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Project Portfolio Management (PPM) and the Emergence of Strategic Portfolio Management

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Originally Posted On: Project Portfolio Management (PPM) and the Emergence of Strategic Portfolio Management – Shibumi


In today’s digitally-charged business ecosystem, almost every organization has an abundance of ideas, innovations, and projects that they need to invest in and execute upon. In this article, we will discuss the emergence of Strategic Portfolio Management in the Project and Portfolio Management & IT Project Management space.

For starters, 45% of businesses admit they don’t fully understand those projects or how to manage them effectively. Major players like Google and Tesla make it seem easy. They push out these grand innovations quarterly and capture significant portions of markets that didn’t even exist before their product splashed onto the headlines. So, how do they do it?

Managing a portfolio of projects, understanding their risks and rewards, and executing those projects in an ever-changing competitive landscape isn’t easy.

It requires an ability to overlay business strategy — a massive, overarching set of objectives, goals, and strategies — to the execution layer of your projects, programs, initiatives, and products. Ultimately, it is critical to success that your organisation has the ability to continuously marry strategy, investment, and execution in a world where the business landscape is constantly evolving.

For years, the answer to these challenges has been Project Portfolio Management (PPM). In fact, 89 percent of high-performing organizations have already adopted PPM strategies, and those that leverage PPM see higher success rates at a 2.5x lower overall cost.

But there’s a problem. PPM may help you understand the context of projects as they apply to strategy, but you don’t just need to join strategy with innovation and projects. You also need to apply strategy to projects in a world where strategies are ever-changing and fluid.

In 2017, Gartner predicted that enterprises that dedicate resources to ensuring strategy is executed across projects will be 80 percent more likely to be industry leaders. Yet, many organizations are outright failing to win with PPM. So, what’s happening? Why are project success rates still low in a world where PPM has taken hold of many organizations?

The answer is simple: PPM needs a touch more strategy, flexibility, and agility. In other words, strategic portfolio management (SPM) is the secret sauce that’s helping winning enterprises execute smarter, faster, and with more agility than their competitors.

What is Project Portfolio Management (PPM)?

What is a Project? A single objective that an organization undertakes, usually to produce a product, service, or benefit within a specific timeline.

What is a Portfolio? It is a higher-level collection of projects, programs or products in a business’s pipeline.

Project management is a critical component of the modern enterprise. Projects, which are the lifeblood of innovation and revenue, require careful input, intelligent strategies, and top-down alignment to succeed with any level of predictability.

We consider project management the first layer of project execution. Successful project management prevents cost overrun, reduces failure rates, and increases project profitability. In fact, companies with well-oiled project management teams save 28x more money on execution than those that come to the table without a game plan.

But how do you know which projects to focus on? Project management revolves around the execution layer of projects. It primarily deals with how to do projects the right way.

Strategic portfolio management focuses on continuously doing the right projects. Almost every organization has an abundance of investment options and figuring out which projects or products to focus time, people, and resources on can be difficult. You can have the most efficient, proven project management strategy in the world but how do you know what the optimal set of investments are?

The easiest way to think about strategic portfolio management is that it aligns project management with top-level business strategies and constantly evaluates investment against results.

It lays strategy over the execution layer of project management. So, let’s say that your organization is sitting on top of 500 projects. You obviously don’t have the time and resources to execute each project with vigor. SPM helps you select the best projects based on business objectives, business strategy, and feasibility. Similar to the approach you would take with a portfolio of investments and to continuously revisit performance in order to optimize for the greatest outcomes.

PMI breaks PPM down into six steps:


  1. Identify projects
  2. Gather resources and validate projects
  3. Identify project pain points
  4. Rank potential projects in terms of viability
  5. Draw a “cut line” (i.e., find the best projects and exclude the rest — no matter how painful that may be.)
  6. Discuss these findings with project leads and EMPOs

In a nutshell, project portfolio management aligns execution with a strategy to define the best possible project portfolio for your business that meets budgets, visions, missions, goals, and current environmental conditions.

What is Strategic Portfolio Management?

Over the past few years, businesses have rushed to inject innovation into their core business models. Terms like “incubation chambers” and “innovation labs” have hit the mainstream, partially fuelled by fear of digital extinction. In fact, McKinsey suggests that 80 percent of traditional business models are at risk of failure over the next few years. So, there’s a palpable fear of being “left out” that’s penetrated the heart of nearly every industry.

To facilitate this need for innovation, companies naturally gravitate towards projects. Perhaps they form ambidextrous teams to tackle innovation and “the core” simultaneously, or maybe they’re pushing innovation into small business chambers. Either way, projects (and portfolios by association) have become increasingly dense and sporadic.

Here’s the problem: 80% of digital projects fail. In today’s digitally fuelled ecosystem, chance almost never pans out. So, this puts companies in a tricky position. PPM — which is heavily focused on the strategy-to-execution side of project management — has a very real flaw. It makes the assumption that the world outside of the project will remain stable and unchanged during the execution layer. But it won’t. Unless your project has a 2-week cycle, there’s a very real (almost certain) chance that the world outside your project will impact the value of your project.

