“Beyond Projects: Creating A Winning Product Portfolio” with Walter Sun, Principal, PRTM
May 2011 Event
by Dan Galatin
Walter Sun, a Principal with the management consulting firm PRTM, presented at the May 4th meeting of the SVPMA. He discussed best practices for managing a portfolio of products to maximize its value to the business.
Mr. Sun began by defining product portfolio management as the set of business processes and capabilities that allow one to make product prioritization decisions across the enterprise. In other words, it is a way to link the company’s strategic objectives to execution. Poor portfolio management can lead to suboptimal performance, reflected in projects that are reactive and late to market. Good portfolio management allows the business to align behind sound decisions for allocating its limited resources.
Six key elements of effective product portfolio management were discussed: portfolio governance; portfolio architecture; the decision-making framework; the linkage to other business processes; resource balancing and pipeline loading; and decision data and systems. Portfolio governance ensures that the right decisions are made at the right time by the right people with access to the right information. It is important to recognize that different types of decisions need to be made at different levels within the company: the executives, middle management, and first-line product managers.
The portfolio architecture defines the structure of the product portfolio in terms that the entire organization agrees to. For example, what is a product line? What is a project? What is a program? What is a target market? The decision-making framework is what most people probably think about when they think about portfolio management. It’s important to consider strategic buckets of investments in order to make apples-to-apples comparisons between like investments. Portfolio views, such as a risk/reward model, allow one to see where the investment level is overweight or underweight. The final element of the decision-making framework is a scoring model that allows one to draw a cut line to prioritize which parts of the portfolio to invest in.
The decisions made in the portfolio management process need to link to other business processes such as budgeting and product development. Without these linkages, nothing will actually be executed based on the portfolio decisions. Portfolio management decisions also need to translate into how the company allocates resources and manages its pipeline. Finally, it’s important to have IT systems that enable the portfolio management process to be executed once it’s put in place. (There are a number of on-premise and SaaS offerings in this space.)
One has to be aware of the challenges to effective portfolio management within the organization. Some of them are behavioral, some are tactical, and some are technical in nature, but all need to be overcome. It can be difficult to remove political barriers within the organization so that the portfolio management framework can be adopted consistently. Getting enough data to implement the process can be a technical challenge. Notwithstanding these potential difficulties, the benefits of effective portfolio management can be immense. Benchmarks demonstrate that the more mature the portfolio management practice gets, the greater the return in terms of revenue and profitability growth.
Dan Galatin has 18 years combined experience in product management and software engineering. He is currently a Senior Product Manager at Keynote Systems and can be contacted at firstname.lastname@example.org.