of the company.
Different organisations across different industries will likely take unique approaches to the process of creating and implementing a strategic portfolio. That said, there are four basic stages to this process that most businesses should be aware of.
Before any organisation can start aligning their resources, they need to understand what it is that they are trying to accomplish—the desired business outcomes. First, assess and understand the strategic goals of the organisation, including both short- and long-term objectives. Second, take inventory of all available resources, including budgets and people. Lastly, review established priorities. Planners and project management offices (PMO) with resource managers can then prioritise and categorise the investments. This step also includes identifying tasks and projects that are not contributing towards strategic success, so that their resources may be redirected for better use elsewhere.
With a clear picture of the current state of the portfolio, the next step is for the organisation to select key business metrics through which they may gauge success. By monitoring process performance, the organisation can identify areas that may require course correction to keep operations aligned with the current strategy. One approach is to establish a phase-gate process to divide traditional projects into smaller, more manageable steps. Analyse these steps to confirm that they support the larger strategic goals and adjust where necessary. Additionally, organisations may incorporate Agile or Hybrid project management methods of working.
In this stage of the process, organisations review their resources and how they’re being used, eliminating any redundancies that they may find. They enable planners and managers to select, prioritise, and schedule the right work continuously while aligning teams, driving efficiency, and staying on strategy. Additionally, it’s important to consider emergent issues or other potential risks that may cause problems. All tasks and other portfolio items must be correctly balanced and aligned with one another to ensure that everything is functioning together consistently.
With the situation assessed, all resources accounted for, metrics established, and portfolio items aligned to established business goals, the portfolio management process is more or less complete. However, there is one final stage that is nevertheless extremely important—ongoing management. The management stage involves tracking the portfolio and all related items, making changes where needed to maintain priorities and continue progress towards business goals. This may also include revisiting budgets, reassigning resources, or even delaying or cancelling projects. Because any active portfolio will require close management, this stage is one that continues indefinitely. A key aspect of SPM is having a single, integrated view that shows all work (pending, ongoing, and completed) in the context of your strategic initiatives, enabling organisations to see actual progress towards key objectives, identify trends that may indicate challenges or opportunities, and analyse the impact of potential pivots.
As previously addressed, strategic portfolio management brings together a number of different disciplines. Here, we identify several important components of modern SPM:
Operating models are used by enterprises to visualise and organise how the organisation operates, bringing together customer offering, business capabilities, and corporate structure to deliver value to customers in a way that is aligned with the organisational strategy.
Portfolio management enables teams and business leaders to take a holistic view of all information technology across the entire enterprise, supervising, controlling, and maintaining resources throughout the organisation.
Financial management helps align costs with business strategy, with an emphasis on accurately forecasting the impact of cutting costs in different areas.
Risk and security management is used to identify potential dangers and to better secure any areas that may present security weaknesses or non-compliance issues. This component provides insight into which systems may carry increased risk, what those risks are, and how best to respond to said risks.
Enterprise architecture governance describes the structural layers of complex business systems and enables organisations to better align their resources and tools with the rest of the business.
Working with limited resources is a fact of modern business. To ensure that those resources are being put to the best possible use in driving business objectives, organisations need powerful strategic portfolio management tools, backed by reliable data and efficient digital workflows. ServiceNow, the leader in IT management solutions, has the answer.
Built on the award-winning Now Platform® (a single, unifying platform that gives you complete, accurate, and timely insight into every aspect of your business, enabling innovation at scale and speed), ServiceNow’s Strategic Portfolio Management (SPM) is the only enterprise SPM solution capable of turning uncertainty into opportunity. Designed as a marriage of methodologies, capabilities, and processes, and supported by fully integrated technologies, ServiceNow SPM empowers decision makers with the insights they need to evaluate and fund the investments that matter most. Connect strategy, delivery, and vital business outcomes regardless of changes to industries or markets, and act with confidence built on unmatched agility and effective digital insights.
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