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PORTFOLIO RATIONALIZATION
MAKING SOUND FINANCIAL AND STRATEGIC DECISIONS FOR INVESTMENT
AND OPERATIONAL EXPENSES IN TIMES OF UNCERTAINTY
April 2020

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© Pariveda Solutions. Confidential & Proprietary
1. Outline a methodology and set of frameworks useful for making
strategic portfolio rationalization decisions intelligently and quickly
(rapid vs. rushed) regardless of organization size.
2. Provide thoughts and ideas around how organizations can plot a
three-stage course to navigate through the uncertainty stemming
from COVID-19.
Contents
This is a discussion document aiming to provide a mechanism
… for mitigating risk during a period of crisis or uncertainty,
… while still allowing the organization to capitalize on potential upside when the crisis
is over.
The methodology and frameworks contained in this document are intended to help
augment existing processes, not replace them.
Pariveda can assist by
… adapting the methodology to each organizations’ particularities,
… performing analyses and ensuring objectivity, and
… facilitate rapid decision-making
Considerations
Document Overview
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1. METHODOLOGY
PORTFOLIO RATIONALIZATION
MAKING SOUND FINANCIAL AND STRATEGIC DECISIONS FOR INVESTMENT
AND OPERATIONAL EXPENSES IN TIMES OF UNCERTAINTY

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Cost Management Cycle Model
As organizations look to shepherd their near-term costs, they must consider the cashflow behaviors throughout the
Cost Management Cycle
As organizations attempt to serve their customers, they create
internal and external Products that are created through Projects
and require ongoing Operating Expenditures to support over time.
Each component of the Cost Management Cycle requires a level of
capital investment and ongoing cash-flow outlay that must be
understood in relation to the current macro-situation in order to
create intelligent Portfolio decisions.
Managing the
Cost Management Cycle
Cost
Management
Cycle
Projects
Ongoing efforts that have a start date, end date,
objectives, and a budget.
Can be delayed, reduced, or cancelled.
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Portfolio Rationalization Maturity Framework (Time vs. Sophistication)
An effective portfolio rationalization approach depends on (a) available time and (b) level of sophistication required
to make sound decisions
Qualitative assessment of
most projects /
investments
Available Time until a decision needs to be made
Levelofsophistication
neededfordecisionmaking
Investments are approved
as long as they are within
budget
Projects are only re-
evaluated when a
problem situation rises
No project management
guidelines are defined or
followed
Investments are approved
on an individual basis
Projects are not
systematically tracked
Basic cash-flow analysis
Qualitative assessment of
non-financial factors, e.g.,
as strat. alignment & risk
Projects are re-evaluated
on progress and budget
Project management
guidelines are defined but
not strictly enforced
Investments are approved
on a collective basis in
executive meetings
Projects are
systematically tracked
Cash-flow analysis and
sensitivity analysis
Projects prioritized on
quant. & qual. Scores,
and portfolio synergies
Projects are re-evaluated
on progress, budget, and
business relevance
Program office promotes
portfolio management
practices
Investments are
periodically re-evaluated
Red-flags are pre-defined
based on internal and
external criteria
Organizations who can ”shift left” and
perform effective portfolio analysis
quickly, but consistently, in times of
uncertainty increase their chances of
survival and ability to capitalize on
opportunities later
How can we get these results faster?
