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Strategy deployment through portfolio management - Portfolio management in practice - EY - Global

Strategy deployment through portfolio management

Portfolio management in practice

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Portfolio management helps organizations steer their project portfolio with a controlled amount of risk.

The portfolio management process itself is a process that is typically executed a couple of times a year.

Although it is usually tailored to match the organization’s type of business, culture and company size, there are usually common key steps:

  1. Translate the strategy into initiative
    The strategic objectives are confirmed and linked to the existing initiatives. Strategic initiatives — collections of programs and projects that are designed to help the organization achieve its targeted performance — are the means through which a vision is translated into practice.

    Mapping will reveal “unsupported” or “poorly supported” strategic objectives, which are objectives that do not have, or have an ill-defined, initiative to support it. For these objectives, a new initiative is defined or the initiative is optimized.

    This step will also detect existing initiatives within the organization that are not aligned to any strategic objectives.

  2. Identify programs and projects
    Initiatives, defined at a high level, are translated into project charters that should include action plans, a defined scope, a business case and a risk assessment. Risk plays an important role in this step.

    Too often, organizations define the scope of their programs and projects too broadly. As a consequence, organizations may set the parameters too wide and miss their objectives, resulting in a high likelihood of failure.

    A critical success factor in this step is to take a phased approach by cutting strategic initiatives into small manageable programs that deliver specific, measurable business benefits.

  3. Optimize the portfolio
    The optimized portfolio is prepared including a proposal to stop, start, accelerate and slow down programs and projects, using a consolidated overview of all of the organization’s programs and projects, including the proper intelligence to facilitate this process.

    Overviews typically contain information about performance to budget, resource requirements, risks, business benefits, links to strategic objectives and interdependencies. Based on the organizations’ defined decision framework, the organization is now able to select and prioritize programs and projects optimized for the organization.

    Key criteria of the decision framework include the amount of resources required and management of interdependencies, and risk.

  4. Approve the portfolio
    Organizations typically invest a material percentage of their revenue in programs and projects. For this reason, the organization’s executive management should formally approve the optimized portfolio beforehand.

    The portfolio provides executives with the additional intelligence needed to support their decision making.

  5. Identify risks and associated remediation strategies
    The programs and projects are reviewed in accordance with their risks and issues, which enables enhanced insight and decision-making. In practice, these are the programs with the highest economic value or the greatest level of risk to the organization.

    The information retrieved from such risk reviews allows an organization to feed this into their portfolio optimization process and take corrective actions on troubled programs.

    Organizations need to focus their risk management efforts on the risks that matter. Large, complex and risky programs should therefore receive the most attention in an organization’s efforts to control their enterprise transformation.

A holistic portfolio approach enables an organization to have a centralized overview of all ongoing initiatives. Executives will be able install monitoring of the key risks and take that into account in their decision-making.


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