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The Process of Portfolio Management

The year 2000 was a unique opportunity for companies and private investors looking to build their portfolios. In 2008, the global financial crisis revived this need as it became imperative to reduce costs. Recent cyber-attacks on some publicly traded companies have forced companies to review their IT security from top to bottom.

Portfolio management is currently one of the priorities of any business and private investor. The purpose of this article is to explain what portfolio management is, which companies are interested in it, and how they should use it over the long term.

Asset management in three steps

The first step is calculating inventory. It consists of collecting information on applications from different angles: descriptive, qualitative, quantitative, financial, technological, and life cycle. The second step, which is an evaluation, consists of measuring business value, functional coverage, technical conditions, and the cost of applications.

About cost, asset managers are interested in operating costs, corrective and evolutionary maintenance, infrastructure, licenses, not to mention the hidden costs. The third and final step is transformation. This is to arbitrate different evolution scenarios of the portfolio.

Once the decision is made, the transformation is carried out as part of classic project management. Portfolio management is not an isolated act like Y2K was. It is a continuous and iterative process that must be triggered on a regular basis.

Best practices suggest an annual cycle. From a governance perspective, it will also be essential to ensure that the approach used is highly correlated with the company’s strategy and the policies that flow from it.

Three levels of maturity within companies

Today, companies looking for a portfolio management solution often share the same characteristics. They are global but operate in decentralized ways. Reinforcing the approach centrally and controlling it globally is a necessity.

Regional organizations are responsible for implementing this type of approach. Some of them are sometimes much more advanced than others. These global enterprises are the result of multiple mergers and acquisitions that have led to a large and dispersed application landscape.

Non-integration and redundancy of solutions are many. The majority of companies are at this stage. To learn more, contact Kirk Chewning today.