Portfolio management

Portfolio Management

Nigel Bell

East of England Branch

21st February 2012

Marshall Aerospace, Cambridge


Proposed Agenda Scene-setting and credentials Some portfolio management definitions Some portfolio management principles Some portfolio management challenges Where we are today (recent survey) Seven simple steps which guarantee portfolio

management success in three weeks* Remaining dialogue

* not really

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Scene-setting Portfolio management (PfM) has been around for

many years in various forms and for various purposes

Since the turn of the century its profile has risen exponentially ...

... perhaps because we live in increasingly turbulent times

The APM established its Portfolio Management (PfM) SIG mid-2010.

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Nigel Bell

Credentials Founding committee member, sower of seeds since 2000 BSc computing > MBCS > CEng > MSc Managing

Change > FBCS > MAPM Systems devt projects IT-enabled change projects

change projects Do > lead > coach PWC consultancy > European IS Dir Low & Bonar >

Global IS Dir Drug Devt Astra(Zeneca) > CEO NHSIA > Cabinet Office > independent/Gateway RTL (+Logica interlude) > Managing Partner HP (Jan 2012)*

PfM: R&D > IS > NHS IS > Business Development

*I am speaking this evening in a personal capacity, any views etc etc 4

Portfolio management

Some definitions P3O ® publication states ‘A portfolio is the investment

in the changes required to meet strategic objectives’ OGC Management of Portfolios® (MoP) states

‘Portfolios represent the totality of an organisation’s investment (or segment thereof) in the changes required to achieve its strategic objectives’

APM defines Portfolio Management as: ‘The selection and management of all of an organisation’s projects, programmes and related business-as-usual activities taking into account resource constraints’.

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... and some more OGC adopts a more process perspective: ‘PPM is a co-ordinated

collection of strategic processes and decisions that together enable a more effective balance of organisational change and business as usual.

National Audit Office emphasises the key aspects of prioritisation and strategic alignment: ‘Prioritisation of all an organisation’s projects and programmes in line with business objectives and matched to its capacity to deliver them’.

Cranfield MS and Open University define it as ‘Managing a diverse range of projects and programmes to achieve the maximum organisational value within resource and funding constraints.’

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The Portfolio Management cycles

Define

Benefits Mgmt

Financial Mgmt

Risk Mgmt

Stakeholder Engagement

Resource Mgmt

Management Control

Understand

Plan

Balance

Prioritise

Categorise

Organisational Energy

Source: OGC Management of Portfolios, pub TSO 2011

Success – a Portfolio Management perspective

Portfolio Management ensures the ‘right’ projects & programmes are selected and managed for success….’Portfolio Management SIG 2011

‘All Projects Succeed’APM Vision 2011

Supports timely decision making and re-

orientation of in-flight projects & programmes

so that strategic benefits are optimised

Ensures early identification of

Projects & Programmes that

don’t add value/benefit so they

are not started or are stopped

Identification of Projects & Programme that are strategically aligned.

Those not strategically aligned are not started or cancelled as early as

possible

Ensures visibility of all projects & programmes and their interdependence and enables tracking and focus

to ensure success. Provides better

engagement with staff

Supports effective and optimised allocation of

resources to better enable the highest priority ‘right’ projects and programmes to succeed

Ensures management of risk at the collective level increasing success of the ‘right’ projects & programmes and a link to business risk management

Provides robust governance of change

across the whole landscape of change /

projects


My 4 contexts and experiences Common factors in prioritisation

– Strategic fit

– Costs to go

– ROI/benefits

– Achievability/confidence Differences

– Pharma R&D: complexity, “failure” rate, maturity

– Pharma IS: dependencies, scale diversity

– NHS IS: politics and Politics!

– Bus Devt: two tier – client and opportunity Common outcomes

– Critical, tier 2, tier 3, parked 9


Some principles

Proactive and visible Senior Management Commitment

Consistent and effective Governance Alignment

Alignment of the Portfolio with Strategic Objectives

Coordination through a Portfolio Office

Shared change culture and associated behaviours

10*ource: OGC Management of Portfolios, pub TSO 2011


Some challenges (1) Getting Portfolio Management started Developing an initial portfolio Prioritising and balancing the portfolio Delivering overall portfolio benefits Dealing with tensions between Portfolio and

BAU/Operational objectives Securing and sustaining business unit

management commitment

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Some challenges (2) Securing and developing people with the

right portfolio skills/capabilities Putting in place the right tools & techniques

to support Portfolio Management Achieving the goals set for a Portfolio

Management function Applying lessons learnt from regular reviews

of Portfolio Management performance

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Portfolio Management SIG – 2011/12 Membership Survey (Preliminary Results)

The PfM survey was launched in December 2011, at which time there were 575 SIG members.

Initial 50 responses have undergone initial analysis.

Those that took part have provided a very good series of responses, across all 15 questions.

Summary results follow. We are keen to encourage ongoing contributions

to this rolling survey – your APM needs you!13

1. Which best describes your role?

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2. To which sector does your organisation belong?

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3. How would you describe the approach to portfolio management in your organisation?

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4. In which part of the organisation is the main Portfolio Management (PfM) function domiciled?

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5. In what units do you structure your portfolio of change / investment initiatives? (multiple selections apply)

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6. How many projects comprise your change / investment portfolio?

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7. How large (£) are your projects? (multiple selections apply)

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8. How many programmes comprise your change / investment portfolio?

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9. How large (£) are your programmes? (multiple selections apply)

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10. Do you also include services/BAU within your change/investment portfolio?

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11. Please rate the importance your organisation attaches to each of the following PfM principles

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12. Please rate how successfully you believe these principles are being applied in your organisation

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13. Please rate how successfully the following common PfM challenges have been or are being addressed

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14. Which (up to 3) topics in Q13 are most worthy of further discussion/ debate through the APM?

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15. Up to 3 topics in Q13 for which you are prepared to draw up a short outline of what has worked well or not so well in your organisation?

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End of core presentation

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Portfolio Management SIGForthcoming Events

Practical Experiences of Portfolio Management

London, 20th March, 5.30pm

Visit www.apm.org.uk/events for more details

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http://www.apm.org.uk/events

Portfolio Management SIGYour next steps Please do complete the survey at www.surveymonkey.com/s/LB93F9C If you are interested in joining the SIG

www.apm.org.uk/group/portfolio-management-sig Join in the debate

– Blog etc To follow up on any other aspect of this evening’s

presentation– email [email protected]

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http://www.surveymonkey.com/s/LB93F9C

http://www.apm.org.uk/group/portfolio-management-sig

mailto:[email protected]

Thank you for your attention and engagement

Travel safely

Nigel Bell

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