Enabling a productive organization presents a clear framework for your organization to complete impactful strategic projects. Four possible strategic focusses for linking portfolio management, programme and project management to business strategy are cost advantage, customer focus. Business policy and formulation of functional strategy 14. In this model, we regard it portfolio management as a strategic decisionmaking process, whereby limited resources are allocated to various it investments, ensuring that a balanced portfolio of investments is made to satisfy the multiple objectives of the firm. Special thanks is extended to those who participated in the case studies by sharing the details of their strategies. Stanford strategic decision and risk management stanford. Effective portfolio management helps achieve outperformance, making your strategy real through organizational change. Early adopters of strategic portfolio management character ized the difference as doing the right projects vs. Strategic usiness planningthe portfolio, explaining the rationale for decisions, and strategic planning sets the context within which portfolio management operates while portfolio management provides crucial information for strategic decision making.
For example, to achieve their strategic objective of new product development to compete effectively in the market could be a portfolio program. Portfolio management is an approach or set of standard best practices for planning, managing and executing work through the project to deliver the end products or services. How to transform projects through portfolio management 5 to overcome these challenges, portfolio management needs to be embraced by organizations to achieve three main objectives. Portfolio management should be complementary to the overall management of the organisation. Strategy governance management and capabilities data and tools alignment of the portfolio to the corporate strategy is not understood too many, often overlapping, projects aligned to one strategic.
Article pdf 253kb tying portfolio decisions to a companys distinctive capabilities can help identify which businesses to divest. The course is intended for 32 academic hours 2 credit points. Management of portfolios mop the 5 mop principles the. Typically, a portfolio management board pmb is in charge for this strategic decision making. Strategic risk management edinburgh business school. Portfolio management can also give senior leaders the nimbleness to stop projects that are no longer delivering value. It is a continual process that integrates business strategy with. Strategic portfolio management iserver orbus software. Providing executivelevel guidance to build a powerful and. Portfolio management pharmaceutical portfolio management kazuo j. Charged with managing such projects effectively, executives are asking, how do we. This is an excerpt of a paper i wrote while working on my mba.
Strategic portfolio management is the next big opportunity to achieve and sustain competitive advantage. Vitally this includes making those difficult choices of. The portfolio s and programs were reorganized to form the portfolio and program hierarchy and efficient portfolio structures, utilizing peoplesoft tree functionality. The framework main challenges of it portfolio management filtering of business requirements is not regulated. Portfolio management strategies portfolio management. Course objectives investment analysis and portfolio management course objective is to help. The forward looking statements involve certain risks and. Stanford strategic decision and risk management stanford online. Investment analysis and portfolio management 5 the course assumes little prior applied knowledge in the area of finance. Managing innovation portfolios strategic portfolio management. Icai the institute of chartered accountants of india.
An ability to clearly communicate how the portfolio is. During the past 20 years companies have greatly improved processes and systems for managing the operational aspects of projectportfolio management ppm budgeting, project management, resource planning, and phase gate processes. Jan 02, 2012 lead change through strategic alignment of project and process performance. As the prioritization of the portfolio is supposed to show impact, resources are required to be allocated accordingly. A strategic approach supplies indepth treatment of the five domains and identifies best practices to ensure the organization has a balanced portfolio management that is critical to success. The portfolios provided by the investment firms are used to construct and manage the smas within individual portfolio advisory services taxsensitive client accounts. Lance van nostrand, pm world journal portfolio management. Some of those criteria should reflect a companys strategic intent. There are two basic approaches for portfolio management including active portfolio management strategy and passive portfolio management strategy. Morgan asset management to help ensure the asset allocation of each portfolio remains in line with the portfolio s objective. The pmi portfolio standard charter states strategic portfolio management is the responsibility of the executive leadership team of the organization, where those involved are deciding if the projects and programs selected for execution align with the organizations strategies. Calendar rebalancing induces negative convexity in portfolios and heightens drawdowns. As outlined above, strategic portfolio management translates innovation strategy into an aligned project portfolio.
Key findings many investors do not realize that calendar rebalancing of a portfolio is an active strategy that essentially buys losers and sells winners. Projects, programs, subportfolios, and operations managed as a group to achieve strategic objectives. Practical and filled with expert advice, strategic project portfolio management. Portfolio management contributes to organisations in many crucial ways. Other criteria should reflect a companys capabilities. Project strategy and strategic portfolio management. Strategic project portfolio management wiley online books. To read the entire article, download the pdf titled strategic project management. Strategic portfolio management enables senior management to create, define and manage the portfolio of strategic options that best delivers the organisations vision, balancing short and long term objectives, risks and costs. Presenting information that is current with the standard for portfolio management, third edition 20.
Typically, organizations execute manage the work through projects to deliver products, services or to manage operations. Feb 12, 2020 strategic management is the management of an organizations resources to achieve its goals and objectives. Delivering on strategy project management institute. Portfolio management refers to managing money of an individual under the expert guidance of portfolio managers. Portfolio management strategies refer to the approaches that are applied for the efficient portfolio management in order to generate the highest possible returns at lowest possible risks. Organizations with mature project portfolio management practices. Her specialty areas are portfolio management, program management, the project management office, metrics, and maturity assessments. The portfolios provided by the investment firms are used to construct and manage the smas within individual portfolio advisory services tax.
