Lean Portfolio Management
Optimize value delivery and maximize business outcomes
With the world changing so fast, enterprises need to speed up their pace and quickly catch up. Customer expectations are different from before, forcing anyone involved in portfolio management to convert digitally and turn to agile transformations, taking advantage of the scaled benefits of agile teams.
Lean Portfolio Management is one of Lean Enterprise’s core competencies aimed at helping organizations realize business agility. The goal is to line up its strategy, investment funding, governance, and agile portfolio operators.
What is Lean Portfolio Management?
Lean Portfolio Management (LPM) is a competency that aligns strategy and execution by applying Lean and systems thinking approaches to strategy and investment funding, Agile portfolio operations, and governance (SAFe) prioritizing product & application development initiatives. It allows stakeholders and clients to prioritize those features that present the greatest business value. Instead of the classic task and resource-driven approach to product development, lean focuses on validating results, with the philosophy that delivering the most valuable components of a product is more efficient and effective than putting more bodies on a job in order to deliver the overall product sooner, but with higher risk and cost.
The primary goal of Lean Portfolio Management is to keep business strategy and agile development aligned. This is to drive the value that the organization delivers to the customers through the products, services, and solutions it offers. In doing so, an enterprise may be able to improve its agility.
Why Lean Portfolio Management?
The market is experiencing rapid change and disruption that traditional product portfolio management methods cannot handle. The only plausible way to keep up with the quickly changing world is to apply a lean-agile approach in portfolio management. At Apptio, we believe that the lean-agile system can better address customer needs.
How Lean Portfolio Management Works
Lean Portfolio Management involves the enterprise managing their portfolio of products, identifying and prioritizing investment proposals with the highest value, and funding those proposals. With LPM, feedback loops are also created, which helps the organization deliver its products or solutions faster.
If performed correctly, LPM increases your agility. It happens when the business’s planning, funding processes and business strategy line up with the enterprise’s desired business outcomes.
LPM features include:
- The ability to identify and prioritize the most valuable and important activities
- Delivery of high ROI work quickly and with minimal interruptions
- Ensuring investment activities are aligned with enterprise objectives
- Efficient validation of work at the conclusion of each sprint
In using SAFe Lean Portfolio Management, organizations can expect:
- Network structure, where everyone in an agile environment is organized around value instead of traditional hierarchies.
- Changes incorporated through finance value flows that create teams with greater continuity and increased learning level and delivery speed.
- Synchronized teams in the network, gradually planning, budgeting, and making decisions instead of the rigid annual planning and budgeting approach.
- Lean business cases are used in highlighting and funding projects that are most valuable for the organization.
- Incremental delivery of work while customer feedback is gathered and utilized to determine the next project.
- Adaptive and value-driven plans that are designed to produce the highest customer value.
Lean Budgeting and Planning
Lean budgeting is a cost-effective Lean Portfolio Management approach to reduce project-based costs, increase throughput, and improve the productivity of cross-functional teams.
Lean budgeting prioritizes value streams over projects with the goal of companies defining values (e.g., products, systems, services) that matter most to their customers. This gives teams flexibility to change plans based on customer feedback and come up new ideas that would benefit the company. Meaning your company won’t be throwing money at things that aren’t working.
Dimensions of Lean Portfolio Management
Agile transformation is a critical solution that enables modern businesses to hold up to the fast-changing world. However, very few businesses achieve desirable results even after transitioning their entire organization based on lean-agile principles. Enterprises could not fully utilize agile transformation because they did not stay aligned after aligning the teams.
For a business to stand and compete in this fast-paced, modern economy, the enterprise must be fully connected and aligned.
Strategy and Investment Funding
Strategy and Investment Funding keeps the portfolio aligned, ensuring it is prioritized according to business value & ROI, so that the enterprise can develop and maintain solutions that customers need. Its role is to ensure that the investment funding goes to the right things and thus the organization can achieve its most important business goals.
With Strategy and Investment Funding, the team can continually adjust and plan for the ever-changing business landscape.
Agile Portfolio Operations
The Agile Portfolio Operations organize the execution of the decentralized program, supporting and enabling the operation’s success. The responsibilities of Agile Portfolio Operations include:
- Coordinating value streams by ensuring there is cooperation between solutions.
- Supporting program execution through key stakeholders adopting a new way of working.
- Fostering operational excellence by improving practices, efficiency, and results.
Lean Governance handles the enterprise’s measurement, spending, compliance, audit, and forecasting expenses. It requires business owners, agile workers, and enterprise architects to engage actively in the following responsibilities:
- Dynamic budgeting and forecasting that entail understanding the past and potential future costs of every solution.
- Creating minimum metrics for each portfolio to ensure strategy implementation, agreed boundaries are aligned with spending and that results are improving continuously.