Over the past few months, I have written several posts regarding the changing landscape of portfolio management and Gartner’s recent PPM Market Universe. As you may recall, part of this research includes a new Magic Quadrant for Integrated IT Portfolio Management Applications. This Magic Quadrant expands the IT portfolio and formally includes projects, applications, services, and enterprise architecture — I contend there is one missing portfolio not listed — the product portfolio.
Over the past few years product portfolio management has matured as a discipline. This maturation has predominantly happened within the context of classic product companies — companies that design and build “real” products like discrete manufacturers consumer packaged goods (CPG), medical equipment, and many others. Because of this discipline, product portfolio management has been tied to the product lifecycle management (PLM) world as a software category. This has brought great value to these product companies, and more are adopting portfolio management every day. My point is to the IT community — an opportunity is being missed.
Practitioners of IT portfolio management have aspired for years to achieve ideal “alignment with the business” as an output of the portfolio management process. Projects, applications, and services can be aligned to the strategic objectives of the enterprise as a way to ensure IT spending is best used. This is fine, but people who know me know that “alignment” is not one of my favorite words. Being aligned is an inherently reactive, passive state — reactivity and passivity are classic traits business people use to complain about IT organizations. Alignment has value for sure, but how can IT organizations get to the next level with their portfolios?
I contend the product portfolio may be part of the answer. The largest IT organizations typically exist in industries such as financial services, health care, and insurance. Aren’t these “services” companies? They don’t design products, so how could the product portfolio be applicable? Hold on one minute. Talk with the businesspeople in these industries, and they will quickly tell you about the plethora of loan products, credit card products, fixed income products, and more that they market and sell. Sounds like a hidden product portfolio.
What if IT organizations understood how every aspect of their investments connected directly to the products that drove the revenue of the firm? That would go beyond passive alignment and put IT spend right in the business. We have seen leading IT organizations think this way, but they are still the minority.
Consider product portfolio management as a tool in your IT portfolio management approach. It has the potential to bring an important new dimension to understanding your IT spend. Let us know your thoughts about this subject. Is product portfolio is the missing portfolio?