Fast & Thoughtful over Rushed
Rapid
Organizations who view lack of time – or macro
turbulence – as a reason to discount their
decision-making standards may (or may not)
realize short-term benefits, but in the long term
they pay the price of reduced sophistication
When facing pressures, good organizations make Rapid (not Rushed) decisions
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Recommended Approach
[1] Workshops or other fast-disposition methods
[2] Detailed analysis, which becomes an input to the organization’s normal portfolio prioritization mechanism
[3] Dimensions adjusted based on organization, and should include the organization’s existing portfolio analysis frameworks
We recommend a three-step approach to rationalizing portfolios that enables informed and timely decisions with
“enough” analysis
N/A
RUN GROW TRANSFORM
MANDATORYDISCRETIONARY
Key Partners Key Activities Value
Propositions
Customer
Relationships
Customer
Segments
Key Resources Channels
Cost Structure Revenue Streams
1. Identify projects you can’t touch
(map projects by portfolio category)
2. Identify projects you must not stop
(map projects by strategic objective)
3. Score remaining projects across quantitative
and qualitative dimensions[3]
Can’t touch these (continue funding)
Must not stop these; continue current level of funding
Must not stop these; opportunity to optimize costs
Rapidly pass through steps 1 and 2 [1]; then do “enough” analysis for the remaining projects in step 3 [2]
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Strategic Value
Risk
Size = $ NPV
Payback Period
NetPresentValue
Size = $ Cost
Non-Financial Benefit
NetPresentValue
Size = $ Cost
Technical Architecture
Suitability
Size = $ NPV

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N/A
RUN GROW TRANSFORM
MANDATORYDISCRETIONARY
Key Partners Key Activities Value
Propositions
Customer
Relationships
Customer
Segments
Key Resources Channels
Cost Structure Revenue Streams
Can’t touch these (continue funding)
Must not stop these; continuecurrent level of funding
Must not stop these; opportunityto optimize costs
Strategic Value
Risk
Size = $ NPV
Payback Period
NetPresentValue
Size = $ Cost
Non-Financial Benefit
NetPresentValue
Size = $ Cost
Technical Architecture
Suitability
Size = $ NPV
Portfolio Mapping Matrix
1. Identify projects you can’t touch:
Definitions and examples
N/A
TransformGrow
Discretionary
Run
Mandatory
Examples
▪ Existing regulatory requirements
▪ Cybersecurity
▪ Quality assurance functions
▪ Payment systems
▪ Internet and mobile presence /
commerce
Efforts that
cannot be
avoided or
deferred and
affect current
operations
Examples
▪ New regulatory requirements
▪ Production alignment to backlog of
orders
▪ Implementing agreed initiatives
with partners
Efforts that
cannot be
avoided or
deferred and
affect future
operations
Examples
▪ Replacement of end-of-life systems
▪ End-user technology refresh
▪ Cost Reduction Projects
▪ Organizational improvements and
sizing
▪ Realization of synergies across LoBs
/ subsidiaries
Efforts
organizations are
choosing to
execute to
benefit existing
operations
Examples
▪ Operational alignment of
distribution channels (e.g. add
branches to a common platform)
▪ Incentives’ optimization
▪ Cloud Migration
▪ Business process reengineering
Efforts
organizations are
choosing to
execute to
benefit future
operations
Examples
▪ Expansion into new customer
segments, new geographies, new
products
▪ Mergers and acquisitions
▪ Data & Analytics, Business
Intelligence
▪ Artificial intelligence, Machine
learning
▪ Process automation
Efforts
organizations are
attempting in
order to grow
into adjacencies
which may
require changes
in their operating
model
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N/A
RUN GROW TRANSFORM
MANDATORYDISCRETIONARY
Key Partners Key Activities Value
Propositions
Customer
Relationships
Customer
Segments
Key Resources Channels
Cost Structure Revenue Streams
Can’t touch these (continue funding)
Must not stop these; continuecurrent level of funding
Must not stop these; opportunityto optimize costs
Strategic Value
Risk
Size = $ NPV
Payback Period
NetPresentValue
Size = $ Cost
Non-Financial Benefit
NetPresentValue
Size = $ Cost
Technical Architecture
Suitability
Size = $ NPV

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Key Partners Key Activities Value
Propositions
Customer
Relationships
Customer
Segments
Key Resources Channels
Cost Structure Revenue Streams
