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Posted by Tom Grant on September 15, 2010
In the last couple of years, an increasing number of technology companies have discovered, or rediscovered, or redefined their own portfolio. Here are a few examples of where you can see this new appreciation of portfolios:
What's going on here? The recession is the most obvious explanation. The portfolio defines the collection of products and services you should provide, and the level of maturity of these investments. When the economy got ugly, tech vendors, in the same fashion as everyone else, put their investments under more careful scrutiny.
While the recession certainly contributed to this trend towards greater portfolio-mindedness, it's not the most important factor. While earlier downturns were not as bad as the recent economic unpleasantness, at least one of them, the bursting of the dot-com bubble, was very painful for the technology industry. Everyone from wing-and-a-prayer startups to big established vendors were benefiting from that era of giddiness, and everyone suffered to some extent when it ended. Nevertheless, the end of the dot-com era didn't result in the same portfolio-mindedness.
The root cause of portfolio-mindedness is a mental shift in how the technology industry understands its own business. The lenses through which tech vendors view both threats and opportunities are different. Vendors used to be in the business of delivering products and services to customers; increasingly, they've seen themselves as creating value that's mutually beneficial for both vendor and customer alike. In this worldview, the portfolio is the tangible expression of that value, as it exists today, and as it might exist in the future.
While that's an easy principle to state, it's much harder to live by it. For starters, it requires an abandonment of an older definition of portfolio management, centered around project, task, and resource management. (Here's an example.) While you have to manage these elements to successfully create and maintain a portfolio, they don't define the portfolio. That bigger concept of portfolio – Portfolio with a capital "P" – is what vendors are trying to define, and then align their business activities around it. You can't identify a hole in your portfolio, or the amount of investment that component A deserves relative to component B, through a schedule manager, time sheet, or governance workflow. Those tools help with execution, not strategy.
Some vendors in the business of portfolio management have understood this shift. Accept Software, for example, has a clear value proposition for their own portfolio: We will help you collect information that affects the future of your portfolio (Ideas), incorporate that information into your decision-making (Portfolio), and then provide clear guidelines for what the portfolio components need to be (Requirements). You can see the contours of Portfolio with a capital "P" very clearly in their tools offering.
Portfolio consciousness-raising is a sign that the industry has matured. Given the rapidity of market changes and the speed of innovation, portfolio management is inherently challenging. The value you provide today may not be exactly the same as what you provide a year from now. Nonetheless, tech vendors see their business depending on taking their portfolio seriously, instead of treating it as just a list of SKUs.
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