Step 2 Identify Needs & Opportunities
The following descriptions describe the processes from a departmental perspective since that is where the selection and commitment of work most often takes place, even though it may be aggregated to a total-organization level.
Many implementations of portfolio management start directly with trying to identify and prioritize the work of the portfolio, most likely because that is obviously where you will find the greatest value. However, if you start there directly, you will soon find your group is in disagreement over what work provides the most value.
The value that work brings to your organization is typically based on the financial cost/benefit implications and how well it aligns with your organization's strategy, goals and objectives. The financial cost/benefit can be calculated and compared once you have the common financial model(s) in place. If, for instance, you agree to adopt Return on Investment (ROI) calculations you can rank the various work requests based on overall ROI. Of course, you could still have disagreements on how the ROI should be calculated, but at least you have a common basis that everyone can use for the discussion.
Alignment to strategy, on the other hand, is not so easy to achieve without some up-front work. Corporate strategy is usually expressed as high-level statements that describe what your organization is trying to achieve (through goals and objectives) and how the organization plans to achieve it (strategies and tactics). If you do not have this base of reference, you cannot evaluate projects for alignment.
Example: You may choose to start a project with a very large ROI. However, if the project does not help you accomplish your goals, you may be wasting your resources. In fact, work that is not in strategic alignment may provide some short-term profitability or short-term value, but could be wasted effort in the long-term. This could be because it ends up needing long-term support that distracts your organization from what you really ought to be doing. This misaligned work also takes up resources that could have been applied to other work that would have allowed you to reach your organizational goals sooner.
You cannot “align” your work unless you have a framework that describes what your organization thinks is important. This is why you need goals and strategies.
How do you best define the goals and strategies? At a departmental level, for instance, you cannot just sit down in a room and make the decisions in isolation. The typical way to define them is by looking at where your department is today and where you want to be in the future, then determining how best to get there. The goals help define where you want to be in the future, and the strategy and tactics help you determine how best to get there. However, without a clear understanding of your department today, it is very difficult to put the other pieces into place.
The place to start is with an assessment of your department, called a Current State Assessment, which tells you about your department today. You need to describe your department's mission, vision, work processes, products, services, customers, stakeholders, values, etc. This is not an easy assignment, especially the first time you do it. However, after you do it once, the subsequent yearly update is not nearly as time consuming since there are usually only incremental changes from one year to the next.
After you know where you are today, you need to define what your department wants to look like in the future – usually in a three-to-five-year horizon. This is the Future State Vision. The Future State Vision should be structured similarly to the Current State Assessment. This includes asking the same types of questions about where your department should be in five years in terms of its capabilities, culture, products, services, etc.
Next you do a Gap Analysis to determine how to get from your current state to your future state. You will probably never reach your future state. After all, it is a vision and as soon as you get close to it, you will have a new vision. So, you are definitely not going to reach it in one year. The result of the Gap Analysis is a short-term and long-term plan that describes the things that need to happen to move you toward your future state.
The Current State Assessment and the Future State Vision are both part of the Identification process of PortfolioStep. These portfolio components give you the foundation that you need in order to make rational decisions on the things that are important and the types of work that are more valuable than other work. The Gap Analysis is part of the Selection process, since it is one of the ways that work gets surfaced for consideration. The Gap Analysis technique will be described as a part of the next section of PortfolioStep.
From a timing perspective, some of the work in the PortfolioStep Categorization and Identification processes can be done in parallel. Defining many aspects of the portfolios 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.
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.
The Current State Assessment and Future State Vision are described in the following sections.
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320.1 Current State Assessment
320.2 Future State Vision
320.3 Develop Departmental Goals, Objectives and Strategy
320.4 Identifying Work for the Portfolio
320.9 Techniquesportfolio management, project management, project office, PMO, project portfolio, project lifecycle management, project consulting, methodology development, quality management, project management training, portfolio training