Portfolios and programs are not the same thing at all.
There's another post that discusses what a program is.
So what then is a portfolio?
This term gained currency during one of the great stock market run-ups (the pre-dot-com-crash one) when everyone fancied themselves to be the next Gordon Gecko.
Financial advisers were always pursuing you to balance your portfolio.
So the PPFM world glommed onto the word "portfolio" to make their idea sexy. The problem was, everybody assumed that project portfolio management worked the same way as your Merrill Lynch statement.
It can, as you will see in the later fuller discussion of the topic, but it doesn't have to, and for most organizations it doesn't.
The Wall Street model is based on assembling a market basket of financial instruments and balancing their risks and rewards; but in the end they are all just different forms of money.
in most organizations, there are stovepipes in which some level of activity is needed, no matter how worthy the activities in other stovepipes may be. No algorithm can model this short of actually specifying what the selected investments are and then faking up an algorithm that reproduces that selections.
In such a case, a portfolio management effort to use a unitary weighted criterion list that decimates certain types of investments is sure to be rejected.
And so they are, on a regular basis. That is why the Wall Street model has not worked in situations beyond financial instruments.
At this point, we can just agree on terms.
Actually you can disagree if you want (hey, comment away!) but at least you'll know what I mean when I use the term.
Portfolios are groups of things that are similar in some manner, perhaps just one manner.
Similar, but not necessarily dependent.
The portfolio provides a means for a manager who is concerned about that item of similarity to look at a wide range of activities, perhaps even all activities in the entire organization, to assess how they stack up with regard to that particular aspect.
One might have a portfolio of all security-related IT investments in the company. Or a portfolio of all IT investments of all types, with the data being examined being the specific issue of whether or how they conform to the company's security standards. In a non-IT setting it could be a look at all employee records to see whether they are current on a particular certification, or it could be the list of all applicants to see how diverse they are. It could be an inventory of bubble-gum trading cards that is being tracked to see whether all active players are represented, or to see which ones have the highest resale value and why.
In other words, a portfolio can be anything you like if they can all be assessed against a common measure, and if that is what you want to measure.
The examples above are a sort of portfolio. The common thread is that they all involve someone analyzing all the items in the portfolio against certain criteria.
In a later set of posts we'll go into how a portfolio is managed, and how that fits in with the organization's program and project management processes.
For now, we'll just say that portfolio management is the practice of evaluating many alternatives against a specific set of criteria.
Nothing more, nothing less.
It might be the means by which the organization selects its investments. It might just be a list of the systems that have employee information in them. The portfolio manager may have decision authority, or may have veto power, or may just be a staff functionary.
It may be used to choose, to rank, or to find things that do NOT fit - as in the picture.
This is not to denigrate the role of portfolio management, just to define what it is. At least, what I think it is. Your experience and ideas may differ: feel free to share your view.