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Large companies usually calculate their projects in the hundreds, with different departments meeting a wide range of targets. With so many simultaneous activities at the implementation stage, it can be easy for a company’s short-term operations to fall out of alignment with its long-term goals. For better organizing and directing their activities, most companies collect their projects and programs into portfolios – collections of independent projects that may not be connected with each other directly, but can be coordinated to work toward one or more of a company’s long-term objectives. A continuous focus on project portfolio management is essential for maintaining enterprise-wide coherence between project activities and strategic business goals.
Here’s a look at the key challenges that a company must overcome in order to implement a successful project portfolio management strategy. But before that let us consider what project portfolio management (PPM) is.
Project portfolio management includes the centralized management of one or more project portfolios to reach strategic goals. It is a way to bridge the gap between strategy and implementation and ensures that a company can use its project selection and execution success.
Companies use PPM typically to identify the future benefits of a project. It helps to predict risks inherent to new investment (and often competing) projects and make a reasonable decision. Project portfolio management also eases team communication and guarantees that all the parties of projects are on the same page. It’s a valuable tool for receiving the commitment of all stakeholders in the company by providing clients and company executives the wider picture, consistent feedback, an opportunity to manage and mitigate risks. PPM also improves transparency, management, and reporting.
What are the objectives Of portfolio management?
The main goal of PPM is to maximize the company’s benefits that are awarded from the projects it implements. It is required to select only those projects that provide the right amount of value, taking into consideration the appropriate resources as well as the strategic fit with the company’s goals. Other purposes comprise striking a balance in the project portfolio by ensuring a related combination of high and low risk and long term and short-term projects. By establishing an optimal mix of projects, PPM ensures a company is better positioning to achieve its operational and financial goals.
Benefits of PPM
As you can see, there are many benefits to managing a group of projects together. Here is the major set of them:
- Help business executives to take responsibility for projects and to think like “members of the team” not “single player”. Looking at all possible project investments in a portfolio and not as individual projects will provide a balance when prioritizing, selecting, and maintaining projects. By comparing the projects as a portfolio, factors of the portfolio can be managed by adjusting the projects within the portfolio instead of trying to make the changes at the project level.
- Boost the value of project investments whereas minimizing the risk. One combination of high risk with high potential return may not be acceptable by itself, but when mixed with other low-risk projects, it may become permissible to the company. Considering the alignment with corporate goals or the need to bring a new technology or product to market to remain competitive. If projects are perceived as corporate investments in a portfolio, then corporate approval and standards take place at the portfolio level and not at the project level.
- Cut the number of needless projects and make it easier to put projects on hold. Looking at all possible project investments in a portfolio will allow you to see redundancy across the portfolio. Looking at projects by department, division, or line of business won’t provide this clarity. With this view of the portfolio and considering other factors such as alignment with corporate goals or the necessity to bring a new technology or product to market, it will be easier to kill unnecessary projects, reclaim the investment where possible and release resources for more proper projects.
- Improve communication and coordination between departments and business executives. Looking at your portfolio of projects and not individual projects will not only provide a balance when prioritizing, selecting, and maintaining projects; it will improve communication within corporate management by talking about the portfolio as a whole and breaking the barriers between sub-portfolios. It will also mitigate the monitoring of a few projects aligned to a department or a business executive and widen the view to the portfolio and encourage management to work as a close-knit team.
- Allow planners to distribute resources more efficiently. No company has the resources to meet all its business needs in the best of times or when times are tough. Having the view of your resources across your project portfolio and being able to prioritize where to apply those limited resources is the main feature of a PPM. The company will be able to check where the resources are being used and apply a prioritization and approval process to ensure the right projects will provide the most value. When projects are completed or canceled, resources can be redeployed to new priorities.
Before you start taking on the project portfolio, it is important to get yourself the best PPM software. Project portfolio management software can provide a top-down approach to help users manage projects and resources across the enterprise. There is no need to use manual tools or any other applications for each project separately, enterprises now prefer a single corporate system that can give a single version of the state of all projects and portfolios, and transparently show the information needed by senior management.
