Practical Portfolio Management How It Really Works. May 26, 2010

Transcription

1 Practical Portfolio Management How It Really Works May 26, 2010

2 Housekeeping We will spend the last minutes on Q&A and cover as many questions as possible The Host will instruct you how to unmute your line to ask a live question during the Q&A session You may submit questions at any time to the Host via the Chat function You may also questions directly to Jenna Dudevoir, jenna.dudevoir@kalypso.com 5/26/2010 2

3 Bill Poston Founding & Managing Partner of Kalypso Innovation Product Development Product Lifecycle Management Over 22 years of Professional and Consulting Experience Portfolio & Pipeline Management Practice Lead PPM Process and Software Solution Expert Innovation Governance & Investment Allocation Innovation Program Management Structures Product Portfolio Management Implementation Extensive Experience Implementing Leading Software Platforms Focused on Value Extraction from Enterprise Software Solutions 3

4 Jeanine Vincent Business Consultant at Sopheon Over 20 years of Business and Technology Consulting Global leaders in chemicals, food & beverage, and consumer packaged goods industries Expert in the design and implementation of product innovation processes and decision support systems Ideation Phase- and Gate-based product development and portfolio management Creation and use of executive dashboards for improved decision making Jeanine Vincent Sopheon Extensive background related to business intelligence technology and its application to product innovation 4

5 The Innovation Engine Integrating these eight processes and capabilities is the key to creating and successfully sustaining an innovation engine that fires on all cylinders Business & Innovation Strategy Front End Of Innovation Portfolio & Pipeline Management Development & NPI Value Management PLM Technology Leadership & Learning Intellectual Property Management 5/26/2010 5

6 Chronic Issues in Product Development In today s environment many organizations are facing a common set of issues in consistently and rapidly delivering true innovation to market Overloaded development pipelines Rampant incrementalism Lack of speed and consistent throughput Low rates of commercial success Cross-functional and cross-company alignment 5/26/

7 Portfolio & Pipeline Mgmt. Solution Vision A PPM solution enables a full suite of integrated innovation and product development processes allowing organizations to create a closed-loop solution to managing the pipeline Business Strategy Innovation Roadmaps Portfolio Management Ideation & Idea Management Phase-Gate Resource Management 5/26/2010 Program Management Launch Execution 7

8 But getting there is not so easy Successfully implementing portfolio & pipeline management disciplines is a challenging and difficult task. Some tried and true advice Learn the mantra, complexity is the enemy Adopt a get started and get better approach This is a management discipline, not just a tool Understand that this is a journey it takes several quarters, if not years, to get really good at this Let s look at six specific recommendations for getting started and keeping it simple 5/26/

9 The Proper Role of Scoring Systems Complex scoring systems are too often viewed as a panacea to defining portfolio priorities. Simple systems can be a valuable input to the team Strategy Portfolio Management uses strategic criteria & analysis to set project priorities Phase-Gate Tactical Resource Allocation 5/26/2010 A list of scored projects can be a valuable input to a portfolio review, but should not dictate priorities 9

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12 Force Ranking Projects is Unnecessary Arguing over the relative merits of two extremely important projects or two not-so-important projects is usually a waste of time & energy Prioritized Master Project List Prioritized Master Project List Top Ten Projects A Projects top quintile. No force ranking Top Ten Projects A Projects top quintile. No force ranking B Projects 2nd quintile. No force ranking C Projects 3rd quintile. No force ranking D Projects 4th quintile. No force ranking B Projects 2nd quintile. No force ranking C Projects 3rdQuintile No force ranking E Projects 5th quintile. No force ranking D Projects 4th quintile. E Projects 5th quintile. No force ranking It may only be necessary to make project trade-offs within the bucket that contains the constraint 12

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14 Rough Cut Resource Capacity Planning If a resource pool is not a bottleneck then it is a waste of energy to try to manage detailed resources. Focus your attention on the constraints Specialty Lab Testing Resource Pool Operations Lead Supply Project Portfolio Demand Operations Lead Supply Total FTEs for Portfolio Projects Operations Lead Supply available FTEs for Portfolio Projects Requires belly button level allocation Operations Resource Pool Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan Quality Device Portfolio Project Demand Quality Device Total FTEs for Portfolio Projects Quality Device available FTEs for Portfolio Projects 4 Requires rough cut capacity planning 2 0 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Efforts are often wasted on granular capacity planning exercises for unconstrained resource pools 14

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16 Project Management vs. Gate Automation Many PPM software solutions offer task-level project management functionality, however this is unnecessary for gate-level decisions Concept Feasibility & Planning Design Test Launch Market ideas & concepts load the pipeline Gate requirements include market forecasts In market sales measure actual success Top level work breakdown structures should map to the phase-gate process & be managed in the system 16

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18 The Limited Value of Time Tracking Cost accounting requirements can clutter the solution for making forward-looking decisions and are frustrating to those that matter Requirements must be consistent with culture Easiest to assume that assigned equals actual You cannot drive looking in the rearview mirror Having data doesn t mean that you have information Stop dreaming of creating planning algorithms Time tracking can be a valuable tool for creating a closedloop learning system, but is dangerous in the beginning 18

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20 Effective Evaluation Criteria Projects can be evaluated countless ways, but companies experience diminishing returns when criteria are redundant and overly complex You can start with as few as four or five criteria Focus on consistency of measurement and definition Realize that the data will never, ever be perfect The value is in the conversation, not the numbers Improve accuracy and sophistication over time Portfolio managers should test assumptions rather than create more data that represents false precision 20

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22 Practical Portfolio Management Difference between theory and practice Does not have to overwhelm the org The value is in the conversation Complexity is the enemy Get Started and Get Better! Automate to reduce the burden Prioritization informs resource management This is a journey Layer in advanced capabilities 5/26/

23 Questions & Answers Unmute your line to ask a live question by pressing *6 Submit questions to the Host via the WebEx Chat function Any questions you d like to address one-on-one can be ed directly to Bill Poston, bill.poston@kalypso.com or Jeanine Vincent, jeanine.vincent@sopheon.com 23

24 Thank You questions or comments to We will you today s presentation For more information visit and 24

25 Thank you for your time 25