So much goes into each individual project that it can be difficult to keep track of the details across two or three simultaneous projects, let alone hundreds. But handling one project at a time would be an inefficient way to run a business.

Project portfolio management (PPM) is a process that steps in to solve that issue. It acts as the hub for your organization’s projects so you can effectively juggle multiple initiatives without over-allocating resources or blowing through budgets. To that end, PPM solutions are packed with capabilities for overseeing a range of projects:

• Project hierarchy: Compares project progress and status across organizational levels for a global view.
• Project roadmaps: Let you visually lay out scope, deliverables and due dates for multiple teams and projects.
• Roadmap dependencies: Mark which roadmap stages or items are dependent on others to reduce bottlenecks.
• Portfolio ranking: Allows comparison and ranking of proposals to determine which are viable to launch given current projects.
• Portfolio prioritization: Enables you to balance projects of varying lengths while considering resource and financial limitations.

Effectively allocate resources

Imagine this scenario: the project manager overseeing a construction site needs a minimum of twenty workers per day lest the project fall behind schedule. But due to poor scheduling and lack of insight into resource availability, five of his workers are assigned to another project. That simple example shows in a nutshell why resource management is critical. Every organization needs to operate effectively, and that includes handling resources.

Project portfolio management helps you avoid similar situations. Here are a few tools they use to accomplish that:

• Resource planning: Lets you see current and expected usage, determine allocations levels, define resource assignments for projects, compare demand with capacity and more. It can also include the capability to estimate resource needs based on past projects.
• Resource optimization: Helps use resources in the most effective way possible, such as balancing workloads and sorting staff by criteria such as skill or availability.
• Resource utilization: Features like heatmaps and Gantt charts provide a view of workloads across individual team members as well as which teams are assigned to which projects. It ensures the right people work on the right project at the right time.
• Reporting: Summarizes information about resource utilization across a broad range of KPIs. These include cost, assigned tasks, availability and team capacity being used.

Gain visibility with real-time insights

Having dozens or even hundreds of projects happening at once, all at various stages, requires you to keep a close eye on performance across the portfolio. When bottlenecks pop up or project scopes change, you need to know immediately in order to adjust.

Problems that arise in one project can have a ripple effect that impacts the entire portfolio. For this reason, PPM software comes with real-time insights that provide comprehensive views into the portfolio.

• Pipeline status: Gives an overview of where each project currently stands.
• Dashboards: Aggregate key metrics that allow you to constantly monitor the portfolio’s health.

Using dashboards, you can get up-to-date data on teams, deliverables, tasks, project progress, issues and other project details. You also gain insight into financial information, such as expenses and remaining budget.

The ability to track changes and trends across the portfolio positions you to respond and make adjustments in the moment. That’s much more useful than finding out two weeks later when a report shows up in your inbox.

Control financials

Another central element to managing a portfolio of projects is controlling the financial impact on your organization. Let’s admit it: budgets can easily get out of hand. Especially without proper planning.

A single project needs to account for a host of expenses — employee pay, material and equipment costs, and quality control, to name a few. Multiply that across hundreds of projects and you can see why financial management is so crucial.

PPM tools can help in two main ways.

First, they include forecasting functionality. This lets you be prepared from the start and gain an accurate estimation of the financial impact of each project. That in turn helps you understand which projects will be the most costly and which will generate the most revenue.

Forecasting tools let you:

• Project revenue
• Estimate cash flow
• Forecast expected costs and cost savings
• Apply forecasts at the project or portfolio level

The second way project portfolio management helps keep your finances in order is through budget management. Used while projects are in progress, these features let you drill into the details.

• What expenses are you incurring?
• Which line items are the most costly?
• What have your fixed costs been over the past month?

Budgeting capabilities let you answer these questions and more. The ability to look at any piece of financial information during a project equips you to stay within spending limits while optimizing for the greatest revenue.

Evaluate risks to improve project performance

A lot of projects fail. Even more don’t fully achieve their objective. Expand that to a full portfolio and you can see the problem.

The best way to prevent those failures from creeping in and wreaking havoc is to assess potential risks proactively instead of reactively.

Any number of things can derail a project timeline, budget or scope. Poor weather, software bugs, competing initiatives and server crashes are a few examples.

The risk management component of PPM software has features that enhance performance across individual projects and the portfolio at large:

• Risk chart, with color-coded levels based on the risk severity
• Drill-down capabilities for spotting potential risks before they happen
• Simulation engine to run what-if scenarios and uncover the risks involved for each, along with the probability of occurrence
• Risk register, which captures project risks in a central place for faster assessment
• Reports on items nearing their deadline
• Communication tools for sharing risks and determining mitigation actions

FAQ

What Is PPM?

Project portfolio management (PPM) is an approach through which decision-makers at an organization choose the most worthwhile projects to pursue based on business strategies. It factors in potential risks, projected rewards, budget capacity and resource availability to determine which projects will generate the highest ROI.

