A portfolio is defined by the Project Management Institute (PMI) "as a collection of projects or programs and other work that are grouped together to facilitate effective management of that work to meet strategic business objectives."

How does the use of portfolio management work in an IT environment? It all starts with the project management office (PMO) where all the projects are centralized and coordinated. This office can also be referred to as a program office or a project office.

A PMO helps in providing all forms of project management functions, including training, policies, procedures and direct oversight in the management of various project objectives. In IT, this is crucial in making sure there is an alignment point that is established.

Some of the main functions of a project office are:

  1. Coordinate and share various resources across all IT projects. These resources include people and dollars.
  2. Develop the relevant project methodologies, policies, procedures and best practices. These will act as a guide to help keep all on the same page.
  3. Handle configuration management functions.
  4. Become the central control point for all project office timelines and budgets that are at the enterprise level.

IT portfolio management goes beyond what a project office does. Portfolio management must align itself within the organization, and it has to be a value-added proposition.

The resources of people and dollars must bring a return on investment (ROI). This is especially relevant to IT as technology is ever-changing. The organization has to make a commitment to use the right mix of talent to achieve the goals that portfolio management represents.

As part of the process to this commitment, the organization should educate all to foster a better understanding of how portfolio management — specifically in IT will work. The executives within an organization must show their support to enable a cultural shift that will have to be addressed. Portfolio management is not an easy concept to understand, but there are many benefits.

One of the benefits of portfolio management is that should become a part of the day-to-day operations of the organization. Portfolio management helps an organization become more successful because of the ROI, which can a company make more competitive. Other benefits include better customer satisfaction, lower costs and growth in revenues.

Finally, IT portfolio management must be part of an overall organization's vision. It helps an organization to become more efficient and effective. It gives them a marketable edge on their competition. In the world of IT, an organization needs this most of all.