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Artificial Intelligence in Portfolio Management: Shaping the Future of Strategy

By Dr. Elissa Farrow
November 8, 2023

In the ever-evolving landscape of portfolio management, organisations can now leverage advanced technologies to not only improve traditional practices but to also unlock new dimensions of efficiency and effectiveness.

Portfolio management extends beyond the realms of definition and delivery; it now encompasses the potential of Artificial Intelligence (AI) to refine prioritisation, long-term forecasting, and strategic management. In this article, I explore some of the implications and impacts of AI on portfolio management and some key considerations for organisations striving to adopt this transformative technology in that context.

The Impact of AI on Portfolio Management

As a foresight specialist, consultant, and strategic advisor, I’ve been privileged to assist many organisations in a range of industries to establish portfolio offices and their definition and delivery practices. These offices are enablers to successful delivery of strategy and in many organisations are a rich source of structured and unstructured intelligence.

I have recently been researching and speaking about the transformative role that AI plays in the world of portfolio, program, and project management. While AI will transform the role of project managers and the management practices over time, it’s when we aggregate big data and AI together symbiotically that we will see the potential for a transformation in the portfolio management context. Some immediate areas that come to mind for me and clients I’ve worked with include:

  • Data-Driven Decision-Making: AI has the remarkable ability to analyse vast datasets, identifying trends, risks, and opportunities. It empowers organisations to prioritise initiatives based on potential impact, cost-effectiveness, and alignment with their missions.
  • Predictive Analytics: AI-driven predictive models forecast project success and impact. This allows organisations to make informed decisions about which ideas should enter their portfolios, going beyond historical data to uncover hidden patterns and insights.
  • Improved Resource Allocation: AI optimises resource allocation by considering budget constraints, essential expertise, and expected benefits. It ensures that an organisation’s efforts are efficiently directed towards their most crucial initiatives.
  • Real-time Insights: AI-powered dashboards provide real-time performance insights for individual projects and the entire portfolio, facilitating swift decision-making and adjustments when required.
  • Identification of Weak Signals: Big Data and AI diagnostics can instantaneously analyse data from various industry, environmental, or customer segments to identify weak signals and emergent trends for future amplification or future mitigation within portfolio strategies.

Building Blocks of AI-Enhanced Portfolio Management

To realise the full potential of AI in portfolio management, several foundational elements are essential:

  • Ethical Assurance: Equipping a new form of assurance that ensures that the AI solution, associate vendor affiliations and funding sources are of the ethical integrity required to maintain confidence and trust.
  • Data Quality: The accuracy and reliability of data are paramount, as AI heavily relies on it for making informed decisions. The source of data and the original configuration is critical. The right parameters for quality and cleanliness of the data and the bias risk mitigation must be encoded from the beginning.
  • AI Integration Strategy: Developing a comprehensive strategy for seamlessly integrating AI into the portfolio management process, encompassing the selection of AI tools, platforms, and the requisite expertise.
  • Change Impact Analysis: Understanding the impact of AI on organisations, processes, and people, including changes in portfolio office roles, responsibilities, and workflows.
  • Training and Awareness: Equipping staff and stakeholders with the knowledge and skills required to harness AI for enhanced decision-making.


Challenges and Conclusions

Integrating AI into portfolio management does come with its set of challenges. Ensuring data privacy and security, addressing ethical concerns, managing the costs associated with AI implementation, and effectively navigating organisational change are all critical considerations. Organisations must also delineate which parts of the portfolio office service and function catalogue remain untouched by AI.

While AI can provide analytic power and provide services such as supplement induction training for new staff, personalised interactions will remain vital. I always encourage clients to commence with the question of what we value, and what could we automate but at what true ‘cost-benefit’. Cost and benefit mean cost or benefit of service, cost or benefit to our mission, cost or benefit to our ethics, cost or benefit to our staff or customer trust, to name a few.

Elevating portfolio management demands a commitment to both respected best practices and the innovative incorporation of AI. Portfolio Offices over time will have hybrid human and machine operating models. By deploying AI for data-driven decision-ready information, predictive analytics, and real-time insights, organisational leaders can become more confident in allocating their resources and amplifying their impact.

AI will emerge as a pivotal game-changer in the pursuit of portfolio office value propositions. Embracing the future of portfolio management means embracing the power of Artificial Intelligence but we need to maintain a very clear view on our acceptable costs or benefits beyond the typical economic metrics.

Senior Consultant and Facilitator, International Institute of Learning

Dr. Elissa Farrow is a futurist, author, facilitator, coach, and strategist. She has over 25 years of experience in research, organisational innovation, design, adaptation, and benefit realisation. Dr. Farrow is known for her compassionate leadership and engagement approach. She is an experienced leader and has been a partner in transformation in various industries. Dr Farrow is a published author, and her doctoral research explored the implications of Artificial Intelligence on organizational futures. Her research created innovative adaptation principles for leaders and delivery teams as well as new knowledge relating to how to best transform organisations operating models to anticipate and create positive futures. In 2023, Dr. Farrow became an Adjunct Fellow at the University of the Sunshine Coast.

Disclaimer: The ideas, views, and opinions expressed in this article are those of the author and do not necessarily reflect the views of International Institute for Learning or any entities they represent.

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