Portfolio Management
Upcoming SlideShare
Loading in...5
×
 

Portfolio Management

on

  • 545 views

Beyond Projects: Creating A Winning Product Portfolio by Walter Sun at SVPMA Monthly Event May 2011 ...

Beyond Projects: Creating A Winning Product Portfolio by Walter Sun at SVPMA Monthly Event May 2011

Go to link below for notes from this event
http://svpma.org/2011/07/may-2011-event/

Statistics

Views

Total Views
545
Views on SlideShare
545
Embed Views
0

Actions

Likes
1
Downloads
35
Comments
0

0 Embeds 0

No embeds

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Portfolio Management Portfolio Management Presentation Transcript

  • 4 May 2011 Beyond Projects: Creating A Winning Product Portfolio PREPARED FOR SVPMAManagementConsultants Where Innovation Operates
  • AgendaIntroductionsPortfolio Management OverviewKey Elements of Effective Portfolio ManagementCommon Implementation ChallengesBenefits of Portfolio Management Beyond Projects: Creating A Winning Product Portfolio —4 May 2011 | © 2011 PRTM Proprietary CONFIDENTIAL | 2
  • PRTM Overview Product Innovation Thought Over 35 years of operational strategy Leadership and innovation 600+ consultants worldwide 19 offices worldwide Major commercial and government sectors: Aerospace and Defense, Automotive Chemicals and Process Industries Consumer Goods Financial Services Government Life Sciences and Healthcare 1,400 1,200 1,250 innovation Private Equity transformations worldwide Cumulative Experience 1,000 Energy 800 Electronics, Computing, and Software 600 400 Communications and Media 200 0 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Beyond Projects: Creating A Winning Product Portfolio —4 May 2011 | © 2011 PRTM Proprietary CONFIDENTIAL | 3
  • Portfolio Management – A Process For PrioritizingAcross Broad Range Of Competing Opportunities Maximize long-term portfolio value—deliver near-term commitments Align to strategic vision Product strategy Characterize markets Maximize value Portfolio Achieve balance management Maintain strategic fit Assign resources Pipeline management Manage bottlenecks Product development Drive from concept to market Beyond Projects: Creating A Winning Product Portfolio —4 May 2011 | © 2011 PRTM Proprietary CONFIDENTIAL | 4
  • Poor Portfolio Management Can Lead To ChronicProblems In Product Development Are your projects Do weak projects persist in predominantly short-term & your portfolio; are there few reactive? project cancellations? Do you have resourceDo you have gaps relative to overload and skill setstrategic priorities; unmet shortages?revenue plans? Are there project slippages and delayed product launches? Beyond Projects: Creating A Winning Product Portfolio —4 May 2011 | © 2011 PRTM Proprietary CONFIDENTIAL | 5
  • What Does Portfolio Management Accomplish?Identifying high-priority product development opportunitiesAligning product pipeline with business strategyAssessing the impact of product launches on revenue and profitsManaging the R&D investment mixAssessing the revenue impacts of changing the R&D investment mixMaking shifts in strategic allocations of funding across markets and/orbusinesses Beyond Projects: Creating A Winning Product Portfolio —4 May 2011 | © 2011 PRTM Proprietary CONFIDENTIAL | 6
  • Six Key Elements of Effective Portfolio ManagementEach element must be carefully considered and implemented 1. Governance 2. Portfolio 3. Decision-Making Architecture Framework 4. Process and 5. Resource Balancing 6. Decision Data Linkages and Pipeline Loading and Systems Beyond Projects: Creating A Winning Product Portfolio —4 May 2011 | © 2011 PRTM Proprietary CONFIDENTIAL | 7
