Agile-based methodologies have become increasingly popular in recent years as organisations seek to become more flexible and responsive to changing market conditions. One area where agile has proven particularly effective is in portfolio management. By applying agile principles to portfolio management, organisations can gain better visibility and control over their portfolios, while also increasing their ability to respond to changing business needs.
Traditional portfolio management focuses on planning, budgeting, and resource allocation for a set of projects that align with the organisation’s strategic goals. It typically involves a hierarchical process, with a senior management team making decisions based on available data and projections. This approach has some limitations, however, including a lack of flexibility and adaptability to changing circumstances.
Agile portfolio management, on the other hand, takes a more iterative and collaborative approach to portfolio management. Rather than relying on a fixed set of requirements and planning assumptions, agile portfolio management is based on an ongoing process of continuous improvement and feedback. This approach allows organisations to adjust their portfolios in real-time, responding to market changes and customer needs. Keep reading to learn how to respond to change in a volatile environment using Agile.
One of the key differences between traditional portfolio management and agile portfolio management is the focus on outcomes. While traditional portfolio management may focus on inputs such as budgets and resources, agile portfolio management focuses on delivering value to customers. This requires a more customer-centric approach, with a focus on understanding and meeting customer needs.
Another key difference between traditional portfolio management and agile portfolio management is the level of collaboration between different teams and departments. Agile portfolio management relies on cross-functional teams and open communication channels to facilitate collaboration, transparency, and rapid feedback. This approach allows organisations to quickly identify and address issues as they arise, ensuring that they can make better decisions about their portfolios.
Common Challenges Businesses Face
Agile portfolio management also involves a shift in mindset, with a focus on continuous learning and improvement. Rather than relying on a fixed set of assumptions and planning assumptions, agile portfolio management encourages organisations to embrace uncertainty and experimentation. This requires a willingness to take risks and try new approaches, which can be difficult for organisations that are used to more hierarchical and controlled environments.
Here are some common challenges that businesses may face when trying to move from traditional to agile portfolio management:
- Resistance to change: Some stakeholders may be resistant to the idea of changing their existing processes and methodologies and may be hesitant to adopt new ways of working.
- Lack of expertise: Organisations may lack the necessary expertise and experience to successfully implement agile portfolio management, particularly if they are new to agile methodologies.
- Organisational culture: Traditional portfolio management is often associated with a hierarchical and command-and-control organisational culture. Adopting an agile approach requires a more collaborative and open culture, which may be difficult to achieve in some organisations.
- Lack of buy-in: It’s essential to gain buy-in from all stakeholders, including senior management, project managers, and team members. Without buy-in, it’s difficult to implement agile portfolio management effectively.
- Integration with existing processes: Organisations may need to integrate agile portfolio management with their existing processes, such as financial management and governance, which can be challenging. A common challenge faced by organisations that introduce agile at scale is managing investments across project portfolios spanning multiple divisions.
- Communication and transparency: Agile portfolio management relies heavily on communication and transparency. Organisations may struggle to establish effective communication channels and create a culture of transparency, particularly if they are used to more closed and hierarchical communication structures.
- Capacity and resource constraints: Agile portfolio management requires more cross-functional teams and a greater focus on customer needs, which can put a strain on existing resources and capacity. Organisations may need to invest in additional resources or reallocate existing ones to effectively implement agile portfolio management.
- Metrics and measurement: Measuring the success of agile portfolio management requires a different set of metrics than traditional portfolio management. Organisations may struggle to identify and track the right metrics to ensure they are delivering value to customers and stakeholders.
Advantages of Agile Portfolio Management
Agile portfolio management not only helps organisations respond better to changing market conditions, but it also encourages innovation and creativity. By embracing uncertainty and experimentation, organisations can explore new ideas and opportunities that may not have been considered under traditional portfolio management practices. This approach can lead to the discovery of new customer needs and market niches, which can ultimately lead to increased revenue and growth.
Moreover, agile portfolio management can also help organisations become more agile and responsive in their decision-making processes. By relying on cross-functional teams and open communication channels, organisations can quickly identify and address issues as they arise, enabling them to make timely and informed decisions about their portfolios. This approach can help organisations avoid wasting resources on projects that are no longer relevant or valuable, and instead, focus on projects that deliver real value to their customers and stakeholders.
Another advantage of agile portfolio management is that it provides a framework for prioritising and sequencing projects based on their business value. By focusing on delivering value to customers, organisations can ensure that their portfolios are aligned with their strategic goals and objectives, and that they are investing their resources in the projects that are most likely to have the biggest impact.
Here are some ways to address the aforementioned challenges:
- Resistance to change: It’s important to involve stakeholders early on in the process and provide clear communication and education about the benefits of agile portfolio management. Demonstrating successful results through pilot projects can also help to alleviate resistance.
- Lack of expertise: Consider hiring or training personnel with experience in agile methodologies to provide guidance and support during the transition. Consulting with external experts can also help fill any gaps in knowledge and experience.
- Organisational culture: Leaders should focus on creating a culture of trust, collaboration, and openness. Encouraging open communication, collaboration, and empowering teams can help create a more agile culture.
- Lack of buy-in: Engaging stakeholders through effective communication and transparency can help build buy-in. Demonstrating the benefits of agile portfolio management through successful pilot projects can also help gain support.
- Integration with existing processes: It’s important to carefully assess existing processes and identify areas where agile methodologies can be integrated. Engaging with stakeholders early on can help identify potential issues and facilitate a smooth transition.
- Communication and transparency: Encouraging open communication channels, regular updates, and transparency can help establish effective communication and create a culture of trust.
- Capacity and resource constraints: Assessing resource needs and prioritising projects based on customer needs can help organisations effectively allocate resources. Consider investing in additional resources or reallocating existing ones to support agile portfolio management.
- Metrics and measurement: Identify and track metrics that align with customer needs and outcomes. Regularly assessing and adjusting metrics can help organisations ensure they are delivering value to customers and stakeholders.
Finally, agile portfolio management can also help organisations improve their organisational culture and foster a more collaborative and innovative environment. By encouraging cross-functional teams to work together and learn from each other, organisations can break down silos and promote a culture of continuous learning and improvement. This approach can help organisations attract and retain top talent, and create a workplace that is more engaged, motivated, and productive.
Want to find out more about how AMO can help with your project management capability? Have a look here (https://agilemanagementoffice.com/consult/) how our team can help yours reach their full project management potential. If you want to know more, contact us on firstname.lastname@example.org