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The changing face of portfolio management

Catherine Smithson
March 24, 2011

Change is here to stay. Not so long ago, the accepted wisdom was that organisations would introduce change, stop and consolidate, then gear up to change again. Change was a disruption to normal. Today, organisations are in a state of constant change or “permanent whitewater” as leadership development expert Peter Vaille termed it.

Today, ‘normal’ for an organisation is to have multiple changes underway simultaneously. A typical change agenda for the year might include several restructures, a relocation, several process improvement projects, new human resource (HR) programs and several IT system upgrades.

Try this quick quiz: list all the changes underway and planned in your organisation. Include organisation-wide changes as well as those in business units and teams. And remember to add all those changes that are not formal projects, those that are just happening.

With so much complex change underway, large public and private sector organisations are discovering the need to go beyond traditional program management and the PMO to change portfolio management and the change management office (CMO). Getting out my crystal ball, I predict in five years they will both be commonplace in large organisations. But what does this emerging trend mean for the project manager and the PMO?

What is change portfolio management?

First, a definition according to change management research specialists Prosci: “Change portfolio management is the structured approach and set of tools for understanding, evaluating and managing the portfolio of change. Its aim is to show the cumulative and collective impact of the changes in the portfolio on the people throughout the organisation.”

The purpose of change portfolio management is to enable the organisation to achieve its goals by succeeding with change and achieving the expected benefits. It extends the approach taken by traditional program management because it covers all types of change, that is, formal projects and programs as well as all business-as-usual changes. It enables executives, managers, program and project managers, to see—often for the first time—the complete range of all changes underway and to manage these changes to achieve financial benefit realisation.

There are several reasons for the emergence of change portfolio management. The volume and complexity of change is increasing. Look back at the changes you counted in your organisation. I regularly ask managers, project managers and change managers in my programs to do this quick count and its quite common to hear totals of 150, 200 or even 300 or more changes.

According to Prosci’s 2009 Best Practices in Change Management Benchmarking Report, 76 percent of participants said they expected an increase in the amount of change in the next two years. IBM reported in its 2008 Making Change Work study that 80 percent of CEOs anticipate “substantial or very substantial change” in the next one-to-three years, but that CEOs rated their ability to manage change as 22 percent lower than needed.

Change collisions drain resources and increase risk. The PMO enables project resources to be allocated across programs of work and be monitored and managed. Dependencies and deliverables can be clearly assessed. However, no one is monitoring and managing the health of business-as-usual changes, which are often key strategic projects. And no one has responsibility for preventing collisions and competition for resources: time, money and people’s attention and effort. Change portfolio management enables us to take the ‘receiving end’ perspective and identify all the changes from all sources that are impacting on a team or division.

When is the organisation ‘full’ with change? We all accept that time, money and other resources are finite. But when it comes to people’s capacity to cope with change we seem to think it’s limitless! The term ‘change saturation’ was coined by Prosci to define the point at which individuals and their organisations cannot absorb or successfully implement any more change. When change saturation has been reached, initiating another change will have a high risk of failure, as well as a negative impact on employee engagement, productivity and retention.

Two-thirds of participants in Prosci’s 2009 Best Practices in Change Management Benchmarking Report reported their organisation was nearing or past the point of change saturation. The consequence of change saturation can be seen all around us in organisations: change fatigue, increased resistance, project delays, reduced benefit realisation and failed change. And today’s failed change is the cause of tomorrow’s resistance to change. With the success rate of change as low as 32 percent, according to the Standish Group Chaos Study in 2009, we can’t afford to have more change fail.

Catherine Smithson
Catherine Smithson is a leading facilitator, educator and consultant in change and leadership. She has 20 years’ experience as a senior manager and a consultant and has an in-depth understanding of best practices worldwide. She is the managing director of Being Human.
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