Make Sense of Strategic Portfolio Management

Separate what's new and valuable from bloated claims on the hype cycle.

Analyst Perspective

Do you need strategic portfolio management, or do you need to do portfolio management more strategically?

Travis Duncan
Research Director, PPM and CIO Strategy
Info-Tech Research Group

While the market is eager to get users into what they're calling "strategic portfolio management," there's a lot of uncertainty out there about what this market is and how it's different from other, more established portfolio disciplines – most significantly, project portfolio management.

Indeed, if you look at how the space is covered within the industry, you'll encounter a dog's breakfast of players, a comparison of apples and oranges: Jira in the same quadrants as Planisware, Smartsheets in the same profiles as Planview and ServiceNow. While each of the individual players is impressive, their areas of focus are unique and the extent to which they should be compared together under the category of strategic portfolio management is questionable.

It speaks to some of the grey area within the SPM space more generally, which is at a bit of a crossroads: Will it formally shed the guardrails of its antecedents to become its own space, or will it devolve into a bait and switch through which capabilities that struggled to gain much traction beyond IT settings seek to infiltrate the business and grow their market share under a different name?

Part of it is up to the rest of us as users and potential customers. Clarifying what we need before we jump into something simply because our prior attempts failed will help determine whether we need a unique space for strategic portfolio management or whether we simply need to do portfolio management more strategically.

Executive Summary

Info-Tech Insight
In the same way that it took many years for PPM to stabilize as a concept distinct from traditional enterprise project management, strategic portfolio management is experiencing a similar period of formational uncertainty. In a space that can be all things to all users, clarify your actual needs before jumping onto a bandwagon and ending up with something that you don't need, and that the organization can't adopt.

Strategic portfolio management is enterprise portfolio management

Evolved from various other capabilities and vendor solutions, strategic portfolio management (SPM) seeks to connect strategy to execution.

While the concept of 'strategic portfolio management' has been written about within project portfolio management circles for nearly 20 years, SPM, as a distinct organizational competence and software category, is a relatively new and largely vendor-driven capability.

First emerging in the discourse during the mid-to-late 2010s, SPM has evolved from its roots in traditional enterprise project portfolio management. Though, as we will discuss, it has other antecedents not limited to PPM.

In this publication, we'll unpack what SPM is, how it is distinct (and, in turn, how it is not distinct) from PPM and other capabilities, and we will consider the extent to which your organization can and should leverage an SPM application to help drive strategic outcomes.

–The increasing need to deliver value from digital initiatives is giving rise to strategic portfolio management, a digital investment management discipline that enables strategy realization in complex dynamic environments."
– OnePlan, "Is Strategic Portfolio Management the Future of PPM?"

Only 2% of business leaders are confident that they will achieve 80% to 100% of their strategic objectives.
Source: Smith, 2022

Put strategic portfolio management in context

SPM is a new stage in the history of project portfolio management more generally. While it's emerging as a distinct capability, and it borrows from capabilities beyond PPM, unpacking its distinctiveness is best done by first understanding its source.

Understand the recent triggers for strategic portfolio management

Triggers for the emergence of strategic portfolio management in the discourse include the pace of technology-introduced change, the waning of enterprise project management, and challenges around enterprise PPM tool adoption.

Spot the difference?

Scope, focus, and audience are just a few of the factors distinguishing what the market calls "SPM" from traditional PPM.

Info-Tech Insight
The distinction between the two capabilities is not necessarily as black and white as the table above would have it (some "PPM" tools offer what we're identifying above as "SPM" capabilities), but it can be helpful to think in these binaries when trying to distinguish the two capabilities. At the very least, SPM broadens its scope to target more executive and business users, and functions best when it's speaking at a higher level, to a business audience.

Strategic portfolio management offers a more holistic view of the enterprise

At its best, strategic portfolio management can accommodate various paradigms of work management and incorporate different types of portfolio management.

Perhaps the biggest evolution from traditional PPM that strategic portfolio management promises is that it casts a wider net in terms of the types of work it tracks (and how it tracks that work) and the types of portfolios it accommodates.

Not bound to the concepts of "projects" and a "project portfolio" specifically, SPM broadens its scope to encompass capabilities like product and product portfolio management, enterprise architecture management, security and risk management, and more.

• Where a PPM solution only shows one piece of the puzzle, SPM looks at the entire investment ecosystem, tracking strategic goals, the ideas generated to help achieve those goals, and all the various kinds of investments made in the service of those goals.
• what's more, where traditional PPM tools required users to adhere to a certain way of working and managing tasks, SPM is more flexible, relying on integrations across various ways of working to provide higher-level insight on the progress of work and the achievement of goals.

Deliver business strategy and change effectively

"An SPM tool will capture business strategy, business capabilities, operating models, the enterprise architecture and the project portfolio with unmatched visibility into how they all relate. This will give...a robust understanding of the impact of a proposed IT change " and enable IT and business to act like cocreators driving innovation."
– Paula Ziehr

You might need a strategic portfolio management tool if–

If you find yourself facing any of these situations, it might be time to step away from your PPM tool and into an SPM approach:

• Your organization is facing a large implementation that will cross multiple departmental units and requires alignment across senior leadership (e.g. a digital transformation initiative).
• You currently have disparate systems tracking different portfolios (project, product, applications, etc.) and types of investments, but lack insight into the whole in terms of how work efforts and investments tie back to strategy realization.
• You are an ePMO or a strategy realization office that doesn't manage work necessarily, but that rather ensures that the work, assets, and capabilities that are funded connect to strategy and drive the realization of strategy.

Sixty one percent of leaders acknowledge their companies struggle to bridge the gap between creating a strategy and executing on that strategy.
Source: StrategyBlocks, 2020