Disciplined Agile

Portfolio Management Practices

Figure 1 overviews the potential activities associated with disciplined agile portfolio management.

2021 Project Management Institute Portfolio Management v5.2 Identify Potential Value Envision the future Obtain customer feedback Monitor business environment Plan Capability Plan delivery capacity Plan exploratory capability Plan operational capacity Explore Potential Endeavors Run a small experiment Run a focus group Evaluate alternatives Estimate ROI Estimate market impact Develop business case Prioritize Potential Endeavors Business value Dependency Due date Learning/exploratory investment Legislated/regulatory requirement Risk Strategic investment Weighted shortest job first (WSJF) Manage Portfolio Budget Beyond budgeting Agile budgeting and lean allocation Rolling wave budgeting Stable team budgeting Annual budgeting Ad-hoc budgeting Initiate Endeavors Citizen development team Experiment team Operational team Product team Project/program team Service team Finance Endeavors Define investment pillars Monitor fund usage Provide initial funding Provide ongoing funding End Endeavors Close-out endeavor Identify end-of-life solutions Identify failing endeavors Initiate solution retirement Govern the Portfolio Assess portfolio health Address portfolio risk Develop guidance Develop portfolio metrics Monitor endeavors Monitor portfolio

Figure 1. The portfolio management process goal diagram (click to enlarge)

The process decision points that you need to consider for portfolio management are:

  1. Identify potential value. Working closely with your product management team (if you have one), your portfolio management team will identify potential new ideas and products to develop. You will do this through monitoring the business environment to see what your competitors are doing, through obtaining feedback from your existing customers, and by envisioning the future needs of your customers through agile modeling and brainstorming sessions.
  2. Plan capability. Your teams must have the resources, both in terms of finance and people, to fulfill its responsibilities. You must have the right people, with the right skills, at the right time, to do the work and this takes a bit of coordination with your people management team to do so.
  3. Explore potential endeavors. The portfolio management team will invest time in understanding a potential endeavor. They may choose to consider the business case for the endeavor, perhaps creating high-level guesses at the potential market potential or return on investment (ROI) of the endeavor. The team may also consider alternative approaches to the endeavor and may even choose to run a focus group or small experiment to better understand it.
  4. Prioritize potential endeavors. Because few organizations have unlimited budgets to work from you will need to prioritize potential endeavors and then invest in the ones that are most important to you. There are several factors to consider when prioritizing, there is no one approach that works for all situations.
  5. Manage portfolio budget. Your portfolio budget needs to be managed, and you will need to work with Finance to do so. Traditional firms tend to follow an annual budgeting process which tends to inject significant overhead and risk into their efforts. More effective strategies are to move away from project-based financing to funding stable teams and to take a rolling wave approach to planning the budget that evolves as your needs and means evolve.
  6. Initiate endeavors. New products may be developed by either a product team or a project team. In the case of products that are radically new to your organization you may decide to first take an exploratory (lean startup) approach where you first validate the market potential of the product via a series of learning experiments. You will also find that you need to initiate service teams that support internal customers within your organization as well as external customers. And of course operational teams are also initiated from time to time.
  7. Finance endeavors. Endeavors need to be funded. This includes both the initial funding for new project/product teams for their Inception efforts as well as ongoing funding once they get going. Additionally, how the funding is applied will be monitored regularly to ensure that it is being spent wisely.
  8. End endeavors. Eventually things come to an end. Some projects are cancelled partway through, some projects go to completion, some offerings are retracted from the marketplace, some service teams are disbanded as the result of automation, and so on. In some cases the ending of an existing endeavor is treated as a full-fledged project and in other cases it is simply part of the ongoing operations of that endeavor.
  9. Govern the portfolio. Someone will govern the overall portfolio, including in-progress development endeavors as well as operational solutions. Portfolio governance is a subset of your overall strategy.