|
What
is Enterprise Portfolio Management?
This
can best be answered by considering three epochs in
the evolution of investment management procedures
in both public and private-sector organizations. In
the decades before 1990, organizations developed and
implemented project-level investment selection and
control methods and procedures. These procedures helped
decision-makers select the individual projects and
initiatives that were most closely linked with the
strategic direction of the organization. Once selected,
project management and control procedures were put
in place to ensure that a funded project achieved
its intended objectives within cost, schedule, technical,
and performance baselines.
In
the second epoch, which evolved in the 1990s, organizations
recognized the need for a portfolio management approach
to investment decision-making. Here, the focus was
at a more aggregate level (rather than at the individual
project level). A cornerstone of the portfolio management
approach is the select-control-evaluate paradigm put
forward by the GAO in 1997. This framework helps decision-makers
achieve organizational goals and objectives by identifying,
selecting, financing, and monitoring the most appropriate
mix of projects and initiatives.
The
third epoch-enterprise portfolio management-is now
in the evolutionary stage. An enterprise involves
an amalgamation of interdependent resources (people,
processes, facilities, and technologies) organized
to obtain a strategic advantage in support of mission
or business objectives. Thus, by its very nature,
enterprise investment management is larger in scope
and more complex than either project management or
portfolio management. This is because, at the enterprise
level, decision-makers must not only consider the
investment options under their control but also take
into account how the alternatives they have analyzed
affect, and are affected by, other components of the
enterprise.*
IFEAD
will conduct in 2005 a research project to address
enterprise portfolio management and how it relates
to the overall enterprise life cycle and the enterprise
architecture of an organization. The emphasis is on
developing and integrating value based methods, tools,
and procedures. While today much of the focus in the
public and private sector has been on business investments
and IT cost reductions, the enterprise-level portfolio
management process has applicability to other types
of investment as well, such as human capital and non-IT
assets, addressing all the elements of the Extended
Enterprise Architecture Framework.
*Definition
by the Mitre Organization, USA
|
