Ans.

"Portfolio Management is a process which facilitates determining the right (project) investments mix, i.e., deploying limited resources to maximize business performance, which is a key management challenge. Most capital investment activities take the form of projects that need to be managed as part of a portfolio. Project portfolio management entails balancing resources, business needs, business risks and changing parameters, while at the same time maximizing the return on (project) investment.

Basically, Portfolio Management is a discipline used to ensure that a correct mix of investment activity is initiated, grouped, funded and managed. Technology assets are categorised as an investment portfolio allowing for:

• Investment bundling
• Prioritisation
• Evaluation
• Decision insight and support
• Balance between timing, current needs, and future requirements

Considering the complexities, the problem of managing the technology portfolio is broken into set of smaller problems to facilitate analysis. Among the issues to be considered when discussing the technology portfolio are:

• • Technology / business alignment
• Investment balance
• Resource management
• Negotiation between competing projects or goals
• Risk mitigation and management
• Technology performance and reporting

Various methods are used to create and balance the portfolio, ranging from highly strategic to tactical: Financial portfolio analysis: Balance and risk mitigation is achieved by spreading investments over a number of different initiatives. Projects are balanced across a number of categories that can include strategic or business objectives, compliance or required maintenance and research and development. Depending on the organisation’s objectives, this allows steering committees to incur the least risk and take advantage of market dynamics.

The budget and financial management functionality of a PM solution should integrate with existing financial and Enterprise Resource Planning (ERP) applications to provide the organization with real-time project-based budget and financial management capabilities. Easy access to accurate project-based financial information is mandatory so that the organization can make better and faster business decisions and invest money for maximum return. Functionality should also be provided to automate traditionally manual processes so that resources previously wasted on redundant data entry, manual analysis of project cost estimates, actual time and expenses can be redeployed.

Benefits that should be enabled by the application include the ability to:

• Align spend with projects of greatest return;
• Utilize project-based budgets to make better decisions;
• Manage project budgets against financial objectives, and
• Make project budgets transparent to sponsor organizations.