Strategic Portfolio Mapping
Source: Business Model Canvas
2. Identify projects you must not stop:
Definitions and examples
Projects to become more efficient
and maximize synergies with
suppliers
Projects to realize operational
efficiencies
Projects to gain more value from the
company’s resources (including human)
Projects that minimize costs
or gain the highest possible
returns from spend
Projects to increase the value
proposition to customers
(B2B & B2C)
Projects to enable increase in
customer attraction and loyalty
Projects to improve distribution
channels efficiency & effectiveness
Projects that allow organizations to
reach additional customer segments
▪ Evaluation of supplier contracts
and procurement practices
▪ Strategic Partner Network
▪ Vertical integration
▪ Virtual Best Practices
▪ Talent Strategy
▪ Organizational alignment and
sizing
▪ Product portfolio
optimization
▪ New product development
▪ Incentives (e.g. bundling)
▪ Customer Experience (from
non-customer, to current-
customer, to past-customer)
▪ Business process reengineering
▪ Cloud Cost Takeout
▪ Cross-BU synergies
▪ Collaboration systems
▪ Operational consistency
among distribution channels
▪ Channel / customer-segment
alignment
▪ Cross-selling
▪ Cost Takeout
▪ Automation
▪ Funding review / restructuring
▪ Loyalty systems
▪ Marketing effectiveness
▪ Omni-channel
▪ Personalization / micro-
segmentation
▪ Data & Analytics
▪ Life-time customer value
▪ New customer segments
Projects that maximize
revenue from existing
and new channels
▪ Pricing strategies
▪ New geographies
▪ Inorganic growth
▪ Best-practice sharing
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N/A
RUN GROW TRANSFORM
MANDATORYDISCRETIONARY
Key Partners Key Activities Value
Propositions
Customer
Relationships
Customer
Segments
Key Resources Channels
Cost Structure Revenue Streams
Can’t touch these (continue funding)
Must not stop these; continuecurrent level of funding
Must not stop these; opportunityto optimize costs
Strategic Value
Risk
Size = $ NPV
Payback Period
NetPresentValue
Size = $ Cost
Non-Financial Benefit
NetPresentValue
Size = $ Cost
Technical Architecture
Suitability
Size = $ NPV
N/A
RUN GROW TRANSFORM
MANDATORYDISCRETIONARY
Key Partners Key Activities Value
Propositions
Customer
Relationships
Customer
Segments
Key Resources Channels
Cost Structure Revenue Streams
Can’t touch these (continue funding)
Must not stop these; continuecurrent level of funding
Must not stop these; opportunityto optimize costs
Strategic Value
Risk
Size = $ NPV
Payback Period
NetPresentValue
Size = $ Cost
Non-Financial Benefit
NetPresentValue
Size = $ Cost
Technical Architecture
Suitability
Size = $ NPV

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Definitions and factors for multi-dimensional analysis
3. Score remaining projects across quantitative and qualitative dimensions:
Definitions and factors
Net Present Value definition
Technical Architecture factorsStrategic Value factors
Suitability factors
Risk factors
Non-Financial Benefit factors
Payback Period definition
▪ The discounted annual free cashflows (upside - cost) for the
time-horizon from the initial investment all the way to several
years after breaking even
▪ Maintainability: Level of effort required to keep the solution
running
▪ Flexibility: Ability to accommodate additional business
processes or changes in required functionality
▪ Scalability: Ability to support additional users while meeting
quality of service standards
▪ Interoperability: Ability to interact effectively with other
systems
▪ Security: Ability to prevent unauthorized disclosure, loss,
modification, use of its data or functionality
▪ Compatibility: Conformance with existing and emerging
internal and external standards
▪ New products: The project allows us to create new products
▪ New customers : The project allows us to address new
customers or increase the share of wallet of existing
customers
▪ New geographies: The project allows us to enter new
geographies
▪ New partnerships: The project allows us to realize synergies
with new partners or increase the synergies with existing
partners
▪ Functionality: Project’s ability to deliver its required
capabilities
▪ Usability: Benefit in end-user’s productivity when working wat
steady-state after project’s completion
▪ Market risk: The market changes preferences before the
payback horizon
▪ Project delivery risk: The project doesn’t get delivered on time
