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Project and Portfolio

Management: Analyzing
Business Project Needs
Without proper sequencing, marketing a software project will quickly
spin out of control. PPM can organize the chaos—if you begin with the
right tools. By Scott sehlhorst

1
Editor’s Note
2
How to Manage
3
Choose Your
4
All for One:
Customer-Driven Risk Strategy Marketing the
Software Carefully—Your Whole Product
Development Portfolio’s at Portfolio
Stake
 1
editor’s note

Home In on Project and Portfolio

Management Strategies

The role of a “product person” in a software development project is es-

sential to the effectiveness of the overall results. But many software teams
lack such a role. This handbook, which drills down into project and portfo-
Home
lio management, has those teams in mind. In the first story, “How to Man-
age Customer-Driven Software Development,” product manager and software
Editor’s Note
consultant Scott Sehlhorst gives readers the questions to ask during dem-
onstrations to improve the effectiveness of the design when the product role
How to Manage
doesn’t exist—while leaving the customer outside of the testing process.
Customer-Driven
Software Next, “Choose Your Risk Strategy Carefully—Your Portfolio’s at Stake”
Development
highlights a framework for assessing your company’s risk level in both cre-
ating and investing in products. Sehlhorst maps out a portfolio investment
Choose Your strategy and the steps to take to best ascertain risk.
Risk Strategy
Carefully—Your And in “All for One: Marketing the Whole Product Portfolio,” he discusses
Portfolio’s
how to apply a coordinated strategy across multiple products for a cohe-
at Stake
sive portfolio. Instead of marketing one of the many products in a portfolio,
businesses should strategically market the entire portfolio, encompassing all
All for One:
Marketing the
products. Sehlhorst warns of the dangers of single-product marketing and
Whole Product has advice on how to build a portfolio that really hangs together.
Portfolio

Brein Matturro
Managing Editor, SearchSoftwareQuality.com

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Quality
Assurance

How to Manage Customer-Driven

Software Development

Encouraging software development project managers to ignore or

discard input from customers is a rarity these days. But it’s not hard to find
software teams that have development and quality assurance but don’t have
Home
anyone formally staffed in a “product person” role like product owner or
product manager. Nature abhors a vacuum, so if you’re on a team that has
Editor’s Note
one, you’ll need to fill it.
Scrum teams I’ve worked with did regular “demo days” on which they
How to Manage
displayed what the team had created during a sprint. Even the least useful
Customer-Driven
Software demos helped create organizational momentum, acknowledgement and vis-
Development
ibility—even if there was no real feedback cycle to the developers. The most
useful demo practice I’ve been involved with was working with a team that
Choose Your delivered in two-week sprints but had weekly demos. The “See what we did
Risk Strategy
Carefully—Your here?” agenda was secondary; the “Tell us about what we did” emphasis was
Portfolio’s
front and center. The extra benefit of a mid-sprint demo was the opportunity
at Stake
to course-correct mid-sprint in addition to getting insight that influenced
the next sprint. These demos were for both employees and users.
All for One:
Marketing the
This process mechanic has a fairly low overhead—it takes less than 5% of
Whole Product the team’s time—and it’s a great vehicle for getting feedback on “Did I build
Portfolio
it right?” Once you do it, you won’t comprehend why you hadn’t always done
it. Most of the feedback is about the user experience—“I like this. I don’t
like that. I’d like it better this way.”
A developer builds a better product because of the recurring demos—for
users; a demo for your boss is not useful here. This is great “build the prod-
uct right” feedback. You also need to get the “build the right product” in-
sights from your customers.

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Quality
Assurance

You can’t—rather, you shouldn’t—ask your customers what they want

and then build it. This is a part of being customer-centered that takes some
skill, and it’s something not many teams are good at even when staffed with
a product person. You need to find out what your customers need. Your cus-
tomers should inspire your product, not define it.
But when you’re also responsible for designing, coding and testing the
product, you don’t have much time to go get inspired. If you do spend a lot of
time on it, you’re really playing a prod-
uct role, regardless of your title. Some
Get the biggest bang
insight is much better than no insight;
Home for your buck when
so start with the low-hanging fruit. Get
gathering insights
the biggest bang for your buck when
Editor’s Note
gathering insights from your customers
from your customers
about building the right product.
about building
How to Manage
All you need to do is subtly tweak the right product.
Customer-Driven
Software the questions you ask during demos.
Development
Instead of just getting insight into the quality of the product, get feedback
about the effectiveness of the design. The goal is twofold: find out if you’re
Choose Your solving the right problems and figure out if you’re solving them sufficiently.
Risk Strategy
Carefully—Your Customers can’t tell you whether you’re solving the right problems—they
Portfolio’s
can only tell you whether you’re solving the right problems for them. Picking
at Stake
the right problems to solve requires that you take a broader view, including
assessing the potential of a particular market, your competitive presence and
All for One:
Marketing the
positioning and even picking the right customers. But the customers you’re
Whole Product talking with can tell if you’ve actually solved the problems. What you want to
Portfolio
get is your customer’s acceptance criteria.
Good acceptance criteria are measureable statements that quantify what
it means to your customers to solve a particular problem. They inform your
test design strategy, allowing you to test what matters, instead of just what’s
easy to test. They let you know what the user’s goals are—in the context of
the solution to a particular problem—and let you know when you’re done.

