Where do SAFe® Program Portfolios Come From?

The Program Portfolio layer in Scaled Agile Framework (SAFe®) seems to be a puzzle for many software organizations as they implement SAFe: how to evolve their existing project-oriented planning function, or (in the worst case) replace a HIPPO (Highest Paid Person’s Opinion) process with something more rational. Let’s apply some systems thinking to this challenge.

What is the SAFe Program Layer?

In SAFe, the top layer is the Program Portfolio, in which IT leadership work with business leadership to ensure the value streams and trains are working on the highest value items.  SAFe’s Program Portfolio process analyzes and prioritizes major new work requests and holds them in a queue until capacity is available on an Agile Release Train.  The interactive Big Picture at scaledagileframework.com contains more discussion of the Kanban process in this layer.

www.scaledagileframework.com

What I want to do today is focus on the “Enterprise” label in the upper left corner of the Framework, and point out that there is a similar process outside the Framework that is a natural interface to the SAFe Portfolio layer. That similar process is called Product Portfolio Management.  It is most often found in commercial software companies, and is the responsibility of Product Management.  I’m so glad that SAFe incorporates the Product Management role!

How are Product Portfolios Different?

Product Portfolios are established by product family and/or by markets served.  Product Portfolio Management practices focus on maximizing Return on Investment for the group of products within the portfolio, across each product’s life cycle.  We evaluate the products within the portfolio not only for their financial contribution, but also their strategic and competitive contribution to the health of the portfolio.  We withdraw weaker products and create new products to fill gaps and meet new market needs.  In annual evaluations, Product Management leadership determines which products in the family will get investment, and which will not.  http://www.showeet.com/23/03/2014/charts-and-diagrams/ge-mckinsey-matrix-for-powerpoint/

There are several models that companies use to guide these decisions; the GE-McKinsey Matrix is an example.

This analysis determines investments for the next year (both new product development and enhancements) – and those become Programs and Projects for the software development organization.

We align investment decisions with enterprise and market strategic themes, which in turn influence the Program Portfolio priorities within SAFe.

Program Portfolio Strategy aligned with Enterprise Strategy.

Let’s Optimize these Two Parts of the System

Alignment of these two processes – Product Portfolio Management and Program Portfolio Management – brings software development organizations into the enterprise strategy conversation.  It helps break the “project” mentality so prevalent in the technical side of the house.  Product Portfolio Management takes a longer term view, managing products across their life cycles. Using SAFe’s Lean-Agile budgeting (funding Value Streams, not projects) aligns with product life cycle investment strategies.  And incorporating Development’s input into the Product Portfolio decisions will make the “keep the lights on” maintenance needs visible during annual investment planning.

Aligning SAFe Value Streams to Product Portfolios might make a lot of sense for your organization.  That way, the flow of value and alignment of priorities becomes very clear.

Aligning these two processes also provides the opportunity for some efficiencies, as well.  Product Managers make excellent SAFe Epic Owners for business Epics.  They already have these key Program Portfolio analysis process deliverables (although they may use different names):

  • Epic Value Statement (positioning statement or value proposition)
  • Roadmap
  • Implementation Strategy (product strategy)
  • Cost of Delay (revenue projection)
  • Business Case

With a metrics-driven approach, Product Managers may be able to do lighter business cases for smaller batches, and then complete the feedback loop with actual results to guide the next round of investment decisions.  This helps move the annual budgeting process toward adaptive planning, leading to greater enterprise-wide agility.

What About Internal IT Groups?

Internal IT groups who are building and maintaining applications that support the enterprise can best align with the Product Portfolio Management process by adding a Technology layer to existing product roadmaps.  Alternatively, align with enterprise strategy by using a Balanced Scorecard or Hoshin Kanri approach to inform application and infrastructure investment needs.

How does your organization synchronize Product and Program priorities?

 

 

Posted in Agile Product Management, Business Cases, For PM Executives, Scaled Agile Framework  |  Leave a comment

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