/ within budget / within requirements
▪ Operational risk: The business operations are not mature
enough to realize the project’s benefits as planned
▪ Creates competitive advantage or responds to competitive
threat
▪ Improves customer satisfaction
▪ Improves company image
▪ Provides future strategic option or improves future readiness
▪ Improved quality or security of operations
▪ Improved management information
▪ Improved information and knowledge exchange within or
outside of Printec
▪ Technical Necessity (security, transaction volume)
▪ Pre-requisite for other investments
▪ The time it takes for the cumulative value of the upside to
equal the cumulative value of the investment (CapEx and
OpEx)
Potential dispositions
Continue
funding
Defer/Decrease Funding
Or
Fundamentally Rethink
For Discussion
and/or
Adapt to current situation
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N/A
RUN GROW TRANSFORM
MANDATORYDISCRETIONARY
Key Partners Key Activities Value
Propositions
Customer
Relationships
Customer
Segments
Key Resources Channels
Cost Structure Revenue Streams
Can’t touch these (continue funding)
Must not stop these; continuecurrent level of funding
Must not stop these; opportunityto optimize costs
Strategic Value
Risk
Size = $ NPV
Payback Period
NetPresentValue
Size = $ Cost
Non-Financial Benefit
NetPresentValue
Size = $ Cost
Technical Architecture
Suitability
Size = $ NPV
N/A
RUN GROW TRANSFORM
MANDATORYDISCRETIONARY
Key Partners Key Activities Value
Propositions
Customer
Relationships
Customer
Segments
Key Resources Channels
Cost Structure Revenue Streams
Can’t touch these (continue funding)
Must not stop these; continuecurrent level of funding
Must not stop these; opportunityto optimize costs
Strategic Value
Risk
Size = $ NPV
Payback Period
NetPresentValue
Size = $ Cost
Non-Financial Benefit
NetPresentValue
Size = $ Cost
Technical Architecture
Suitability
Size = $ NPV

10.
2. ORGANIZATIONAL AGILITY
MINDSET, SKILLSET, TOOLSET
BEST PRACTICES FOR NAVIGATING THE COVID-19 CRISIS
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COMPLEX
Probe – Sense – Respond
COMPLICATED
Sense – Analyze – Respond
CHAOTIC
Act – Sense – Respond
OBVIOUS
Sense – Categorize – Respond
Cynefin framework
As business leaders shift from the Chaotic to the Complex Domain, they must discern a path forward based on
emerging patterns and new inputs
Work-from-home
transition & Remote
effectiveness
Cash stewardship
&
Portfolio
rationalization “Leaders who try to
impose order in a complex
context will fail, but those
who set the stage, step
back a bit, allow patterns
to emerge, and determine
which ones are desirable
will succeed.”
-David Snowden (HBR)
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Organizational agility framework
Source: Donald Sull, “The Upside of Turbulence”
Organizations must make smart portfolio decisions in emergent situations to mitigate near-term danger while
balancing future opportunity
Understand Danger / Opportunity
Develop a shared framework and
context on the state of the world
around us
MAKE
SENSE
Agree on Preferred Way Forward
Agree on conscious review,
observations, and process to guide
actions and decisions
MAKE
CHOICES
Be Flexible & Adjust as Necessary
Compare initial assumptions with
experience, explore gaps, and
make mid-course corrections
MAKE
REVISIONS
Solve for Danger / Opportunity
Ensure effective execution of
decisions made across the
organization
MAKE
THINGS
HAPPEN
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From chaos to a new normal
Case: first 6 weeks of COVID-19
Based on the emergent nature of COVID-19, organizations are forced to collapse decision timelines as they attempt
to navigate uncertainty
High level of anxiety, disruption, and a sense that
no-one is in control.
Business leaders are in damage control in this
phase - short term crisis management and
financial tightening up while trying to minimize
lay-offs.
Vulnerable companies will fail.
Things are taking longer than originally expected,
but we are over the worst.
More companies will fail because they couldn’t
ride out the storm – winners and losers start to
emerge.
Leaders are focusing more on opportunities that
are emerging as a picture of the New Normal
starts to crystalize.
The After-COVID-19 world has changed and will
never go back completely to the way it was.
Business Leaders who had the foresight, formed
their “new normal strategies” and started
innovating and adapting early will reap the
rewards.
