Everything You Need to Know About Enterprise Portfolio Management

Large organizations today are at an inflection point. They must operate more nimbly in order to get from strategy to execution faster, but the operational models that helped them thrive in the past are ill-suited for today’s landscape. Research from CB Insights found that 60% of companies take over a year to bring a new product to market. Meanwhile, smaller, newer entrants take valuable market share by better serving segments of their customer base.

Organizations are failing to drive desired outcomes at an alarming rate and frequently have lapsed deadlines and ballooning costs

The primary challenge for many organizations is the growing gap between strategy and execution. Good ideas only take you so far: To fend off competitive threats and win in the marketplace, execution is king.

Many enterprise businesses have turned to Enterprise Portfolio Management to close this gap. If implemented correctly, Enterprise Portfolio Management helps organizations gain visibility into ongoing work, ensure the work is tied directly to strategic objectives, and use this visibility to surface insights into better managing execution.

So what is Enterprise Portfolio Management, how did the Enterprise Portfolio Management Office (EPMO) arise, and how is the EPMO driving business value both internally and externally?

This guide will walk through everything you need to know about Enterprise Portfolio Management and how the EPMO drives organizational transparency, velocity, and efficiency.

Organizations with EPMOs that are well-aligned to corporate strategy report with more successful project outcomes

What is Enterprise Portfolio Management?

Before we dive into how the EPMO is transforming the deployment of work, we must first understand exactly what Enterprise Portfolio Management is, and where the EPMO fits into the larger organization.

Enterprise Portfolio Management increases the alignment of projects, programs, and portfolios with corporate strategy. An Enterprise Portfolio Management Office (EPMO) establishes and oversees the governance of projects, programs, and portfolios, integrates and scales priorities for efficient use of resources, and evaluates performance to ensure benefits realization and continuous improvement.

Organizations with EPMOs that are well-aligned to corporate strategy report with more successful project outcomes

Many organizations already leverage one or more project management offices (PMOs) to help deliver projects at the functional, business unit, or geographic level. The goal of a traditional PMO is to return value to its unit or domain. An EPMO has a broader mandate to deliver against an organization’s strategic objectives.

The reasons for creating an EPMO in addition to traditional PMOs include:

  • PMOs are focused on improving the delivery of work, rather than understanding which work is the right work
  • PMOs struggle to show value to executives because the work they do isn’t obviously connected to the “bigger picture”
  • PMOs do not typically work cross-functionally or across domains with other PMOs to deliver high-impact initiatives
  • PMOs don’t have the visibility across units or domains to prioritize demand from the business or see opportunities to combine projects
  • PMOs may adopt a wide variety of project management methodologies (Agile, Scrum, Waterfall, etc.), making it difficult to report status or ROI at a global scale
  • The projects managed by a PMO may not have executive support or visibility, putting them in a riskier spot than those at the EPMO level

In plain language, EPM is the practice of breaking down work and understanding what work is going on in an organization, from Business Strategy → High-Level Initiatives → Business Unit Work Streams → Individual Projects. By unpacking all this work the EPMO can obtain actionable insights such as: whether or not a project impacts their strategic initiatives, do they have separate BU’s working on similar projects, what resources will a similar project need in the future or how much a project costs to complete.

This information is vital for business leaders who must consider not only the impact of projects under their own purview but across the entire organization. This visibility into all work allows each functional department to find alignment as a whole, moving in unison towards profitability and away from redundancy. After all, when all projects and programs are in line with strategic objectives and core competencies, the company can move faster towards increased profits.

To give you a sense of the work the EPMO does, here’s a list of questions Enterprise Portfolio Management will answer in order to give companies actionable visibility and insight into all work and resources:

  • Which projects should we fund, and which ones should we cancel?
  • Which of our projects are the riskiest, and how may we mitigate those risks?
  • Which projects are under-performing and need more management intervention?
  • How do we improve the monitoring and management of risk and compliance?
  • How do we attract, retain, and motivate the best employees?
  • How do we manage product costs to improve profit margins?
  • Which are our most mission-critical projects for the upcoming year?

How is EPM Different from Project Portfolio Management and Enterprise Project Management?

Great question. First, let’s recognize the alphabet soup around EPM. Whether it’s Project Portfolio Management (PPM), Enterprise Project Management (EPM) or one of the many other acronyms, the terms are related but not necessarily interchangeable.