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Quality
Assurance

Imagine the following chain of questions and answers:

Company: We built this to allow you to do X. Would this work for you?
Customer: Not completely.
Company: Why not?
Customer: It mostly lets me do X, but not always.
Company: When doesn’t it work?
Customer: In situations Y and Z.

Such a dialogue allows you to tease out specific acceptance criteria. Maybe
Home
it needs to work faster, as in nonfunctional requirements. Maybe your prod-
uct needs to behave differently in special cases, or alternate flows in use-case
Editor’s Note
terminology. Perhaps your product needs to allow users to deviate from the
flow and abandon the original goal in some situations, called exception flows.
How to Manage
Or maybe you just built something that lets users go through the motions
Customer-Driven
Software without actually achieving their objective, creating a lot of activity without a
Development
lot of results. Asking why gets desired results. So do the specifics of how the
product will be judged an acceptable tool for achieving those results.
Choose Your Such conversations allow you to easily move from “Do you like our imple-
Risk Strategy
Carefully—Your mentation?” to “Did we solve this problem sufficiently for you?” That’s the
Portfolio’s
low-hanging fruit. They also create the foundation for gaining insight into
at Stake
the next question: “Did we solve the right problems for you?” Demos will
sometimes uncover that your product is—or more likely is not—solving the
All for One:
Marketing the
right problems. But that fruit is higher up in the tree. You’re going to need a
Whole Product ladder—a dedicated product person—to develop the needed insight. n
Portfolio

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Planning

Choose Your Risk Strategy Carefully—

Your Portfolio’s at Stake

Mutual funds were created to help you manage and distribute the risks
among individual stock investments. Any particular stock could be high risk
or low, and risks from multiple stocks could cancel each other out. Some in-
Home
vestments promise low returns at low risk, while others have the potential
for high return but at higher risk.
Editor’s Note
The choices you make about investments in the products in your port- 
folio make for a good analogy. You will have some investments that reflect
How to Manage
a lot of uncertainty about the market and your ability to create them. When
Customer-Driven
Software creating products, I use the mantra “Build the right thing right.” You do mar-
Development
ket research to understand what the right thing is and then leverage, extend
and invent capabilities to create the product right. For each product you’re
Choose Your about to invest in, you can assess your uncertainty—about your ability to
Risk Strategy
Carefully—Your build what is needed and how well you
Portfolio’s
understand what is needed.
at Stake When managing a
When managing a portfolio of prod-
portfolio of products,
ucts, you have to make investment de-
All for One:
cisions in a coordinated way, assigning
you have to make
Marketing the
Whole Product each of your products a role in a con-
investment decisions
Portfolio
certed strategy, defending market lead-
in a coordinated way.
ership, attacking a market leader and
entering new markets. The strategy you choose reflects a set of activities you
would take together. You will be choosing from multiple possible strategies—
and the challenge is to pick the right one. Uncertainty of outcome is a frame-
work you can use to contrast different strategies. Your company’s appetite
for risk may eliminate strategies as being too conservative or too risky.

