What is driving organizations to improve agile portfolio management?
Agile portfolio management is being driven by the continued acceleration in the pace of business. Organizations are having to make strategic decisions more quickly, and implement those decisions in a way that generates immediate responses. With planning cycles now quarterly as a standard and often more frequent, they simply can’t take several months to implement every decision. That’s where agile portfolio management helps.
Agile portfolio management also has the potential to allow organizations to gain a competitive advantage. If an organization can minimize the time from the identification of an opportunity to the delivery of value around that opportunity then it will enhance its reputation, capture early adopters, be perceived as innovative, etc.
Why is agile portfolio management important?
Agile portfolio management is important because in a fast-paced business climate, traditional portfolio management methodologies simply will not cut it. In short, the old way of doing things is not working. Suitable business growth today requires organizations to think differently and adapt quickly. Agile portfolio management leverages the same kind of Agile concepts that revolutionized project execution for the past decade. It’s more important than ever for organizations to be able to react and respond to changes fast and with minimal disruption without sacrificing quality. This flexibility and iterative execution creates continuous improvement opportunities for organizations resulting in faster delivery times, innovative results, better forecasting, and continuous growth and advancement.
What is the main goal of agile portfolio management?
Put simply, agile portfolio management seeks to streamline and accelerate the ability to deliver value from strategic investments. It takes agile principles from delivery teams and applies them to more strategic levels of the organization. The goal is to develop better solutions, implement them in less time, increase the ability to pivot where necessary, and improve ultimate customer and organizational value.
What steps would you recommend to improve agile portfolio management?
The steps I would recommend to improve agile portfolio management are innovation, investments, backlogs and integrations. Let’s start by talking about innovation. Focus on solutions that results in an excellent customer experience while also enhancing overall business value. This means keeping a pulse on your industry to track changes in environment while also exploring emerging technologies. Investments is the next place to evaluate. Always invest in the areas that have the best chance for success. This requires your investment of time, money and resources to be as Agile as your overalls strategy. Be prepared to shift your investments quickly. Next, let’s look at backlogs. One of the challenges of an Agile methodology is in adjusting how to fill your pipeline. The speed of Agile requires organizations to create a backlog list of pre-prioritizes initiatives that are ready to go at a moment’s notice. This ensures you’re never wasting time and resources on an initiative that isn’t delivering value. Lastly integration is a crucial component of effective Agile portfolio management. This starts with leadership who should solidify the goals of the organization.. It’s the PMOs job to translate those needs into action while also providing data that allows them to adapt mid-deliverable if needed. This concept should apply to every phase of the project lifecycle from planning to realization. You won’t master agile portfolio management overnight, but these steps should help get you there faster.
What does a good agile portfolio management framework look like?
A good agile portfolio management framework should be customer driven, data driven, fast and connected. According to a 2019 State of the CIO Report from Forrester, these areas are identified as the shift that occurs when transitioning to applying agile principles at the portfolio level. The shift from customer aware to customer driven is the highlight of the focus on customer satisfaction. From data rich to data driven, showcases the shift of data becoming the driver for insight-led decision making prioritizing alignment for organizations. Shifting from perfect delivery to fast delivery is another shift highlighted. It’s important to note that it doesn’t mean low quality. Lastly, the shift from siloed to connected highlighting the importance of an integrated approach and view of organization demands and priorities.
What does it look like for organizations that are seeing success with agile portfolio management?
Organizations that successfully embrace agile portfolio management are completely different from those who don’t. They’ll be more focused on value streams – the way that value is created by the organization and flows to customers (internal and external). They’ll embrace concepts like DevOps and continuous delivery within their IT environments and all employees and contractors will be focused on delivering the most value in the least time at the highest quality.
Agile portfolio management enables a completely different perspective around how work gets done. Organizations that leverage it will likely have already completed much of their digital transformation work and will now be focused on delivering a continuous business transformation through continuous innovation and optimized value in every element of the business.
They’ll also be planning, funding and delivering work using strategic portfolio management and will have empowered teams with the autonomy to make many key decisions – keeping decision making as close to where work happens as possible. Governance and funding models will embrace lean principles and the entire organization will be able to pivot quickly whenever necessary.
