The roots of a portfolio management process model can be found in W. Edwards Deming’s quality management cycle of Plan, Do, Check and Act. In the 1950s, Deming proposed a process model where business processes are reviewed continually to identify improvements. The Plan phase designed new or revised existing processes to improve business results. The Do phase implements the process improvement plan and measures the results. The Check phase reviews the results and reports the status to the management team. The Act phase determines the changes needed to improve the process.
Deming’s model can be reordered and aligned to a portfolio management process model. Instead of following a Plan-Do-Check-Act process, a Plan-Act-Do-Check model can be adopted. With any portfolio, portfolio planning is required to organize the work within a portfolio. Prioritization is needed to focus on the critical projects within a cycle plan. Project execution occurs and ideally delivers the business results. Finally, the monitor phase inspects the project portfolio and the inspection results filter into the next portfolio planning iteration. The table below aligns a modified Deming model to an IT portfolio management framework.
| Modified Deming Cycle | Primary Portfolio Management Processes |
| Plan | Plan Portfolio Planning |
| Act | Portfolio Prioritization |
| Do | Portfolio Execution |
| Check | Portfolio Monitoring |
These portfolio management processes represent primary portfolio management processes that are typically found in a portfolio management process. Although these processes represent the core portfolio management processes, a successful portfolio management solution includes four layers of processes: primary, support, organization and technology architecture processes.
IT Portfolio Management Framework
Portfolio management processes can be separated into four layers. The primary processes layer includes the key processes required to analyze, plan and prioritize a portfolio of applications, projects and programs. The support layer provides the key management processes to ensure successful execution across technology, project management, risk management and financial management. These processes are further supported by an organization layer that utilizes common metrics, techniques and terminology across the organization. Finally, the architecture layer describes the software tools required to adequately support portfolio management. The figure below illustrates the four layers.
IT Portfolio Management Framework
A brief description of each process layers is described below. Subsequent articles will provide a detailed overview of each process layer.
Primary Process Layer
- Portfolio Planning: Identifies opportunities and develops the initial business case for candidate projects
- Portfolio Prioritization: Prioritizes the candidate list of programs and projects to provide business value
- Portfolio Execution: Selected programs and projects are executed and the application portfolio is updated to reflect the ongoing efforts. The execution phase is governed by the organization’s software development lifecycle and supporting project management processes
- Portfolio Monitoring: Includes current-state assessment of existing IT applications, projects and programs within the portfolio. Application and project/program data is reviewed to identify opportunities to eliminate redundant solutions, fix process gaps and improve application health.
Support Process Layer
Technology Architecture Management: In mature IT organizations, IT standards are adopted and patterns form to provide a common blueprint for application infrastructure. The architecture management process compares the current architecture standards to the portfolio’s underlying architecture and identifies compliance gaps.
- Project Management: All aspects of the Initiate, Plan, Execute, Control and Close processes are used to project execution phase
- Risk Management: The Risk Management process is conducted at different points in the portfolio management process. Initial and current risk assessments are performed as projects move from portfolio planning to portfolio execution.
- Financial Management: Supports all four primary processes as the total cost of ownership for each opportunity is evaluated, prioritized and executed across the portfolio.
Organization Context Layer
- Metrics, Methodology, Terminology: Describes the common language, definitions, metrics, measurements and approaches to integrating the primary and support processes. Across the enterprise, portfolio managers need to follow a common methodology using common terms and measuring progress with consistent metrics.
Architecture Context Layer
The architecture layer describes the software tools used to support portfolio management. It is difficult to effectively identify, analyze and summarize the results of the portfolio management processes without a supporting information infrastructure. For small portfolios, Excel spreadsheets and desktop databases are sufficient for planning. As organizations grow, business intelligence and data warehousing tools can be effectively used to answer multiple facets of the portfolio management questions. Packaged portfolio management tools also help organization manage the assets in the IT portfolio.
As organization’s implement a portfolio management process, portfolio managers are encouraged to review this model to ensure the primary processes are supported with support processes and include both organizational context and IT architectures. The next few articles will take a closer look at the different layers in the portfolio management model and describe its application.
