Key Metrics for Strategic Portfolio Management

Key Metrics for Strategic Portfolio Management

Organizations like yours invest considerable time and resources in developing their portfolios. Therefore, it only makes sense that you want to measure and track the performance of these portfolios.

In this blog post, we will discuss what strategic portfolio management is, its benefits, and key metrics that can be used to evaluate strategic portfolio management.


What is Strategic Portfolio Management?



Strategic portfolio management is deciding which projects or programs to invest in and how to allocate resources among them. The goal is to maximize the value of the portfolio, which may include multiple businesses or lines of business.

Portfolio managers must consider various factors, including the organization’s strategic objectives, the risks and opportunities associated with each project or program, and the available financial resources.

The portfolio management process typically begins with reviewing the organization’s strategic plan and assessing the current portfolio. This information is used to develop criteria for evaluating and selecting projects or programs.

The criteria may vary depending on the organization’s goals and objectives, but they typically include customer need, market opportunity, competitive landscape, technical feasibility, and financial return.

Once the criteria are established, the projects or programs in the portfolio are evaluated against them. This evaluation may be conducted using various methods, including cost-benefit analysis, net present value analysis, or internal rate of return analysis.

After the assessment, a decision is made about which projects or programs to invest in and how to allocate resources.

The strategic portfolio management process is ongoing; as conditions change, new projects start, and others discontinue. As such, it is crucial for organizations to periodically review their portfolios and make adjustments as necessary to ensure that they align with their strategic objectives.


The Benefits of Strategic Portfolio Management



There are many benefits to using strategic portfolio management, including the following:

Improved Decision Making



Strategic portfolio management helps organizations to make better decisions about which projects to invest in and which to cancel or delay. By taking a portfolio approach, organizations can ensure that they are investing in the right mix of projects to help them achieve their strategic objectives.


Increased Clarity



Strategic portfolio management also increases clarity within an organization about the priorities and what needs to be done to achieve them. This clarity can help to improve communication and collaboration between different departments and team members.


Enhanced Alignment



Another benefit of strategic portfolio management is that it enhances alignment between an organization’s strategy and project portfolio. This alignment ensures that all the portfolio projects work together to support the organization’s overall strategy.


Reduced Risk



Strategic portfolio management can also help reduce risk by ensuring an organization is not over-invested in any particular project or area. By diversifying their investments, organizations can protect themselves from potential problems with any one project or initiative.


Increased Return on Investment



Finally, strategic portfolio management can help increase an organization’s return on investment (ROI) by ensuring they invest in the right mix of projects. By carefully selecting projects with a high probability of success, organizations can maximize their chances of achieving a positive ROI.


The Key Metrics That Can Be Used To Evaluate Strategic Portfolio Management



Many different metrics can be used to evaluate the effectiveness of strategic portfolio management. Some of the most important ones include the following:


Alignment With Organizational Goals



The first metric that can be used to evaluate strategic portfolio management is alignment with organizational goals. To assess this, organizations should review their portfolios periodically to ensure that the projects they invest in align with their overall strategy. This process can help identify any projects that may have become misaligned over time and need to be modified or discontinued.


Budget Variance



By tracking the difference between actual and forecasted costs, organizations can gain insights into where they are overspending or underspending relative to their expectations.

This information can then adjust future budgeting and resource allocation decisions. In addition, by analyzing budget variances across different projects, managers can identify which initiatives are consistently coming in under budget and which require additional investment. This type of analysis can help to improve the overall efficiency of the portfolio management process.


Timeliness of Project Delivery



Another important metric is the timeliness of project delivery. This metric captures the percentage of projects completed on time and within budget.

Organizations should aim to have a high percentage of their projects delivered on time to avoid delays and disruptions to their operations. In addition, by tracking this metric over time, organizations can identify patterns and trends in project delivery times and use this information to improve their planning and execution processes.


Delivered Business Value



By tracking the rate of value delivery, organizations can get a clear picture of how much value is being delivered relative to the number of resources being invested.

A high-value delivery rate indicates that the portfolio delivers more significant value than what is being spent. In contrast, a low rate suggests that the portfolio needs to provide more value relative to the invested resources.

This metric can assess the effectiveness of individual projects and the portfolio.


Customer/Stakeholder Satisfaction Rate



To evaluate portfolios, track the customer or stakeholder satisfaction rate on projects.

This metric allows you to see how your projects impact those who matter most to your organization. Are they happy with the results? Do they feel like their needs are being met? Do they see value in what you are doing?

You can make adjustments to your projects to ensure you meet the needs of your customers or stakeholders.


Project Success Rate



The final metric that can be used to evaluate strategic portfolio management is the project success rate. This metric captures the percentage of projects that are considered successful based on predefined criteria.

Organizations should strive to have a high project success rate to maximize the return on their investment in the portfolio management process.


How Uppwise Can Help Organizations In The Strategic Portfolio Management



Uppwise can help organizations in the strategic portfolio management process by providing access to a library of pre-built templates and tools. This can help organizations to streamline their planning and execution processes and improve the overall efficiency of their portfolio management operations.

Uppwise can also track, manage and optimize projects, portfolios, and programs. The tool provides a centralized repository for all project-related information, which authorized users can access from anywhere in the world.

Contact us today to learn more about how we can help you!