Comparing Company vs. Departmental Portfolios

Sunday, November 20, 2016, AM | Leave Comment

Portfolio management ensures that your organization spends its scarce resources on the work that is of the most value.

A fundamental question is whether your company wants to manage a portfolio of work at the company level or at the department level.

Here are the pros and cons.

portfolio

  • Company Portfolio

    Larger portfolios drive better resource allocations across a wider portion of the company. They are also the more complex to plan and manage. As you can imagine this could get unwieldy, but let’s look at two different examples of where this could work.

    • Your company may not be so big and so the combined projects of all the departments can be understood, planned and managed.

    • If your company is larger, you could create a Strategic Portfolio that would only hold the major projects across the company. In this case, even though you may have hundreds (or thousands) of projects in total, there may only be a Top 50 (or Top 100) that would be part of the Strategic Portfolio.

    The major purpose of creating as company-wide portfolio is to prioritize the projects across the various functional groups to make the best use of the limited funding available.

    For example, let’s say that the IT, Human Resources, Sales and Manufacturing departments all have important projects they want to complete in the coming year.

    Perhaps the Human Resources department will only get to fund their top three priorities for the year, so that the Sales Department can fund their top 15.

    This may seem unfair to the Human Resources department, but it may be the very best allocation of funding from a company perspective.

    One challenge with the company-wide portfolio is that you have business managers from various departments trying to pass judgment on the value of projects that they do not know a lot about.

    The managers are trying to compare projects from Sales, IT, HR, Manufacturing, etc. It may be difficult to make these decisions since the projects and the benefits could be very different.

  • Department Portfolios

    The other way that portfolios are build is a department at a time. For instance, you might have an IT portfolio, and a separate Finance Portfolio and a separate Sales Portfolio. This might be the best way to go for a number of reasons.

    • It keeps the work within the portfolio at a more reasonable level.

    • It does not introduce animosity among the various departments.

    • It allows subject matter experts to make decisions that affect each department.

Conclusion
So, this is the challenge. The larger your portfolio, the better you can allocate scarce resources to the most important projects.

However, the larger the portfolio, the more complicated they become, and the harder it can be to determine which work is of most value. Each company makes this comparison of the pros and cons and decides at what level they will manage portfolios.

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This column is © copyright to www.Method123.com and originally appeared in their weekly project management tip newsletter.

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