A Quick Guide to Product Portfolio Management

Product portfolio management is the process of evaluating, selecting, and prioritizing IT products. 

It can be applied to physical products, services, or both. It is sometimes referred to as “product stack” management.

In the context of product portfolio management, a product is a bundle of deliverables that provides a measurable outcome to a customer. A service is a process-based deliverable. 

The relationship between products and services is often unclear. For example, many companies define an employee as a type of service. 

Effective product portfolio management is critical to success in any marketplace. The selected products and services help define the organization’s value proposition and the customer segments it serves.

Product portfolio management is part of business, which is itself part of enterprise strategic management and is sometimes referred to as “business strategy”. 

What are the Objectives of Product Portfolio Management?

Product portfolio management is an ongoing process. 

It involves continual review and realignment of the organization’s products and services to meet customer needs, business strategy, and economic conditions. 

Businesses also often employ product portfolio managers to identify market opportunities. The product portfolio manager may be part of a business development or marketing team. 

They can also be a liaison between the development team and corporate strategy. 

Steps to a Product Portfolio Management

Capture product information

This step involves gathering all relevant data about each product. 

The information may be available in a variety of forms, such as a list of all active product projects, a list of all inactive projects, or a listing of the products sold in the marketplace. 

The data may also exist as spreadsheets or databases. 

Select products for review

The next step is to identify the products that will be examined in more detail. If this is an annual process, the product portfolio manager may choose some new products to review and some old ones to revisit. 

Score products

The next step is to score each product according to its potential value, risk, cost, and other measures. 

For example, high-value products might receive a score above 80 on a scale of 0-100; medium-value products might receive scores between 60 and 80, and low-value products might receive scores below 60. 

Prioritize products

The product portfolio manager might choose to prioritize products in several ways. 

One approach is to sort products by scores and then assign each product to one of three categories: high potential, medium potential, or low potential. 

Another approach is to sort the products by scores and then identify priority segments for each product type. 

For example, a company might define priority segments for each product type and then sort the products by scores within each segment. 

Another option is to define priority segments for each product type and then sort the products into priority segments according to their scores. 

The third approach is to sort products by scores and then assign them to one of three categories: high priority, medium priority, or low priority. 

Conclusion

Product portfolio management is an ongoing process. 

It involves continual review and realignment of the organization’s products and services to meet customer needs, business strategy, and economic conditions. 

Effective product portfolio management is critical to success in any marketplace. The selected products help define the organization’s value proposition and the customer segments it serves.