Maximize Your DX Efforts: 3 Steps to Building an Effective Project Portfolio
The DX Roadmap series is produced by Victoria Fide Marketing with input and oversight from our leadership team and industry SMEs.
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Can you recall your last family vacation? Picture this: you, along with your spouse and children, aged 15 and 8, are exploring the vibrant city of Salt Lake City, UT. You’ve put in the work to plan and prepare for the vacation, and you’re excited to finally be there.
Very quickly, however, you realize that it’s one thing to prepare a list of activities, and another thing to manage the resources and logistics needed to ensure an enjoyable experience for the whole family. You need to balance sight-seeing and hiking, shopping and events, thrill-seeking adventures and rest. Additionally, you need to keep track of everyone’s chargers, sunglasses, and blood sugar levels, while doling out snacks and parental quips when necessary.
In the same way, while the technology roadmap is an essential artifact for planning and managing future initiatives, a project portfolio is a critical component to managing all current projects, including their resources, timelines, and interdependencies. Without a cohesive, synergetic strategy binding multiple projects together as a unified, tactical whole, organizations are doomed to bleed resources in multiple areas and risk never reaching their desired objectives.
In this article, we will examine what comprises an effective project portfolio and how to use it to ensure your efforts are concentrated on the most impactful areas. Armed with the visibility that a project portfolio provides, you will be equipped to make real-time, data-driven decisions that will maximize your digital transformation investments and turn your ad hoc efforts into a strategic path toward sustainable success. Let’s dive in.
The Undervalued Keystone: Reassessing the Role of Project Portfolio Management in Strategic Businesses
Too many CIOs or other executives simply do not have the necessary visibility of active projects to make informed, real-time decisions regarding resource allocation, investments, and direction. Even if they are aware of all projects that are currently being undertaken – which, in our experience is regrettably unlikely – they still may not have the necessary information to understand how each project is supposedly contributing to the organization’s objectives. This results in wasted resources, siloed departments, and an organization that is divided and possibly even undermining its own efforts.
Business leaders who truly want to lead an effective transformation must demand a greater level of organizational maturity, and they must commit to the steps necessary to make informed, strategic decisions. One of those steps is to build a technology roadmap to ensure all projects are aligned with organizational priorities. Another step is to build and manage an effective project portfolio.
What is a Project Portfolio?
A project portfolio is an artifact (a document, diagram, software, or any combination thereof) that compiles detailed data on all ongoing projects within an organization. This is done to guarantee that the organization maximizes the effectiveness and efficiency of its current initiatives. The portfolio is managed by a Project Portfolio Manager (PPM) responsible for overseeing and prioritizing the projects within the portfolio, regularly reviewing it, and ensuring any updates are communicated. This allows executives and relevant stakeholders a holistic view of all active initiatives and their dependencies, risks, and resources.
An effective project portfolio significantly enhances visibility across all projects, leading to more data-informed decision-making and ensuring that resources are distributed optimally across projects. Moreover, it fosters efficient communication by providing a clear overview of project statuses, which in turn leads to heightened stakeholder engagement by keeping all parties well-informed and aligned with project goals and business objectives. This enhanced collaboration, facilitated by better visibility and communication, ultimately contributes to the successful completion of projects and the achievement of strategic objectives.
3 Steps to Building an Effective Project Portfolio
Anyone can make a list of current projects and call it a project portfolio, but to reap the true benefits of effective project portfolio management, there are a few key steps you must take.
Step One: Select and Prioritize Projects
To build an effective portfolio, you must begin by identifying and selecting projects based on their alignment with the overall business strategy, potential for ROI, and resource availability. Your technology roadmap will greatly inform this project selection, allowing you to select projects in the most logical order.
Additionally, you must consider whether your organization will be able to achieve success with the projects simultaneously. The best combination of projects involves a healthy mix of high-risk versus low-risk and long-term versus short-term projects. By balancing these projects, resources can be more effectively allocated across departments, enhancing the probability of meeting deadlines successfully.
Step Two: Gather and Track Information
Once you’re certain your portfolio showcases a diverse collection of projects that mirror your priorities and demonstrate your ability to manage them successfully at the same time, your project portfolio manager (PPM) must gather and track information for each project across three main areas. This information will continuously evolve and should be regularly reviewed and updated by the PPM to ensure accuracy. Any changes to the portfolio must then be communicated to the project teams, executive teams, and all relevant stakeholders.
Resource Allocation:
Managing resources effectively is crucial for the success of any project portfolio. The PPM must have a clear understanding of available resources and how they are being allocated across projects. This involves tracking resource utilization across projects, identifying potential conflicts or overallocation, and adjusting as needed to ensure the right resources are assigned to the right projects.
For example, imagine you have a project to improve your manufacturing operations, a different project for sales operations, and another for warehouse management. On the surface it may seem that you could execute all these projects concurrently as they primarily affect different departments. However, since they all involve financial transactions and require time and resources from the finance team, you may need to consider staggering them to avoid overwhelming the financial department simultaneously.
