1. IBM Software Thought Leadership White Paper
Rational
Smarter responses to the marketplace
with enterprise portfolio management
By Roger LeBlanc, Rational sales executive, IBM Software Group

2. 2 Smarter responses to the marketplace with enterprise portfolio management
Contents the right opportunities for their growth. Project portfolio
management models have traditionally been considered
2 Examining the plateau of project success rates among the most effective management frameworks to keep IT
3 Integrating projects, products and applications within investments in check with business strategies. However,
portfolio management because the strategy formulation process is usually aligned to
the annual business planning cycle, with the most committed
4 Using a single, comprehensive solution for IT portfolio organizations providing a biannual update, this is often a
management struggle. Shifts in market segments do not wait for business
5 Turning to IBM for a business solution planning cycles, and whoever manages to be first on a market-
place trend will likely reap higher margins and earn a top spot
in the customer’s mindshare.
Examining the plateau of project
success rates Project portfolio management models started to take hold in
Changes in marketplace conditions and customer demands accelerate the corporate IT world in the late nineties. Early on, one of
at an ever-increasing rate. the most common industry trends used to justify the need for
project portfolio management was that more than half of IT
Traditional marketplace leaders are competing head-to-head with projects were failing. Over the years, and following many
smaller, better differentiated competitors vying for market share via millions of dollars invested in project portfolio management
the web. solutions and practices, a significant corresponding increase in
project success was not seen. Clearly, linking project invest-
Software—whether embedded in a product or consumed as the prod- ments to strategies is a good idea, but project portfolio
uct itself—is changing the game. It is increasingly a primary differ- management alone is not sufficient to change the course and
entiator and value driver in the minds of consumers and customers. lead to a measurable effect on returns on investment and
marketplace positioning. Consequently, product and project
All these factors and more are accelerating the race to the
marketplace. Businesses today need an ability to harness this
new reality and make it work for them. The key is to embrace

3. IBM Software 3
investment decisions are not based on objective information complex applications and systems providers) or with product
or current consumer needs but rather on “the loudest voice in portfolio management (for complex software products and
the room,” which may be one reason that so many IT projects embedded software providers). A key driver behind this shift is
fail. The lack of marketplace- and customer-driven decision the realization that the investment decision support construct
support prevents businesses from: used to prioritize and manage IT investments must better
represent the needs and priorities of end users and consumers
● Accommodating innovative ideas that arrive after the pro- of products and services. Inserting this application or product
ject’s start, resulting in missed revenue opportunities. portfolio management layer provides the focus required to
● Determining whether or when a project should be drive timely decisions based on the input and needs of those
terminated or rescoped to pursue new, more-valuable who use the products and services that organizations deploy.
opportunities. Additionally, using a product or application portfolio process
● Adjusting limited budget allocations in a timely manner to model provides a buffer between each business planning cycle.
support the initiatives generating the most value to the This buffer allows for timely adjustments to the portfolio of
business. investments based on changes in marketplace or business
● Estimating the true costs, risks and value of prospective conditions, which may or may not require a change to
project investments, keeping organizations from realizing organizational strategies themselves.
their strategic and tactical goals.
To achieve maximum value from their portfolio of invest-
Because investing in project portfolio management solutions ments, businesses need to not only work faster but also work
alone hasn’t worked, business leaders need to approach the smarter. They must listen to and incorporate the voice of all
optimization of their investments in a new way. stakeholders. Moreover, they must measure and objectively
evaluate data to determine the benefit and value of a product,
Integrating projects, products and feature or capability to the business.
applications within portfolio management
A growing trend across several industries, and embraced as an Today’s faster, smarter organizations are the ones that effec-
effective way to deal with changes in the marketplace, is sup- tively link strategies to execution. By establishing a model that
plementing or replacing traditional project portfolio manage- allows for timely adjustments to the portfolios from inception
ment with application portfolio management (for large and all the way through the execution life cycle, businesses can

