PORTFOLIO MANAGEMENT

M A X I M I Z E B U S I N E S S V A L U E F R O M T H E T O P

S P Y R O S K T E N A S , M B A , B S C ( I T ) , P F M P, A C P, P R I N C E 2H T T P : / / O P E N - W O R K S . O R G / P R O F I L E S / S P Y R O S - K T E N A S

WHAT IS A PORTFOLIO

A portfolio includes programs, projects, operations

Portfolio

ProgramProje

ct Project

Project

Operations

Project

HOW IT CONNECTS

• An organization may have more than one portfolios, each addressing unique organizational strategies and objectives

• Portfolio groups together Programs, Projects and Operations in order to facilitate the effective management of that work to meet strategic business objectives

• Portfolio management ensures that interrelationships between programs and projects are identified and that resources (e.g., people, equipment, funding) are allocated in accordance with organizational priorities

WHY WE NEED IT

Do the right things vs Do the things rightValue

Value

WHY WE NEED IT

• Balances conflicting demands between programs and projects

• Allocates resources (e.g., people, funding) based on organizational priorities and capacity

• Aligns with organizational strategies by selecting the right programs or projects, prioritizing the work and providing the needed resources

• Measures success quantitatively and qualitatively

• A common place for all processes, deliverables, people, achievements, more value by sharing

HOW PORTFOLIO MANAGEMENT FITS“We believe that we are on the face of the earth to make great products and that’s not changing. We are constantly focusing on innovating. We believe in the simple not the complex…”

Vision MissionPortfolio

Management

OperationsPrograms - Projects

“Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone…”

SelectPrioritizeEnablePerformManage Risk

Build in

ValueDeliver the Value

WHAT WE MANAGE

• Portfolio alignment to strategy• Financial resources• Human resources• Material or equipment resources• Portfolio component performance• Risks

FROM STRATEGY TO PORTFOLIO, INJECTING BUSINESS VALUE

Strategy Management:Successful business value realization begins with comprehensive strategic planning and management.

Organizational strategy can be expressed through the mission and vision of the organization, including orientation to markets, competition, and other environmental factors.

More Business

value

Business value is a concept that is unique to each organization.

Business value is defined as the entire value of the business - the total sum of all

tangible and intangible elements.

Portfolio Management:Optimizes project or program objectives, dependencies, costs, timelines, benefits, resources, and risks.

Allows organizations to have an overall view of how the strategic goals are reflected in the portfolio, institute appropriate governance management, and authorize human, financial, or material resources to be allocated based on expected performance and benefits.

WHAT WE MEASURE

• Change in net present value (NPV) of the portfolio• Return on investment (ROI) of the portfolio• Internal rate of return (IRR) of the portfolio • Percentage by which cycle times are reduced due to the portfolio

• Degree of strategic alignment• Degree to which portfolio and organizational risks have been adequately managed

by undertaking the portfolio components• Recognition of legal and regulatory compliance• Sustainability and corporate responsibility

OPTIMIZE PORTFOLIO

cost

value

Portfolio Identify the right mixHelp it happenFine tuneMonitorAlignCheck Strategy – Propose Change

Portfolio

A CASEPROVIDER OF DEFENSE AND SECURITY IT SYSTEMS AND SERVICES

Before…• Vision: Undefined | Mission: De facto: The provision of defense and security systems and

services. The sale of other IT services where possible

• Activities• Sale of hardware• Sale of third party software• Sale of in-house made software• Procurements Consulting• Structure• Functional departments, Hardware, Software, Development, Consulting, Sales, Finance• Operation• Mixed sales department. All cases handled on a first come first served basis. Limited

knowledge of Project details at a central level• Limited cross functional people. Limited resource sharing. No Performance monitoring

THE PROBLEM

• Doing everything that brings money… or what it seems that brings money• Fireman metaphor for delivery teams• All cases were treated as high priority from sales. No comparison and prioritization based on

actual metrics• Finance had performance results but no process or authority in order to optimize the projects

mix• In order to create more business value, it was almost always essential to increase business

costs• Functional managers assigning more resources to own department projects, not sure when

and why to assist other departments• Lost opportunities (no enterprise level risk management)

THE SOLUTION

• Set an enterprise level PMO with a Portfolio Manager as the head• Integrate the different project management and resource management tools• Set a vision “make the world safer for citizens, assisting those that have to protect us” • Redefine mission to exclude anything out of the core business. Set strategy for growth• Set simple procedures: All new Project Initiation requests pass from sales to the central PMO• Projects are prioritized based on a few basic characteristics, ROI, Degree of strategic alignment• Resource allocation at the central level is based on projects prioritization• Check sub-portfolios performance every 3 months• Make suggestions to the management on where to focus (i.e. Abandon in-house hardware business,

outsource projects with low strategic alignment, create sales pre-qualification forms with details like customer budget, ballpark estimation, and disqualify when lower than certain limits)

• Set specific timeframes for control and actions

THE RESULTS

ProjectValue

ProjectCosts

Number ofProjects

-12M -9M -6M -3M 0 3M 6M 9M 12M

7M

5.5M

6M

7M

8.5M

6M

7M

8M

9M

5.5M

6.5M

6.5M

6 M5.5M

4M

5,5M

5,5M

6.5M

12

1415

13 13

8

9 910

11M

6.5M

11

Established Portfolio ManagementPrimitive -> Mature

THE RESULTSROI: from 14% to 37%

-Better reputation for business-More focused on strategic business areas-More targeted sales efforts-More productive people-More motivated people-Reasonable pace for delivery teams-Increased executive involvement and support for projects-Procedures for control-Procedures for introducing change at top level-At least now it is known how we perform (well or badly)

PUT IT IN WORK, AND KEEP IT SIMPLEIdentify Current Issues, Check Position.

If it feels like this …

• Check if there is some sort of Vision/Mission/Strategy in place• Check Governance and Finance Disciplines• Tailor Made (no method / tool that fits all)• Think about : selection->prioritization-> cross functional resource management->monitor and control->change

Most leadership teams have no idea as to when they must say NO to a new opportunity (Joy Gumz). Change this with quantitative and qualitative checks and Be happy!

PORTFOLIO MANAGEMENT

MAXIMIZE BUSINESS VALUE FROM THE TOP

…EVEN IF YOU LOSE SOME ON THE WAY, YOU WILL GET MORE.

Spyros Ktenas, MBA, BSc(it), PfMP, ACP, PRINCE2

http://open-works.org/profiles/spyros-ktenas

THANK YOU!