Another vital resource to consider is your team. Imagine a situation where you have an outstanding project sponsor known for delivering high-quality outcomes. However, if he is overseeing multiple projects at one time, some details might slip through the cracks and the projects may suffer. Strategically assigning project managers and sponsors is crucial, ensuring that the right people are overseeing the right projects and minimizing the chances of burnout.
Risk Management:
Every project comes with risks, and the PPM must be able to identify, assess, and mitigate potential risks for each project in the portfolio. This involves regularly monitoring risk exposure across projects, creating contingency plans, and communicating any changes or updates to stakeholders.
Imagine that you have a team comprised of senior members having significant experience with current processes and operations. However, the technology platform they have been using for years is now unsupported by the tech manufacturer and now they must upgrade to a modern platform. In your risk assessments, you’ve identified that the team is showing resistance to change. Throughout the project, you will need to monitor the levels of resistance and let it inform your risk mitigation strategies, whether that’s incorporating additional testing, training, or other change management activities to ensure everyone is comfortable with the changes.
Financial Management:
Digital transformation projects require significant financial investment, and the project portfolio must have a clear understanding of budget allocations, expenses, and potential returns. The PPM will track project budgets, monitor spending and financial health, allocate funds to different initiatives as needed, and ensure that projects are on track to deliver the expected ROI.
For instance, consider a company currently undertaking a critical project to modernize their core IT infrastructure. As the project progresses, the scope expands beyond the original estimation, straining the project budget significantly. By reviewing the project portfolio, however, they were able to assess the financial health of all ongoing initiatives and identify areas where funds could be reallocated without jeopardizing other projects.
Transformation is not easy, but it doesn’t have to be impossible. Take control of your project’s success today and schedule a free 30-minute consultation to find out how Victoria Fide can equip you for transformational success.
Step Three: Report and Communicate Changes
Having clear, concise, and consistent reporting is crucial for the success of a project portfolio. The PPM must regularly report on the status of each project, including updates on milestones and KPIs. The PPM must also provide a visual representation to communicate risks, budget, and any changes or updates. This allows stakeholders to stay informed and make real-time, data-driven decisions.
A critical component of effective reporting is consistency. When project managers report project statuses in different ways, it becomes challenging to accurately compare progress across the portfolio. It may also hinder other stakeholders’ ability to draw meaningful conclusions to support strategic decisions. Using a consistent reporting methodology within the same framework ensures unified portfolio-level tracking, which is crucial for accurately identifying issues and areas of risk or impact. This approach allows for informed and effective decision-making.
Where The Magic Happens: Real-Time Decision Making
The project portfolio is more than just a list of all active projects; it is a tool that continuously adapts to the evolving information and status of the organization and its projects. This fluidity enables executives like you to make informed decisions about project investments, strategic business moves, and resource allocation. Any shifting priorities or decisions within the organization should be reflected in the portfolio, while on the flip side, any efforts within the organization that do not align with the portfolio should be terminated. This two-way, real-time communication fosters an agile culture dedicated to continuous improvement and efficiency.
Let’s revisit the example of the family vacation. If you had planned to take a morning hike only to wake up to rain, flexibility is key. You will need to adapt and make another plan, whether by acquiring rain jackets and umbrellas or opting to go to an indoor climbing wall instead. When it comes to digital transformation initiatives, they never go 100% to plan. If you want to increase your chances for success, you must be able to monitor the risks, resources, and contexts to make data-informed decisions in real time.
Real-time monitoring and decision-making requires your PPM to keep the project portfolio up to date and review it on a weekly and even daily basis. Your project portfolio will inform decisions such as resource allocation, deadlines, responsibilities, and more, ensuring that all efforts are aligned with the overall business strategy. Gaining this type of visibility empowers you to evolve from a business leader to a strategic innovator.
Maximize Your DX Efforts: Growing Toward Project Portfolio Management
A well-organized project portfolio can alleviate feelings of being overwhelmed and provide a clear starting point, answering the perennial question, “Where do we even begin?” Nevertheless, achieving this requires considerable effort and management, making the role of a skilled project portfolio manager (PPM) crucial. Your PPM will select and prioritize projects based on your technology roadmap. They will collect and regularly update essential information on resources, risks and finances, and effectively communicate progress and changes to the project team, executive leadership, and stakeholders.
It’s important to note, however, that building and managing an effective project portfolio may not be immediately possible for every organization, depending on their level of organizational maturity. This is a process of continuous improvement, and it will continue to evolve and become more and more effective as you progress and commit to strategic, data-informed decisions.
If you’re ready to lead more effectively and maximize your organization’s efforts, begin by building a project portfolio. Schedule a consultation with Victoria Fide today and meet our team of digital transformation experts. We combine industry best practices with business prowess, and our Proven Process for Transformational Change can equip any company to succeed in leveraging technology to bring about positive, transformational change.
Don’t pass up the opportunity to lead your organization to success with a trusted advisor that understands the intricacies of digital transformation. Contact us now to start your transformational journey and subscribe to our LinkedIn newsletter for insights and practical tips to help you succeed in your self-directed digital transformation (DX) initiatives.
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