How do you make sure your portfolio is heading in the right, strategic direction? The quick answer is: data.
Portfolio managers have access to more data than at any time in recent history. Your organization will adopt an ever-more data-driven approach to running both day-to-day operations and the portfolio of programmes steering it towards is strategic objective.
That means also using the same data which supports decisions on strategic direction to also check validity once the portfolio is delivering. Change your data sets half way through implementation without fully understanding the effects of this change will bring confusion and potential disorientation.
Let’s consider some real-life portfolios: the Infrastructure Projects Authority (IPA) has a pipeline of infrastructure projects with a total value of about £425 billion – and this only covers the work between 2016 and 2021. Over a similar timeframe a global oil major plans to spend about £100 billion.
What have these organizations got in common? They have different strategy teams, customers; a vastly different range of products and sets of outcomes. And yet they share many things too: a clear focus on the future, a shared and communicated vision of the outcome, access to a vast array of data and the means at their disposal to deliver against their target. In addition, they must also prepare for what is likely to be a difficult few years to 2020. This means planning to amend the focus while delivering against the plan.
These portfolios are the result of scoring and weighting against a set of criteria which aligns directly with the organization’s strategic objectives. When you change the criteria for qualifying projects into a portfolio, this changes your direction of travel away from the strategic objectives. Conversely you can also correct the direction of a portfolio by the same means, if you identify that the portfolio is not on track.
Using data to drive portfolio direction
How can and should you use data to make decisions that affect your portfolios?
- Set your portfolio’s strategic direction based on a clearly understood data set. Show your working and explain your direction, which should be aligned with your organization’s strategy.
- Understand the trends behind the data and what is driving them. Taking a single data point is not good enough.
- Don’t be afraid of reactive thinking. If you trust and understand the data you are using, and how it helps to monitor your direction, then amending your course and explaining your rationale will be successful.
Managing your portfolio is always going to face pressures. I tend to think of a company’s portfolio as an asset in its own right, with a value which the Portfolio Management Office has to nurture and protect, constantly managing the threats it faces.
One of the intrinsic elements of your portfolio’s value is the data which informs delivery. Without this data, and without maintaining the data set which supports it, your portfolio is liable to drift, grow too large or simply be heading in the wrong direction. Keep your data healthy to keep your portfolio healthy!
See our Management of Portfolios (MoP®) section for more information about portfolio management.