  • 1. GovernanceWhat is Portfolio Governance?  Agreement on the roles and responsibilities of various participants in the portfolio management process to execute objectives and optimize outcomesEffective Portfolio Governance is characterized by the following attributes:  Multi-level cascading decision-making Example:  Organizationally aligned with P&L accountability and/or decision authorities Enterprise  Clearly defined decision points portfolio performance Portfolio investment Accountability for Business Business Business  Tops-down portfolio investment decisions Group Group Group decisions  Bottoms-up management of portfolio performance BU BU BU  Bi-directional interactions to inform decisions Investment Investment Investment Beyond Projects: Creating A Winning Product Portfolio —4 May 2011 | © 2011 PRTM Proprietary CONFIDENTIAL | 8
  • 2. Portfolio ArchitectureDifferent portfolio segments are generally driven by different priorities;therefore, a structure of sub-portfolios is used to allocate investmentsExample: Portfolio Sub-Portfolio 1 Sub-Portfolio 2 Sub-Portfolio 3 New products Enhancements Maintenance Prioritization based on the overall strategy, and expressed in relative investment levels across sub-portfolios Criteria Criteria Criteria  ROI/NPV/expected share  Revenue/market share  Key customer satisfaction  Initial investment opportunity  Open defects by level  Technology readiness  Competitive position  Compliance/regulatory risk  Execution risk  Opportunity cost and exposure Individual Programs Individual Programs Individual Programs Criteria-driven Criteria-driven Criteria-driven prioritization prioritization prioritization Beyond Projects: Creating A Winning Product Portfolio —4 May 2011 | © 2011 PRTM Proprietary CONFIDENTIAL | 9
  • 3. Decision Making FrameworkEffective portfolio analysis relies on three complimentary techniques PURPOSE EXAMPLES Strategy Strategy Ensures Total R&D Investment Total R&D Investment Strategic Buckets strategic alignment Break- Market Market Incre- Through B Market New Radical A C Markets mental Risk-Adjusted NPV Net Revenue Launch Ensures Portfolio Views investment balance High Low 30 27 24 21 18 15 12 9 6 3 0 Composite Risk Remaining TTM—Months Weights Category Criteria Market Segment Size Market Segment Growth Attractiveness/Fit 2x Opportunity Revenue Impact or Cost Reduction Attractiveness Potential Gross Margins Maximizes value Development Cost Alignment with Strategic Initiative and Priorities Market Impact 1.5x Scoring Models through Strategic Fit Capability Leverage Competitive Advantage Proprietary Position prioritization Technical Change Composite Risk Probability of 1x Technical Program Complexity Availability of Skills/Resources Success Platform/Product Leverage Business Model Change 1x Probability of Market Maturity Commercial Competitive Intensity Success Commercial Assumptions Beyond Projects: Creating A Winning Product Portfolio —4 May 2011 | © 2011 PRTM Proprietary CONFIDENTIAL | 10
  • 4. Process and LinkagesIntegrate the portfolio management process with other key businessprocesses and establish a regular cadence of portfolio reviews  Strategic priorities  Project priorities, selection,  Product/technology and staging roadmaps  Project scope and charters  Value drivers  Plan change requests Strategy Portfolio Pipeline/Project Development Management Execution  Need for change in plans/roadmaps  Release roadmaps  Master project list  Project attractiveness  Performance to target  Resource needs Strategic  Current  Project timing and priorities operating  Resource progress needs plan  Resource assignments  Performance to target  Project  Master project list priorities Functional Revenue Planning Resource and Budgeting Management  Investment targets by  Headcount needs strategic bucket  Resource supply  Return targets Beyond Projects: Creating A Winning Product Portfolio —4 May 2011 | © 2011 PRTM Proprietary CONFIDENTIAL | 11
  • 5. Resource Balancing and Pipeline LoadingResource balancing and pipeline management picks up where portfolioprioritization leaves off Strategic Priorities Resource Supply/Demand Throughput Align programs Manage overall resource Manage critical in the portfolio needs versus availability bottlenecks to optimize with strategic priorities flow of programs Strategic Resource Portfolio Management Tactical Resource Pipeline Management Supply-Demand Balancing Management 1 2 3 4 Know your Know what Know what Identify, assign, program priorities resources you resources you monitor, and adjust and investment need to do have available to program resources allocation the programs do the programs effectively Beyond Projects: Creating A Winning Product Portfolio —4 May 2011 | © 2011 PRTM Proprietary CONFIDENTIAL | 12
