The 5 Biggest Challenges in Strategic Portfolio Management
Strategic portfolio management (SPM) is essential to any business organization’s success. It requires skillful assessment of current and emerging projects and resources to determine the best combination for optimal results. However, SPM can be challenging to manage with ever-changing markets and demands.
This article will address five of the biggest challenges faced by those in charge of strategic portfolio management and how to overcome those challenges.
Let’s get into it.
Challenges in Implementing SPM
The following are critical challenges in implementing SPM:
Determining Alignment With Organizational Goals
Strategic portfolio management requires hard work aligning project portfolios to organizational goals. This often involves deciding which projects to pursue and which to discard.
This can be difficult for some reasons.
For one, there may be many projects going on at any given time, making it hard to keep track of which ones align with the organization’s goals and which ones don’t.
Additionally, an organization’s goals and objectives can shift over time, meaning that projects may no longer fit into the overall portfolio or need re-evaluation to align with those new goals.
Finally, different organizational stakeholders may have different opinions about its goals, making it difficult to reach a consensus on which projects to pursue. To solve this problem, there are several things to consider.
First, create a clear list of the organization’s long-term goals and ensure everyone is on the same page about them. This should be done in consultation with all stakeholders to ensure that all voices are heard and accounted for. Next, establish criteria for projects to accept or reject based on their alignment with those goals.
Additionally, create a process for regularly re-evaluating projects and their alignment with organizational goals to ensure they align with what the organization wants to achieve. Finally, create a process for introducing new projects when needed and evaluating them based on specific criteria.
Another challenge in strategic portfolio management is balancing resources. This means ensuring that the right resources are assigned to the suitable projects at the correct times and that there are enough resources to go around.
This can be difficult due to competing demands from different projects, limited access to specific resources (such as specialized personnel or equipment), and the fact that resources may only sometimes be available when needed.
To address this challenge, it’s important to promptly identify the critical resources needed for each project and plan for their acquisition. Additionally, look for ways to maximize efficiency by sharing resources where possible or leveraging external sources of help if necessary.
Finally, prioritize projects and resources so that the most important ones quickly get the attention they need.
Difficulty Forecasting Project Value
Forecasting project value is vital to successful strategic portfolio management, and it takes work to do accurately. This is because the potential value of a project can take time to predict in advance, as so many variables could affect the outcome.
Additionally, projects may require investments upfront before the organization can expect any returns, which means forecasting must consider the potential rewards and the costs involved.
Finally, changes or unexpected events during a project can drastically alter its original forecasted value.
To overcome these challenges, conducting thorough research and analysis is essential when coming up with an initial forecast. Also, plan to monitor and respond to market shifts or unexpected events. This will help ensure that the project’s forecasted value remains accurate throughout its duration.
Risk management is an integral part of strategic portfolio management. It involves assessing potential risks associated with each project and determining how to mitigate them.
This can be challenging due to the ever-evolving nature of markets and the uncertainty of project outcomes. Additionally, different risk types may require different management approaches, making it hard to create a comprehensive risk management strategy.
To manage risk effectively, it’s essential to identify potential risks early in the planning process and develop strategies for addressing them.
This should involve a rigorous assessment of all potential risks and an evaluation of the probability of each risk occurring and its potential impact.
Also, create contingency plans for how to respond should a risk come to reality. In less formal terms, never be caught slacking (or at least try hard).
Finally, be sure to periodically review the risk profile of each project and adjust mitigation strategies accordingly.
Adapting to Market Changes
The markets are constantly evolving, and strategic portfolio management must be able to adapt quickly to remain competitive. This can be challenging due to the nature of project cycles and the fact that changes may occur quickly or unexpectedly.
To address this challenge, it’s essential to build flexibility into the SPM process by creating short- and long-term plans that account for expected changes.
Also, create a process for monitoring external factors such as industry trends and customer feedback so that the team can respond quickly to changing market conditions.
Finally, periodically review project goals and objectives to ensure they remain relevant and aligned with current business needs.
Overall, strategic portfolio management can be complex, but with proper planning and execution, these five challenges can take time for an organization to succeed.
Organizations can ensure their strategic portfolio is running smoothly and delivering the desired results by creating clear goals, balancing resources, forecasting project value accurately, maintaining quality control, and responding to changing priorities.
With the right strategy, even the most complex portfolios can be effectively managed for continued success.
Uppwise offers a comprehensive Strategic Portfolio Management solution that can help organizations of all sizes to implement and manage their portfolios effectively.
Our software is designed to streamline the portfolio management process, from project selection and prioritization to execution and tracking.
We offer a flexible and customizable platform that you can adapt to meet your organization’s specific needs. So, if you’re looking for a solution that can help optimize your portfolio management, get started with Uppwise today.
Founder of Uppwise, Gioacchino has solid hands-on, experience and vision in the PPM Market, gained as a startupper and founder of a number of software & cloud-services companies. During the last two years he has lead the company transformation, shifting from the offering of a traditional PPM product to a new suite of SPM, APM and CWM products.