What is Portfolio Management?

Just as program management refers to managing a set of projects, so portfolio management refers to managing a set of related programs within an organization.

An example of a portfolio is all of the security-related projects and programs within an enterprise. That might include ongoing efforts by the information technology group to secure data, a marketing campaign to assure customers of the security of stored files, the legal team's assessment of potential litigation around security breaches, employee education campaigns, general risk assessments, and so on.

Considering all of an enterprise's related programs together has obvious advantages, although it can be challenging to do well. Since a common problem in companies is too many ongoing projects and programs, or too few resources, or both, portfolio management can help address those issues with its big-picture view.

The acronym PPM is sometimes used, referring to Project Portfolio Management.

With good portfolio management, programs can be compared for relative progress and success, priorities can be adjusted to meet strategic goals, redundant or failing programs can be ended, troubled areas can be corrected more quickly once they are spotted by the more objective portfolio management group, and resources can be shifted among projects and programs for maximum returns. Also, the firm's overall risk can better be assessed, rather than the individual risk presented by an individual program.

As with a financial portfolio, one goal of portfolio management is balance : riskier projects or programs can be offset with more sure-to-succeed programs undertaken at the same time, so that the company's overall risk remains manageable.

A portfolio manager can be a single individual, but is more likely, especially at larger companies, to be a team of leaders that meets regularly to monitor ongoing projects and programs, and vet new ones. As the relatively new concept of portfolio management gains interest, companies may bring in consultants to help set up and train individuals on the art and science of portfolio management.