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How do Business Strategy and IT Portfolio Management “fit” Together?

This question was listed as the #1 topic of interest in a Gartner pre-event poll of 2012 PPM & IT Governance Summit attendees with over 70% indicating a “high” or “very high” level of interest.  Business-driven PMOs must first understand this and then clearly communicate the answer to business leadership, PPM and PMO stakeholders and PM practitioners.

Our answer is encapsulated in a previous blog post entitled An Approach to Integrated IT Portfolio Analysis, September 21, 2011. It is worth restating because our thinking has expanded in this area and the question allows us to frame our answer around the notion of “fit” and the implied pain point that current processes aren't succesful in forging a fit.

The key to understanding how best to “fit” business strategy and IT portfolio management together is to think about managing the fit between three distinctive portfolios: strategies, resources and work.  From a systems perspective it’s important that these portfolios can exist without pre-supposing the existence of the other. In some project-centric systems, a strategy can only exist if it has a project or project idea that can be aligned to it.

So, while it’s important to have distinct and standalone strategy, work and resource views, the major business value is in managing the intersection of these portfolios. Let’s review what business processes are represented in these intersections. After all it is these intersections where the “fit” between business strategy and IT portfolio management is forged.

1. Project/resource linkage is the traditional core focus of PPM systems (what resources are assigned to what projects). Where business strategy and IT portfolio management come together here should be obvious. The business leadership wants to know what resources are working on what projects and to ensure that higher priority projects are being executed first. The IT portfolio management function (e.g., PMO) provides the information and governance process for ensuring that this happens.

2. Strategy/project linkage should consist of a top-down process for executing projects based on strategic objectives and a bottom-up process for aligning a portfolio of project ideas or in-flight projects with the business strategy. The top-down process should be characterized as a formal articulation and communication of corporate strategy through Hoshin objectives, balanced scorecard metrics, KPIs, strategic pillars or other strategy definition and execution methodologies.  The IT portfolio management function uses strategic priorities as a starting point for project demand filtering and prioritization. The portfolio management function also uses these business objectives and priorities to align project ideas and requests from the bottom-up to corporate objectives as part of the project selection process. It is the IT portfolio management or PMO's function to provide that line-of-sight between how business strategy and project activities are being fit together from both a top-down and bottom-up perspective and deliver these views to business strategy leadership through executive dashboards and reports.  

3. Strategy/resource linkage answers business leadership questions such as how are our resources deployed relative to strategy and do we have sufficient capacity now and in the future to execute our strategy. It is the function of the IT portfolio mangers and/or PMO to understand current resource capacity and utilization and plan for future needs and communicate related status, requirements, issues and risks with the business leadership.

4. Strategy/project/resource linkage. Where all these circles come together is where analytics and complex scenario and investment planning come in. Business leadership wants to be able to model various strategy execution scenarios involving disparate project, program and product resources and associated risks. The IT portfolio management function and PMO function is the gatekeeper of this information. This promises to be another area where business strategy and IT portfolio management business processes need to fit together. A previous blog post entitled The Future of PPM and PMOs is Analytics (January 30, 2012) further elaborates upon this notion. 

In sum, "how do Business Strategy and IT Portfolio Management “fit” Together?" We can tell you where they fit together -- at the intersections of your strategy, work and resource portfolio management processes. The "how" is represented by the concepts and processes discussed above. Implementation is up to you.