Portfolio planning is crucial for strategizing and building the portfolio of investments, projects, or services of a company, based on what the organization is after. Earlier, Anand Jayapalan had spoken about how portfolio planning helps business leaders and management teams to capably put together the perfect blend of risk and reward. However, it is important to understand that there is much more to portfolio planning. It essentially is a multi-step process that comes with its own unique applications.
Portfolios simply provide companies with a way to organize and shape their operations and projects in order to keep an eye on the bigger picture. It is common to hear about portfolio planning in the context of finance. A financial portfolio basically consists of the grouping of varied assets like stocks, bonds, and mutual funds. Investors make use of portfolio planning for the purpose of designing a group of assets that capably meets their risk tolerance, and delivers the desired return on investment (ROI). Portfolio planning is also used quite commonly in the process of project management, in order to review the project portfolio of a company and make sure that everything the team of the enterprise is doing makes sense.
When it comes to organizational or project management, a portfolio can include a myriad of things, like properties, inventory, products or services, and everything in between. The goal of portfolio planning in an enterprise is pretty much the same as in financial portfolio planning. It helps in determining which products or projects should a company be working on, in which order they must be tackled, and how much time and resource should be devoted to it.
Earlier, Anand Jayapalan had mentioned that portfolio planning goes hand-in-hand with several benefits, an improved project selection process being one of them. Portfolio planning involves selecting projects that are going to be the right fit for a company. As a result, this process involves going through the goals, risks, and available resources of a company, in order to identify the projects that can be a good fit for it. Portfolio planning can also significantly help develop a big picture of the organizational activity of a firm. With time, the teams of a company get bigger and its operations expand. As a result, many businesses end up losing the sight of their long-term roadmap. For instance, let’s say that a company takes on a huge project that takes up a large amount of the time and energy of its employees. As they spend a high amount of time or resources on this one project, they would invariably start to focus less on ancillary projects until somebody ends up dropping a ball somewhere. Such a situation can be prevented with proper portfolio planning. It helps make sure that a company can juggle multiple projects without compromises.
Portfolio planning is quite helpful in improving the focus of a company on objective business goals. It encourages teams to put focus on assessing and reassessing how projects align with the strategic goals of the firm. In case a project begins to look irrelevant, a portfolio manager may use the planning process to either reel that project back in or reallocate resources to a project that aids the company to meet its targets.
