Think Bigger – Agile Portfolio Management (APM)
Agile Portfolio Management (APM)
Over the past decade we have seen organisations shift from waterfall project delivery to Agile delivery, for example, dividing tasks into the smallest pieces of functionality, delivering multiple workstreams at once, minimal planning beyond MVP’s and allowing teams to innovate and pivot to fit changing external factors as they work towards their solution. But how can these tried and tested principles be allied to an entire portfolio? With Agile Portfolio Management (APM) we take the core Agile principles and apply them at a portfolio level, allowing senior leaders to look across the entire book of change, often in fixed regulatory timelines, and strike a balance between control and agility by leveraging the principles of Agile Delivery at scale.
How does APM differ from traditional Portfolio Management?
In traditional portfolio management approaches, each project must have a specific business case to support funding requests through an annual budgeting process. A detailed roadmap of projects is formed, and the portfolio is assessed to review which projects should be prioritised – considering the costs involved and alignment to the organisation’s strategic objectives – before funding is allocated and delivery can begin. This process can lack flexibility to respond to ever changing economic and regulatory influences, which can prove risky as priorities are subject to change.
Agile portfolio management, as the name suggests, is using an Agile approach to managing a portfolio of projects in a coordinated way to translate strategic objectives into business outcomes. Differentiating factors in APM include decentralised decision making, enhanced data metrics for measuring progress, better decision-making and fast feedback loops that allow projects to pivot and change in response to external influence and ultimately increase transparency across the portfolio.
- Project Initiation and Prioritisation
In contrast to traditional methodologies which use detailed planning artefacts such as Project Initiation Documents, programmes using APM methodology are only required to create a Lean Business Case which summarises on a single page: Key Dates, Stakeholders, Outcome Hypothesis, Scope, Requirements & MVP, and from this a go/ no-go decision can be made, and seed funding secured. Funding is not secured for the entire project at the planning phase, instead a project/programme is often granted seed funding for an MVP only and incremental funding allocation takes place upon regular evaluation of the impact / business case.
APM allows the programme to regularly review the business case against actual performance using the increased wealth of real-time data within the chosen toolsets (Jira / Rally) to make informed decisions along the project lifecycle, and cut funding if performance is not as expected, as opposed to traditional portfolio management where whole projects are funded at the outset based on assumptions. We have seen this play out in financial services firms who are leveraging agile principles across a portfolio, by mapping tech initiatives (“book of work items”) to management goals to ensure work is continually evaluated in line with strategic objectives. In addition, resources are not fixed to a given project but are versatile across any project in the portfolio based on their expertise and where they can be utilised most effectively.
For many banks this would require a huge cultural shift to succeed. With APM there can be a perceived lack of control as portfolio managers are funding a lean business case often without clear visibility of the outcome. This change in approach also doesn’t align with the traditional way many banks run budget and funding cycles and requires a shift in thinking at the top to make this work; however, if implemented successfully the portfolio can benefit from increased engagement and short implementation cycles and therefore a faster time to market, with the ability to pivot and change direction quickly.
- De-centralised decision making
Another way that APM is beneficial across an entire portfolio is in speed and execution of decision making. By decentralising the decision-making authority to the team level and away from a central portfolio management team, this removes the requirement to wait for monthly cycles of SteerCo and ExCo ceremonies to make strategic decisions. In Agile portfolios, we see less emphasis on regular status reports to interpret performance and instead rely on availability of real-time data within the in-built tooling (Jira / Rally) to make decisions, which is accessible to the entire team. By using these tools, decision makers can see clearly how many ‘tasks’ have been completed and validated, what is still outstanding and exactly when items are scheduled for. This level of transparency is a fundamental difference to how agile portfolios operate in comparison to traditional portfolio management approaches.
What are the implementation challenges
- Does one size fit all, or is a hybrid approach possible?
APM may seem like a one-size-fits-all solution to managing a portfolio. This can cause friction when the APM methodology is applied to portfolios that have previously been successfully operating using a traditional approach, and portfolio managers are asked to shift to a new way of working with perceived less control and oversight. However, there is room for principles of both APM and traditional portfolio delivery to successfully coexist and create a hybrid portfolio which benefits from the best aspects of both
For example, a reg adherence project that needs to be completed before a pre-determined date and to adhere to a pre-determined set of acceptance criteria could leverage a hybrid approach, whilst it is challenging to pivot the resource and budget, it would be possible to track the project using APM tooling to track the timelines and milestones towards completion.
- Senior Management Buy-In
When empowering teams to make decisions for themselves, senior managers can lose visibility of decisions being made at team level, which can make APM a difficult methodology to support. In traditional methodologies, senior manager compensation is often benchmarked against ability to deliver against well-defined plans for a full annual cycle. In APM, without long term visibility of what delivery will take place and the associated governance forums to monitor progress, senior managers can struggle to buy in to short sprint cycles and delegated authority. To mitigate this it would be prudent to agree a governance approach involving regular touchpoints, which meets the needs of the teams delivering the work and the confidence in delivery that senior managers require. For larger strategic decision making there must also be an escalation route to get a steer from senior stakeholders who have oversight at the portfolio level and who are required to communicate progress externally.
- Measuring Performance
APM focuses on increased availability of data for performance monitoring, and as with any data analysis techniques, statistics are often subject to cognitive bias and do not always consider risks / issues that have arisen throughout the sprint cycle. For successful performance measurement, outcomes should be considered that are both qualitative and quantitative and the team should consistently use fast feedback loops, aligned with an assessment of the outcomes of each sprint cycle against the strategic aims of the organisation. There is still opportunity for senior managers to retain visibility of progress at a high level within the Jira tooling which as alluded to above, can provide reports and burndown charts showing percentage completion and how many tasks are still outstanding.
Taking the next step towards Agile Portfolio Management
Agile business processes seem to be among the most challenging pieces on the way to unlocking enterprise agility. It is a difficult and complex task to transition an entire origination to a new APM model – this process is incremental over time.
Within financial services we have seen employment of Agile practices, but this has been predominantly limited to technology functions, rather than managed at the portfolio level. Organisations that succeed in this transition are those that can integrate technology and business expertise and collaborate effectively to achieve the same strategic objectives. As outlined above, another key enabler of successful agile portfolio management is through obtaining senior management buy-in, as achieving the full benefits of agility at scale is dependent on the whole bank to push the broader agile agenda.
BCS Consulting has extensive experience in designing and building Portfolio Management functions for our clients, in addition to supporting the transition from traditional portfolio management methodologies to leveraging APM principles cross-organisation.