Project Portfolio Management (PPM) is quickly being replaced - at least to a certain extent - by Strategic Portfolio Management (SPM). In this article, we'll examine the key differences between the two concepts and explain how they will impact your approach of project and product planning.
Strategic portfolio management (SPM) is quickly replacing project portfolio management (PPM)—at least to some extent. In this article, we'll explore the key differences between PPM and SPM to determine which approach might best suit your business needs.
Facing tight budgets and fast-shifting business priorities, many project management offices (PMOs) are fighting to achieve project excellence and prove their strategic value. So, keeping up with the latest technologies, frameworks, and methodologies might feel like an unnecessary additional burden. However, investing in the right change—whether that’s automating processes with AI-enabled tech or building on the success of PPM with SPM—can yield substantial benefits.
In this article, we’ll look at the 2 main methodologies: PPM and SPM. What defines them? What are their key differences? And which one is right for your business?
What is Project Portfolio Management?
For over 20 years, project portfolio management (PPM) has enabled users to more efficiently centralize and manage their project and program portfolios. As digitalization accelerates, PPM platforms have become essential tools for PMOs, helping them align projects with broader organizational goals and make more informed, effective decisions.
After all, the goal of PPM is not to help PMOs find a way to do all possible projects, but rather to shift an organization's focus from “doing a project right” to “doing the right projects.” This approach provides organizations with a more objective and measurable way to:
Dedicate resources to projects that will deliver the greatest short- and long-term value
Identify, rank, coordinate, and track projects that align with organizational goals
Empower all team members to make decisions, driving bottom-up delivery and execution
Opt for both traditional and hybrid project management approaches, including Agile methodologies
Gain insight into project feasibility, risk, and resource management
What is Strategic Portfolio Management?
In 2017, Forrester Research introduced the term Strategic Portfolio Management (SPM), which adopts a top-down approach to projects and portfolios, emphasizing alignment and adaptability from business-wide strategy to execution. By enhancing visibility across initiatives, SPM highlights the importance of continuous planning from strategy to results. Agile methodologies, which support this approach, have transformed the project management market by promoting the following:
Flexibility for teams to adapt to changing requirements and scope
Speed through incremental changes, short iterations, and frequent feedback
Enhanced collaboration and communication between stakeholders and team members
This has forced organizations to redefine how they deliver products and services, both at the project- and company-level (scaled Agile). With SPM, PMOs gain:
Distinct links between business strategies and business outcomes.
Valuable strategic alignment thanks to a top-down approach.
Clear identification of project relevance to the broader strategy.
Visibility of project portfolio impact on the business and portfolio balance.
PPM is still extremely valuable. But it is often considered too departmental and “bottom-up” for businesses that experience shortened planning cycles and are moving further toward digital transformation. As such, SPM’s top-down and organization-wide approach may be more suited to fast-paced, digital-first businesses.
Similarities, Differences, and Embracing Technology
While PPM and SPM both build on the fundamental methodology of project management, their incremental value becomes clear when we define them alongside each other:
Project Management focuses on project delivery, offering visibility at the project level alone.
PPM takes this one step further, providing a framework for selecting the right value-driving initiatives and delivering visibility at the portfolio level.
SPM is about clearly articulating strategy and outcomes and translating them into projects, products, or services that deliver a unified vision. SPM provides visibility at an organizational level.
All three approaches have their place in a project-centric organization’s framework. With the right tool for your organization’s unique needs, leaders can enhance strategic decision-making, alignment, and ROI, driving new initiatives tied to vision with the help of real-time data insights.
Planisware’s solutions, for example, provide PMOs with greater visibility over their project portfolios and wider business goals. This supports more strategic decision-making at the project, program, and portfolio level, which helps maximize return on investment (ROI). But, they also enable executive stakeholders to quickly identify gaps or opportunities for new activity and investment that move the needle on strategic goals. This allows organizations to realize their vision, elevate project success, and boost the strategic value of their PMO.