Chaos
Phase
Acceptance
Phase
New
Normal
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From chaos to a new normal
Case: first 6 weeks of COVID-19
As a result, organizations must make informed, consistent, and strategic decisions quickly while right-sizing level of
sophistication in order to survive
▪ Ensure safety for employees and customers
▪ Amplify communication, sense of belonging, and
personal connection, internally and externally
Chaos
Phase
Acceptance
Phase
New
Normal
▪ Define the business’s new context
▪ Adapt leadership methods for this new context, as
needed
▪ Re-tooling leadership expertise for the new normal
▪ Communicate lessons-learned
▪ Celebrate successes
Leadership
Strategy
Process
Organization &
People
Technology
▪ Make sense of the current situation
▪ Solve for survival of the business (e.g. emphasis on cash
vs margin)
▪ Discover key changes in the business environment
▪ Allow for “unknown/unmet” ideation (i.e. how can we
plan for things we haven’t thought about before)
▪ Emphasis on market development and sales (over e.g.
new product development)
▪ Harness opportunistic openings (e.g. inorganic growth)
▪ Execute business continuity plans if needed
▪ Redefine critical tasks to work non-traditional channels
(e.g. virtual collaboration)
▪ Include more (i.e. also non-critical tasks) to the new-
work-order
▪ Improve process based on lessons from previous phase
▪ Institutionalize what worked and re-design what didn’t
▪ Design for flexibility in preparation for a next crisis
▪ Promote mental and physical health
▪ Adapt HR methods to virtual (e.g. evaluations and
training)
▪ Reinforce good behaviors and correct bad ones
▪ Decide on phasing-in talent: who comes back in who
continues working from home
▪ Redesign structures and talent capability &
development strategies, based on lessons learned from
the previous phase
▪ Implement virtual work (changes may be needed
throughout the technology stack)
▪ Ensure security
▪ Monitor technology operation and improve as
necessary (e.g. mitigate security issues in virtual-
meetings platform)
▪ Re-evaluate product/project portfolio and restart
previously “paused” projects that qualify
▪ Accelerate technology that enables new opportunities
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▪ We will remain open…
▪ We are observing CDC recommended practices
Not attractive: “It’s all about us”
▪ You don’t have to leave your home for shopping…
▪ We will bring the car to you…
▪ If you want to visit us, these are our opening hours…
▪ And we care about the safety of our community
Attractive: “It’s all about you”
Both screen shots taken on 04/11/2020
Acceptance Phase Example: Safeguarding revenue by attracting customers through appropriate messaging
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Organizations must find the right balance
between broad objectives and focused
analysis (mitigating danger), while
keeping an eye on future risks and
opportunities (pursuing opportunity)
Where do we go
from here?
Step 1: Define Priorities
Emergent events collapse timelines and move priorities;
agree on what is important
Examples: cut costs “on purpose”, maintain/accelerate projects with
early upside, safeguard critical operations
Step 2: Analyze the Portfolio
Execute 3-step process against in-flight and planned
projects; rapid over reactive
Remember: Can’t touch, Must not stop, Rapid quantitative and
qualitative analysis
Step 3: Plan for the Future
Begin future planning to adapt to the New Normal and
address potential future “wave”
Harness opportunities and improve contingency planning across
Leadership, Strategy, Process, Organization & People, and Technology
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Stan Vlasimsky
Over 30 years of experience in
Consulting across a wide number of
industries and areas – with an emphasis
on large scale transformation. He was at
Accenture for 25 years serving clients
around the globe.
Dimitrios Vilaetis
Over 20 years of experience in
Corporate Strategy and IT Strategy, both
in Management Consulting and in
industry. Chief Strategy Officer in
industry; also, Bain & Co, Booz Allen,
Accenture.
Robert Greiner
Over 15 years of IT experience in several
industries emphasizing on the strategy
and delivery of custom software
applications. Expert in architecting cloud
solutions focusing on quality and
automation.
Stan.Vlasimsky@ParivedaSolutions.com Dimitrios.Vilaetis@ParivedaSolutions.com Robert.Greiner@ParivedaSolutions.com
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