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Planning

The objectives you’ve assigned each have two key risk factors. Can you
succeed in doing it on-time and under-budget? And once you’ve built the
product, or make enhancements to an existing product, will they succeed in
the market and thereby support your strategy?
I was first introduced to this framework in a presentation by Jose Briones,
director of business development at ezCollaborator.com, about managing in-
novation (slide 24).
His presentation was extending the work of Rita McGrath, a profes-
sor at Columbia Business School, and Ian MacMillan, director at the Sol
C. Snider Entrepreneurial Research Center at the Wharton School of Busi-
Home
ness in the book The Entrepreneurial
Mindset. While his focus was on the
Editor’s Note The question is:
suitability of different processes to
How much of your
managing projects with different risk
How to Manage
investment do you
profiles, I’ve had success utilizing the
Customer-Driven
Software framework as a lens for comparing the
want to be low risk
Development
collective risk profile of different in-
versus high risk?
vestment strategies.
Choose Your Without this uncertainty framework, many people will talk about “low-
Risk Strategy
Carefully—Your hanging fruit” investments—capabilities that are within easy reach of your
Portfolio’s
development teams. These are the “high value, low cost” investments.
at Stake
The question is: How much of your investment do you want to be low
risk versus high risk? Briones’ matrix does not include cost or value com-
All for One:
Marketing the
ponents, and it assumes that you’ve already made prioritization decisions
Whole Product that include an analysis of bang for the buck. That analysis is based on a
Portfolio
premise of perfect certainty. When plotting investments in individual prod-
ucts against this framework, you can make each point reflect the size of the
investment.
When the executive team reviewed the risk profile of this strategy, the
team was asked to go back to the drawing board and come up with a strategy
that reflected a lower level of investment in the riskiest area in the matrix. 
When looking at the uncertainty matrix, the executive team can visualize

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Planning

the amount of confidence teams have in a particular investment. The team

can also compare two strategies and assess the riskiness of each portfolio of
investments relative to each other.
Portfolio strategies encapsulate “What we may go do as a company.” As
a leadership team, you have to choose from different strategies of “what
we should do.” A strategy is realized through a series of investments across
products—and it is at this per-investment level where your teams can pro-
vide you with their insights about the potential success of those invest-
ments. In aggregate, it gives you insights into “Can we do it?” and “If we do it,
will it work?” n
Home

Editor’s Note

How to Manage
Customer-Driven
Software
Development

Choose Your
Risk Strategy
Carefully—Your
Portfolio’s
at Stake

All for One:

Marketing the
Whole Product
Portfolio

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Portfolio
Management

All for One: Marketing the Whole

Product Portfolio

When managing multiple products as a portfolio, you get a risk manage-

ment benefit. The overall risk of failure of the portfolio is lower than the risk
of failure of any of the individual products. It allows you to place multiple in-
Home
vestments in multiple products, but with the risk of the products canceling
each other out. This is true whether you treat the portfolio of product offer-
Editor’s Note
ings as independent products or ones that will be marketed as part of a cohe-
sive offering.
How to Manage
When you have a portfolio of products managed as a whole, you get addi-
Customer-Driven
Software tional benefits—the value of the portfolio becomes greater than the sum
Development
of the values of the products in it. For
a cohesive portfolio, you have to ap-
At its simplest,
Choose Your ply a coordinated strategy across the
Risk Strategy a coordinated strat-
products.
Carefully—Your
Portfolio’s
egy could be to cover
At its simplest, a coordinated strat-
at Stake
egy could be to cover the market with
the market with
multiple products. You develop an un-
multiple products.
All for One:
Marketing the
derstanding of the market and segment
Whole Product off different groups of users. For example, an auto manufacturer sells dif-
Portfolio
ferent groups different types of vehicles, all of them tailored to each group’s
unique needs. Families get minivans; trades-people get trucks; singles get
sports cars.
Alternatively, instead of segmenting the market for a single “problem,” or
customer need, with multiple products targeting different groups of custom-
ers, you can define your market in terms of multiple related problems. So
you develop a line of products, with each product in that class targeting one

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Portfolio
Management

specific problem. As a beverage company, you might sell a variety of drinks—

some may replenish the body after exercise; others provide daily nutrition or
refreshment on a hot day.
Each product will probably initially target non-overlapping problems. Over
time, however, the products will grow their appeal—in capabilities and posi-
tioning—to capture larger portions of the market. Products will cannibalize
each other’s target markets as they overlap. Post-exercise drinks will start to
encroach on the daily-nutrition drinks. Single people will start to purchase
minivans for their general utility.
These are the types of problems that any multiproduct company faces.
Home
This level of coordinated strategy, however, doesn’t appreciably unlock ad-
ditional value beyond the aggregate
Editor’s Note
value of the individual products. The
By lowering the
next level of coordination is required to
How to Manage
cost of customer
achieve that value.
Customer-Driven acquisition, you can
Software When you have divided your market
Development
into related problems faced by the same
be more efficient—
customers, a good strategy for grow-
and that will either
Choose Your ing your overall sales is to increase the
increase profitability
Risk Strategy
Carefully—Your “share of wallet” that you capture from or enable you to
Portfolio’s
any particular customer. You attempt to accelerate investment
at Stake
cross-sell Item X to existing customers in the products.
of Item Y. Over time, you move toward
All for One:
Marketing the
having each customer purchase all of your products. Convincing customers—
Whole Product especially loyal ones who already trust you to solve one problem—that you
Portfolio
can solve multiple problems is easier than acquiring new customers. By low-
ering the cost of customer acquisition, you can be more efficient—and that
will either increase profitability or enable you to accelerate investment in
the products. This unlocks additional value as a proportion of revenue. But it
doesn’t necessarily make you more competitive.
Your customers have choices about whose products to use—yours or your
competitors’—to solve their problems. They can choose to mix-and-match

