310.0 Categorization

Step 1 Portfolio Setup

The place to start in the portfolio management process is to first define what your portfolios will look like. Remember that a portfolio is a collection of work and resources that you are managing as a group in a way that maximizes the total business value. There are a number of ways that your organization can define portfolios. One way, for instance, is to consider all of the work within your organization as one large portfolio. This is probably the most efficient from an organizational perspective, but it is also the most difficult to implement because of the various people and departments involved. Another option is to set up multiple portfolios, perhaps one for each major division or department.

There are also many ways that you can build your portfolio structure. The Setup process helps you determine the structure that makes the most sense for your organization or your department. This includes defining the overall portfolio scope, the benefit categories and hence the Portfolio Components, and the work balance you are trying to achieve. It may also include the benefit models and/or the financial models that you will use to assess the projects in the portfolio, and the roles and responsibilities of those involved. Clearly defining the portfolio category will allow more targeted focus in the subsequent Identification process.

The two up-front processes in PortfolioStep are Categorization and Identification. From a timing perspective, some of the work of these processes can be done sequentially and some can be done in parallel. Defining many aspects of the portfolio first will help reduce the scope and increase the focus of the Identification process. However, some of the information from Identification, especially the Future State Vision, may need to be used to complete the Categorization process, especially in subsequent updates.

Example: You can determine your Portfolio Components and current Balance Points during the Categorization process, but you may not be able to establish your new Balance Points without feedback from all stakeholders. This feedback would come from the Future State Vision, which is a part of the Identification process.

Departments (Staff Related) vs. Portfolios (Work Related)

PortfolioStep can be used at many levels in an entire organization, and the higher the level the better. Different organizations often use different terminology to refer to their departmental structure. In some companies, this might be:

Company -> Division -> Department -> Group -> Team, etc.

However, in other organizations a department might be at a higher level than a division. In a government ministry it might be:

Ministry -> Department -> Section, etc.

The exact terminology used in the organizational structure is not important in PortfolioStep, but the concept is used throughout the process. Therefore, for the sake of argument, PortfolioStep uses the generic term "departments" to refer to departmental entities including functional departments, business and operational units. In your organization, these entities may be labeled divisions, departments, agencies, and so on.

Departments are a way to structure people. Finance people, for instance, typically work within the Finance department. Likewise, Sales people work in the Sales department and IT people work in the IT department. Portfolios, on the other hand, are a way to organize work.

Example: A portfolio might be defined for the top 50 projects of your organization or the top projects of a particular department. Likewise, you may have a portfolio that contains all of the support work that the department provides. In fact, you may decide to create portfolios that overlap with your physical departments.

Or you may have an IT portfolio that covers all IT people. In that case, the IT department would be the same thing as the IT portfolio, which includes all of the IT work. You might also create internal portfolios within the IT department. Again, these internal portfolios could align with the internal IT departments, but they do not need to.

Portfolios are logical entities and departments are physical entities. It is probably more efficient to have the portfolios align with the departmental structure. They are easier to manage if they are. However, they do not need to be.

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310.1 Define the Portfolio - Organizational Scope

310.2 Define the Portfolio - Work Scope

310.3 Define the Balancing Categories

310.4 Portfolio Balance Points™

310.9 Techniques

Supporting Templates

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