Project Portfolio Management software criteria for choosing
After the PPM tools review, we underlined a few key points for choosing the best PPM tool fit your team.
- Resource management – Like project management tools with resource scheduling software, PPM software with resource management will help you make better decisions. This includes features for scheduling resources and managing timelines, and projections.
- Financial administration – should help you improve correctness in managing financial projections, with functionality for estimating costs and managing budgets. The best software has the option to manage payrolls and payment invoices.
- Risk management – Risk management tools enable the company to plan respectively, make risk response plans and easily estimate the impact of What If situations.
- Reporting & analytics – With robust, streamlined reports that allow you to see what works and what doesn’t, you set yourself up for future success. Modern portfolio management software must provide multiple options for generating reports. There are plenty of modern PPM tools with great data visualization tools for communicating data to stakeholders.
- Integrations – Because there is no perfect PPM software out there, we need tools that sync or integrate with other project management tools.
How to choose the best portfolio management software for your projects?
Now, you have the insight into the most popular PPM tools out there. At this point, we’ll walk you through the final steps on how to choose the best PPM solution for your organization. Ask yourself these questions when choosing PPM software:
What is your PPM maturity level?
According to the Gartner model by placing it into one of the 5 models:
- Reactive – this accounts for all organizations with an ad-hoc approach to projects. There is a minimal requirement for high-end PPM tools, although they’ll prove necessary for growth.
- Emerging Discipline – the next level of management and approach to projects. It involves the use of basic PPM tools but on a more frequent and advanced level.
- Initial Integration – follows a more holistic approach to PPM. This is the point where a larger organization pattern is needed. Risky decisions could surface, and data tracking must be on point.
- Effective Integration – This is the point where automation becomes necessary, and a manager needs help in order to execute everything on time, and within budget.
- Effective innovation – This is the end-game everyone strives for. PPMs are fully utilized on multiple levels, and an Enterprise Project Management Office is installed to facilitate the execution.
What are the main requirements?
Take the time to plan in detail the requirements that your team has for a PPM tool. Analyze the previous work and the forthcoming projects, and try to make an assessment.
How would the PPM tool fit into your workflow?
Think about every tool you and your team use besides a PPM tool. Check for integration compatibility and see in which part of the project cycle you are going to integrate the newly acquired tool first.
How long to set it up?
Just keep in mind that your current projects might need to come to a short pause in order to fully integrate a new PPM tool. Also, think about the support for different native platforms, like Android and iOS, and fit it into your team.
Easy to onboard
Your team will need some time to learn the new set of PPM tools that are going to be implemented. Consider every step: time to study, training and support from the software developer, etc.
Types of project portfolio management software
PPM solutions are made for businesses managing numerous projects, at a time, with a large workforce. These solutions focus on helping businesses effectively manage resources and prioritize projects.
Small businesses should carefully analyze their need for a PPM solution. Start by understanding the two types of PPM software categories mentioned below:
- Full-suite PPM software: These are advanced tools that help businesses manage an exhaustive portfolio of projects and offer detailed reporting plus collaboration features. These tools help teams identify project bottlenecks, analyze resource utilization, communicate with project stakeholders, schedule project tasks and track project budgets.
- Specialized PPM software: These tools are like slimmed-down versions of full-suite solutions. They offer specialized functionalities that help project managers improve specific aspects of project portfolio management such as reporting or collaboration. In turn, these solutions can offer industry-specific functionalities, such as templatized project dashboards for tracking IT portfolio projects, for example.
We advise you to ask your vendor before taking a solution: Whether their PPM solution is a full-suite solution serving to diverse project portfolio management needs or does it focus on improving certain aspects such as reporting, etc?
Also, PPM tools can be deployed in three different ways: on-premises, cloud-based or hosted.
What kind of solutions will you choose with what features? You might not even think about a custom Project Portfolio Management software for your company. The custom solution will have all features to meet your specific needs and you will be able to add or cut functions depends on your demands. Sure it will take time to develop a custom PPM solution but it will worth every spent dollar on it.