Getting started:
The Product Portfolio Management practice is driven by the ever-increasing competitive pressures placed on
organizations to constantly innovate as a way to produce more for less, all the time. Although more traditionally seen
as a framework to manage consumer products purchased by external customers (tangible goods and software
products), it is now equally important for organizations that are developing large-scale applications to be used by
internal corporate customers and stakeholders.
The time and effort required to develop large-scale portfolio management process reference models from scratch can be
substantial. Therefore, consider adopting a generalized process framework that can be adapted to reflect the specific
criteria, business conditions, and characteristics of your organization, instead. This not only optimizes the
time-to-value of this process, but also provides a foundation that can be ported to other areas of the business where
portfolio management can generate value, such as project portfolios, application portfolios, and process improvement
portfolios. That us why this Product Portfolio Management practice has been developed from a generalized version
of a portfolio management model.
Although this reference model might not represent all of the specific varieties and concepts that your organization
wants to include, working from this model provides a 90% solution that requires minimal effort to adapt and, most
important, provides a foundation of best practices that have been harvested from specialized consultants and proven
models over the years. By using this model, your organization can focus on the most important components that
reflect its particular nature, such as these elements:
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Classifications of work requests (such as projects, enhancements, and support)
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Standardized formats to capture the required data
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Critical data elements (such as competitive data, differentiating features, and unique capabilities)
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Prioritization and selection criteria
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Representative analysis and decision models
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Executive decision matrices and criteria
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Reporting and publishing formats that can be understood and used across the organization
Given the immediate priorities of the organization, deployment of all three main activities of portfolio management
(Define and Prioritize, Balance and Authorize, Monitor the Portfolio and Conduct Reviews) is not
recommended. Instead, select the activity that reflects the most urgent need of the organization and that people
are mostly likely to be ready and willing to adopt. However, it is typical to approach the deployment of this process
model in the natural order of the activities:
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Define and Prioritize. Process all requests submitted for the portfolios so that proper
classification and standardized evaluation can lead to effective prioritization.
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Balance and Authorize. Assess and select the most beneficial sets of components to maximize the
portfolio value yet minimize risk. It is critical to authorize only the work that has been approved by the
portfolio executives.
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Monitor the Portfolio and Conduct Reviews. Conduct regular and cyclical reviews to monitor all
work in progress, as well as to identify deviations and changes required to maintain an optimal portfolio that is
aligned with the organization's strategic objectives.
Common pitfalls
There are common pitfalls experienced when adopting a portfolio management model, including the ones listed in the
following subsections.
Trying to do it all at once
As discussed previously, a common pitfall is to deploy the end-to-end portfolio management process as a single
effort. The most important factor to a successful process initiative is obtaining high levels of adoption. There
are considerable changes and significant cultural impact caused by the implementation of a structured mechanism to do
what has been done intuitively and regulated by the instincts of a select few executives. Depending on the urgency and
readiness of the organization for a particular portion of a Product Portfolio Management model, determine which of
the three main activities will provide the most value to the organization, and then focus on that activity
initially.
"Homemade" portfolio management framework, created from scratch
Some organizations might decide to undertake the development of their own portfolio management model, because their
needs are so unique. In doing so, they waste tremendous time and effort, which takes them away from focusing their
scarce resources on distinctive competencies and differentiating capabilities. They end up owning and needing to
maintain a model that the industry should be providing and maintaining, instead.
The advantage of using the model proposed by this practice is that several dimensions of this model can be adapted,
streamlined, and expanded over time. You can select how much is initially adapted by starting with relatively
little process adaptation. Instead, for initial deployment, focus on including critical data, specific scorecards,
criteria, and analysis models that are proven to work within your organization. Once feedback from portfolio
stakeholders is harvested on process areas to be improved, added, or deleted, the progressive and evolutionary
nature of the process framework will encourage adoption and result in quicker payback to the organization.
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