Scaled Agile Framework (SAFe): How To Implement Lean Portfolio Management

Today’s corporate world is rapidly changing due to globalization and disruptive innovations in the field of technology. Businesses need to keep up with the changes in consumer needs and interests. They have to be agile and develop unique solutions faster and more efficiently.

Traditional methods of portfolio management are no longer efficient. One way you can enhance business agility is lean portfolio management. It allows you to develop an agile framework to manage costs and deliver more excellent value. It will facilitate your investment decisions and improve strategic business outcomes.

Introduction to SAFe Framework

The Scaled Agile Digital Framework (SAFe) is an industry-standard versatile framework for implementing Agile, DevOps, and Lean practices at scale. It’s also customizable and sustainable. SAFe follows ten agile principles to guide your strategy implementation in any business context. They will help you find solutions to unique, complex problems and ensure continuous improvement.

The SAFe portfolio aligns business strategy to portfolio execution through a collection of development value streams. Each value stream functions under a shared governance model. It provides one or more solutions for a business domain to fulfill its strategy.

Typically, a SAFe portfolio can develop the whole solution set for a small to medium-size company. Large organizations usually need several portfolios for every business unit, division, or line of business. SAFe’s portfolio configuration is a minor configuration you can leverage to gain business agility.

The SAFe portfolio has three further core competencies:

  • Lean portfolio management: Aligns business strategy to portfolio execution by applying lean-thinking approaches to plans and investment funding.
  • Continuous learning culture: A set of practices and values that motivate individuals and enterprises. It is helping them to improve performance, knowledge, innovation, and competence.
  • Organizational agility: Explains how disciplined agile teams and individuals with a lean mindset can create new strategies. They are always looking for ways to optimize their business processes and adapt quickly to new opportunities.

The SAFe portfolio has program-level roles, artifacts, and events. The portfolio palette is designed as follows.

Source: scaledagileframework.com

Portfolio Management in SAFe Framework

Lean portfolio management (LPM) in SAFe involves the SAFe portfolio collection of development value streams. The value streams can provide internal operational value streams and develop products or create solutions for external customers. SAFe portfolio management is modernized to facilitate the Lean-Agile style of working in today’s world.

The LPM function of a SAFe portfolio has the highest level of financial accountability and decision-making capability for the value streams. Altogether, it makes it possible to define, communicate, and align different business strategies. Let’s look at the three dimensions of lean portfolio management in SAFe.

Strategy and investment funding

Strategy and investment funding ensures that the whole portfolio is aligned and funded. Creating solutions is necessary to achieve business objectives. You need to ensure that the suitable investments are allocated to the right places to meet targets. Strategy and investment funding needs collaboration among executives, portfolio stockholders, business and product owners, Enterprise Architects, scrum masters, and product managers. Its responsibilities include:

Connecting the portfolio to enterprise strategy

The primary responsibility of the strategy and investment funding is to facilitate the organization’s broader objectives. It also helps to provide feedback to the company through the portfolio context.

Maintaining a portfolio vision.

The portfolio vision describes the future state of the value streams and solutions. It also explains how these coordinate to meet both portfolio’s goals and the organization’s broader targets. The LPM function reviews the portfolio canvas quarterly and discusses how it can improve its alignment with the strategic themes.

Realizing the portfolio vision through Epics

Epics are large initiatives that are required to meet the future state planned in the portfolio vision. The LPM function visualizes and manages the flow of Epics via the Portfolio Kanban. Epics can be pretty uncertain. Hence, it’s best to use the SAFe Lean Startup Cycle for epic implementation.

Setting up lean budgets and guardrails

Lean budgets and guardrails are a group of governance and funding practices that enhance development throughout and maintain financial governance. It decreases or removes the need for traditional cost accounting and project-based. It also minimizes delays and frictions, and overhead. Lean budgets bring in funding for the value streams. At the same time, guardrails support these budgets by offering governance and spending practices and policies.

Establishing portfolio flow

Portfolio flow is the process of managing portfolio Epics throughout their lifecycle. It limits the number of in-progress, significant business initiatives to align with the portfolio’s capacity.

The LPM function uses the Kanban system to:

  • decrease batch sizes;
  • limit the work in process;
  • size of longer-term development queues.

Architectural practices and agile principles are crucial in guiding the portfolio flow. Enterprise architects use engineering methods and adaptive designs to facilitate constructive initiatives for the portfolio. They translate the organization’s overall vision and strategy into successful technology plans.

Agile portfolio operations

Agile portfolio operations coordinate value streams, support decentralized strategy execution and ensure operational excellence.

Value stream coordination

Usually, value streams tend to depend on each other to operate. However, coordination enables you to manage any dependencies among the value streams. This process will give you certain portfolio-level advantages and abilities that your competitors can’t grasp.

Decentralized program execution

Centralized decision-making is a traditional approach that can hamper your Lean-Agile efforts. You can reconstruct the traditional Program Management Office (PMO) into an Agile Program Management Office (APMO). By operating via the APMO, the LPM function can successfully nurture and apply program execution patterns across the portfolio.

The APMO can utilize the specialized knowledge, skills, and relationships with executives, managers, and other stakeholders of the traditional PMO. The APMO is also responsible for assisting human resources in staff development and Agile hiring.

Operational excellence

Operational excellence is a process that concentrates on the continual improvement in practices, results, and efficiency to optimize performance. The LACE – Lean-Agile Centre of Excellence – usually takes a leadership position to drive operational excellence. The LACE might be a part of the APMO or a standalone group.

