Datasheet

www.microsoft.com/office/portfolioserver/
26
Use Advanced Analysis to Improve Portfolio Selection
Use advanced portfolio analytical techniques to assess the portfolio’s alignment with the
organization’s business strategy and identify and break the constraints prohibiting the
portfolio from reaching the Efficient Frontier.
Break Portfolio Constraints with Efficient Frontier Analysis
Efficient Frontier modeling enables analysts to visually identify the project or program
portfolio that will deliver the maximum strategic value under varying constraint
thresholds (such as $5 million budget or $10 million budget). Each point on the Efficient
Frontier represents a different bundle of projects (or programs) from the proposed
portfolio. The Efficient Frontier represents the best value. For example, in Figure 13 you
can see that with a $34 million budget you can achieve approximately 72 percent of the
portfolio’s total potential strategic value, although the current portfolio solution is only
achieving 60 percent. Organizations can use the Efficient Frontier in two ways:
 Identify the point of diminishing return: Find the point where the curve
begins to flatten, indicating you are paying a lot more to achieve a
disproportionate amount of strategic value.
 Benchmark the selected portfolio against the Efficient Frontier: Compare
the position of the selected portfolio in relation to the efficient frontier.
In reality, due to varying constraints (for example, interdependencies, project
alternatives, mandatory investments, and resource constraints), most portfolios are
suboptimal and fall beneath the Efficient Frontier (see Figure 13). Analysts can use
Portfolio Optimizer to identify and break these constraints, which will move the portfolio
closer toward the Efficient Frontier and increase the total strategic value from the
portfolio under the same budgetary constraints.