When people hear the term project portfolio management (PPM), many think that it is a process to manage IT projects and investments. This is not surprising considering Richard Nolan first applied the portfolio concept in relation to IT back in 1973 in an article in the Harvard Business Review.
Using project portfolio management principles to manage IT investments has been working well for years. However, there is absolutely no reason those principles should only be applied to IT. In 2006, Anand Sanwal, CEO of CB Insights, and former VP of American Express, said, “I remain amazed at how the entire portfolio management discipline has become largely focused on enabling corporate portfolio management for IT investments. Corporate Portfolio Management should be used for any area where discretionary expenditures and hence investments are occurring including advertising & promotion, innovation/R&D, operations, sales, IT, capital expenditures, etc.” In the twelve years since he made that statement, we have found many companies are applying portfolio management to project portfolios across the organization, but we still run across a fair number of organizations who do not realize that it works for business areas outside of finance or IT.
First, let’s take a quick look at the problem organizations were trying to solve by applying PPM to IT, and if that problem exists in any other areas of business.