Portfolio Management Best Practices: Measuring Business Value

Enterprise goals, the portfolio, work, and investment decisions should all be based on measurable business outcomes. Business outcomes generate metrics, the way to measure value. The key is to standardize the way the enterprise measures business value.

Business Value Standards can help guide the right decisions for the portfolio, based on the work that can generate the most value. The standards list in the table provides six primary business value types with the associated examples and metrics.

Table 1

Business Value Type Associated Examples Associated Metrics
Generate New Revenue Net new sales, improve lead conversion rates or reduce sale cycle time, improve up-sell/cross-sell Increase revenue by X currency
Reduce Costs Reduce costs for licensing, managed services, maintenance support contracts costs, retire legacy platform, reduce workforce needs due to automation or reduced skills needed Reduce costs by X currency
Increase Productivity Automate or eliminate a process step or task, reduce cycle time or manual hours # of hours * estimated hourly cost * quantity
Improve Service Delivery Improve service delivery by reducing cost of performing a service Reduce cost per day, per hour, or per service
Mitigate Business Risk Implement new security systems or disaster recovery solutions Benchmarked industry risk analysis data with (ROM) risk scenarios

These example metrics help define how to measure the results from prioritization of items within the portfolio. The performance of the portfolio is based on the business value results that are realized by successfully executing on business objectives.

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