Use Data Analytics to Unlock Strategic Portfolio Management and Maximize Value Creation

Over the last decade, there has been a significant turnover among Fortune 500 companies. An analysis by WatchMyCompetitor in 2023 found that 52% of the companies listed on the Fortune 500 in 2003 were no longer on the list in 2023. The churn is due to various factors, including bankruptcy, mergers, or falling behind in revenue. This observation highlights how dynamic the market is and how quickly digital transformation and technological advancements can disrupt business models.

How can established companies maintain health and relevance in today’s fast-paced markets?

One consistently effective strategy is to establish a strategic portfolio management discipline. Strategic portfolio management (SPM) is the continuous process of critically assessing corporate initiatives and investments (grouped into portfolios) to ensure that they align with where the organization wants to go and deliver the expected returns. It puts emphasis on making value-based decisions and trade-offs. This practice is increasingly adopted by companies looking to improve their performance and resiliency.

Now contrast that with how lagging companies often operate: They invest in many shiny new projects at once and waste finite resources or invest too little in new technologies or strategies due to their success with existing business models, products, and practices.

SPM is valuable because it helps organizations eliminate waste and focus their finite resources on the activities most likely to advance their strategic objectives and maintain health.

The Power of Data Analytics in SPM

To do SPM well, you need data to guide your portfolio management choices. Specifically, data can help your organization:

• Make the right calls on capital and resource allocation to drive your target business outcomes
• Make trade-offs when multiple projects are competing for the same resources
• Learn from past projects and use that learning to inform future project selection
• Know when it’s time to cut the cords and move on to a more valuable initiative

Data is the essential fuel that drives SPM processes, including:

• Portfolio optimization. You can use data to ensure that resources (e.g., people, tools, money) are allocated optimally across projects to deliver the highest aggregate value for the portfolio. Portfolio optimization supports profitability by focusing on projects and products that generate higher margins and eliminating unprofitable ones.
• Project selection. When you can analyze historical data on project performance, risks, and returns, you can gain insights to inform future project selection. For instance, data can help you draw out patterns and commonalities in successful projects and unsuccessful projects and use those learnings to improve planning and execution moving forward.
• Predictive analytics. You can use data to predict project risks, potential roadblocks, and resource needs for proactive management. Data can help you predict which projects could have the most impact. You can also experiment with different scenarios and use predictive analytics to see which scenarios maximize profit and minimize risk.
• Performance monitoring and reporting. With data-driven reports and dashboards, you can track progress toward strategic goals and use those findings to make timely adjustments. Additionally, you can start comparing the performance of products or projects to understand their respective yields.

Turning Data into Actionable Insights: Key Steps

How do you get the right data and turn the data into actionable insights?

The first step to getting good data is to inform everyone who provides it about what you need from them to make effective portfolio optimization decisions.

You’ll need to collaborate with decision-makers to establish common terminology (and a set of key metrics) you can all use to estimate and report on the business benefits, costs, and feasibility of major projects and initiatives. Publish a rubric that details what data your decision-makers need to see to make prioritization decisions and how various factors are weighted (if applicable).

The next step is to collect and consolidate the data into a single source of truth. This step is often easier said than done because stakeholders are often comfortable with the tools they use today. They may be reluctant to learn another tool to enter their data. Yet, getting data about your company’s strategies, key metrics, initiatives with business case information, initiatives’ roadmap, and capacity (e.g., roles available to do various types of work) into one place is critical if you want your leaders to make better decisions at the highest level.

Thus, you’ll need a system that lets people easily enter and manage their own data and empowers various roles to analyze that data to inform decision-making.

Shibumi is one option chosen by many enterprises looking to establish an SPM discipline. It serves as a single source of truth that all executives, business units, and regional leaders can use to plan and manage their initiatives. Because it centralizes this data, users can access data visualizations, filters, and different views to analyze their portfolios and compare projects through various lenses.

Whether you choose Shibumi or a different tool, a highly effective SPM tool should make it easy for you to do the following:

• See how an initiative will deliver quantified business benefits and/or incur costs over time
• Generate forecasts based on past performance and stated assumptions
• Visually compare the value and feasibility of multiple initiatives side by side
• Aggregate or roll up data through a defined hierarchy (e.g., Company -> Value Pillar -> Initiative -> Project) and report on the value of projects at different levels of aggregation
• See the delta between a project/initiative/portfolio’s target results and actual results
• See the major risks in projects or initiatives.
• See the overall roadmap of projects or initiatives you are in charge of and any interdependencies between work items

Benefits of Data-Driven SPM

If you don’t have high-quality data to inform SPM today, rectifying the situation should be a priority. Getting high-quality data and utilizing an SPM approach and a software system will yield many business benefits, including:

• Improved decision-making. Data facilitates objective and informed decisions regarding project selection, resource allocation, and portfolio management.
• Reduced risks and increased ROI. Data-driven insights help mitigate project risks and optimize portfolio performance for increased ROI.
• Enhanced transparency and communication. Data provides a common ground for communication and fosters transparency in portfolio decision-making. More collaboration supports better strategic alignment and resource utilization, and faster project turnaround.
• Increased responsiveness to change. Data-driven insights can inform proactive portfolio adjustments to adapt to evolving market conditions or unexpected opportunities.
• Faster time to market. Data can help you speed up decisions along the product development and delivery lifecycle and help your products reach the market sooner, giving your company a competitive advantage.
• Streamlined resource management. Data can help decision-makers gain a more precise view of the resources each project will require and know when to boost resources (like hiring temps) or when excess resources can be deployed to other projects.

Shibumi is a leading software tool built to help Fortune 1000 organization leaders and teams gather and make sense of the data they need to make effective portfolio management decisions and drive business outcomes. Learn more about how you can use Shibumi to achieve and measure value from your portfolio.