What is the difference between Project Portfolio Management (PPM) and Strategic Portfolio Management (SPM)?

Project Portfolio Management (PPM) is quickly being replaced – at least to a certain extent – by Strategic Portfolio Management (SPM). In this article, we’ll examine the key differences between the two concepts and explain how they will impact your approach of project and product planning.

Project Portfolio Management (PPM) has been around for more than 20 years. It represents a category of software that provides users with a centralized way to manage one or more project portfolios efficiently. The objective here is to align this work with broader organizational goals in order to make more informed and effective decisions on portfolios, projects, and programs. (See: https://www.planisware.com/hub/blog/why-project-portfolio-management for more information.)

In a nutshell, the promise of Project Portfolio Management is its ability to shift an organization’s focus from “doing a project right,”—which oftentimes is insufficient at the organization level—to “doing the right projects.” With PPM, organizations have a more objective and measurable way of dedicating available resources to the projects that will bring them the greatest short- and long-term value. Therefore, the goal of PPM is not to simply find a way to do all possible projects.

However, in 2017, Forrester Research introduced the term Strategic Portfolio Management (SPM) to the project management world. The company also built a “Forrester Wave” report around it to identify the key software players in this new and fast-growing market (Full disclosure: Planisware is identified as a “Leader” according to this report).

For Forrester, PPM is much too departmental and bottom-up to be relevant in a world of shortened planning cycles and a general desire to move towards digital transformation. In fact, it’s the introduction of Agile methodologies, that Forrester credits as the true disruptor of the project management market. This has forced organizations to redefine how they operate and deliver products and services to the market, both at the project- and company-level (scaled Agile).

SPM emphasizes the importance of continuous planning exercise, a unified level of planning with traceability from the strategic axes to the results being delivered, as well as the adoption of Agile planning.

Additionally, in 2020, Gartner Research underscored that PPM is now a commodity. With so many software vendors providing PPM-like functionality today, PPM, as an approach, is no longer seen as a differentiator. In fact, Gartner sees the market as now being divided into two: On one hand, there’s adaptive project management (PM),  where the focus is squarely on execution and the delivery of products and services; on the other hand, there’s Strategic Portfolio Management, which focuses on the enterprise-wide strategy-to-execution alignment and adaptation.

Gartner sees SPM as an effective way to articulate business strategies with their associated business outcomes—and then being able to take action on those outcomes in the form of business capabilities, investments, programs, products, etc.

Similarly, both Gartner and Forrester stress the importance of an organization’s agility and its embrace of digital transformation. How fast companies can adapt to both disruptions and the pace of the market will ultimately define who becomes the industry “winners” in the future. Therefore, it makes little sense today to optimize “isolated” portfolios when a company’s priority is to transform the organization as a whole to seize new opportunities and adapt to ever-changing market or customer dynamics.

Planisware agrees with this perspective. Strategic Portfolio Management offers an entirely new way for companies to operate more efficiently and effectively.

Project Management focuses on project delivery, offering visibility at the project level alone. PPM takes this one step further by providing a framework for selecting the right value-driving initiatives, with visibility at the portfolio level. Finally, SPM is all about clearly articulating strategies and outcomes and then translating them into actual projects, products, and services that deliver on a unified vision. This approach provides visibility at the organization level.