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Effective Portfolio Management:

Making Strategy a Reality
 E
xecutives have constrained
and limited assets,
and to make informed
investment decisions they
must understand the impact,
dependencies and risks that are
associated with each initiative.
An understanding of these
relationships allows them to make
informed investment decisions on
initiatives with appropriate levels
of risk and reward. Broad-base
categorizations of the type of
investments within a portfolio are
to run, grow and transform the
business. Companies that pursue
business excellence do so through
a combination of great strategy
and powerful execution. Portfolio
management is the bridge
between the two, i.e. making
strategy a reality.
Portfolio management has
become increasingly important as
companies face shorter product
lifecycles, rapidly transforming
technologies and greater global
competition. How businesses get
return on their money invested
is paramount to the growth or
survival of that company. As a
process, portfolio management
Broad-base
categorizations of the
type of investments
within a portfolio
are to Run, Grow
and Transform the
business.
is to make sure that products,
services, projects or programmes
that organizations are delivering
are focused on meeting strategic
objectives and delivering benefits.
Essentially, portfolio management
is about doing the right things
with the right benefits, irrespective
of whether those things are
products, services, projects or
programmes. If they are not
right then they should be closed
or stopped, as assets need to be
allocated appropriately.
Portfolio management helps
realize maximum business value
as it
Enables achievement of the best
return from total investment in
assets
Provides a decision framework to
senior managers and executives
on investments
Helps with the right services
being delivered, products being
developed and programs and
projects being undertaken
2
 Effective portfolio management
provides a mechanism to make
Effective portfolio sure that the organization is doing
management the right things and achieving
appropriate benefits. In many
organizations, there could be
hundreds of such programs and
projects running across different
functions with a geographically
dispersed setting. This complexity
causes organizations to struggle
with doing the right things and
realizing appropriate benefits.
The outcome is that organizations
receive a poor return from
their investment by failing to
unlock the full value of their
capital investments.
The following are the key elements
for portfolio management
to be effective through a
combination of great strategy and
powerful execution.
Governance
Governance for portfolio
management includes giving
directions when looking for
benefits being greater than
investments, and how risks and
interdependencies come into
play across services, products,
programmes or projects.
Portfolio Management enhances
executive decision-making based
on company specific criteria,
and key decisions are made at
governance forums.
Strategy alignment and risk
tolerance
Successful executives have
realised that portfolios represent
where they are today in their
current operations (catalogue)
and what they will be in the future
(pipeline). As the strategy and risk
tolerances change, portfolios will
need to change. Portfolios have
a direct line of sight with strategy
and risk tolerances to be effective
in making strategy a reality.
3
 High

D E K

Re-evaluate Accelerate

C F Y
Economic Value

M
Stop Execute
A
N
B

X
Low
Low High
Strategic Alignment

Figure 1: Value map of services, products, programs or projects (a, b and so on) showing the level of strategic
alignment and the executive decisions (stop, re-evaluate, execute, accelerate) for portfolio management

4
Portfolio office
Portfolio office is established
to provide timely and accurate
information to all structures,
processes and information. It
is required to enable effective
decision making and portfolio
delivery success.
Capability and asset allocation
When doing portfolio
management, pipeline gridlock
needs to be avoided with
appropriate asset loading,
be it people, infrastructure,
or applications.
Engaging the organization
Success in portfolio definition and
delivery is only possible if people
are engaged, focused on the
appropriate goals and get a sense
of working together as one team.
In addition, the portfolio change
initiatives must have senior
management commitment.
Challenges
There are few challenges to
running an effective portfolio
management within an
organization. The underpinning
issue that organizations struggle
with is keeping their portfolio,
irrespective of whether it is a set
of services, products, programs
or projects, under control
and relevant.
Taking a risk-based approach to
the challenges leads to some key
portfolio management risks.
 CHALLENGES RISK

Effective decision making to stop poorly performing Inefficient resource allocation

services, products, or projects
Extended timelines and missed deadlines
Unrealistically determined benefits

Ineffective sequencing, creating problems in delivery Ineffective conversion of strategy into action

Unclear portfolio strategy alignment Failure to achieve business objectives

Lack of sufficient experience and capability within Inefficient delivery and execution with inconsistent
portfolio management functions portfolio management

Organizations inability to absorb change due to lack of Delays in the delivery and increased costs
asset capacity

Ineffective monitoring, reporting and aggregation tools
Inconsistent portfolio data across business units or
functions
Lack of effective actions due to slow identification
of key issues
Differing decisions leading to inconsistent outcomes
of portfolio management

The way forward

Organizations that have strategic alignment of initiatives,

successfully implemented return on capital invested,
effective portfolio management resource allocation, and overall
have seen improvements in performance.

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 Dr. Roma B. Mohanti is the Management Consultant, Process Excellence,
Wipro. He has over 25 years of industry experience in areas of Portfolio
About the Management, Program/Project Management, Operational Excellence,

author Governance, Risk and Compliance, Organization Strategy and Balanced

Scorecard, Agile, Lean Six Sigma, and Service Management. He is a key
contributor on engagements with leading UK FTSE 100 clients. Roma
received his Doctorate from the North Carolina State University, USA.

Wipro Ltd. (NYSE:WIT) is a leading information technology, consulting

and business process services company that delivers solutions to enable
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Wipro LTD 2016 IND/PMCS/JUL2016-DEC2016

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