Portfolio Management Software
Published December 07th, 2016 by

What Is Portfolio Management: Tools, Skills, and Techniques

What Is Portfolio Management: Tools, Skills, and Techniques

What is portfolio management? It is achieving that balance between an opportunity and its risks in order to maximize the profitability and benefits of the project undertaking. It is a set of processes that a manager carefully executes to assess a number of factors and formulate a series of strategies that the business will use to gain the maximum return for benefits. Ideally, a portfolio manager will use a pre-determined set of steps to evaluate the risks and opportunities. But in some cases, he or she will have to use his or her own judgment based on what’s obvious or on logical reasoning.

Successful project portfolio management is critical, as it is not completely guaranteed. In fact, according to the CHAOS report from the Standish Group, only a third of projects implemented are completed as planned.

Why is portfolio management necessary? Basically, any kind of project involves some sort of uncertainty at any point within its execution. The uncontrollable factors and influencers of a project sometimes define its success or failure, so it is important to address these things beforehand. It is a broader type of risk management, and also an aspect of project management. Therefore it is important to invest in the tools to make the processes more efficient to execute. Portfolio management plays a significant role in making a business achieve long-term success by staying efficient despite the changes in the market it will encounter.

A good portfolio manager should know how to convert ideas into a strategic culmination of priorities incorporated as goals within a project. He or she should do this systematically to arrive at different case scenarios for better assessment. There will be a scoring system to follow wherein each scenario is evaluated with considerations on profitability, available resources, and risks. It should also align with the company’s general goals that must either support it or accelerate its realization. To do this, a manager must have a wide exposure to different business case scenarios, critical thinking, and strategic management skills to boot.

Successful portfolio management involves consolidating and organizing all data pertinent to each case scenario in a project. This is to make sure that there is a strong basis for forecasting and analysis, which will also be useful for stakeholders and investors alike. This will enable the managers to see the bigger picture so that it can make informed and sound decisions.

What Is the Difference Between Project and Portfolio Management?

The main difference is the scope since project management deals with a specific type of endeavor individually whereas a project portfolio management revolves around managing different sets of projects that a business will undertake. The latter gives more emphasis on seeing to it that all projects will be aligned with the overall goals of the business and that it will benefit everyone. It also serves as the groundwork for current and future projects.

Portfolio management is a strategic approach in implementing more purposeful projects that yield higher returns for the business. It serves as the backbone for proposed projects, which also defines its scope and level of impact to the business as a whole. In essence, it supports or influences project management through the following ways:

  1. Management of resources – manpower, time, and financial allocation.
  2. Designation of a sound timetable for project planning and execution.
  3. Provides a bigger picture to pinpoint the risks and opportunities involved in projects.
  4. Provides a “formula” to make a more accurate calculation of ROI based on potential risks and opportunities from the beginning until the end of the project.

Essential Skills and Techniques Involved in Portfolio Management

How is project portfolio management being applied? Portfolio management for projects is an invaluable set of strategies that ensures the smooth implementation of projects, which involves planning, risk assessment, monitoring of the operational activities, updating of stakeholders and encouraging investors. This will only be successful with a combination of portfolio management skills, strong team effort, and the best portfolio management tool.

The portfolio manager holds the key to the successful implementation of portfolio management for projects. He should have an extensive experience and exposure to various projects, which are essential to developing a strong eye for detail. It is also vital to have a set of strategic skills that will help him arrive at a sound and informed decision all the time. Aside from that, he should also have the following basic skills:

  1. Fresh and viable ideas

A portfolio manager should know how to acknowledge challenges and needs within the company to come up with ideas for its growth or improvement. He should be able to exhaust all possible sources that will lead him to fresh but viable ideas that can open more opportunities for the business.

  1. Continuous research

A good portfolio manager not only relies on his own experiences but also diversifies his learning and strategies from the experience of others like him. If operating within an industry, his educational background and his peers can introduce additional perspectives to consider making the project more relevant in benefitting the industry as a whole.

  1. Tolerance for risk

Projects are always with uncertainties, but it can be also beneficial to keep the manager grounded on something to minimize the risk for the company. Risks sharpen the skills of a portfolio manager in maximizing the resources at hand that will yield maximum returns. He should achieve that right balance between grabbing the opportunities and minimizing the risks involved.