So let’s look at a few specifics. Project Portfolio Management is the centralized management of the processes, methods, and technologies used by project managers and project management offices to analyze and collectively manage current or proposed projects based on numerous key characteristics. The objectives of PPM are to determine the optimal resource mix for delivery and to schedule activities to best achieve an organization’s operational and financial goals, while honoring constraints imposed by customers, strategic objectives, or external real-world factors.

Sounds familiar, doesn’t it? Just like at the enterprise level project managers need to manage the time, resources, skills and budgets necessary to accomplish all interrelated tasks. And just like EPM, it grants centralized visibility to help planning and scheduling teams to identify the fastest, cheapest or most suitable approach to complete projects and deliver on KPIs.

Enterprise Project Management is the field of organizational development that supports organizations in managing internally and adapting to change. Enterprise Project Management is a way of thinking, communicating and working, supported by an information system, that organizes the enterprise’s resources in a direct relationship to the leadership’s vision and the mission, strategy, goals, and objectives that move the organization forward. Simply put, EPM provides a 360-degree view of the organization’s collective efforts.

So again we have the organization, tracking and analyzing of a company’s projects as they relate to the strategic vision and business objectives. In some cases, Enterprise Project Management evolves into Enterprise Portfolio Management. This happens when Enterprise Project Management creates a portfolio of current and future projects and assumes responsibility for selecting which projects to keep and which to discard based on performance and value. In any case, it is imperative to continuously re-evaluate projects in the portfolio to create a useful feedback loop.

The Need for Visibility and Alignment

The current competitive landscape for large organizations is difficult to navigate, with competition from both established players and new entrants seeking to steal market share. Think of an enterprise company like a cruise ship — large and powerful but very difficult to steer. A cruise ship can’t abruptly pivot in the same way a small boat can, just like a legacy organization can’t rapidly respond to shifting customer sentiment the same way a startup can. For instance, it might take a small company three months to bring a new product to market versus well over a year for a much larger one.

In addition to external competition, large organizations need to deal with unwieldy and opaque internal structures. As more services and products are offered to customers new processes, applications and infrastructure are created internally. Also, many enterprise organizations have kept market share through mergers and acquisitions, leading to a lack of visibility into internal systems and units. This often results in duplication, redundancy, and nonalignment of work. In order to gain control over this tangle of internal processes and make well-informed decisions companies need visibility into the entire landscape.\

In the past, project management was done on an ad hoc basis or within a siloed business unit. Companies realized they must implement a continuous process for evaluating the entire portfolio of projects against business-relevant criteria. In this way, not only can the EPMO manage the breadth of the project portfolio as a group (versus on an individual basis), but they can allocate budget at a more strategic level, avoiding a multitude of case-by-case discussions.

Tackling Serious Enterprise Challenges

The stark reality facing most enterprises is a lack of alignment and fragmented internal processes. This results in poor execution, low predictability of performance, and inconsistent decision making. But in order to establish a comprehensive EPM framework that will drive operational agility, cut down on work inefficiencies and improve project ROI we must first understand these major challenges. Let’s take a look at the 4 biggest:

Lack of Alignment

Most leaders at large organizations see disparate projects and initiatives across multiple business units, involving people from multiple functional groups, often in different physical locations. This complex network of work leads to many stumbling blocks. Important decisions are made in secret, affecting the actual work and the accounting of it as well. Budgets, committed costs, and returns of different projects vary greatly between accounting and reality. Finally, this lack of visibility allows for duplication of work, redundancy of projects or commitment to projects that don’t advance the companies strategic goals or business objectives.

Lack of Predictability

While project management frameworks and approaches might be consistent within the organization, the success of any individual project is very rarely predictable. That’s because most organizations simply won’t know if they have the right resources to complete a project until they try. Successful companies can identify the capabilities needed to complete a project, dynamically deploy both internal and external resources, and reallocate resources as needed.

An EPMO could help mitigate this challenge by collecting and indexing the skills available within its own organization. And, as projects evolve and diverge from the original flight plan, the EPMO could take corrective action because they have real-time insight into what’s happening on the ground. The EPMO should also be gathering insights into past projects in order to anticipate and avoid pitfalls.

Reactionary Decision Making

The lack of alignment and predictability leads to reactionary decision-making. Failure to adequately plan, resource, and track project success gives organizations little room for error when risk events arise. Adverse conditions and poor understanding of a project’s objectives and status create an environment in which decisions — often with a large impact on a company’s strategy — are made on a whim.

