Project and Portfolio Management (PPM) has been a solution for 20+ years, evolving as new needs emerge in the market. Strategic Portfolio Management (SPM) is a newer methodology that branched off from PPM with the emergence and adoption of Agile methodologies. As the world has become centered around technology, the scope and reach of tech has permeated every aspect of life and business which has created a need within organizations to support and create their own technology or tech environments. As IT and development teams have seen a higher demand, increasingly limited resources, shortening deadlines, and the rapid speed of technology advancements, more teams have adopted Agile methodologies to stay flexible and deliver the greatest value. The shift to a more agile world has prompted the split between PPM and SPM as projects are managed, organized, and resourced differently, but how different are they really?
The Big Difference – The First “P”
The main difference between PPM and SPM can be found in the first “P” of PPM– Project. The way an organization funds and manages their work dictates whether or not they need project management capabilities in their portfolio management tool.
SPM does not have project management capabilities within the tool, it is tailored more to Enterprise Agile companies whose work is organized into products and whose resources are organized into agile teams. Agile teams are made up of an established group of people who contribute towards a specific, or set of specific products or deliverables. These teams are generally continuously funded long term and are organized to deliver the most value as quickly as possible. Agile teams are resourced as a team, work is brought to the existing teams and their time and effort are prioritized based on the work needed within each project. The iterative approach to project management which allows agile teams to be more flexible introduces unique requirements not inherent in most traditional project management tools, most agile teams manage their projects with tools that specifically support Agile methodologies, like ALM Octane or Jira. SPM recognizes that projects executed by agile teams are best organized and managed using their own agile project management tool(s), utilizing the bi-directional integration with ValueEdgeTM Agile for real-time data and insights into value delivered by work in progress.
PPM has extensive project management capabilities and supports both traditional project management and hybrid project management. Not all companies are Enterprise Agile and organized into agile teams, these companies need a way to proactively manage programs, request, projects, resources, and in the hybrid cases - agile teams across the enterprise while making strategic decisions on what work to prioritize and how to best resource to deliver the most value. Projects not resourced by agile teams require staffing a project so the team can execute and deliver, people are brought to the work. These projects generally have a finite budget and timeline in which the work is expected to be completed, flexibility and change can come at a higher cost. Hybrid project management helps portfolio managers monitor and analyze projects and priorities being executed by project teams and agile teams to ultimately reduce the number, cost, and impact of failed projects. Project and portfolio managers need an objective and measurable way of dedicating available resources to the projects that bring them the greatest short- and long-term value, PPM supports a wide range of project management methodologies.
The “S” - Strategy
The word “Strategy” in the SPM title doesn’t mean it has stronger strategic capabilities than PPM, on the contrary PPM has robust strategic portfolio management capabilities, but it does indicate the significant role strategy plays in the approach to portfolio management. The different strategic approaches SPM and PPM have to portfolio management can be identified in how portfolio decisions are influenced: top-down or bottom-up.
SPM embraces the shift from “doing things right” to “doing the right things” with a top-down approach to the software development lifecycle that closes the gap between business strategy and agile delivery by aligning business objectives with execution. Enterprise architecture, funding allocation, governance, vision, and strategy are set at the leadership level of the organization, laying the groundwork needed to ensure decisions made downstream align key business objectives with execution through the planning and delivery stages. Strategy is communicated through portfolios, providing strategic alignment and transparency across all teams to ensure business strategy and outcomes drive idea creation and prioritization of initiatives that will maximize ROI and support the strategic priorities of the business. As value is realized through execution and delivery, the PMO can explicitly communicate the value contributed directly through portfolio initiatives and agile teams can see the impact their work has on the business.
The top-down approach of SPM creates an environment where the lines between business and agile delivery are more intertwined creating more opportunities for business strategy to impact delivery, and visa versa. By frequently assessing the perceived business value, value delivered to customers, and actual business value delivered the business gains flexibility and can adapt its strategy to pivot and address disruptions or take advantage of opportunities. Through continuous planning inherent in SPM, the business gains agility needed to react quickly and maximize its ability to strengthen the business and drive revenue.
PPM provides organizations relying on traditional, agile, and hybrid resources the necessary ability to use both top-down and bottom-up approaches. The strategy-to-product approach of top-down allows PPM users to avoid guesswork when making decisions and align portfolios and initiatives with business goals and strategy set by leadership to achieve maximum impact. With the project management elements built in to PPM, the bottom-up, or project-to-strategy approach, facilitates “doing things right” through the detailed reporting, data analysis and dashboards that provide drilled down information at the project, program and resource level. Decision making and prioritization with PPM can still be driven by strategy and can see the same benefits SPM delivery in connecting business strategy to agile delivery while utilizing the bottom-up approach through the data insights provided by the PPM modules that support traditional, hybrid and agile project management. Strategic portfolio management is a capability within PPM, and continuous planning can be used in PPM to reduce the number, cost and impact of failed projects. The business’ agility may be limited to the agility of resourced project teams, using a combination of the top-down and bottom-up approaches to portfolio management can allow companies to monitor performance and prioritize investments.
SPM is the exciting new trend in the portfolio management market and its potential to drive business impact through strategic alignment has been drawing attention within the space. Enterprise Agile organizations that organize their work into products can utilize ValueEdge Strategy, Micro Focus’ Strategic Portfolio Management product, in conjunction with the ValueEdge Agile module to help close the gap between business strategy and agile delivery, gain business agility, and deliver competitive advantage. PPM is the strong and steady project and portfolio management tool that continues to evolve to meet the needs of portfolio managers across a wide array of industries. Organizations whose work is organized into projects and who utilize traditional or hybrid project management will find that Project and Portfolio Management provides the capabilities necessary to strategically and proactively manage programs, projects, and requests across the enterprise. Remember, just because strategy isn’t in the title doesn’t mean strategy isn’t a key piece of PPM, the decision on whether to go with SPM or PPM comes down to how the work is organized and resourced.