  1. Looking at projects as investments

A good business is a culmination of individual successes; your employees’ and your projects alike. A good portfolio manager sees that the success of a business comes from the interwoven successes of all the projects it undertakes, so it is important to align it to the company goals and to its operational needs on a continuous basis. Projects serve as the business’ investments since it aims to accelerate its growth in various ways.

Aside from the portfolio manager’s skills, it is also important to adopt the right techniques to ensure that ideas are implemented systematically and resources are maximized to yield the highest returns. Basically, a portfolio management involves the right balance and consistency of data. This is to ensure that the decisions made before, within, and after the projects are based on factual and tested data.

What are the efficient portfolio management techniques? The execution of efficient portfolio management includes the following techniques:

  1. Two and three-dimensional matrices

Mathematical analysis of set variables, which is represented on a graph. The variables are based on the Key Performance Indicators or KPIs that have strong influences over decisions. This technique is considered as the most flexible one since it can suit to any industry, company, or scenario under evaluation.

Although mathematical in nature, the method still involves human judgment plotted against other given variables to form a two or three-dimensional matrix. This will give different case scenarios to be observed by the manager and his team. To come up with the most relevant outcome, the variables with the most impact to decisions will be given priority. This is to give the right weight of consideration to the overall outcome of the evaluation.

The usual variables used are R&D inputs (will impact the company’s competitiveness in the market), other market influencers, resource allocation, technology impact, industry maturity, and budget. These are plotted in a matrix, depending on what influences the project execution most.

  1. Programmable mathematical analysis

Uses a machine language approach wherein a pre-determined set of the algorithm is used for the system to analyze and optimize the portfolio. It is reliant on computers and is not as flexible as the matrix technique since it is programmed according to the nature of the company. The upside is that it conducts the evaluation more efficiently than manual methods without sacrificing the attention for details.

  1. Other native techniques that include decision maps and trees

Tools to Use for a Successful Portfolio Management

What is a portfolio management software? Portfolio management leans on strong leadership that involves planning and predicting outcomes based on risks and opportunities surrounding the projects. It is a complex methodology of tracing possibilities and uncertainties, which requires a great deal of time to analyze and process for a realistic, attainable, and beneficial outcome.

According to Forrester Research, a business that decides to adopt a portfolio management tool can expect around 255 percent returns overall.

Today, businesses can utilize a portfolio management software to make the processes more efficient and the manager to arrive faster to its goals. It also broadens the business’ capability to analyze more projects at a time and have it aligned to the company’s goals.

Portfolio management tools are widely available in the market as stand-alone software or as integrated features of ERP software because of mergers and acquisitions. Together with other tools that portfolio managers use like spreadsheets and project management software, it is a great addition to include portfolio management software to plan more effectively and execute the processes involved more efficiently.

The best portfolio management software should be able to basically do the following for your company:

  1. Deploy a robust portfolio management in an enterprise-level
  2. Should have strong analytics and reporting capabilities
  3. Can offer a venue for remote collaboration and communication to take place among key people in the organization
  4. Must have a user-friendly and intuitive working interface to maximize its usability and functionality

Project portfolio management tools are mostly used as enterprise solutions to minimize the use of multiple and independent software for each business process. This makes the streamlining of the workflows easier to do. Making it intuitive to use increases the user’s efficiency.

Its remote collaboration capabilities are mostly beneficial for teams since it promotes efficient communication and information sharing. It also centralizes document sharing and access to make more informed team members. This is also valuable for stakeholders seeking information about the project, making it easier to share the files and updates they need.

Ultimately, a portfolio management software can help the business achieve its goals and, at the same time, meet the expectations of its stakeholders. It also minimizes the communication barriers which may interfere with the smooth execution of the projects. It can also help assess the risks and uncertainties within projects and target the opportunities that will maximize the value and profit of the business in the long run.

Want to explore your options today? See the reviews of the best portfolio management software from and take advantage of the wide range of vendors and software integrations available, and arrive at the most suitable software and what portfolio management services that will fit your business needs and direction.

Trevor Price

Trevor Price helps small businesses leverage mobile technology to reach their audience and extend their capabilities in delivery, information, and tracking.

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