Why a Portfolio is like an iTunes playlist!by David Walton (No Comments )
For those of you who read my blogs, you will know that Bestoutcome has developed a PPM tool, PM3, to manage Projects, Portfolio and Programmes. Our background is in managing large projects and programmes and our tool, PM3, is designed by practitioners for practitioners.
You can get quite clever here and have portfolios within portfolios. So in an IT Department you could have the IT Portfolio and within that the Infrastructure portfolio and the Development portfolio. These ‘child portfolios’ contain all the infrastructure and development projects respectively. Selecting the overall IT portfolio in PM3 will enable you to see all the infrastructure projects together and all the development projects together.
This is very powerful. But ‘portfolio’ is one of the most misunderstood terms in project management. It is often confused with programme; but the two terms have very different meanings and different uses in a PPM tool, like PM3.
The following definitions are the ones that I use:
- Programme: a group of interdependent projects with a common goal.
- Project: a group of related activities to deliver a specific goal. Within a programme, a project goal is essential to the achievement of the overall programme goal.
- Portfolio: a group of projects that can be delivered independently. Projects may have a common high-level objective. Projects are often grouped together for management purposes.
One of the key differences is that a project can only be part of one programme but can be in multiple portfolios. For example, a business transformation programme can have many constituent projects. You may have a Customer Relationship Management (CRM) project as part of the transformation.
This CRM project can be in multiple portfolios or ‘buckets’ –as we sometimes call these. For example, a CRM project could be in the marketing portfolio as the Marketing Director may want to view all marketing projects. The projects in the marketing portfolio are related but not necessarily inter-dependent. The CRM project may also be in the IT portfolio as it contains a new system that IT will have to implement and support.
We have found this portfolio concept hard to explain especially when you put programmes into the mix. We have resorted to call these portfolios: ‘reporting buckets’ which seems to help. The idea being that you may want to report on related projects or even a disparate group of projects.
Another example may be that I want to report on: strategic projects or 2016 projects. This helps to distinguish a portfolio from a programme as most people would realize that the ‘2016 projects’ group is not a programme but a portfolio; the portfolio can be viewed as a ‘reporting bucket’.
Recently, we came up with another way to help explain what a portfolio is. Most of us are now familiar with iTunes from Apple Inc. In iTunes you can create a playlist or many playlists. A playlist is like a portfolio. You add a new playlist and then drag a song or number of songs to the new playlist. Just like a project can be dragged into many portfolios (in PM3), a song can be in many playlists.
In iTunes you cannot, however, have a playlist within a playlist as you can in PM3. I’m not sure you would want to do this with playlists anyway.
Why Portfolios are Important
Simply put they are important because you can derive huge benefit if you use these properly.
When we implement PM3 for a client, we often work with them to define their portfolio structure. If you have not created the right portfolio structure it can limit the benefits of this powerful functionality.
Here below, you can see how easy it is in PM3 to create a portfolio of a group of projects. For example, you may get a request from an Operations Director for a report on all the projects that affect Operations. To do this manually or in Excel would be error prone and take many hours.
If you create a new portfolio called Operations Portfolio you can, in PM3, run many reports against this portfolio. Many PPM tools in the market have limited portfolio capabilities and this is, in our opinion, one of the really big benefits of a PPM tool.
For more information on PM3 and its portfolio management capabilities, visit our website: http://bestoutcome.com/products/pm3/
Or view this video: http://bestoutcome.com/resource/video-1-portfolios-programmes-and-projects/
Or contact us at firstname.lastname@example.org
Image by: GBPublic PR and remixed by Bestoutcome under the Creative Commons License