PPM gives executives and the project management office (PMO) a bird’s-eye view of the business. Existing at the strategic level, it enables the execution of individual projects at the optimal time to increase value and drive growth.

What Is PPM Software?

PPM software is an enterprise-level system that organizations use to control multiple projects across teams and departments. Typically, PMO teams use project portfolio management software, with the goal of aligning projects to business goals, identifying and executing strategies that deliver the most value, optimizing financials, and monitoring the health and performance of the portfolio.

PPM vs. PM vs. EPM

At first glance, it can be difficult to distinguish between PPM and project management applications. Overlap does occur, with some of the fully-featured PM tools having similar functionality. The major difference is that PPM software zooms out to take in details from across departments and projects, rather than narrowing in on accomplishing a specific project.

Enterprise project management (EPM) — also known as enterprise program management — falls somewhere in the middle. It’s similar to project management in that it aims to facilitate daily operations and doesn’t focus so much on the big picture.

But EPM is also more robust than PM tools. It addresses a broader scale and aids in managing projects across an enterprise. And like project portfolio management, EPM seeks to achieve business objectives and provide value at the organizational level.

What Are the Benefits?

PPM software is all about enabling your organization to achieve initiatives in a cost-effective, efficient way whether that’s determining which projects are most lucrative to pursue or addressing risks to eliminate losses.

There are too many benefits to list, but here’s a summary (in addition to the list at the top of this page) to give you an idea of how a PPM solution could impact your company:

• Centralize your resources into a single pool to aid smart planning
• Pinpoint obstacles within individual projects that may affect the portfolio
• Keep projects aligned with business objectives
• Control costs
• Reduce manual tasks with automation
• Shorten the time to project completion
• Streamline operations

What Are the Main Features?

Given the role project portfolio management solutions play, most come with a broad toolset. The exact features you need depend on your company’s requirements. However, the following components are the major capabilities you should look for in any product:

• Resource management: This includes charts and calendars.
• Risk management: This includes Gantt charts, a risk register and a risk matrix.
• Financial management: This includes billing and invoicing, accounting, timesheets, and forecasting.
• Reporting and analytics: This includes BI functionality, reports and charts.
• Change management: This includes real-time monitoring and messaging, along with a request repository.
• Pipeline management: This includes timelines, charts and request forms.

For an in-depth look at what the main project portfolio management features are and how they can aid your organization, check out our PPM requirements article.

Is Cloud Deployment Better?

There are advantages and drawbacks to cloud PPM, but the pros generally outweigh the cons.

Each company’s needs are unique, but you can expect a cloud solution to serve you in the following ways:

• Provide agility and scalability
• Remove the need for maintenance and upkeep
• Give users access anywhere there’s an internet connection
• Reduce upfront costs
• Integrate with other systems

On-premise solutions are more customizable and may be more cost-effective in the long run. But they also require maintenance, physical servers and in-house IT expertise. Plus they lack the easy, remote access cloud systems offer.

What Are Some Examples?

While the number of PPM products available is smaller than what you’ll find for project management tools, there’s still a decent range of options. Some of the top players include Microsoft Project, Jira Portfolio and Clarizen.

Head over to our PPM Leaderboard for a full rundown of the top systems. You can see how products compare across a wide range of requirements, view ratings, get pricing info and more.

How Do I Choose the Right Software?

PPM systems have a lot to offer. But the system you choose will only be effective if it matches your unique business needs. To that end, there are some steps you can take to guide you toward the best fit.

• Determine your organization’s maturity level. Gartner identifies five levels of maturity: reactive, emerging discipline, initial integration, effective integration and effective innovation. Each stage involves an increase in complexity and demand as your organization develops. Your company’s maturity level determines the need for and use of PPM tools.
• Gather requirements. This is the list of must-haves you require in a system for it to support your operations. It could include top modules needed and whether you need cloud or on-premise deployment.
• Determine cost. You can’t forecast an ROI for your purchase until you know the impact to your bottom line. Our PPM price guide can give you an idea of price points for the leading solutions.
• Get executive buy-in. The main way to get stakeholders on board is to show the value in adopting project portfolio management software. It’s also valuable to approach the situation from their perspective so your goals are aligned with theirs.
• Test the software. Reading facts and analyzing lists is helpful. But to truly test a system’s fit, you should put it through real-world scenarios if you can. Some vendors offer free trials for this purpose.

There are also other factors to consider:

• How long the implementation will take
• What the onboarding process looks like
• Whether you’ll receive post-implementation support from the vendor
• How you can drive user adoption once you’ve rolled out the system

Buying software is an extensive undertaking. To help you streamline and speed up the process, we built an easy-to-use platform for managing your search from start to finish. It will enable you to gather requirements, shortlist vendors, send out RFPs, and follow up with vendors for demos and other info.

If you’re just starting out, we recommend taking a look at our interactive analyst comparison report. It’s an easy way to compare the leading PPM software across a number of requirements.