4. 4 Smarter responses to the marketplace with enterprise portfolio management
build the right product at the right time for the right cus- Customer needs do not wait for product and application
tomers. Additionally, beyond the shortcomings of project releases
portfolio management for organizations needing to quickly The race to the marketplace is not only with competitors but
adjust and rebalance their portfolio in real time, other factors also with customer wants and needs. Businesses need to be
are forcing executives to revisit assumptions. able to listen and respond to the voice of the customer—
before they start projects as well as throughout the process.
A project isn’t the sum of its parts—but rather a container
for them To avoid the chance that a product or application will be out-
After a project has been launched, it can be quite difficult to moded by the time it reaches the marketplace, customer needs
change its course, mostly because the project is bound by the must be identified, prioritized and traced across the execution
processes and governance designed to push it through its life process. The customer voice needs to have presence and
cycle. As a result, engineers often efficiently do the wrong authority throughout the entire life cycle.
thing because the project life-cycle process can’t easily accom-
modate changes that happen after the start of a project. By adopting product or application portfolio management
within their portfolio management models, businesses can
Today, being a leading organization is not simply about assemble the end product or application in a flexible, near-
accommodating change—it’s about embracing it. As a result, real-time manner. They can gain and maintain proximity with
executives are focused on the opportunities that change can the customer through ideation and prioritization activities. As
drive and how to take advantage of them. The best way is to a result, businesses can achieve quicker time to market with
not think of the project as the end goal but rather as a con- the right product—increasing their chance of being first to the
tainer for its components, such as product features, require- marketplace, which usually garners a premium profit.
ments and fixes: components that truly represent the value of
the project to the business. The focus shifts from protecting Using a single, comprehensive solution for
the boundaries of the project to optimizing content and
IT portfolio management
keeping it current, relevant and aligned to the needs of the
Choosing among project portfolio, product portfolio and
business. By adopting a product or application portfolio mind-
application portfolio management models is often difficult for
set, organizations can gain that acute perspective of value.
any given organization. In many cases, the best answer is a
Aligning strategies to execution is not about picking projects;
combination of two. Highly product-focused organizations
it is about keeping projects relevant and value-added.

5. IBM Software 5
will favor a product portfolio management framework to drive Plus, a solution built on best practices and proven governance
the strategy layer but can take advantage of project portfolio frameworks can improve the portfolio management and prod-
practices for their operational layer. The challenge this poses uct management processes and compliance, helping a business
to executives is how to benefit from the best of both domains to better plan, execute and measure the performance of its
while keeping the overall process model simple and flexible; an product lines.
effective approach is to adopt a portfolio management con-
struct that can simultaneously work for projects, products and Improve quality
applications—in other words, a construct that can act as an A portfolio management framework that is adaptable for prod-
umbrella over all portfolio management models, whether it ucts, applications and project management infuses flexibility
focuses on projects, products or applications. into its processes, enabling a business to quickly adjust
roadmaps to both realign with changing marketplace needs
Make the right decisions and accommodate innovative ideas that may occur after the
An integrated portfolio management solution can capture start of a project. It can also help decision makers visualize and
business and marketplace requirements from customers, ana- prioritize customer needs to help ensure that a product’s most
lysts, marketplace researchers and internal stakeholders. By valuable capabilities are not minimized or eliminated through
collecting and centralizing that information as well as other project delivery.
product- and project-critical data, a solution can bridge the
gap between business and IT and can support informed deci- Turning to IBM for a business solution
sion making, status reporting and portfolio review. As a result, IBM offers IBM Rational® software for portfolio manage-
business leaders can make the right investments and build the ment, which can provide an adapted solution for products,
right products for the right marketplaces at the right time— projects and applications. This modular and flexible approach
improving business success. supports multiple methodologies and is built on best practices
for both processes and guidance.
Speed time to market
With project, product and application data centralized, busi- IBM Rational Focal Point™ software delivers integrated
nesses can escape the chaos of trying to manage information in portfolio and product management capabilities to business
emails, documents and spreadsheets. Users can quickly obtain users. It helps drive business value and innovation by empow-
the information they need, when they need it—improving ering executives and leaders to prioritize investments; make
their ability to respond to changing marketplace and business informed, objective decisions; perform scenario, statistical and
conditions. financial analyses; and align project decisions with financial,
marketplace and business needs. This top-down solution is
designed to be easy for line-of-business decision makers to use
and adopt, providing a quicker return on investment.

6. For more information
To learn more about IBM Rational Focal Point software
and other management solutions, please contact your
IBM sales representative or IBM Business Partner, or visit:
ibm.com/rational/offerings/ppm
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