  • 6. Decision Data and Systems Project and Portfolio Management (PPM) systems—key elements Real-time support for phase review decisions Decision Teams New Product Revenue $40,000 Commitments Pipeline Stakeholders from based on actual management Portfolio mix and Other Functions Revenue (000s) $30,000 Executives Original resource what-if analysis $20,000 $10,000 Revised availability, Product Product Support 5% $0 project, and Improvement 5% Strategic +1 +3 +5 Year +7 +9 pipeline status Greater visibility Major Products investment of for 15% resources, downstream visibility to the functions New Platforms 75% entire pipeline Portfolio + Financials Project Resource planning, Teams allocation, and Resource assignment tracking Managers Integrated Simplified Data Regressi Results Testing HTML Status tracking of XML Test on Resource Profile progress and Less time spent 1400 1200 Resource Projects issues tracking Better use ofResource Level 1000 and 800 resource pool, Templates for communicating vii. Training Requirements vi. Product Configuration v. Technical Documentation iv. Voice of Customer Analysis iii. Product Requirements ii. Product Overview i. Introduction Product Specification 600 400 bottleneck project plans progress 200 management and 0 1 2 3 4 5 6 7 8 9 10 11 12 deliverables Period Process management ensures alignment between systems and process Beyond Projects: Creating A Winning Product Portfolio —4 May 2011 | © 2011 PRTM Proprietary CONFIDENTIAL | 13
  • Common Implementation Challenges Organizations don’t agree or follow through on Discipline tough portfolio decisionsMore behavioral Portfolio decisions cut across managerial Politics responsibilities, threatening power and control A lack of ownership of process at required levels of Ownership organization impedes resolution of portfolio gaps No one agrees on how to estimate the value of Point-of-view projectsMore technical Inconsistent views on platform, product, program, Data project terminology to structure the portfolio Product and roadmap interdependencies render Complexity simple risk-reward analyses inadequate Without a good tool, bringing the data and analysis Bandwidth together takes too much time and effort Beyond Projects: Creating A Winning Product Portfolio —4 May 2011 | © 2011 PRTM Proprietary CONFIDENTIAL | 14
  • Benefits of Portfolio Management PRTM’s benchmarking show that improvements in product development practices drive top- and bottom-line growth Stage 4 PRTM Product Development Maturity Model Stage 3 Extended and Benchmarking Enterprise Portfolio Excellence Stage 2 Excellence Core processes Project and Processes aligned linked across to achieve platform internal and Stage 1 Product leverage, portfolio external business Excellence balance, and partners for Functional Stage 0 Functions aligned excellence in maximum leverage Excellence project selection for effective Informal Excellence within execution from and execution Management functions, but not concept to market Informal practices across functions based on individual Managing Across experience Managing Managing Portfolios and Across Functions Across Projects Partners* Data for companies Revenue Growth*representing the top 20% of 19% 19% 32%development practicesscores EBIT Growth* 8% 23% 54% Source: PRTM’s Global Product Innovation Benchmark Beyond Projects: Creating A Winning Product Portfolio —4 May 2011 | © 2011 PRTM Proprietary CONFIDENTIAL | 15
  • PRTM Contacts Walter Sun Principal T +1 650.864.3545 444 Castro Street F +1 650.967.6367 Suite 400 M +1 510.366.1151 Mountain View, CA 94041 USA wsun@prtm.com www.prtm.com Beyond Projects: Creating A Winning Product Portfolio —4 May 2011 | © 2011 PRTM Proprietary CONFIDENTIAL | 16