Episode 149: Project Portfolio Management Explained
The PMBOK® Guide defines Project Portfolio Management as "The centralized management of one or more portfolios, which includes identifying, prioritizing, authorizing, managing, and controlling projects, programs, and other related work, to achieve specific strategic business objectives." As always with definitions from the PMBOK® Guide, they are straightforward, dry, to the point and they give you a good idea what the term is all about. But they are usually also lacking in regards to telling you much about how Project Portfolio Management is performed out in the world.
But that's where The PM Podcast comes into play. We bring you the real life experience and explanations about Project Portfolio Management with one of the big names in Portfolio Management: Terry Doerscher from www.planview.com.
Terry recently published "Taming Change with Portfolio Management", a book that he wrote together with Pat Durbin. I have taken this book release as an opportunity to bring Terry on the show to look into the basics of Project Portfolio Management. You'll hear his definition, the 4 core portfolio management information structures, how portfolio management enhances the value we deliver to our organizations and more.
Win a copy of Terry's book: Go to our Facebook Fan Page at www.facebook.com/pmpodcast find the announcement of this book giveaway and simply add a quick comment (Deadline to participate extended to July 21 2010).
Here are the winners of our PDU Podcast giveaway. The PDU Podcast is our sister podcast which helps PMPs and PgMPs earn at least 1 PDU every month. All you have to do is to watch the video webinars and you have just earned a PDU. You can find it at www.pducast.com. And the winners are
- Premium Listener: Keith Hopkins from Fullerton right here in California
- Free listener: Ilias Biris from Espoo in Finland
Congrats to both of you
Oh... and just in case you are now completely confused about the difference between The PDU Insider and The PDU Podcast... The PDU Insider is a newsletter in which I give you inside tips about earning PDUs. And The PDU Podcast is a videocast where you can watch webinars and earn PDUs.
Below are the first few pages of the transcript. The complete transcript is available to Premium subscribers only.
Cornelius Fichtner: Hello and welcome to this Premium Episode #149. I am Cornelius Fichtner. This is The Project Management Podcast™, nice to have you with us.
Here is another Premium Episode to which only you, our premium subscribers get access. And of course, in a few days, you'll also get the PDF transcript. Enjoy!
Last week, we spoke with Terry Doerscher from Planview and he gave us an introduction to project portfolio management. This week, we are going to where the rubber meets the road. We want to learn in what steps exactly Project Portfolio Management, PPM, can be introduced in an organization. We'll look at this from various angles and we'll specifically discuss the following types of assessments that Terry recommends that you perform in your organization before you even get started.
He recommends that you first do a (1) general operational assessment, (2) an organizational assessment, (3) a functional assessment, and (4) a technological assessment.
The information that we talk about in this interview was taken from Terry's book "Taming Change with Portfolio Management" and as is usual here on the Podcast, everyone who is subscribed as a premium subscriber, that’s you, obviously, is automatically entered to this giveaway. But if you want to double your chances, then please go to our Facebook Fan Page at www.facebook.com/pmpodcast, find the announcement of this book giveaway and simply add a quick comment. You can either tell me how great you think the podcast is or can just say "Pick me! Pick me! Pick me!" or something along those lines. Everyone who adds a comment to our Fan Page before July 7th 2010 gets a chance to win. The address again for you: www.facebook.com/pmpodcast.
And now, enjoy the interview.
Female voice: The Project Management Podcast’s feature Interview: Today with Terry Doerscher, Chief Process Architect for Planview.
Cornelius Fichtner: Hello Terry and once again, welcome back to The Project Management Podcast™.
Terry Doerscher: Thank you very much, Cornelius.
Cornelius Fichtner: In this interview, we are going to look into how to implement portfolio management, which is also a part of your book “Taming Change with Portfolio Management”. But before we get into that, let’s bring everyone onto the same page again here. Give us a definition of portfolio management, let’s start with that.
Terry Doerscher: Sure! I think it would be good to summarize the earlier session by just giving us a working description of what portfolio management is really all about. And ultimately, the discipline of portfolio management allows us to group together a collection of independent subjects so we can collectively manage them towards achieving the common objective.
The unique thing about portfolios is they give you the ability to gather, present, analyze different types of information from many different perspectives and levels of detail. And depending on the objective of the portfolio, check the information about its subjects and present them compared to different ways in order to assess performance, drive decisions, and then ultimately take action.
So portfolio management establishes a consistent process structure and decision support framework to allow us to have transparent and trustworthy decision making across many different levels and parts of the enterprise. Does that make sense?
Cornelius Fichtner: That makes a lot of sense, yes! It’s probably one of the best definitions and the most concise definitions that I’ve heard. Yeah!
Terry Doerscher: Hopefully, we can get the various disciplines to look at that and agree that, yeah, I can work with that.
Cornelius Fichtner: Good luck, I would say, right?
Terry Doerscher: Yeah. You know, if we do nothing else with this, Cornelius, if we can make that happen, I will go to my grave feeling complete.
Cornelius Fichtner: Wonderful! So as I said, we want to talk about how to implement portfolio management. That means we’re changing something in our organization, right, to get started and that’s what your book is about, taming change also.
So if we’re implementing portfolio management, we’re changing something that means people are going to push back on us. From your experience, what are usually the biggest areas where we will experience pushback in an organization when we’re going to start out implementing portfolio management?
Terry Doerscher: Sure, that’s a great question, Cornelius. I think for the answer to that, first off, let me back up and say: Yes! This implementation certainly involves changing how organizations work together. And we all know what happens when every, you mentioned, change in an organization. It’s something that various parts of the organization would like to keep upon other parts of the organization but maybe sometimes aren’t so open to themselves, right? But if we go back to the definition of what portfolio management is and the benefits it brings, I think we can get an insight into why some parts of the organization might find that they’re resisting it.
First off, putting in comprehensive portfolio management and I believe we described it in Taming Change is really a long-term, programmatic improvement initiative. So there’s real work involved with not only garnering sponsorship for that but also in developing the capabilities, getting the organization’s information together and putting the supporting infrastructure in place. And it’s also getting involved some new skills and capabilities that has to be established as well on the part of the individuals. So the organization needs to first clearly understand really the immense power and benefit that portfolio management brings in order to see how its value is going to far outweigh the cost.
Secondly, I think portfolio management is all about sharing information. Say, you can make those trustworthy, transparent and defensible decisions. And as we know, some organizations really struggle with breaking down organizational silos or even organizational layers because those silos or layers often retain their power by holding information and making lateral decisions with that information, right? So all of a sudden now, we’re creating a whole new level of transparency in an organization. It can be threatening.
Third, I think it’s around how portfolio management foster some measure of consistency about how an organization really approaches, how it governs change and the decisions that are made. For example, who’s got certain rights? The processes that are being involved and executing those consistently. And once again, this drives a very open and collaborative structure and that can be perceived as a threat to lines of business or departments and they might like to do things their own way with a minimum of outside influence.
Cornelius Fichtner: In your answer, you mentioned a few keywords here that I’d like to focus on my next question: You mentioned silos, you mentioned layers, you mentioned departments. Is portfolio management something that we implement on the whole of our organization or do we do it for department, for silos, what’s a good approach here?