Improving your portfolio management to keep services relevant
Blog posted by: Chris Gallacher, VP & Principal Consultant, Forrester Research and contributing author to ITIL 4 Digital and IT Strategy, 10 May 2023.
What’s the point of portfolio management and how has it evolved over time?
According to the ITIL 4 portfolio management practice, this is about organizations having the “right mix of programmes, projects, products and services to execute the organization’s strategy within funding and resource constraints”.
Ultimately, it’s there to manage demand and drive innovation based on business needs. And this means IT organizations must align their IT service management practices with the overall business to deliver the necessary innovation.
Therefore, companies must capture what they need to be good at and capture those capabilities to allow the IT organization to inform how technology will support each capability and, in turn, build a service that delivers value in support of key outcomes.
This creates a necessity for IT to actively speak to the business and identify what technology will do to facilitate business outcomes. For example, discussing the applications the business uses – something that’s mutually understood by the business and IT.
However, what needs to evolve today is the level of agility within both IT and the business.
While many organizations make a plan that’s fixed for the financial year, portfolio management takes often unexpected requirements from the business to respond to and support more immediately which requires agility on both sides. Both the business and IT need to operate in an agile way to deliver continuous value to customers, employees and partners.
Current performance of portfolio management practices
The governance in portfolio management helps the planning process and the ability to prioritize and scrutinize the services being provided to a certain level and budget as well as deliver on strategic objectives.
Portfolio management must work to ensure capabilities and services are available to address two areas of demand:
- Strategic demand – such as expanding into a new market or launching a new product
- Operational demand such as an influx of new employees, increase in sales.
And using objective key results (OKRs) gives people clarity and focus about what the organization needs to achieve and how that affects the portfolio. More organizations are using OKRs to help manage performance towards strategic goals by breaking down work that needs to be performed into manageable tasks.
But what we’re not seeing consistently is all the information needed – such as outcomes, resources and risks – to make decisions. Evaluation of risks is an important step to help ensure certainty of meeting defined outcomes.
Risks could include:
- Delivery risk – i.e., the ability to deliver an initiative, product or service
- Technology risk – issues that could affect the technology
- Organizational risk – impact on the organization, skills and people to achieve outcomes
While being able to manage risk gives greater certainty about delivering value – for example, in moving services from on-premise to cloud – I think a lot of risk management is currently missing when it comes to being able to realize value sooner.
What does ITIL 4’s portfolio management practice bring to the table?
ITIL 4’s portfolio management practice is Important in terms of addressing the multiple aspects of managing risk, the ability to deliver the value you’re promising and to prioritize what’s important to the customer.
It’s also useful in categorizing what you should consider in terms of a funding model and what resources you have available to develop and deliver services.
You can then create multiple portfolios, each with a defined lifespan. Portfolios are not meant to be there forever; ITIL 4 touches on this and the need to review a portfolio’s value and ongoing relevance to the organization. This includes taking an agile approach to review and reprioritize initiatives regularly and ensure portfolios remain relevant. Organizations are adapting agile techniques but too many adopt agile in one area (e.g. technology) but do not follow through to ensure the whole business is agile, such as financial management to fund initiatives incrementally.
Reviewing and improving the service portfolio management approach
To start the process of improving your organization’s portfolio management approach, you first need a charter for each portfolio: what’s the portfolio there for? What is its purpose?
Equally, you need to identify the new projects, initiatives managed in the portfolio that will lead to new services.
In addition, you need definition and a commitment to reviewing the portfolios on a periodic basis based on what the business needs to service its customers. If a portfolio doesn’t support the critical capabilities, it needs to change.
While some standard services will always remain, it’s the broader view of where an organization has competitive advantage to influence where sourcing decisions should be made. Reviewing and managing the portfolio is about how the organization delivers services and retains its edge in the market.
And it’s important to have the right measures in place: the OKR approach plus performance metrics to make sure the organization is tracking towards them.
Latest News from
ITIL 4 Strategic Leader – challenging the status quo in IT and digital26/09/2023 16:20:00
Blog posted by: David Cannon, Executive VP, nfiniti3 and lead editor, ITIL 4 Leader: Digital and IT Strategy, September 20, 2023.
M_o_R and the actual management or control of risks26/09/2023 10:20:00
Blog posted by: Kate Boothroyd, Director, KB Risk Consulting Limited, Director, KB Risk Consulting Limited, September 2023.
ITIL 4 Service Configuration Management Practice: creating joined-up and well-managed service resources25/09/2023 16:20:00
How does an organization ensure it has accurate and reliable information about the resources available to deliver effective products and services?
PRINCE2 7th edition: sustaining a business case25/09/2023 12:15:00
Blog posted by: Sue Taylor – Co-author, PRINCE2 7, September 2023.
ITIL 4 Foundation: valuable at any point in a career22/09/2023 13:20:00
Blog posted by: Lucy Banks – Global Head of Problem Operations, Barclays, 20 September 2023.
Sustainability in project management14/09/2023 13:20:00
Blog posted by: Anne Dam Jensen – Teknologisk Institut/Lead trainer PRINCE2® and PRINCE2 Agile ® and Green Project Management (GPM) trainer, September 2023.
Don’t Underestimate the Scope of Scope in Project Management13/09/2023 10:10:10
Blog posted by: Brad Bigelow – Owner, Adcors, Owner, Adcors, September 2023.
ITIL 4 Practice Manager: the new way to certify your service management credentials12/09/2023 16:10:00
Blog posted by: Adam Griffith – ITIL Architect, PeopleCert, Consultant, IT best practice, AXELOS, September 2023.