Portfolio Prioritization Approaches and Techniques
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Portfolio Prioritization Approaches and Techniques
Do you face any challenges in portfolio prioritizing? When a portfolio is large, consisting of hundreds of projects, then a systematic approach would certainly help provide a framework to define the right priority. The prioritization approach may differ based on the organization‘s maturity level - If the organization’s maturity level is low or a startup is on a growth spurt then having a simple approach may work rather than a business capability-driven process. We will discuss both approaches here in this article.
Please refer to the attached diagram (see Portfolio Prioritization - A Capability Driven Approach.pdf). For a less mature organization, a faster process can be leveraged with simplified steps 4 to 7 to filter non-critical projects and prioritize them. A more complex capability maturity-driven approach can be leveraged by any organization irrespective of their size and number of projects. This capability-driven process is an ongoing process and not a one-time exercise. We will take the Sales function as an example here but the approach is the same across business functions. Portfolio prioritization is not a one-time exercise rather an iterative process throughout the year.
1. Biz Capability Inventory – Inventory all the business capabilities level 1 to level 3 e.g. for sales L1 capability, one of the L2 capabilities is ‘GTM Strategy and Planning’ and one of the L3 capabilities is ‘Sales Planning’. Across the functions, there can be 100s of capabilities but start small with one function. Sometimes, we can go to L4 level capability if a business function would like to do an analysis at a more granular level.
2. Building Capabilities Heat-Map – In the past, we had defined 5 level criteria for scoring each capability. It is a collaborative exercise among IT, business, and ops teams. Each criterion may have a different weighted score and can be adjusted based on business needs. Here is the criterion we have used which can be tweaked as needed
- People - Some questions to ask - Do we have the right people supporting capability? Is people’s skill level adequate to do their job?
- Process - Is the process well defined?
- Systems/ Technology - Do we have automation built into the system? Is the system scalable?
- Data Insights - Does Ops have adequate operational and BI reports available to make the right decisions?
- Governance - Is there proper process governance or process keep changing?
3. HeatMap: based on the weighted score, categorize low, medium, and high bands which denote the level of maturity. It is a good indication of the state of business.
4. Project Inventory – Have a well-defined demand intake process that can help collect a list of the projects.
5. Project Filtration – We know that there is no way to get all the projects done in a specified time, having a good well understood filtration criteria helps filter projects which are not required to be done. Some of the criteria would be project ROI (Return on Investment), compliance, alignment with company goals, LOE (Level of Effort), etc. Work with business partners to define this criterion.
6. Prioritize Projects – Understand the Company and business priority and the project dependencies, then build an integrated roadmap that will help prioritize projects.
7. Iterate Projects Prioritization – Project prioritization is not a one-time exercise, business priority may change, hence the project roadmap needs to align. We need to iterate project priority on, monthly/quarterly basis to make sure we are putting time and money on the right projects which will give the biggest bang for the buck and help the company grow.
8. Re-assess HeatMap– If we have been working on prioritized projects then it should turn the needle for the capabilities they are enabling. Re-evaluate heat map on a quarterly/ yearly basis.
9. Measure Results / ROI – The job is not finished until we see the fruits coming out from the tree we planted. Measuring the results of any project is as important as finishing it.
10. Re-assess Capabilities – It is advisable to reevaluate capability if there are any changes because of the company rolling out a new product or services or selling in a new market or a change in the direction.
Hope this framework would help prioritize the portfolio effectively and alleviate some of the challenges during the process. I would love to hear your thoughts, please provide your comments if you agree or disagree with this approach.