How does agile portfolio management need to be addressed differently for different levels of PMO maturity?
Immature organizations and PMOs are not going to be able to successfully embrace agile portfolio management. It is a comprehensive approach to how business gets done, and as such it requires a degree of maturity to already have been achieved. Having said that, the journey towards agile portfolio management can help drive that maturity.
Elevating agile from the execution layers to more strategic parts of the business is a first step, whether that is as part of a formal model like SAFe or simply as a result of applying agile thinking to planning activities. Strategic portfolio management will also help drive PMO and enterprise maturity and create the kind of alignment between objectives, investments, work and outcomes that will enable the development of value streams and the management of the business, and portfolio, in an agile manner.
What is the role of the PMO in agile portfolio management improvement?
Ultimately, agile portfolio management is still portfolio management, so a PMO, especially a strategic or enterprise PMO with accountability for portfolio management success, must ensure it is operating as effectively as possible. The difference is that agile portfolio management becomes an approach to how the entire business is run, so the PMO has a broader set of stakeholders.
For example, value streams are a critical aspect of agile portfolio management and the process of mapping and managing those value streams requires specialized resources. Often, organizations that leverage value streams also embrace the related disciplines of enterprise architecture and business architecture, and here to the specialist functions involved need to be part of any discussions around the evolution of agile portfolio management.
To achieve this, the PMO really must be the hub of strategic delivery, and that’s a big evolution from where many PMOs find themselves today. They need to be staffed by experienced business leaders, they need to have the trust and respect of every area of the organization, and they need to be capable of implementing enhancements and confirming the expected improvements.
What are must haves when considering effective agile portfolio management?
There are a few guiding principles that I would suggest when considering effective agile portfolio management. First, get closer to your customer/stakeholder to move from being a service to a strategic business partner. By prioritizing business value over start and end dates, you’re bound to see greater success. Next centralize your project portfolio management to gain true visibility into your entire portfolio. With this visibility, you gain access to true capacity planning and enforce project governance and give you the ability to select the right methodology for the right project. Lastly, this is always going to be a work in progress. Increase you credibility while focusing on continuous improvement to see better ROI and higher project/product success. These principles will give you a great start to effective agile portfolio management.
What roadblocks do teams face when trying to get better at agile portfolio management?
There are a few common roadblocks that organizations face when trying to get better at agile portfolio management. Agile projects have historically been hard to get insight into meaning there is no visibility. With a top-down perspective of Agile portfolio management you’ll gain greater transparency across the entire organization. Cultural bias is another roadblock teams face when trying to get better at agile portfolio management. When applying Agile at the portfolio level, you gain greater control over all projects and can objectively prioritize those that have realistic and value driven timelines. Another roadblock people perceive with agile portfolio management is that they can’t mix methodologies. That’s incorrect. Just because you are managing Agile projects doesn’t mean all project need to be. Keeping mixed methodologies in the same portfolio allows for iterative and prioritized planning, regardless of methodology.
How to get internal buy-in for proper agile portfolio management?
I don’t believe that many organizations are going to commit to agile portfolio management in isolation. It requires a commitment to creating a completely agile enterprise – to evolve from doing agile to being agile if you will. If organizations have already made that commitment, then buy-in will likely be relatively easy.
Where challenges might occur is with the adoption of some of the concepts around agile portfolio management – switching to value stream-based delivery will be a big shift, empowering teams and providing them with a degree of autonomy over decision making, etc. In these situations, it is important to maintain a focus on why the changes are being made – to improve the ability to consistently deliver value and achieve the goals and objectives of the organization. If that can be achieved then the concept will set itself.
What stakeholders should be included in agile portfolio management decisions?
Ultimately, there are a few key stakeholders that should be included in agile portfolio management decisions. Leadership and executives are clear contributors to the agile portfolio management strategy in ensuring it aligns and continues to align with the strategic goals of the business. The PMO is often times also involved in driving change management which is fueled by agile portfolio management processes. Executives and the PMO are the two main players in delivering agile portfolio management in an organization
If there is one concept that every organization understands, it’s that change is hard. Shifting from the comfortable way you’ve always done things to a brand-new strategy can seem like a daunting task. However, just because your traditional methodology is comfortable doesn’t mean that it is actually making things easier — or that it is efficient, sensible or profitable. And it certainly does not mean it is customer-friendly. Former General Electric CEO Jack Welch is known for advising organizations to, “Change before you have to.” Welch understood that proactive change was critical to becoming a winning organization and he enthusiastically embraced and applied the concept within his operations.
