Portfolio management is a coordinated collection of strategic processes and decisions that together enable the most effective balance of organisational change initiatives and business as usual. By ensuring that:
- changes to business as usual are agreed at the appropriate management level and contribute to at least one strategic objective
- strategic decisions are made based on a clear understanding of cost, risk, impact on business as usual and the strategic benefits to be realised
- resources and changes are prioritised in line with the current environment, existing changes, resource capacity and capability
- all changes are reviewed frequently in terms of progress, cost, risk, priority, benefits and strategic alignment
It involves the collection of relevant information about the organisation’s investment initiatives, including policy, programmes and projects, and aligning their delivery with strategic objectives, business requirements and the organisation’s capability, capacity (to deliver and adopt change) and maturity.
Portfolio management should not just consider those policy, programme and project commitments comprising the organisation’s change agenda, in terms of resources (i.e. money, people, infrastructure and other facilities), but should also consider the wider business picture taking account of business as usual. Only by understanding and appreciating the organisation’s full suite of commitments, i.e. corporate, policy, programme, project and operational (business as usual), can a fully balanced business portfolio be achieved.
In this context, business as usual is defined as the things done to keep the business operating day to day. By understanding the demands on business as usual, its lifecycles and key events, the delivery of change initiatives through policy, programmes and projects can be timed and managed to ensure least disruption.
The process of developing a portfolio to deliver an organisation’s or department’s strategy will need to take into account operational priorities as well as strategic priorities. In defining the portfolio, existing policy, operational programmes or projects that are not aligned to the strategy may have to be realigned or terminated. Operational programmes or projects may also be put on hold while higher-priority projects supporting the strategy are delivered. There will only be a finite amount of resource available to deliver both strategic and operational change so there will need to be a balance to ensure resources are deployed to best effect.
In practice portfolio management is carried out at many different levels in an organisation, at the corporate level, at directorate or divisional level and within business units.