Lack of EPM Governance

EPM governance is the management framework used to maximize the value of the portfolio. This framework should govern the selection and approval of projects as well as the internal processes required to ensure projects get the appropriate funding and human capital resources to be successful. Unfortunately, many organizations don’t document and adhere to a governance structure at the enterprise level.

If implemented correctly, the EPMO offers organizations the ability to prioritize the right projects, plan and resource those projects as needed, track the status and ROI of every project in the portfolio in real-time, and surface insights that inform the evolution of the organization’s strategic portfolio.

Creating a Strategic EPMO

Now that we understand what EPM and the EPMO are — and how they unlock massive returns for the business — how should organizations empower the EPMO to be the driving force in executing the organization’s strategy?

There are several ways to build a strategic EPMO, but most successful organizations follow a 7-step process (download our exclusive guide for this process here):

  1. Which projects should we fund, and which ones should we cancel?
  2. Which of our projects are the riskiest, and how may we mitigate those risks?
  3. Which projects are under-performing and need more management intervention?
  4. How do we improve the monitoring and management of risk and compliance?
  5. How do we attract, retain, and motivate the best employees?
  6. How do we manage product costs to improve profit margins?
  7. Which are our most mission-critical projects for the upcoming year?

With this framework in place, leaders must then position the EPMO correctly within the organization. While every organization has a different hierarchy (dependent on company size, industry, complexity, culture, etc.), the EPMO typically belongs wherever strategic planning happens. In many organizations, this means the EPMO reports to a chief operating officer (COO) or chief financial officer (CFO). This empowers the EPMO to ensure strategic alignment at the very top of the organization.

The Need for a Central EPM Platform

The process of launching an EPMO is a massive initiative that may require significant organizational or process changes, development of management and governance frameworks, and in some cases the creation of an entirely new function. The process of launching and optimizing a strategic portfolio of projects is so complicated, in fact, that you’ll need a technology system beyond spreadsheets, presentations, and emails.

A central EPM platform is required to track:

  • The progress of all current projects in flight
  • The NPV of those projects The success (or failure) of all recently completed projects
  • How each project rolls up into the company’s strategic objectives
  • All internal and external resources
  • The skills and capabilities unique to each of those resources
  • How engaged and productive those resources are

Most enterprises rely on a panoply of software to manage tasks and processes, but increasingly organizations recognize the need for software to track the management and execution of their strategic objectives. Strategy execution platforms integrate strategy planning and goal-setting with resource management, portfolio management, project management, and performance management. They are also built to capture and surface insights about ongoing work in order to guide changes to strategy development.

Software platforms for EPMO management not only improve the success of ongoing strategic portfolio work. They also allow senior leaders to monitor and control risk, issues, and financials across the portfolio.

Once you start measuring performance, you can begin to start measuring value, and nothing can be more important for executive leadership. For example, improving schedule performance for all your projects over a period of a year can be translated into improvement in average project cycle time, which can be translated into improvement in time to market, resulting in the number of new products your organization produces, which can add significant value to your organization through increased market share. Value measures, therefore, provide information on the performance of the organization rather than the performance of a project.

Why Catalant

As organizations increasingly rely on EPMOs to drive strategy execution, they realize they need an EPM software platform with capabilities beyond basic project management and reporting. A more holistic solution would combine best-in-breed planning, tracking, and reporting features with critical resource management capabilities to allow organizations to get the right people on the right work at the right time.

Catalant is used at more than 30% of the Fortune 100 because it combines the best of traditional strategy execution management tools with fast access to a vetted network of over 65,0000 elite independent consultants and firms. The Catalant platform enables organizations to:

  • Define, break down and organize critical projects within an enterprise portfolio
  • Identify, access, and allocate needed resources with the right capabilities
  • Accelerate, adapt, and complete mission-critical work
  • Report on the quality, speed, and cost of executed work
  • Surface insights into the impact of resources on work
  • Grow revenue and profit through continuous optimization of the portfolio

Catalant’s unique approach of combining modern SaaS portfolio management tools with an army of experts to help execute on critical work has proven successful in several ways. Catalant customers saw a 30%-50% improvement in speed to launch new projects and a 10%-20% increase in productivity due to fast resource management, all while saving up to 50% of traditional consulting costs.

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