Agile Portfolio Management – A Preferred Approach When Investment Dollars Shrink
Agile work methodologies have become a compelling trend in project portfolio management (PPM), with a host of proponents touting the benefits of its speed, innovation and customer satisfaction. There’s no doubt that Agile can indeed deliver such benefits and many organizations are now looking at how they can apply Agile practices to realize those benefits to help them tackle the new challenges created by the global pandemic. But not all projects are conducive for Agile, and it is important to select the methodology best suited for the project at hand. What is more important in times such as these is to adopt Agile Portfolio Management to promote better organizational agility and ensure your portfolio of projects is aligned to the goals of the organization. Here’s what I mean.
Agile Portfolio Management means that your portfolio is adaptable, well maintained, and aligned. It ensures you have resources to complete the work you take on and you are constantly re-evaluating which initiatives your dollars are going toward. Furthermore, that you have the ability to make the changes required to stay aligned with the goals of the business – even as those change.
Deciphering Agile Portfolio Management from Agile Project Management
While companies are motivated to make the shift to an Agile model, it is important to first understand what that means for your unique organization, and which areas will undergo the change. It is a common misconception that making projects agile will result in an agile portfolio, which of course it doesn’t quite work that way. A quick look at some areas where they differ:
Selective Application: Agile Portfolio Management
Once you understand Agile Portfolio Management and the implications at the high level, the next step of course is adopting this model. One of the key reasons that many organizations hesitate to implement Agile is the misperception that they must jump in with both feet and apply Agile practices across all areas of project and portfolio management — and that simply isn’t true. There are more options than a wholesale, instantaneous change and in fact more effective with a phased approach.
If your organization is capable of making a sweeping change to embrace Agile across all areas of project and portfolio management, excellent! For those who have concerns, however, rest assured: You can selectively apply your use of Agile and still see the benefits. Applying the Agile methodology to project management is not necessarily right for all businesses because not all projects or industries have the ability to operate on an iterative, rapidly changing trajectory. Agile Portfolio Management, however, is something that most businesses can successfully implement, particularly in light of the current situation with the COVID-19 pandemic.
The ability for a business to pivot and realign its investments quickly based on timely, accurate data is more critical than it has ever been before. Across the enterprise, organizations are being forced to make drastic changes to their operations to protect their longevity. In the realm of portfolio management, this means reprioritizing project selection to emphasize those that strengthen the business and help it weather the challenges ahead. It also means empowering the PMO to say no to projects and back that decision with hard data.
In times of plenty, IT leadership doesn’t worry so much, and they’re willing to approve many, if not most, projects. However, effective portfolio management becomes especially relevant when the PMO has to start saying no. As the available resources and investment dollars shrink, the PMO needs hard data around capacity, value and strategic alignment in order to prioritize a portfolio of projects and ultimately say no to some initiatives. As such, Agile Portfolio Management is the optimal methodology for maintaining a strong portfolio that delivers the greatest business value. Here are three key reasons why:
- Agile Portfolio Management centralizes all projects regardless of methodology. This means that even projects managed with more traditional methodologies like waterfall can reside in an Agile portfolio. Centralization provides the PMO with the power to manage the entire spectrum of work from a single source and give each project the methodology best suited for it.
- It provides high visibility, data and reporting. The PMO can see who is doing what on which project in real time, anytime. They can see the resource allocation to each project, the time spent, the progress and the results and use that information to make sound decisions about present and future project selection. Again, it’s worth noting that Agile Portfolio Management does not mean all the projects managed under an Agile portfolio are Agile themselves – just that the portfolio is.
- Agile Portfolio Management supports the creation of a backlog. Because the PMO can centralize projects and see progress and results in real time, they are able to begin making strategic decisions about future projects, creating an effective pipeline of vetted work that is ready to go as soon as space opens up.
To put this more succinctly, Agile Portfolio Management makes it easier for the PMO and the stakeholders to closely monitor every aspect of the projects within that portfolio and use the information gained to make strategic decision that support the longevity and security of the organization.
Overcoming Roadblocks to Agile Portfolio Management
Even as you take steps to transition to an Agile model, there will be challenges you encounter. Here are a few that you might anticipate:
- No Visibility: many think Agile teams work in an organized chaos fashion and at the end deliver something of value but the nitty gritty is hard to understand. With Agile Portfolio Management it is quite the opposite – visibility is a key component and understanding the true status of projects – Agile or otherwise – is inherent in this type of management structure.
- Cultural Biases: some people just don’t work well in unstructured environments and can’t adapt. Again, this perceived roadblock is contradictory to actual Agile Portfolio Management working environments. Planning becomes even more important (though also more frequent) and work is not “chaotic” but “iterative” and pieced out into more manageable pieces.
- Can’t Mix Methodologies: while it is true it can be difficult to manage projects of different methodologies within the same portfolio, it is also incredibly important to do so. Having a complete picture of all project work and resources available across all project types is the only way to get a real understanding of capacity and demand. This critical element is arguably the determining factor of success for organizational agility.
- Unpredictable: hearing this almost makes me laugh; Agile has really gotten a bad rap for delivering exploratory or innovative projects that are unpredictable in nature. That doesn’t mean managing using Agile will make the project unpredictable. Bringing Agile to the portfolio level actually makes the portfolio more predictable because you know you’ll be measured against business value and investing in projects that are the best for the business, rather than those that are most reliable.
- Replacing PMOs: another misperception of Agile that is wildly off base. Wide adoption of Agile is making the role of the PMO more important as investment in project management practices yields better project results and requires increased oversight.
Bringing It All Together
As you adopt Agile principles it is important to understand the critical difference between Agile Project Management and Agile Portfolio Management – and that you can have one without the other. Not all projects need to – or even should be – managed in an agile fashion to be able to achieve Agile Portfolio Management. Note again the key point that Agile can provide great visibility at the portfolio management level, despite how individual projects are managed. This top-down approach is what delivers so many benefits, like funding and resource management, to Agile Portfolio Management. Best of all, this can be accomplished in a phased and methodical manner, delivering both short-term value and longer-term organizational transformation to withstand change.