Enterprise Portfolio Management

last edited by: Diane D. Miller PMP on Sep 23, 2009 3:10 PM login/register to edit this page

Contents
1 Attributes
2 Success Criteria
3 Life Cycle
4 Software Tools
5 More Resources

Enterprise Portfolio Management (EPM) is a set of interrelated techniques and/or activities, systematically applied to maximize a company's investment decisions. This involves a centralized view of all major projects within the organization, viewing them as one portfolio or a set of portfolios being led by functional departments (IT, HR, Finance, Marketing, etc.).

EPM differs from IT Portfolio Management in that its scope spans the entire enterprise, versus just the IT Department. IT Portfolio Management seeks to align IT projects with the business strategy. Enterprise Portfolio Management also seeks to optimize the value of all significant projects within the enterprise to deliver on the business strategy as a whole. Decision-makers must therefore not only consider the investment options under their control but also understand how the alternatives play with other components of the enterprise - either creating or depleting value overall.

Proper alignment is essential. Top management clarifies direction and core-competencies; when all projects and programs center around these, profits soar -- or inversely, companies tank. Take your pick. A disciplined approach to portfolio management ensures at the very least the following life-cycle is considered: 1) start-up decisions, 2) investment maintenance, and 3) fulfillment of exit strategy.

Attributes

Techniques include:

  • portfolio planning,
  • investment ranking,
  • portfolio balancing,
  • enterprise resource planning
  • and master scheduling.
Examples of projects to be included in the managed portfolio include:
  • planned mission-critical initiatives,
  • projects spanning more than one business function,
  • projects to develop new capabilities and/or competitive advantage,
  • projects to reduce operational costs related to corporate acquisition or reorganization,
  • and ongoing internal services (e.g. IT support services).
Results to look for include:
  • the quantification of the value of efforts,
  • enabling measurement of progress,
  • increased morale due to mission-clarity and sense of purpose,
  • and objective evaluation of investment scenarios.

Success Criteria

At its core, Enterprise Portfolio Management enables accurate and objective comparisons of potential investments. It allows investment decisions to be made based on the best available information.

To successfully implement enterprise portfolio management, an organization must:

  • embrace transparancy,
  • be forthcoming and honest in investment analysis
  • embrace a consistent set of measures (which can be financial, but can also include balanced scorecard criteria and other less concrete measures)
  • maintain a fair system of gathering metrics
  • and possess competent managers responsible for projects, on-going operations and assets.
Key competencies (according to Meta Group) include:
  • Integrated enterprise-level strategy/planning,
  • architecture
  • and program management

Life Cycle

A successful enterprise portfolio management model happens by purpose, not chance. A life-cycle is custom to each implementation but at the core should include three most basic elements.

Start-up Decisions

  • Also know as green-lighting or business case approvals, this stage addresses the question: What criteria are we using and how are we consistently scoring candidate projects to formally proceed with?
  • Keep change records about the decisions for historical reference. Sometimes, projects denied have a way of reappearing under different names. Sometimes a fresh approach is good, but don't be afraid to refer to previous dialogs.
Investment Maintenance
  • The joy is in the journey, and that joy can be measured. Are the expense levels to plan, is the revenue or output on track? Are new external forces at play that cause us to rethink our initial decision?
  • This is the boring middle... but if neglected, could absolutely drain the organization's bank.
Fulfillment of Exit Strategy
  • Also known as "sunsetting", "retirement", or "legacy plan", every project at some point should have an exit plan. In this case, an exit is not bad, it's good. It could describe a new release, or a merger -- it depends on the nature of the item under consideration.
  • Without this, the tendency is to let nature take it's course. That's great for the wild outdoors but an expensive and generally irresponsible course otherwise.

Software Tools

The Projects@Work PPM Software Evaluation Tool is a free vendor-agnostic software evaluation tool.

More Resources

The Enterprise Portfolio Management Council (EPMC) is a non-commercial organization whose goal is to support and accelerate the development of Enterprise Portfolio Management processes, tools and techniques, for the betterment of the industry at large; and to create a forum where like-minded corporations can work together to improve the quality of their on-going portfolio management deployment. Portfolio management capabilities, though still in its early stages of maturity, has the potential to become a significant driver in helping corporations to expand market share and to improve efficiency, lower costs and reduce waste. With hundreds of billions of dollars spent each year on internal projects and programs, portfolio management has the potential to significantly increase the return on internal investments.

AAA EPM Case Study by San Retna, Chief Portfolio Officer for AAA of Northern California, Nevada and Utah.

Maximizing Return on IT Investments With Enterprise Portfolio Management by San Retna in ComputerWorld

The Enterprise Solutions Competency Center provides the US Army with support for enterprise solutions. This is their EPM definition page. link is dead

Institute for Enterprise Architecture Developments definition of EPM.

Moneyproject - a look at the techniques involved in the Total Project Control (TPC) Methodology by Stephen Devaux on Projects@Work


last edited by: Diane D. Miller PMP on Sep 23, 2009 3:10 PM login/register to edit this page

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