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Portfolio
Management

items from multiple vendors; in enterprise software, this is referred to as a

“best of breed” strategy. Because of this behavior among buyers, there is still
room to increase the value of your portfolio—by solving problems that span
the domains of each individual product.
Consider the problem space of communicating with co-workers. You may
have a portfolio of products that addresses different communication needs:
an email client for formal, multi-person, long-form, asynchronous com-
munication and an instant messaging application for informal, short-form,
synchronous communication. Each type of communication represents one
problem, and users have multiple products from multiple vendors from which
Home
to choose to solve each one.
Now imagine the following scenario: A user is reading an email discussion
Editor’s Note
that has been working its way through several people, and there’s something
in the most recent email that compels
How to Manage
her to have a conversation with one of
Customer-Driven There is still room
Software the participants in the discussion. The
Development to increase the value
communication has “time urgency,” and
there’s value to unlock.
of your portfolio—
Choose Your You could add integration capabili-
by solving problems
Risk Strategy
ties to both applications to allow them
that span the
Carefully—Your
Portfolio’s
to stand separately but work together domains of each
at Stake
when a customer owns both of them. individual product.
A simple approach might be to show
All for One:
Marketing the
presence information—online or offline status—of all the participants in an
Whole Product email thread directly in the email client user interface. Another is to enable
Portfolio
a user to click on one of the participants’ names and initiate a synchronous
dialogue. This would require you to develop some incremental capabilities to
allow the two applications to interoperate without fundamentally changing
either application’s core capabilities.
You’ve now solved a problem that neither product could address indepen-
dently—without growing its domain and cannibalizing the other product.
You’ve created a value-proposition for having both products. This unlocks

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Portfolio
Management

additional value, creating a tangible and explicit justification for your cus-
tomers to purchase multiple products from you.
There are two strategic benefits to this approach. First, it differentiates
each of your products relative to your competition with the allure of a par-
ticular item that aims to solve an otherwise unaddressed problem. Second,
it will accelerate share-of-wallet play by providing incremental value to your
customers.
But don’t offer services to solve these domain-crossing problems in coor-
dination with competitors’ products. That will eliminate the share-of-wal-
let benefits in exchange for increasing the per-product value. For example, if
Home
your instant messaging client were to enable any email client to seamlessly
initiate synchronous conversation, you would cancel out the differentia-
Editor’s Note
tion that was inherent in your email client. When your product teams oper-
ate independently and optimize locally, there is the risk that each product
How to Manage
will trade portfolio-share-of-wallet dollars for single-product-market-share
Customer-Driven
Software dimes. Instead, coordinate the per-product investments to leverage your
Development
portfolio and solve problems the individual products are not solving. n

Choose Your
Risk Strategy
Carefully—Your
Portfolio’s
at Stake

All for One:

Marketing the
Whole Product
Portfolio

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 about
the
author

Scott Sehlhorst provides product

management and strategy consulting
services at software consultancy Tyner
Blain. He worked for an enterprise soft-
ware vendor for eight years and as an
electromechanical design engineer for
Project and Portfolio Management:
another eight years. He has a bache- Analyzing Business Project Needs is a
lor’s in in mechanical engineering from SearchSoftwareQuality.com e-publication.
Carnegie Mellon University. Email him Barney Beal
at scott@tynerblain.com or follow him Senior Executive Editor
on Twitter @sehlhorst. Jason Sparapani
Managing Editor, E-Publications
Home
Jan Stafford
Executive Editor

Editor’s Note
Brein Matturro
Managing Editor

Melanie Webb
How to Manage
Associate Site Editor
Customer-Driven Linda Koury
Software Director of Online Design
Development
Mike Bolduc
Publisher
mbolduc@techtarget.com
Choose Your
Risk Strategy
Ed Laplante
Carefully—Your
Director of Sales
Portfolio’s
elaplante@techtarget.com
at Stake
TechTarget
275 Grove Street, Newton, MA 02466 
www.techtarget.com
All for One:
Marketing the
© 2012 TechTarget Inc. No part of this publication
Whole Product may be transmitted or reproduced in any form or
Portfolio by any means without written permission from the
publisher. TechTarget reprints are available through
The YGS Group.

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