The program blended academic theory with realworld techniques to enhance leaders ability to analyze information and alternatives to make the best critical. On a strategic level, portfolio and resource management must be fully aligned. Portfolio management presents the best investment plan to the individuals as per their income, budget, age and ability to undertake risks. Strategicusiness planningthe portfolio, explaining the rationale for decisions, and strategic planning sets the context within which portfolio management operates while portfolio management provides crucial information for strategic decision making. The risks themselves may be strategic or non strategic but they all contribute towards the overall strategic risk profile of an organisation and, therefore, fall within the remit of the strategic risk management system. Building on existing client management information systems it provides the focused business intelligence to enable senior management make the strategic tradeoffs that can only be made at that level. A successful portfolio management strategy must comprise an endtoend framework that methodically guides organizations from project selection through. Strategic management involves setting objectives, analyzing the.
Strategic portfolio management spm helps decision makers align an organizations portfolios to best execute on the corporate strategy. Our approach establishes two tiers of decision optimization by extending our strategy science methodology upward to the executive committee and its portfolio management responsibilities. Effective portfolio management aligns a companys investments, people, and programs with its overall strategic objectives. This paper examines and compares two case studies in practicing strategic portfolio management spm, one effort that. Providing executivelevel guidance to build a powerful and efficient process from initial adoption to portfolio. Ginger levin is a senior consultant and educator in project management. The spo is an organizational entity responsible for mapping strategy to projects and monitoring projects and portfolios to ensure they continue to address strategic. Strengthen the strategic alignment of programs and projects to prevent initiatives being undertaken that do not support the enterprise strategy 2. The firms were selected for their complementary investing styles. Strategic portfolio management provides a robust link between strategy and operations. Optimizing tradeoffs for strategic portfolio management. Continuous monitoring of the chase strategic portfolio by j. During the past 20 years companies have greatly improved processes and systems for managing the operational aspects of projectportfolio management ppm budgeting, project management, resource planning, and phase gate processes strategic portfolio management, while practiced for many years by leading companies in.
Portfolio management meaning and important concepts. Portfolio management minimizes the risks involved in investing and also increases the chance of making. The strategic role of project portfolio management pucsp. Portfolio management the art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals. If a business unit helps a company meet its strategic goals, such as becoming an emergingmarket player or developing a certain set of unique skills, then managers should rate it higher against their strategic criteria. Portfolio management definitions portfolio an appropriate mix of or collection of investments held by an institution or a private individual. Project portfolio management helps to properly allocate and optimize available resources between projects, programs and other tasks strategic alignment of it projects the right portfolio management tool helps your organization to align all planned and ongoing projects with the overall strategic initiatives measurement based portfolio optimization. Based on our experience, with the right tools and processes an overall planning and delivery efficiency enhancement can be achieved on both it and business side. The distinction between strategic thinking, strategic management and strategic planning 45 strategy in actionquick strategic thinking in unfavourable circumstances45 strategy in actionsony the disruptive innovator 50 principles for the successful use of strategy 61 finding the right strategic mix of entrepreneurial creativity and. Lead change through strategic alignment of project and process performance. Ongoing investment manager evaluation by chase investment services. Since 2006, the stanford strategic decision and risk management certificate program has been a highquality, decisionmaking professional education program for leaders around the world. In a laymans language, the art of managing an individuals investment is called as portfolio management.
Strategic portfolio management information strategic portfolio management is about deciding where best to focus the organisations finite resources in order to meet strategic objectives, considering the business as a portfolio of activities and making tradeoffs across the portfolio. Managing innovation portfolios strategic portfolio. Business portfolio analysis matrix strategic management. The portfolios and programs were reorganized to form the portfolio and program hierarchy and efficient portfolio structures, utilizing peoplesoft tree functionality. An explicit line of sight between all the projects in the portfolio and the strategic intent of the hosting organization 2. The risks themselves may be strategic or nonstrategic but they all contribute towards the overall strategic risk profile of an organisation and, therefore, fall within the remit of the strategic risk management system.
Morgan asset management to help ensure the asset allocation of each portfolio remains in line with the portfolios objective. Successful organisations make strategic choices about which activities should be implemented to deliver their vision. Jan 27, 2012 this is an excerpt of a paper i wrote while working on my mba. Strategic management involves setting objectives, analyzing the competitive environment. The centralized management of one or more portfolios to achieve strategic objectives. For example, to achieve their strategic objective of new product development to compete effectively in. Ezawa bristolmyers squibb company daag san francisco february 25, 2004. To be successful, strategic portfolio management must be built on top of a robust enterprise project management system that the organization is trained to use and actually finds indispensable for daytoday management. Active engagement of the executives who will be directly and visibly responsible for the composition of the portfolio 3. Portfolio management refers to managing an individuals investments in the form of bonds, shares, cash, mutual funds etc so that he earns the maximum profits within the stipulated time frame. Enabling a productive organization presents a clear framework for your organization to complete significant strategic projects. Only with executive support can project managers achieve the results that enable the organization to implement its strategy through its projects.
The it portfolio management stepbystep methodology presented in detail in chapter 5 is a proven process for applying it portfolio management and has eight stages. To manage a portfolio of projects successfully, a project manager must obtain and exploit the support of senior management. Strategic management is the management of an organizations resources to achieve its goals and objectives. Abstract project portfolio management ppm is evolving swiftly and becoming the main tool of managing complex project environment.
Their input, advice, and lessons learned, both successes and failures, have been incorporated into this document so that we may all apply better strategic management processes in our organizations. It encourages companies to make all of their decisions using a capabilities lens. The goal of this paper is to contribute to the understanding of how it portfolio management affects strategic it investment decision making. Pdf strategic operations management radhitya wirawan. Six principles of strategic portfolio management smartorg. Strategic rebalancing the journal of portfolio management.
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