Modern PM Tools

Lean Portfolio Management

12.08.2019

Do your projects take too long a lead time from Idea creation to the delivery of results?

Just training a team in agile program or project management methods will not help to solve this problem. In order to reduce lead time, you need to optimize the whole value chain. Not only regarding idea management but also for portfolio management including the teams involved in this process. Lean Portfolio Management helps to shorten the lead time on enterprise level and therefore supports to become an agile organization.
To give you an overview of Lean Portfolio Management, we want to guide you through an example.
A company starts an agile initiative in order to address two major problems:
1. Transparency: Project Teams are working on 10 projects simultaneously, so that they are not able to forecast accurately.
2. Lead time: The lead time from Idea creation to roll out needs approximately 1,5 years in average. This results in the lack of opportunities to their competitors, thus they created their idea faster.

At first, we want to face the issue of transparency. One of the factors for having self-organized teams is to have prioritized goals as well as a high transparency, so that the team can pull the work and decide when to start new work. To sum this up: stop starting, start finishing.
Due to “Little’s Law” lead time in a system increases with the amount of work teams acting simultaneously. Hence, the number of projects which are started need to be limited.
We suggest facing these issues by a prioritized Portfolio Backlog.

Limiting the portfolio with a prioritized Portfolio Backlog in Azure DevOps

It is crucial to decide about the idea’s priority. Either the idea has a priority which suppresses another demand or it is not important enough and will therefore be dropped out. Only start a new project if the previous one is finished.

Radical transparency about the status

As soon as the Project manager pulls a new project he and his project team update the status autonomously. Specific stage gates formally ensure that the portfolio manager has current information concerning the projects during the project phases.

Together with the portfolio manager, the management decides which ideas turn into a demand in order to prioritize them afterwards. In terms of Lean Portfolio Management, prioritization means evaluating both demands and projects.
A demand is a project with resource requirements and a business case. To become a project, the portfolio manager works with the management to develop the requirements. You decide whether to charter a project and turn a demand into a project. From now on, the project manager will update the status in cooperation with the portfolio manager if the project passes a stage gate. You move the status of sprint reviews based on fact-based actions and milestones.

Business agility and lean portfolio management: continuous prioritization at portfolio level

As the process continues, our first project "Project Online Migration" from our backlog in Figure 1 delivers the customer benefit and the prioritization in the portfolio backlog is therefore automatically updated:

 

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Conclusion

In summary, you can pursue the following measures for the successful implementation of lean portfolio management:

  1. Projects should be prioritized.
  2. Limiting projects and demands to shorten lead times at the organizational level.
  3. Start of projects according to limitation.
  4. Radical transparency at portfolio level.
  5. A tool is needed to track the status and ranking so that lean portfolio management can be implemented. Azure DevOps supports Lean Portfolio Management.

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