Why an Agile Portfolio Management Framework is Important
You would be hard-pressed to find a business today that still relied on a staff of typists banging out memos, bills of sale and customer communications on old-fashioned typewriters. Yet thousands of organizations still rely on similarly siloed technology and antiquated methodologies for some of their most high-level operations.
One of the most surprising examples of this is found in the strategies companies use to implement portfolio management and project delivery. The project management office (PMO) is a foundational part of operations and critical to business transformation. Your PMO determines which projects are a priority, assigns deliverables and objectives, manages capacity and designates resources. Yet many organizations neglect optimization of this critical operation, resulting in lost time, money and, most importantly, customers.
This information will help you take on the challenge of optimizing your portfolio management strategy by leveraging the same kind of Agile concepts that have revolutionized project execution for the past decade. By embracing Agile methodologies at the portfolio level, your PMO will become the driver of responsive change in your enterprise, addressing and improving your greatest business challenges, including prioritizing customer satisfaction, streamlining alignment with corporate objectives, and developing key performance indicators for continuous success. You’ll be equipped with the responsive processes, tools and confidence necessary to transform your organization.
Why Should You Change Your Portfolio Management Strategy To Focus On Agility
In a fast-paced business climate with sky-high customer expectations, traditional portfolio management methodologies simply will not cut it. In short, the old way of doing things is not working. Sustainable business growth in a digital economy requires organizations to think differently and adapt quickly. In fact, the results of a recent Gartner survey note that faster strategic project delivery is the number one factor driving organizations to shift their methods of portfolio management.
- Common Pain Points in Traditional Portfolio Management
- Failure to live up to expectations
- Unable to keep pace with rapid changes
- Lack of clarity
- Effectiveness inhibited by time-consuming, manual functions
- Focus on deliverables, not customer satisfaction
- Fragmented organizational structures or unbreachable silos
- Skill and resource shortages
- Inaccurate forecasting
Are any of these pain points familiar? There is a solution: Agile Portfolio Management Tools. Once a solution used solely by software developers in product development, Agile methodologies have quickly expanded to other industries across multiple levels of management and operations. The same principles that drove the creation of the Agile Manifesto in 2001 work equally well in project delivery and portfolio management. Agile is flexible and scalable, and can be applied to individual projects or across multiple projects, teams and deliverables at the same time.
How Agile Project Portfolio Management Works
An Agile methodology breaks work into actionable, short-term sprints, with adaptations implemented on the fly. This allows for faster delivery — without sacrificing quality. In order to ensure exceptional outcomes and superior customer satisfaction, change is allowed at any time in the process. This flexibility and iterative execution create continuous opportunities for improvement. The end results are:
- Improved customer satisfaction
- Faster delivery times
- Fulfillment on commitments — promises made are promises kept
- Innovative results
- Continuous growth and advancement
- Enhanced communication
- Better forecasting
- Measurable results
Key Markers of Agile Portfolio Management
Here are some key markers of successful Agile Portfolio Management:
- Customer satisfaction is the ultimate goal in all phases of operations
- Applied from the top down — full integration across teams and levels
- Change is always welcome when it results in the best customer outcomes
- Focus is on continuous improvement via an iterative planning process
- Teams deliver products, not projects
- Responsive to strategic business objectives
- Project and portfolio management are centralized, regardless of methodology
Key Elements of Agile Portfolio Management
Now that you have a good understanding of why your organization should shift to Agile, let’s take a deeper look at the how. A solid Agile Portfolio Management strategy must rely on four key elements: innovation, investment, backlogs and integration.
Innovation: Focus on solutions that result in an excellent customer experience (CX) while simultaneously enhancing overall business value. (Hint: Focusing on the first part almost always delivers the second.) Seek opportunities to create offerings that no one else has. This requires that your organization keep its finger on the pulse of your industry to track changes in environment and explore emerging technologies. And of course, you should commit to deliver what you promised when you promised it.
