IBM White Paper | Smarter responses to the marketplacewith enterprise portfolio management
IBM Software Thought Leadership White PaperRationalSmarter responses to the marketplacewith enterprise portfolio managementBy Roger LeBlanc, Rational sales executive, IBM Software Group
2 Smarter responses to the marketplace with enterprise portfolio managementContents the right opportunities for their growth. Project portfolio management models have traditionally been considered 2 Examining the plateau of project success rates among the most effective management frameworks to keep IT 3 Integrating projects, products and applications within investments in check with business strategies. However, portfolio management because the strategy formulation process is usually aligned to the annual business planning cycle, with the most committed 4 Using a single, comprehensive solution for IT portfolio organizations providing a biannual update, this is often a management struggle. Shifts in market segments do not wait for business 5 Turning to IBM for a business solution planning cycles, and whoever manages to be ﬁrst on a market- place trend will likely reap higher margins and earn a top spot in the customer’s mindshare.Examining the plateau of projectsuccess rates Project portfolio management models started to take hold inChanges in marketplace conditions and customer demands accelerate the corporate IT world in the late nineties. Early on, one ofat an ever-increasing rate. the most common industry trends used to justify the need for project portfolio management was that more than half of ITTraditional marketplace leaders are competing head-to-head with projects were failing. Over the years, and following manysmaller, better differentiated competitors vying for market share via millions of dollars invested in project portfolio managementthe web. solutions and practices, a signiﬁcant corresponding increase in project success was not seen. Clearly, linking project invest-Software—whether embedded in a product or consumed as the prod- ments to strategies is a good idea, but project portfoliouct itself—is changing the game. It is increasingly a primary differ- management alone is not sufficient to change the course andentiator and value driver in the minds of consumers and customers. lead to a measurable effect on returns on investment and marketplace positioning. Consequently, product and projectAll these factors and more are accelerating the race to themarketplace. Businesses today need an ability to harness thisnew reality and make it work for them. The key is to embrace
IBM Software 3investment decisions are not based on objective information complex applications and systems providers) or with productor current consumer needs but rather on “the loudest voice in portfolio management (for complex software products andthe room,” which may be one reason that so many IT projects embedded software providers). A key driver behind this shift isfail. The lack of marketplace- and customer-driven decision the realization that the investment decision support constructsupport prevents businesses from: used to prioritize and manage IT investments must better represent the needs and priorities of end users and consumers● Accommodating innovative ideas that arrive after the pro- of products and services. Inserting this application or product ject’s start, resulting in missed revenue opportunities. portfolio management layer provides the focus required to● Determining whether or when a project should be drive timely decisions based on the input and needs of those terminated or rescoped to pursue new, more-valuable who use the products and services that organizations deploy. opportunities. Additionally, using a product or application portfolio process● Adjusting limited budget allocations in a timely manner to model provides a buffer between each business planning cycle. support the initiatives generating the most value to the This buffer allows for timely adjustments to the portfolio of business. investments based on changes in marketplace or business● Estimating the true costs, risks and value of prospective conditions, which may or may not require a change to project investments, keeping organizations from realizing organizational strategies themselves. their strategic and tactical goals. To achieve maximum value from their portfolio of invest-Because investing in project portfolio management solutions ments, businesses need to not only work faster but also workalone hasn’t worked, business leaders need to approach the smarter. They must listen to and incorporate the voice of alloptimization of their investments in a new way. stakeholders. Moreover, they must measure and objectively evaluate data to determine the beneﬁt and value of a product,Integrating projects, products and feature or capability to the business.applications within portfolio managementA growing trend across several industries, and embraced as an Today’s faster, smarter organizations are the ones that effec-effective way to deal with changes in the marketplace, is sup- tively link strategies to execution. By establishing a model thatplementing or replacing traditional project portfolio manage- allows for timely adjustments to the portfolios from inceptionment with application portfolio management (for large and all the way through the execution life cycle, businesses can
