What is Strategic Portfolio Management (SPM)?
Strategic Portfolio Management (SPM) is a set of processes and business capabilities that aid in selecting the right investments to meet strategic goals. SPM is conducted at the top executive level of the organization.
SPM is about articulating a global, enterprise-wide strategy with its associated goals and expected outcomes. It aims to continuously deliver through projects, products, and services that transform the organization in the desired direction.
The term “Investments” in the context of SPM refers to many actions that touch on many business aspects. Some examples include:
- Large-scale business projects (such as exploring a new market or investing in a significant new product development project)
- Major transformation projects (such as digitization of a significant part of the business)
- Major financial decisions (such as share buyback programs)
SPM has close ties to PPM and Project Management but at a much broader scope. SPM is becoming popular due to the need for more organizations to reinvent themselves in the face of disruptions.
What is the Difference Between PPM and SPM?
Project Portfolio Management (PPM) has been used for over two decades, but a newer model is emerging. Strategic Portfolio Management (SPM) is gaining popularity in larger organizations with ambitious goals. So, what is the difference?
Defining PPM
PPM allows businesses to centralize project management and align all projects and portfolios with broader objectives and goals. It refers to the tools, methods, and strategies used to manage a specific project portfolio, which includes overseeing several connected projects with a shared goal or outcome. PPM helps businesses streamline and optimize project delivery, as well as assess the value of individual projects and entire portfolios to the organization using real-time data.
Defining SPM
SPM’s key differentiator to PPM is its top-down approach and focus on enterprise-wide strategy-to-execution alignment and adaptation. In a 2017 report, Forrester Research introduced Strategic Portfolio Management (SPM) to the landscape. The difference lies in the modern need for digital transformation, agility, and a ‘single source of truth’ — which SPM presents to its users. This makes it suitable for large businesses and those looking to grow fast, scale at pace, or undertake many high-stakes projects at once.
How Does Strategic Portfolio Management Help Governance?
Governance describes the processes, practices, and people that have authority over and are accountable for business decisions. This includes standardizing processes, defining roles and responsibilities, and assigning key decision-makers for final approval. SPM provides a framework for standardizing, measuring, and reporting on projects, ensuring they relate to the company’s broader strategic goals.
Effective SPM supports governance by streamlining and centralizing all projects at an enterprise level. This ensures that everyone and every task is working towards the organization’s strategic goals. With standardized practices, methods, and templates in place, governance becomes more straightforward thanks to easier decision-making, clearer accountability, greater transparency, and more.
What is the Role of a Strategic Portfolio Manager?
A Strategic Portfolio Manager plays several crucial roles in a business. There will likely be some overlap with PPM. However, SPM takes a higher-level approach, more focused on connecting activities, tasks, and portfolios to business outcomes. The role includes but is not limited to:
- Aligning projects with strategic goals
- Identifying risks to the business, finances, and timelines
- Providing information to solve issues
- Ensuring teams complete high-priority projects first
- Managing and allocating resources
- Reporting on, predicting, and managing budget and finance
- Increasing project visibility and creating a ‘single source of truth’
- Gathering and utilizing data to make better business decisions
What Are the Benefits of SPM?
SPM helps businesses ensure that organizational goals are the focus of projects and portfolios, emphasizing the significance of strategic alignment. This higher-level approach presents many benefits, including but not limited to:
- Better communication between teams, stakeholders, and the enterprise as a whole
- Prioritizing projects that better align with the business’s strategic goals
- Enhanced project ROI thanks to more centralized goals, objectives, and key results
- Increased adaptability and clear visibility of when it’s time to kill a project
- Accurate, real-time data to measure project success
- Easier prioritization of projects and, in turn, resource allocation
- A clear and centralized view of all information, projects, tasks, and budgets
- Enterprise-wide standardization of processes and templates
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