Whenever I hear the term “Portfolio Management” I start to think in terms of dealing with a financial advisor for retirement planning. So it came as no surprise that when I started my next section in the training from ITSM Zone called Portfolio Management it talked about investments.
The portfolio accounts for the providers investments, which includes new projects or programs as well as existing services and capabilities.
The BRMI definition describes portfolio management as “The art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation and balancing risk against performance.”
The nice things about the course work as it applied here was it broke this definition down into consumable chunks. Taking the definition we can see that:
“The art and science of making decisions” applies to portfolio management making objective, repeatable and consistent decisions. Where we may have had made decisions for priority on ‘gut feeling’ or escalations by the loudest voice previously we now have something that assists in that regard systematically
“Investment mix and policy” this speaks to the ability to classify the investments. Much like a personal portfolio you may want to have more or less risk in the mix depending on the organizational appetites as well as what their business objectives support.
“Matching investments to objectives” this speaks to making decisions based on the mix of investments and matching them to objectives, much like it says.
“Asset allocation” outlines all of the provider’s resources. Typically when we speak of assets we are talking about technology or finance but it also includes people as resources.
“Balancing risk against performance”. It almost goes without saying that the lowest risk opportunities also have the lowest, if even more stable, returns. This component of the definition speaks to just that. Portfolio management needs to find the right balance when making investment decisions. This will differ from organization to organization.
So what makes this important? Well, this is a key component in the value management approach, it also ensures that the provider only has services available that contribute to strategic objectives and meet business outcomes.
The benefit of doing this is that we are able to make consistent and objective decisions as it applies to investments which represent the business strategy.
For more information check the BRMI and consider membership to reap the full benefits available.\