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A Portfolio of Business Outcomes

While project portfolio management owes its genesis to financial portfolio management, there are some key differences. The first is the outcome of the portfolio. With a portfolio of financial assets, such as stocks, the return is measured in the same common denominator: dollars. This allows us to create some common key measures of performance, such as return on assets, price/earnings ratios, ROI, etc.

Projects, however, are not all directly tied to dollars. Some projects improve employee moral, some increase market share, and some simply make current operations more efficient. Another way to look at this is to think of each project as a business outcome. Companies invest in a project to achieve a certain goal. Recent examples from EIG clients include:

  • Web site re-vamp to increase sales and customer satisfaction by streamlining the web experience.
  • Employee self-service application to improve employee moral and gain efficiencies in HR
  • SAP implementation to automate financial processes and improve decision support.
  • Stabilization effort to improve performance of various core apps. For this customer, this should produce increased sales, improved employee satisfaction, and reduced help desk costs.

How, then, to look at portfolios of such diverse business outcomes? Rather than simply grouping projects by size or business unit (which is valuable, of course), some companies are now grouping by strategy or like outcomes.

A classic is by investment type, and the two popular models are:

  • Run, Grow, Transform
  • Strategic, Informational, Transactional, Infrastructure

Portfolios of like outcomes might look like:

  • Employee projects
  • Customer projects
  • Transaction automation projects
  • Infrastructure projects

Portfolios by strategy might look like:

  • Gain market leadership
  • Most satisfied employees
  • Double revenues
  • Low cost provider

Wait a minute, does this look like strategic alignment? You bet it does! But then, that’s the real reason we start projects in the first place – to better execute company strategy. And that’s why all projects should be aimed at business outcomes, not simple financial metrics.

July 28th, 2009 | Tags: , | Category: Portfolio Management

163 comments to A Portfolio of Business Outcomes

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