Portfolio management sample


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Corporate Effectiveness and Business Excellence
Value Management Approach

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Portfolio management sample

  1. 1. © IBT, Los Angeles, California, USAPortfolio Management – A Value Management ApproachSample Document – June 10th, 2013Sandeep (Sandy) MujuInnovative Business Transformation (IBT)
  2. 2. © IBT, Los Angeles, California, USAGain visibility on the innovation projects portfolioAlign the innovation investments with stakeholder objectivesMake the right choices when prioritizing investments and projectsInnovation Portfolio ManagementImprove ability to execute on innovation value generationA Value Management Approach
  3. 3. © IBT, Los Angeles, California, USA Project information is hard to collect◦ No standardized way to document projects◦ Incomplete documentation◦ Non-centralized information◦ Projects at different stages of their life cycle Inadequate portfolio view◦ Project investments are unorganized Noframework, no tool, no time, no resource◦ Too many projects or information to analyze◦ Programs reflect capital authorization instead oflogical sequencing Ineffective communication about theportfolio◦ Business is not interested◦ Unsure about what to communicate◦ No clear executive view of the portfolio and itsbusiness impacts◦ Unclear strategy executionGain Portfolio-wide Visibility into ProjectsThe issues The propositionsA simple format tocollect projectinformation and toguide projectmanagers aboutwhat to documentA logical grouping ofinitiatives in aproject-programportfolio hierarchyA single view of currentand proposed portfolios(which projects, when,at what cost, for whatpurpose) highlightingfinancial & non-financial benefits, risks,and payback periodsProjectBProjectCProjectDProjectAProgram1Program2PortfolioProjectE
  4. 4. © IBT, Los Angeles, California, USA Project value is hard to define◦ Unable to scope projects to deliver optimumvalue◦ Can’t measure where the portfolio will havethe most impact on value◦ No link between portfolio and share price Project performance targets are notspecified◦ Measurement is different for each project◦ Hard to capitalize on project process maturity◦ Too many variables (or inconsistent variables)complicate comparison of projects Strategic Alignment is unclear◦ Unable to obtain clear sponsorship frombusiness (CSD versus BSD)◦ No clear linkage between corporate strategicobjectives and investment strategy◦ Can’t identify where the portfolio fails tosupport business◦ Corporate, Business and Innovation grouproles and responsibilities are unclearAlign Investments with Stakeholder ObjectivesThe issuesOur Objective: improve growth through innovationOur Portfolio: 65% of initiatives support cost reduction?(Better start asking questions…)A standardframework foridentifying projectimpacts on balancesheet, incomestatement and sharepriceMAINTENANCEA clear categorization ofinvestment types, allowingalignment to businessobjectives (CSD, BSD)An adapted business case thatreflects project diversity andenables comparison andprioritization of projectsThe propositions
  5. 5. © IBT, Los Angeles, California, USA Projects can’t be compared◦ Investments underway are not the ones withthe most value◦ Projects types and benefits are too different Project prioritization process is unclear◦ Business Units don’t participate in projectselection◦ No common criteria to prioritize projects Investments can’t be justified◦ Politics play a bigger role than businessvalue◦ Incomplete or non-existent financial data◦ Undocumented benefits◦ Difficult to justify some types of projectsPrioritizing InvestmentsThe issuesA value / risk matrixclearly identifyingthe projects with themost enterprisevalue and the leastrisk or complexityA view of the plannedbenefits and theirimpact on thecompany for the nextseveral years, whichallows you to controlthe portfolio’sexecution and impacton the company.The propositionsRisk/Value Matrix : All ProjectsA1A2A3A4A5A6A7A8A9A10A11A12A13I1I2I3I4I5I6I7I8O1O2O3O4O5 O6O7O8T1T2T3T4T5T6T7T801234560123456RiskValueInnovation Maintenance Productivity GrowthLow RiskHigh ValueLow ValueHigh RiskOverallBenefits