Investments: Always invest in areas that have best chance of success. This requires that your investment of time, money and resources be as Agile as your overall management strategy. Be prepared to shift your investments quickly and do so as often as is required. Focus on projects and initiatives that create and drive value and innovation. Adaptive, Agile investment requires consistent monitoring, which we discuss further in Part Four.
Backlogs: One of the challenges of adjusting to an Agile methodology lies in adjusting how you fill your pipeline. The speed of Agile requires organizations to create a backlog list of pre-prioritized initiatives that are ready to go at a moment’s notice. Maintain and continually prioritize the backlog — don’t create an artificial ranking. This ensures that you’ll never be wasting time and resources on an initiative that isn’t delivering value, innovation and CX. It also keeps projects from getting lost in the shuffle or accidentally de-prioritized.
Integration: Effective Agile portfolio management should work from top to bottom. End-to-end management starts with the leadership, who guides the what, when, why and how and works simultaneously with portfolio management and work execution. The trick to effective integration is that it must be applied to all strategic initiatives at all times. Your PMO should translate the needs of leadership to action, while also providing data that allows them to adapt mid-deliverable. Work execution should deliver on the orders from the top within the guidelines of the portfolio — and it should provide feedback to quickly change and grow mid-work. This concept should apply at every phase, from planning to realization.
Agile portfolio management strengthens your organization through innovative growth, properly directed investments and a well-managed pipeline. The success of these initiatives depends on full-scale integration from idea to execution, with buy-in from all levels of the organization.
The Agile Work Methodology — Deliver Products — Not Projects
Implementing the key elements of an Agile portfolio can be greatly enhanced by a shift from project delivery to product delivery. According to a survey conducted by Gartner, 55 percent of organizations have made the decision to shift from project delivery to product delivery. The Agile-driven strategy has been touted in a variety of C-suite publications and it’s a top topic in the biz blogosphere. What’s driving this trend? Success, of course. In a Gartner survey of more than 1,000 companies, all of them reported benefits from the shift to a product-centric delivery methodology, including improved internal engagement, improved customer engagement, accelerated delivery, and lower costs.
The Difference Between Project Delivery and Product Delivery
“55% of organizations have made the decision to shift form project delivery to product delivery.” (i) Gartner Survey
Project delivery, whether through waterfall, Agile and hybrid management methods, focuses simply on accomplishing tasks against a set of deadlines and the desired outcome is based on completion. While this is a pretty standard way to operate, it comes with a key drawback: The potential for growth ends when the project does. And that’s not the only way an organization can leave money on the table in how they deliver. When an organization is focused solely on delivering projects, there’s also the tendency for work to become siloed, not to mention project neglect and resource shortages. When organizations experience these challenges, they often blame them on immediate circumstances instead of symptoms of a more global problem with delivery as a whole.
Product delivery is an iterative, open-ended strategy that focuses on customer satisfaction. There is always room for improvement, investment and advancement. Think of it this way: When a person makes a car purchase, they follow a checklist of wants and needs and accomplish a list of tasks (securing funding, test driving, titling) with the end result being the purchase of the car. However, unless that car is going to sit in the garage, it’s going to require an ever-evolving list of maintenance to protect the initial investment. These items include regular oil changes, detailing, fluid re-fills, tire rotation, etc. And there are always future improvements like adding in a remote starter or upgrading the stereo system to add new value that enhances your original investment.
The former action is a single goal accomplished; the latter, a continuous focus on investment, maintenance and improvement. A product delivery strategy isn’t tied to any specific project management methodology; it’s Agile because it drives an organization to rapidly evolve by continuously looking for opportunities to innovate, create and deliver what no one else has through building upon, and learning from, previous accomplishments.
Prioritize initiatives based on what is important to the business but don’t just manage activities – measure outcomes. Product management ensures you are working toward the right goals and achieving business benefits regardless of how you get there. It also creates a culture of change and improvement to hold your organization accountable to its most imperative business objectives. Project management ends when the project does. By contrast, product management evolves constantly with customer satisfaction as the true end goal.
