Portfolio management is about building your foundation
Recently, I renovated my house. That actually involved a collection of projects, some of which involved the foundation: electricity, heating, plumbing and lighting. The choice of what and how was mainly made together, as a family. But we deliberately kept some subprojects out of the central group process. For example, the home office in the extension, with all the specific functionality needed to do your work well.
This renovation involved miniature portfolio management. The project at my home illustrates why organizations do this and what ultimately makes the difference in the decision-making process. With portfolio management, you can adequately address organization-wide challenges by thinking from the expected value for the whole. The question is: which projects do you include in this discussion, and which do you not? That depends on how ‘loosely coupled’ they are…
Traditionally, you determine which change projects have the highest priority and then allocate time and budget accordingly. But not everything is part of this centrally led discussion. After all, by delivering the right products and services, business managers must achieve results that are in line with the objectives. The what and how of commercialization towards the customer, market or partner ecosystem is a matter for the director responsible.
In many organizations, this is shifting towards prioritization within agile teams, who are responsible for products with associated functions and customer requirements. Budgeting involves a Dragon’s Den-like setting, where business cases are pitched with a view to the required funding. In the agile world, the product manager or product owner has a key position.
Products and services with which organizations distinguish themselves in the market and achieve business results are relatively ‘loosely coupled’. They are largely independent, but do use the organization’s facilities, support activities and infrastructure. There are always things that need to be organized centrally. For example, when security, finance or compliance are at stake. For that basis you make use of centrally organized services. In the case of my house, good locks, connected smoke detectors and a certified alarm system together ensure that the workspace is protected – you don’t make up a separate solution for that.
If things are loosely coupled ‘at the front end’ of the business, i.e., operate independently of other systems, then the business director or product manager can arrange distinctive matters themselves. If there is in fact interconnection with, for instance, an ERP system or other IT-legacy, then adjustments must be included in a centrally managed prioritization. Who or what is up first is a matter for business and IT to weigh up. The person responsible for resource planning has a key position here, together with colleagues who are also directly dependent on their business goals and results. You must keep the director of the distinctive business at the front end out of this as much as possible.
The colour of business activities
In order to support our clients in the best possible way, Anderson MacGyver maps out their business activities and the supporting IT in detail. Depending on the dynamics and differentiation, the business activities are given their own colour. Green, blue, orange and purple indicate the areas in which, for example, investment is needed to keep the basics in order, where efficiency can be gained in supporting technology and where data and technology can increase direct business value.
The distinctive, loosely coupled business activities should therefore be kept as far as possible from the central portfolio discussion. In this purple domain, it is mainly a matter of assigning them to the right business unit, board member or team. Major changes in the other colors are preferably part of a widely supported prioritization. This is also the case at home. Because nobody wants to end up without electricity and in the cold in a poorly secured house.