What makes the wheels turn in your organization? Or in ANY organization for that matter?
Most people would say projects (and of course their cousin, operations) represent the gears of progress. After all, it's how work gets done. Projects (driven by effective project management) are where planning, execution, and leadership take place.
Portfolio management is the realm of strategies, budgets, targets, and priorities. This area facilitates WHICH work gets done and which critical initiatives you can afford to undertake.
Most traditional PMOs (Project Management Offices) focus on driving effective Project Management, and the more strategic and advanced ones help foster good Portfolio Management practices as well. But PMOs should consider two additional, equally important domains, and, sadly, many do not.
First, Resource Management is key. Resources (the people, their skills, their engagement, and their productivity levels) are ultimately what make results happen. Put another way, if projects are the gears, people are the grease that keeps those gears turning. I've often used another apt metaphor: People are the fuel upon which an organization runs.
Think about this: You can meticulously plan the most important and strategic work the company can be doing, but if you don't have the right people when you need them, you won't be able to execute flawlessly--if at all. In other words, your portfolio isn't feasible.
I'd go so far as to say that resource capacity planning should be built into the portfolio management process. Each initiative should be assessed against spend and capacity: i.e., Can we afford to do this, and do we have the people to do it when we need it?
Lastly, Benefits Realization is where you define the goals of your initiatives, and where you assess metrics and results against them and aim to proactively maximize the results.
This is all a lead-in to my key point. The four imperatives of any value-driven PMO are (and you've probably heard some of this before):
Project Management = Doing the work right
Portfolio Management = Doing the right work
Resource Management = Doing the right work with the right people at the right time
Benefits Realization = Measuring and maximizing the results
All four are needed to produce value, and a PMO is in a perfect "bird's eye view" position to influence success in all four areas.