A strategic portfolio management is the process of generating, managing and evaluating a portfolio of strategic proposals focused on delivering long-term results and benefits. Its objective is to manage the portfolio with the constant evolution of the strategy of the business, and maximize value from business investments.
The business’s strategic purpose and its portfolio of initiatives are very much interconnected, and drive one another. Defining the strategic objective of the organization shapes the foundation on which a portfolio of proposals can be established. The results and benefits that arise from the portfolio serve to carry the strategy, and make it possible to assess the efficiency of the strategy and proposals in delivering value for the business.
Often businesses underestimate the significance of maintaining a portfolio of their change proposals. Strategic portfolio management, applied well, will:
- Provide the essential link between the realization of the business strategy and key strategic initiatives to ensure congruency.
- Provide a prioritization of strategic initiatives that best achieve the targeted changes within budget and time constraints.
- Provide a strong link between strategic development, investment decision-making, business planning and delivery activities.
- Provide a cross-organizational approach to managing the risks, capabilities and resourcing issues arising from the interdependencies of the proposals.
- Provide the senior management the ability to direct and manage a portfolio of programs, implementing the corporate objectives and strategy within a dynamic environment.
- Provide focus on strategic initiatives rather than project inputs, and use performance measures and reporting based on benefits realization, rather than direct program deliverables/metrics.
- Prevent poor return on investment on programs and projects that do not support the overall strategy of the organization.
