In our last blog, we reflected on the fact that within the next four years, most organisations will have an Enterprise-wide PMO, supporting strategy definition to strategy execution, focusing on choosing the right investments.
Enterprise-wide Portfolio management was defined as an ecosystem, containing an integrated set of strategic processes and arrangements that together enable the most effective balance of investments in change and other activities.
Shortcomings of existing maturity models were discussed, and eight distinctive features were established that will help recognise mature portfolio management organisations during a very rapid evaluation.
The eight features, plus extensive practical experience, gained over many years of management consulting across almost any industry, is reflected in my framework, measuring the maturity of Enterprise-wide Portfolio Management across six different themes.
1. Strategy and Leadership
As reflected in the above definition of Enterprise-wide Portfolio Management, the corporate scope is one of the determining factors as far as strategy and leadership are concerned – portfolio management should not be an activity restricted to the “IT” domain, and even more worryingly, to the change/project element within the overall investments. Strategic alignment of the investments to company objectives does not occur and consideration for the mix of investments is seen as prioritisation at best. Target setting by the leadership is deemed as too cumbersome and difficult and is therefore replaced by goal setting around constraints. Looking at concepts such as ‘Beyond Budgeting’ or ‘Zero-based Budgeting’ is pushed even further down the line.
2. Corporate Culture
Understanding and addressing Corporate Culture is arguably the most difficult aspect of Enterprise-wide Portfolio Management. The type and level of bureaucracy defined by the level of standardisation and conformity is in almost regular conflict with adhocracy. None of this matters if it is not supported by adequate and effective communication. Probably the most effective way of approaching Enterprise-wide Portfolio Management is by setting individual targets in line with corporate objectives and goals.
3. Governance Arrangements
Governance Arrangements comprise of processes and procedures within an organisation to regulate the decision making from top to bottom. These must be complete i.e. covering the greatest number of possible scenarios, while also being clear i.e. accounting for interpretation of these cases that are not covered. Empowerment of individuals by delegation will allow for agility.
Some might be surprised but one of the quickest ways of establishing the maturity of an organisation as far as Enterprise-wide Portfolio Management is concerned is through a view on the Reporting practices. The management and culture should allow for progress and status reporting, as well as a common understanding for the provision of a truthful representation of the facts.
5. Supporting Functions
Supporting Functions starts with having a central PMO with an enterprise-wide remit, supporting all aspects of portfolio management. In order to operate successfully, effective cooperation must be established with several other enterprise-wide functions such as Enterprise Architecture, IT, HR, and Finance, to name just a few.
6. Processes and Tooling
An Enterprise-wide process framework with Portfolio Management recognised as a strategic management capability will provide a good starting point, as long as planning is seen as a core process throughout the organisation where investments also will be re-evaluated on a quarterly basis. Depending on the size of the organisation, the number of investments that are managed throughout an end-to-end lifecycle and other factors, adequate support provided by tooling will be increasingly required.
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Blog post written by Holger Heuss, our trainer for the new two-day Portfolio Management and the PMO course.
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