MoP (Management of Portfolios) defines the portfolio as “the total investment of an organisation (or part of it) in the changes required for achieving its strategic objectives”.
Managing the portfolio, from the point of view of MoP, involves “a coordinated collection of processes and strategic decisions which together allow an effective balance between organisational change and the usual activity (Business as usual)“.
To do so, it describes two continous management cycles: the definition cycle, where the necessary initiatives are identified, prioritised and planned, and the delivery cycle where the execution of the initiatives are managed at the portfolio level, focusing on aspects such as governance, management of benefits, risks, departments and resources.
The MoP guide must not be applied the same way in all organisations, instead adapting its principles and practices to specific aspects of each organisation such as:
- Organisational culture
- Governance structure
- Strategic objectives
- Scale of investment in programmes and projects
- Maturity in management of programmes and projects
- Existing financial and strategic processes
Specifically, if we wish to scale the agility at the portfolio level, can we continue to use MoP as a reference for portfolio management? In this article, I try to briefly explain the adaptation of MoP for agile portfolio management.
According to SAFe, the keys for agile portfolio management are as follows: it must be organised around the flow of value; Lean Agile budgeting must be carried out, portfolio Visibility must be established through Kanban and WIP limit systems; Technological Decisions must be based on Enterprise Architecture; there must be objective Metrics which support governance and improvement; and finally, the Delivery of value must be carried out through Epics.
Let’s see how MoP helps us to achieve these objectives:
1. Organisation around the flow of value
The success of portfolio management revolves around the achievement of strategic objectives. For this, MoP uses techniques such as Benefits mapping to allow the clear relation of strategic objectives with benefits (quantification of the expected value) and the results of programmes and projects. Within the portfolio definition cycle, we must categorise each initiative based on the expected value and base the financing of initiatives on the defined benefits.
2. Lean Agile budgeting
Financial management is a very notable aspect within portfolio management. When prioritising and estimating the return on investment, MoP defines the multi-criteria analysis technique, for which the agile measure (proposed by SAFe) of WSJF (Weighted shortest job first) can be used.
During the execution of the portfolio, the application of the Staged release of funding criteria allows an appropriate decision to be made on which initiatives to invest in at all times.
3. Visibility of the portfolio through Kanban and WIP limit systems
To ensure transparency, the visibility of the status of all initiatives of the portfolio, and an appropriate use of resources, Kanban can also be used at a portfolio level. This system also allows the “clear line of sight”, a necessary technique in MoP for guaranteeing that there is visibility from the strategic objective and the expected value to the initiatives that must allow them.
4. Technological decisions based on Enterprise Architecture
SAFe establishes the need for Enterprise Architects for determining the high level technological lines which the initiatives of the portfolio must follow. MoP does not include these roles, as it assumes that the initiatives are not necessarily IT, but considers that all parties involved in the delivery and usual activities must be represented within the decision bodies of the portfolio.
5. Objective metrics which support governance and improvement
One of the key success factors defined in MoP is commitment to continuous improvement. The way of coordinating the acquisition of lessons learned will be included in the improvement events at different levels: retrospective at a team level, Inspect & Adapt events at a programme level. Furthermore, the application of the Staged release of funding criteria allows decisions based on the knowledge required on what should be invested at all times.
Additionally, the definition of the Business Change lifecycle (the lifecycle of all initiatives in the portfolio) allows pertinent metrics on progress reflected on the Portfolio Dashboard (for example, as a set of indicators within the portfolio Kanban), and will allow more appropriate decisions to be made.
6. Delivery of value through Epics
Beyond the name, Epics are a set of initiatives to include in the portfolio, organised by expected value. Each epic will lead to programmes which must be managed through Agile Release Trains (ARTs). An agile portfolio does not include individual projects as we want to ensure the flow and sustainability of effort, eliminating lulls which starting and finishing each project entail.
The structure of a PMO at hte portfolio level, as MoP indicates, is a key success factor which guarantees that agility is present at all levels and that information flows through them.
Ultimately, MoP can help us to provide structure and organisational liaison with the structure to allow agile management of the efficient portfolio.