Enterprise Project Portfolio Management is a way for large corporations to manage and evaluate a large number of projects by grouping them into strategic portfolios. These portfolios are then analyzed for overall effectiveness, how their estimates compared with actual costs, and whether they align with the larger, strategic objectives of the organization.
In effect, it's a data-driven process using lessons learned to help a company decide which types of projects to keep doing or stop doing.
The process involves executives regularly reviewing portfolios to decide which ones make the cut. They look at how budget is spent, at how much value and ROI each project portfolio delivers, and they ensure there are enough resources to go around. Executives closely monitor the progress of project portfolios in real time by using enterprise project portfolio management software that compares current data with past data.
Why Would a Company Need Enterprise Portfolio Management?
Enterprises that engage in project portfolio management are typically bombarded by:
- An overwhelming number of simultaneous projects that do not deliver value to the organization, often due to a lack of focus
- Projects that don't support larger, company-wide business goals
- Projects that are massively delayed, leading to uncollected revenue and delayed ROI
- Resource conflicts, most notably when people are assigned to simultaneous projects resulting in bottlenecks and delays
The entire point of enterprise project portfolio management is to improve the bottom line by eliminating project portfolios that drain resources and do not contribute to the health of the enterprise.
But in order to do that, organizations face several challenges.
The Challenges of Enterprise Project Portfolio Management
When your enterprise is managing complex, large-scale efforts made up of simultaneously running projects, you will face difficulties such as:
Governance and oversight: While projects might survive with a simple structure (e.g. a project manager, a senior exec, and a business sponsor), entire portfolios will require more complex governance involving far more stakeholders spread out across several departments.
Planning and execution: With tasks running in parallel, planning and managing a project portfolio requires serious administration, coordination, and leadership skills.
Financial management: As large scale portfolios are tracked and analyzed, more responsibilities are placed on the shoulders of those authorizing, recording, and reporting these expenditures. It means more room for error, and therefore more need to conform to regulations regarding expenses.
But there is a major upside. Once the process is set in motion and strategy is infused into all project-related expenditures across the enterprise, projects align better with enterprise goals. Nothing is started that doesn't support the larger strategy. And eventually project portfolios perform better from an economic standpoint, giving the enterprise better overall return on investment.
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