Lean governance

Lean governance is concerned with managing expense forecasts, spending, measurement, and audit and compliance. APMO/LACE, enterprise architects, and business owners need to collaborate to ensure lean governance actively.

The lean governance function has the following responsibilities:

Dynamic forecasting and budgeting

SAFe lets you create budgets in a lean way. The agile process is a welcome replacement to fixed and long budget cycles and financial commitments. Budgets can be adjusted regularly, usually every six months, or when any significant occurrence demands.

Portfolio performance measurement

You need to set the necessary metrics for each portfolio to ensure proper strategy implementation. Here are some of the lean portfolio metrics that can be used to measure the progress of a portfolio.

Source: scaledagileframework.com

Constant compliance coordination

Traditional methods of compliance expose the business to the risk of late discovery and even legal issues. Lean audit and compliance is a more continuous approach that supports the flow of value and reduces overhead. Now let’s see how you can implement SAFe lean portfolio management.

Implementation

The key to implementing agile, SAFe lean portfolio management is defining the LPM function and leveraging the Kanban system.

Define the LPM function

As mentioned above, the LPM function focuses on strategy and investment funding, Agile portfolio operations, and lean governance. Program and Portfolio Management (PPM) leaders need to search for the right talent for each area.

They need to ensure that the APMO understands agile philosophies, LPM events, core SAFe terms, and traditional PMO services:

  • Data collection;
  • Analysis;
  • Reporting;

The APMO should collaborate and share its knowledge.

Establish the Portfolio Kanban system

The SAFe approach advocates the ‘build-measure-learn approach for agile development. Epics are the primary business investments that take place within a portfolio. PPM leaders can use the Portfolio Kanban to visualize and manage the flow of Epics. Every Epic passes through multiple Kanban states. An assigned owner needs to define an Epic’s minimum viable product and monitor its progress.

You can see the Portfolio Kanban system in the image below.

portfolio kanban system gartner

Source: gartner.com

The first three states – funnel, reviewing, and analyzing – focuses on priorities.

  • Funnel: It consists of the ideas provided by Agile Release Trains (ARTs). These ideas tackle all strategic issues that might impact business models. The funnel is used solely for brainstorming.

Thus, no WIP limits are needed. The ideas are sent to the Portfolio Kanban’s respective funnels. They can be reviewed and approved based on the strategic significance, predicted cost, and other factors.

  • Reviewing: Epic owners, along with stakeholders, define the Epic’s purpose, business outcomes, quantitative and qualitative advantages. Here you need to specify the WIP limits.
  • Analyzing: Business owners, disciplined agile team members, solution architects collaborate to analyze the Epics. Architects identify alternative solutions and check for business and technical viability. BO’s define the minimum viable product, determine the cost predictions, form a Lean business case.

It’s necessary to establish WIP limits for each state in a value-driven Portfolio Kanban system, except for Funnel. PPM leaders can accommodate their traditional portfolio management practices to the Lean-Agile Portfolio Kanban states.

Establish regular LPM events

LPM events are essential for prioritizing and reviewing all proposed works. All relevant stakeholders can show up for these events. They utilize the portfolio metrics and other actionable insights given by the APMO.

For the LPM function to operate effectively, three significant events must take place:

  • Portfolio sync: checks the progress of the portfolio in achieving its target. This monthly event reviews the Epics in different stages of the Kanban system, evaluates the metrics, and addresses all bottlenecks.
  • Strategic portfolio review: focuses on realizing and improving the portfolio vision. It ensures continuous alignment of strategy, budget, and implementation. It’s a quarterly event to review the metrics and update the OKRs (objectives and key results), Epics, and investment guardrails.
  • Collaborative budgeting: This is where a group of stakeholders decide the allocation of the portfolio budget across Epics and solutions. It usually happens twice a year.

How PPM Express Can Help you implement Lean Portfolio Management

PPM Express is a SaaS platform that helps improve portfolio and project visibility by collecting project-related information across portfolios and project management systems like Jira and Azure DevOps. If you are struggling with the shift from Traditional to Agile, PPM Express is the right tool for you to leverage.

It’s imperative to work with the right PPM toolkit to improve the PMO’s influence and reach. Your toolkit has to be:

  • Scalable – Appropriate for both small teams and a large number of employees
  • Flexible – Adapt to both the traditional and Agile methods
  • Transparent and provide linkage – Give you an overview of the portfolio and in-depth insights into a particular business project.

PPM Express is a lightweight lean portfolio management tool that meets the immediate needs of business teams and entities. The number of users starts from 20 people up to hundreds and thousands. It enables SAFe portfolio management with the following features:

  • Friendly interface and ease of use that connects all the project data, from terms and budgets to performance indicators
  • Advanced customization capability to make it suitable to any market segment or business area
  • “Budget section” for budgeting and “Release section” for including release dates for the portfolio
  • Ability to create both short-term and long-term reports
  • Ability to meet the needs of APMOs and executives in portfolio flexibility and transparency
  • Data synchronization capability to let you set up perpetual synchronization and also a specific coordination routine
  • Scalable and transparent Configurable table to check the basic statistics for each portfolio and get an overall timeline. The Dashboard has all the portfolio details for viewing and editing. It has a ‘progress bar’ and ‘Status section’ with summarized details of all portfolios.

Wondering if it’s right for your business? Sign up for our 30-day free trial and see for yourself!

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