Agile Portfolio Management – Regardless Of Project Methodology
Most organizations feature pockets of project activity – all drawing on a limited group of resources – throughout the company, with no standard work methodology: some teams leverage Agile methods, others traditional Waterfall, and still others, a hybrid of the two. The next step in establishing an Agile Portfolio Management process in your organization is to close that visibility gap by bringing all of your relevant projects together, regardless of the specific project type and approval workflow, into a single portfolio, allowing timely and effective decision-making. Keeping projects centralized at the portfolio level allows executive leadership to understand the true investment of the portfolio and allows initiatives to be measured against their individual objectives rather than standardizing and trying to give all projects the same weight of importance – it’s just not realistic. With an Agile Portfolio Management approach, the efforts of a development team working in Jira, an infrastructure group managing a Waterfall project and a design team using a simple stage-gate process can all be rolled up to a single portfolio view, enabling true capacity planning, prioritization and more.
Portfolio management, unlike project management, factors in resource requirements and budget constraints across all projects and allows you visibility from the top down. When all work is rolled up to the portfolio level you can see where bottlenecks are and which areas have the most risk involved – and then make decisions to ensure the success of the portfolio. If Agile projects are siloed into their own portfolio or managed individually, you can’t easily tell the impact of change on the entire process. Adding portfolio level structure and reporting across all projects – while still allowing teams to execute in whatever tool suits them best – helps create a true Agile portfolio, giving leaders and executive management better visibility and insight into all projects and product investments.
Change your operational mindset and focus for enhanced agility and effectiveness. Don’t be afraid of methodology – execute in whatever method suits the project, and then roll up reporting, resourcing, and more into a single management framework. Waterfall, Agile and hybrid approaches can live in harmony.
Agile Portfolio Management Drives Continuous Improvement
Every seasoned leader knows that the key to success is to never assume you’ve achieved perfection. However, recognizing the need for responsiveness and continuous improvement does not have to feel like a hamster wheel of failure-focused thinking. An Agile portfolio strategy requires your PMO to master the mindset that every change is a new victory in delivering the best results to your customers. As Forbes contributor Steve Denning describes it, “The Agile organization is a growing, learning, adapting living organism that is in constant flux to exploit new opportunities and add new value for customers.” (ii)
How Do You Measure Success?
In order to measure success for future growth and continuous innovation, reporting is imperative. When time-bound, task-based projects are replaced with products that deliver ongoing value, PMOs can begin to practice principles of continuous improvement. Unlike traditional portfolio management – where a quarterly or annual planning process doesn’t provide a large enough sample to really measure efficiency – the faster, iterative planning enabled by Agile Portfolio Management allows PMOs to measure each step in the planning process and adjust it as inefficiencies are identified.
In addition to traditional measures like on-time delivery or budget vs. actuals, the Agile organization can add a variety of key performance indicators that serve as a foundation for continuous improvement, such as:
- Measuring the time project requests stay in each stage of the approval process to identify potential bottlenecks.
- Tracking which skills are required for each project or product type and measuring the availability of those skills.
- Measuring stakeholder satisfaction along with the realization of specific, pre-determined benefits.
- Identifying a dynamic list of top projects/products based on alignment with key strategic goals.
- Tracking the relative effectiveness of projects/products based on the work methodology used.
Commit to a mindset of continuous improvement backed by comprehensive, accurate reporting. Find opportunities to grow and succeed by leveraging the faster, iterative planning cycles of Agile Portfolio Management to identify process inefficiencies and become more responsive to stakeholder feedback and satisfaction.
If your organization is still following a traditional portfolio management strategy, you may be experiencing multiple pain points that can be resolved by becoming more flexible, more adaptive — more Agile. Change is intimidating, but it is also necessary if your organization wants to stay competitive and deliver the best in products and customer service. Take the leap and re-invigorate your portfolio and project management strategies by leveraging Agile methodologies in your organization.
i - www.gartner.com/smarterwithgartner/cio-agenda-2019-move-from-project-to-product-delivery
ii - https://www.forbes.com/sites/stevedenning/2016/08/13/what-is-agile/#29c91b9426e3