  6. 6. © IBT, Los Angeles, California, USA Unable to adapt to changes◦ Difficult to identify and discontinue troubled projects◦ Portfolio does not adapt to changing objectives◦ Business case evolves, but projects not re-assessed Lack of comprehensive, continuous view of theportfolio◦ Projects have conflicting objectives, timelines,and priorities◦ Redundant or overlapping projects with double-counted benefits◦ New opportunities at mid-year aren’t considered Inadequate integration with the other businessmanagement processes and approaches◦ Program Management not blended with 6-Sigma◦ Portfolio management not linked with strategicplanning and budgeting processes◦ Continuous reviews not tied to PMOgates/checkpointsDevelop Strategy Execution DisciplineThe issues The propositionsA rolling execution processto monitor and maintainportfolio alignment withobjectives.An ability to compare andprioritize projects ofdifferent length, styles,status at any stage of theirexecution.A consistent framework tointegrate all rewardssystems, standards,governance approachesinto Risk/Reward balancedValue generation.Monitor PortfolioStatus andPerformanceIdentify NewOpportunitiesReprioritize /OptimizePortfolioPoliciesandRewardsRolesandRespons.Methods &ApproachesTools andEnablersOrganizationalStructureDeploymentandMonitoring
  7. 7. © IBT, Los Angeles, California, USADetermine MostRelevant Costs andBenefits for EachProject Type withBusiness CasesInnovation Portfolio Management LandscapePortfolio Landscape helps speed-up the journey through every step of Portfolio Management.Set upPortfolioDevelopPrioritizationModelCollectCollectProjectProjectInformationInformationCollectProjectInformationAnalyzeAnalyzePortfolioPortfolioAnalyzePortfolioPrioritizePrioritizePrioritizeProject &ProgramsCommunicate& ReportDeploy &ExecutePortfolioMonitorPrograms& ProjectsMonitorChangesDetermine yourprioritization criteria, inputconstraints, success KPIs,performance thresholds.Collect project datawith standardizedtemplateConsolidate informationand produce reports tohighlight key Portfolioand Project data insupport of theprioritization processRisk/Value Matrix : All ProjectsA1A2A3A4A5A6A7A8A9A10A11A12A13I1I2I3I4I5I6I7I8O1O2O3O4O5 O6O7O8T1T2T3T4T5T6T7T801234560123456RiskValueInnovation Maintenance Productivity GrowthLow RiskHigh ValueLow ValueHigh RiskMonitor the portfolioperformanceCompleted per initiative sponsorsTeam Established/Well UnderwayTarget Identified$x$x$x$x$x$xRevised OriginalTarget IdentifiedTeam Established/ Well UnderwayCompleted per Initiative SponsorsTranslates to a$x MM annualrun rateBenefit Tracking ReportTimeEBITDAImpact($M)FY03 OpportunityFY05 Target - ΔEP=$200M ΔEBITDA=$330M
  8. 8. © IBT, Los Angeles, California, USAThe Strategic ImperativeWhat should GX’s Innovation Strategy Look Like?• Need seeker strategy• Market reader strategy• Technology driver strategyWhat should GX’s Innovation Portfolio Look like?• Incremental innovation• Evolutionary innovation• Disruptive/Radical innovationWhat should GX’s Innovation Success Measures Look like?• First to market disruptive innovations• Substitute products developed or brought in-house• New entrants converted into partners• New to world products launched• New product revenues generated• Patents obtained and/or licensed
  9. 9. © IBT, Los Angeles, California, USAWays we may be able to help GX …DrivingBusinessInnovationBusiness Strategy& PortfolioManagementGlobalSourcing& DFxFull Lifecycle NPD& TechnologyCommercializationMarketFeasibilityTesting &NPI
  10. 10. © IBT, Los Angeles, California, USAContactPhone: +1 (323) 947-7029Email: smuju@ibtransform.comDr. Sandeep Muju brings a versatile and seasoned techno-commercial background withleading Fortune 500 global corporations in various executive leadership roles as well externalAdvisory experience with global corporations drive transformational business performanceimprovements.He has a PhD in Applied Mechanics after which he also obtained an MBA in Strategy &Operations. Additionally he has Six Sigma Master Blackbelt background (DFSS, Lean, Growth), andPMI PMP experience. Over the years he has received several awards and honors including, R&D100 Award, Patent & Trade Secret Awards, Quest for Excellence Award, Business ExcellenceAwards & Honors, Industry Panelist, Conference Keynote Speaker, etc.Sandeep “Sandy” Muju