Site icon Joanna Vahlsing, PMP

PMO Directors Series: Program and Portfolio Management

Program and portfolio management is mostly about governance and strategic alignment as the organization’s work grows and becomes more interdependent and complex. It’s about understanding and continuously evaluating the prioritization of investment in (and throughout) the organization.

In a tech product company, one way to organize the product delivery teams is into programs aligned with the products and the investment/value streams.

Organizing by product and investment streams allows for the following benefits:

Note: if the organization is small and there’s only one program, all the items in the portfolio connection section would apply to the program leadership to work with the appropriate company leadership.

You’ll notice that I started at the lowest level and worked my way back up because the emphasis needs to be on the product delivery teams, not the top-down command-and-control of the portfolio leadership. Information is flowing in both directions.

What’s most important is alignment to overall strategic goals and understanding of the investment mix.

Alignment to Strategic Goals

A company usually has a list of high-level goals for a particular timeframe, which sets the framework for how those goals and strategies cascade through the system. In the model above, the portfolio leadership would decide, together with program leadership, if the current investment mix is set up to support the achievement of those goals and outcomes, and if not, work with the company leadership to make necessary changes.

Program leadership would then work with the product delivery teams to adjust their goals and outcomes accordingly.

Throughout this, it’s important not to speak in features; that’s the “how” for the product delivery teams to figure out using Discovery and Delivery processes to meet their goals and objectives and “move the needle” on their KPIs.

In addition, there is some governance required to ensure that product delivery team goals and outcomes are aligned with the company goals and outcomes.

Understanding the Investment Mix

We’ll get into budgeting in a later post, however, as the PMO Director, one area where you can support this is by maintaining visibility of the level of investment for all the product delivery teams – at the individual level, the program level and the portfolio level. If you don’t have access to salaries, just use headcount counts to get a sense of the allocation. This is powerful information for the program and portfolio leadership to have insight of where the investment is going and you can work with them to make any adjustments/re-allocations.

When reporting investments, the lowest level to report is at the team-level. If you go down to the individual level, it will continue the mindset that individuals can be split across teams and that the goal is 100% utilization of all team members all the time.

Ideally, you’ll have a strong product person with you to be able to model some return on investment based on the value that was provided to the customer. For example, back to my example of a team working on the Sign-Up Funnel. Let’s say that the team increased conversions by X%, we can then determine that the impact was an increase of Y% subscribers, adding Z dollars to revenue – think of yourself working with them almost like an investment fund manager.

Business Cases

I used to love the simplicity of the concept of a business case. Isn’t it great that we can know up-front how much something is worth, and we can determine an ROI, which can be used to determine if we move forward with an idea? It sounds so logical and elegant!

Like most things, that’s usually not how it plays out. I’ve observed groups spending weeks and months determining the perceived value – getting their analysis down to the exact penny because they were afraid to be wrong. I appreciated their thoroughness and thoughtfulness – why wouldn’t I, I wanted an accurate estimate too, right? Eventually, months later, we’d have something, and then we’d get to work.

Then I had the opportunity to work with a business leader who would create business cases so quickly – usually within a few days. I was amazed and surprised – I thought, wow, this person must really get it, and I had to know their secret! One day I asked her, and her response was: “Oh, I’m just guessing, no one really knows for sure until we start testing and getting feedback from the market, but I feel confident enough to start testing my ideas. Plus, no one ever goes back and looks at those estimates once the work is done – and even if they do, the estimates are going to be wrong.

That was another “aha” moment for me because there’s a mindset associated with ROI assumptions and budgets. Let me explain:

Just like estimates, determination of ROI is a best guess, so the sooner those guesses can be tested, the faster the organization better understands how to adapt and adjust any investments.

As the PMO Director, you can work with the organization to create these lightweight governance frameworks, establish expectations and provide clarity of how all the various groups work together as part of the whole.

As always, would love any feedback and of your own “aha” stories.

Next, let’s get into Budgeting and Capitalization.



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