How will you define business?

Answer 1

Portfolio management is a process to ensure that your organization or department spends its scarce resources on the work that is of the most value. If you practice portfolio management throughout your organization, this process helps to ensure that only the most valuable work is approved and managed across the entire enterprise. If you practice portfolio management at a departmental level, it will provide the same function at this lower level.

Department leaders that do not understand how their budgets are spent, and who cannot validate that the work being funded is the most important, will find themselves under greater scrutiny and second-guessing in the future. Portfolio management can help your department answer some of the most basic, yet difficult, questions regarding work performed and value provided.

Example: You have a chance to answer simple questions such as the following.

• Are your resources allocated to the most important work?

• Are you allocating the right amount of resources in new business investments versus keeping the older, mission-critical processes up and running?

• Do you have capacity to do all the work on our plate for the coming year?

• When new work comes up during the year, can you identify the previously approved work that will no longer be completed?

• When should you stop supporting old stuff and make the investment in new stuff?

In general, the value of utilizing a portfolio management approach to managing your investments is as follows:

• Improved Resource Allocation. Too often today, low value projects, or projects in trouble, squeeze scarce resources and do not allow more valuable projects to be executed. One critical step is for all departments to prioritize their own work. However, that is only part of the process. True portfolio management on an organization-wide basis requires prioritization of work across all of the departments. In addition to more effectively allocating labor, non-labor resources can be managed in the portfolio as well.

  This includes equipment, software, outsourced work, etc. Just because you outsource a project, for instance, and do not use your own labor, does not mean it should not be a part of the portfolio. The same prioritization process should take place with all of the resources proposed for the portfolio.

• Improved Scrutiny of Work. Everyone has pet projects that they want to get done. In some departments, managers make funding decisions for their own work and they are not open to challenge and review. Portfolio management requires work to be approved by all the key stakeholders. The proposed work is open to more scrutiny since managers know that when work is approved in one area, it removes funding for potential work in other areas. As stewards of the department's money, the Executive will now have a responsibility to approve and execute the work that is absolutely the highest priority and the highest value.

• More Openness of the Authorization Process. Utilizing a portfolio management process removes any clouds of secrecy on how work gets funded. The Business Planning Process allows everyone to propose work and ensures that people know the process that was followed to ultimately authorize work.

• Less Ambiguity in Work Authorization. The portfolio management planning process provides criteria for evaluating work more consistently. This makes it easier to compare work on an apples-to-apples basis and do a better job in ensuring that the authorized work is valuable, aligned and balanced.

• Improved Alignment of the Work. In addition to making sure that only high priority work is approved, portfolio management also results in the work being aligned. All portfolio management decisions are made within the overall context of the department's strategy and goals. In the IT department, portfolio management provides a process for better translating business strategy into technology decisions.

• Improved Balance of Work. In financial portfolio management, you make sure that your resources are balanced appropriately between various financial instruments such as stocks, bonds, real estate, etc. Business portfolio management also looks to achieve a proper balance of work.

Example: When you first evaluate your portfolio of work, you may find that your projects are focused too heavily on cost cutting, and not enough on increasing revenue. You might also find that you cannot complete your strategic projects because you are spending too many resources supporting your old legacy systems. Portfolio management provides the perspective to categorize where you are spending resources and gives you a way to adjust the balance within the portfolio as needed.

• Changed Focus from Cost to Investment. You don't focus on the "cost" side of your financial portfolio although, in fact, all of your assets were acquired at a cost.

Example: You may have purchased XYZ company stock for $10,000. However, when you discuss your financial portfolio, you don't focus on the $10,000 you do not have anymore. You invested the money and now have stock in return so you focus on the stock that you now own. You might also talk about your investment of $10,000 to purchase the stock, but your interest is in its current value and whether it has generated a positive or negative benefit! Likewise, in your business portfolio, you are spending money to receive benefits in return. Portfolio management focuses on the benefit value of the products and services produced rather than just on their cost.

This switch in focus is especially important in the Information Technology (IT) area, where many executives still think of value in terms of the accumulated cost of computers, monitors and printers. Using the portfolio management model, you show the value of all expenditures in your portfolio. These expenditures include not just the computing hardware and software, but also the value associated with all project and support work. If the value is there relative to the cost, the work should be authorized. If the value is not there relative to the cost, the work should be eliminated, cut back or backlogged. However, the basic discussion should be focused on value delivered - not just on the cost of the products and services.

• Increased Collaboration. In many organizations, senior managers make business decisions while only taking into account their own department.

Example: The Marketing Division is making the best decisions for Marketing, and the Finance Division is making the best decisions for Finance. However, when all the plans are put together, they do not align into an integrated whole, and, in fact, they are sometimes at odds.

You cannot perform portfolio management within a vacuum. If you practice portfolio management at the top of your organization, all departments will need to collaborate on an ongoing basis. If you are practicing portfolio management within a service department like IT, portfolio management will force collaboration between and among IT and the other client departments.

• Enhanced Communication. This is a similar benefit to increased collaboration. In many organizations today, functional departments do not communicate well with their peer departments or even within their own groups. Portfolio management requires an ongoing dialog. If your portfolio is organization-wide, the heads of the departments will need to communicate effectively.

  This enhanced communication will also be required between the Executive and the portfolio management team. In addition, there are many more opportunities to communicate the value of the portfolio. Portfolio metrics should be captured and shared with the rest of the departments. A portfolio management dashboard should be created and shared. The business value of portfolio projects should also be measured and shared.

• Increased Focus on When to Stop a Project. This is equivalent to selling a part of your financial portfolio because the investment no longer meets your overall goals. It may no longer be profitable, or you may need to change your portfolio mix for the purposes of overall balance. In either case, you need to sell the investment. Likewise, when you are managing a portfolio of work, you are also managing the underlying portfolio of assets that the work represents. In the IT Division, for instance, the assets include business application systems, software, hardware, telecommunications, etc. As you look at your portfolio, you may recognize the need to "sell" assets. While the asset may not literally be sold, you may decide to retire or eliminate the asset.

Example: A number of years ago you may have converted to new database software and now you realize that only a couple of the old databases remain in use. It may make sense to proactively migrate the remaining old databases to the new software. This simplifies the technical environment and may also result in eliminating a software maintenance contract. This is equivalent to selling an asset that is no longer useful within the portfolio.

Where to StartMany implementations of portfolio management start directly with trying to identify and prioritize the work of the portfolio, most likely because that is obviously where you will find the greatest value. However, if you start there directly, you will soon find your group is in disagreement over what work provides the most value.

The value that work brings to your organization is typically, though not necessarily, based on the cost/benefit implications and how well it aligns with your organization's strategy, goals and objectives. Alignment to strategy is not so easy to achieve without some work up-front. Corporate strategy is usually expressed as high-level statements that describe what your organization is trying to achieve (through goals and objectives) and how the organization plans to achieve it (strategies and tactics). If you do not have this base of reference, you cannot evaluate your work for alignment.

If you are in agreement on the need for alignment, the next question is how best to define the goals and objectives. You cannot just sit down in a room and make the decisions in isolation. The right approach is to develop a corporate strategy that looks at where you are today and where you want to be in the future, then determining how best to get there. Without a clear picture of where you are and where you want to be, it is very difficult to put the necessary organization and processes into place.

Answer 2

Business is a cycle which is run by particular person or more.

Answer 3

A business is an organization engaged in the trade of goods, services, or both to consumers.

Answer 4

They typical definition for business is an enterprise, firm, or organization that is involved in sale and/or trade of products and/or services to a consumer.

Answer 5

what is one modern definition of business

Answer 6

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