4 Smarter responses to the marketplace with enterprise portfolio managementbuild the right product at the right time for the right cus- Customer needs do not wait for product and applicationtomers. Additionally, beyond the shortcomings of project releasesportfolio management for organizations needing to quickly The race to the marketplace is not only with competitors butadjust and rebalance their portfolio in real time, other factors also with customer wants and needs. Businesses need to beare forcing executives to revisit assumptions. able to listen and respond to the voice of the customer— before they start projects as well as throughout the process.A project isn’t the sum of its parts—but rather a containerfor them To avoid the chance that a product or application will be out-After a project has been launched, it can be quite difficult to moded by the time it reaches the marketplace, customer needschange its course, mostly because the project is bound by the must be identiﬁed, prioritized and traced across the executionprocesses and governance designed to push it through its life process. The customer voice needs to have presence andcycle. As a result, engineers often efficiently do the wrong authority throughout the entire life cycle.thing because the project life-cycle process can’t easily accom-modate changes that happen after the start of a project. By adopting product or application portfolio management within their portfolio management models, businesses canToday, being a leading organization is not simply about assemble the end product or application in a ﬂexible, near-accommodating change—it’s about embracing it. As a result, real-time manner. They can gain and maintain proximity withexecutives are focused on the opportunities that change can the customer through ideation and prioritization activities. Asdrive and how to take advantage of them. The best way is to a result, businesses can achieve quicker time to market withnot think of the project as the end goal but rather as a con- the right product—increasing their chance of being ﬁrst to thetainer for its components, such as product features, require- marketplace, which usually garners a premium proﬁt.ments and ﬁxes: components that truly represent the value ofthe project to the business. The focus shifts from protecting Using a single, comprehensive solution forthe boundaries of the project to optimizing content and IT portfolio managementkeeping it current, relevant and aligned to the needs of the Choosing among project portfolio, product portfolio andbusiness. By adopting a product or application portfolio mind- application portfolio management models is often difficult forset, organizations can gain that acute perspective of value. any given organization. In many cases, the best answer is aAligning strategies to execution is not about picking projects; combination of two. Highly product-focused organizationsit is about keeping projects relevant and value-added.
IBM Software 5will favor a product portfolio management framework to drive Plus, a solution built on best practices and proven governancethe strategy layer but can take advantage of project portfolio frameworks can improve the portfolio management and prod-practices for their operational layer. The challenge this poses uct management processes and compliance, helping a businessto executives is how to beneﬁt from the best of both domains to better plan, execute and measure the performance of itswhile keeping the overall process model simple and ﬂexible; an product lines.effective approach is to adopt a portfolio management con-struct that can simultaneously work for projects, products and Improve qualityapplications—in other words, a construct that can act as an A portfolio management framework that is adaptable for prod-umbrella over all portfolio management models, whether it ucts, applications and project management infuses ﬂexibilityfocuses on projects, products or applications. into its processes, enabling a business to quickly adjust roadmaps to both realign with changing marketplace needsMake the right decisions and accommodate innovative ideas that may occur after theAn integrated portfolio management solution can capture start of a project. It can also help decision makers visualize andbusiness and marketplace requirements from customers, ana- prioritize customer needs to help ensure that a product’s mostlysts, marketplace researchers and internal stakeholders. By valuable capabilities are not minimized or eliminated throughcollecting and centralizing that information as well as other project delivery.product- and project-critical data, a solution can bridge thegap between business and IT and can support informed deci- Turning to IBM for a business solutionsion making, status reporting and portfolio review. As a result, IBM offers IBM Rational® software for portfolio manage-business leaders can make the right investments and build the ment, which can provide an adapted solution for products,right products for the right marketplaces at the right time— projects and applications. This modular and ﬂexible approachimproving business success. supports multiple methodologies and is built on best practices for both processes and guidance.Speed time to marketWith project, product and application data centralized, busi- IBM Rational Focal Point™ software delivers integratednesses can escape the chaos of trying to manage information in portfolio and product management capabilities to businessemails, documents and spreadsheets. Users can quickly obtain users. It helps drive business value and innovation by empow-the information they need, when they need it—improving ering executives and leaders to prioritize investments; maketheir ability to respond to changing marketplace and business informed, objective decisions; perform scenario, statistical andconditions. ﬁnancial analyses; and align project decisions with ﬁnancial, marketplace and business needs. This top-down solution is designed to be easy for line-of-business decision makers to use and adopt, providing a quicker return on investment.