In the digital age, simply understanding the value of a portfolio in a brief moment isn’t sufficient. PPM, which certainly includes strategy, doesn’t account for rapid changes in the digital ecosystem. It’s a mid-horizon process that primarily focuses on discovering which projects to work on, not on which projects to continue to work on. Strategic Portfolio Management (SPM) enables continuous delivery and data-fuelled metrics and outlooks into the PPM process.

So, if project management is doing projects the right way, and PPM is doing the right projects, SPM is doing the right projects at the right time based on continuous evaluation, metrics, and an understanding that you may need to cut projects, redefine them, and adjust them during the project execution lifecycle.

This may sound a little confusing or redundant, so let’s look at an extreme example.

Your organization used PPM to identify 10 amazing projects to focus on. One of these projects is a new technology for your on-site employees that’s integrated into your company network. Your project managers and teams bust out the Kanban boards and start to execute this project over a 2-year timeline. Unexpectedly, 6 months later, COVID-19 hits. 3 months later, half of your workers are remote and the on-site project you are running is going to launch to a bare office.

With traditional PPM, you did everything right. You picked the highest value project based on available information, used the right project management strategies, and executed the project under budget and on-time. But it still failed. You could blame the black swan event. Or maybe you could blame the initial PPM phase. But the problem isn’t either. You didn’t adjust your project execution to evolving world events. Leveraging an SPM solution, you would have identified an initial issue during the first few weeks of COVID-19, and adjusted your portfolio of investments to deliver value remotely, or (at the very least) scrapped the project momentarily due to changes in the value proposition.

Here’s the big secret: most changes that happen over the lifecycle of a project are small and continuous. No project begins and ends in the same ecosystem. Implementing an SPM solution enables you to identify ecosystem changes and continuously optimize your portfolio of investments.

Understanding SPM in the Context of PPM Technology


Strategic Portfolio Management isn’t new. In fact, organizations have been adopting agile practices and interactive methodologies to PPM for the past few years. Instead, SPM puts a term to the language of modern PPM that helps organizations uncover meaningful technology that appropriately tackles their modern portfolio management needs.

Deloitte famously said that modern PPM practices need to go beyond the question, “Am I doing things right?” Instead, they should answer the question, “Am I doing the right things right?” SPM takes this a step further. You need to know if you’re “doing the right things right at the right time and place.” It’s the next evolution of PPM, and technology vendors are taking notice.

Traditional PPM platforms primarily focus on “viewability” and portfolio architecture. They may combine financials, and some data feeds to give you a great overview of projects, but they fail to deliver one key component: real-time, data-driven decision-making. Modern strategy-to-execution alignment requires beyond-the-grain insights. You need a constant feed of real-time data from all your systems to make informed decisions. These aren’t just decisions on which projects to fund initially; they’re decisions that help you determine which projects to pivot, fuel, and (in some cases) eliminate.

According to Gartner, 50 percent of PPM leaders will integrate SPM technologies to help them define their projects and project goals. To be clear, SPM requires the fusion of technology and leadership. Achieving those mid-horizon strategic goals requires intelligent insights, plenty of actionable decisions, and a wealth of data and governance capabilities.

Adaptive Project Management vs. Strategic Project Management: Two Different Solutions?

Recently, Gartner released a whitepaper entitled “The PPM Market Now Supports Strategic Portfolio Management and Adaptive Project Management.” In it, Gartner suggests that PPM tech leaders will offer Strategic Project Management (SPM) and Adaptive Project Management (APM) solutions as part of their PPM offering. So, what is Adaptive Project Management (APM)?

This is where things get tricky. Gartner is essentially splitting (or “bifurcating”) PPM into two components. SPM is how organizations find and continuously maintain the right portfolio of investments, and APM is how organizations execute on those investments. The point being made by Gartner is that lacking either side of the coin (SPM or APM) results in an inability to efficiently transform and compete in the marketplace.

How Shibumi Can Help You Realize the Value of SPM

Shibumi’s Strategic Portfolio Management solution empowers C-Level, Strategy, EPPM, and IT leaders with a dynamic decision support system that provides the real-time information needed to make effective decisions driving the achievement of critical business outcomes. Shibumi enables the alignment of execution to strategy including dynamic scenario planning and data-driven insights that reduce organizational risk, increase agility, and maximize return on investment.

Importantly, Shibumi gives you the ability to dig deep into any portfolio based on real-time data feeds, often from your existing APM tools, providing portfolio-level reporting and governance at scale. In addition, Shibumi can manage project pipeline, investment prioritization, and the delivery of business benefits against KPIs to give project leaders the data they need to constantly optimize project investments.

Ultimately, Shibumi is a portfolio management solution that helps you execute projects at scale using the best possible information while helping you adapt to real-world disruptions. it enables our customers to achieve their roadmap of strategic business outcomes more consistently.

Are you ready to experience the future of portfolio project management? Contact us today.

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