By prioritizing practices that drive organizational agility and value creation, IT can build and deploy software and services that are tightly aligned with the ever-changing business requirements of the dynamic digital marketplace.
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Making Lean the Dean of IT Portfolio Management
1. Making Lean the Dean of IT Portfolio
Management
By prioritizing practices that drive organizational agility and value
creation, IT can build and deploy software and services that are more
tightly aligned with the ever-changing business requirements of today’s
dynamic digital marketplace.
Executive Summary
Amid the hypercompetitive global economy, Agile
software development has emerged as a proven
way to rapidly launch business-aligned software
and services. Despite considerable momentum,
however, we still find that organizational decision-
making and governance methods have remained
rooted in old practices tied to traditional design,
funding and execution models.
Customer-centric organizations recognize that
in today’s fast-changing business environment,
Agile project methods and delivery are not
sufficient. To enable market differentiation, it is
time to turn the emphasis to scaling agility within
strategic- and portfolio-planning processes.
In our engagements assessing enterprise project
and portfolio management (PPM) capabilities,
we have found numerous instances of organi-
zations applying a legacy mindset to portfolio
management, using waterfall-based, phased
budgeting and planning cycles. This creates a
drag on Agile teams, many of whom are trained
to deliver quicker, better and less expensive
products to keep their organizations viable in
today’s dynamic digital marketplace.
Lean-Agile portfolio (LeAP) management
introduces techniques for organizing work in Agile
organizations from portfolios to teams, providing
the visibility needed to ensure alignment and
success with future initiatives. The goal of this
approach is to demystify what happens in large
enterprises in which various interdependencies
can derail success with Agile.
This white paper reveals how Lean practices,
applied to portfolio management, can help bridge
the gap between Agile teams and management
and create a winning digital enterprise. It also
highlights the drawbacks of traditional portfolio
management, and discusses how Lean values
and principles can be applied to design a LeAP
program management framework for prioritizing
organizational thinking. We also identify practices
that drive organizational agility and value
creation using portfolio, programs and teams in a
change-driven world.
cognizant 20-20 insights | december 2016
• Cognizant 20-20 Insights
2. cognizant 20-20 insights 2
But First, Some Definitions
According to the Project Management Institute,
a portfolio is a collection of programs, projects
or operations that are managed as a group
to achieve strategic objectives.2
Portfolio
management is the coordinated management of
one or more portfolios to achieve organizational
strategies and objectives. Management processes
include evaluation, selection, prioritization and
allocation of limited resources to best accomplish
the strategic intent of the enterprise.
As portfolio management practices take hold,
they generate crucial contextual information
that feeds back to enterprise strategic planning,
altering current and future investment decisions.
A portfolio management capability3
answers the
following key questions:
• Are our prioritizations in line with our company
targets and capitalization goals?
• Are we working on the right things?
• What work should we plan to do?
• What expertise would we need to deliver our
plans?
• Where are we spending our capacity?
• What work is in process?
• How much value are we planning to deliver?
• When and how much value are we actually
delivering?
• What work should we kill, and where do we
re-direct our funds?
We have found that Agile teams and executive
management have different answers to these
questions due to their different focus areas (see
Figure 1) and are evaluated on different measure-
ment parameters.
To address these mismatches, IT organiza-
tions must shift from a traditional portfolio
management approach that is administration-
focused to a value-driven portfolio management
operating model that is inclusive, lean and geared
toward leveraging decentralized decision-making.
A Review of Traditional Portfolio
Management
As depicted in Figure 2, traditional portfolio
management follows a rigid, phased approach
that moves from opportunity search to project
realization. This often results in delays and long
lead and cycle times. In addition, project selection
and fund allocation follow an annual cycle, with
resources and funds locked for the remainder of
the year.
Mismatch between Teams and Executives1
Figure 1
Topic Agile Teams Executive Management
Execution Style Focus is on “how” to do it. Focus is on “what” to do.
Objective Quick response to market
requirements.
Strategic alignment and meeting business needs.
Planning Iterative and incremental. Predictive and prescriptive.
Roadmap &
Release Visibility
Two sprints (approximately four
weeks out).
Two to four quarters (about six to 12 months out).
Key Practices
and Artifacts
User stories, epics, velocity, story
points, tasks and sprints.
Timelines, roadmaps, priorities, releases, strategy
and alignment.
Desires Accelerated time to market, reduced cost, higher quality.
Opportunity
identification,
categorization
and elaboration
using enterprise
PPM tool.
Evaluation of
current opportu-
nities based on
strategic
alignment.
Opportunity
selection based on
feasibility studies
and traditional
evaluation process
and models.
Prioritization
based on the
long-term horizon
plans, capacity
and available
funding.
Detailed business
case prepared
with cost, output
and milestone
commitments for
sponsor approval.
BUSINESS CASE/
PROJECT CHARTER
OPPORTUNITY
PRIORITIZATION
OPPORTUNITY
SELECTION
OPPORTUNITY
VALIDATION
TRADITIONAL
TYPICAL
ANNUALCYCLES
OPPORTUNITY
SEARCH
Figure 2
Traditional Portfolio Management4
3. cognizant 20-20 insights 3
This model leads to practices depicted in Figure 3,
which can undermine an enterprise’s ability to
quickly respond to change. The results: missed
revenue opportunities and delayed ROI on
software development initiatives.
As a result, IT organizations need a new style
of portfolio management that incorporates the
following functions:6
• An objective, balanced and accepted process
to evaluate ideas and produce the next set of
prioritized initiatives.
• Capacity management, which in the new model
takes into account the demand, supply and
resource constraints that impact portfolio
delivery.
• Financial management, which now explores the
funding, investment opportunities and financial
returns from the overall portfolio.
• Performance management, which continuous-
ly tracks progress against pre-defined metrics.
• Governance, which ensures required gates and
processes are in place for effective decision-
making, work allocation and on-demand perfor-
mance reporting, with traceability from strategic
objectives to real value delivered by teams.
These capabilities, reinforced with best
practices, must be injected into existing portfolio
management, which leads to the creation of a
LeAP program management framework. In the
next section, we will more deeply explore LeAP
and what it entails.
Lean-Agile Portfolio Program
Management
First, let us consider the LeAP Manifesto7
(see
Figure 4, next page) that will drive the proposed
LeAP framework. The primary focus of LeAP is
to empower enterprise agility by limiting work
in process (WIP), prioritizing economic value
and promoting continuous delivery through
localized content authority and decision-mak-
ing.8
In addition, it is critical to incorporate
continuous feedback and improvement, using
fact-based lifecycle governance.
By following the LeAP manifesto, IT organiza-
tions can keep pace with the speed of digital
business, and adapt to changing internal and
external business requirements. Using LeAP, IT
can prioritize activities with the highest impact,
and allocate the right “resources” to getting work
done. LeAP also helps direct incremental funds to
where they would be most effective, with frequent
re-balancing across portfolios. A LeAP approach
also helps coordinate incremental delivery of pri-
• Key resources dedicated to multiple projects.
• No flexibility for changing priorities.
• Big upfront design, analysis paralysis.
• Fixed schedule & functionality planning;
difficult to change.
• False agreement, no buy-in.
• Misses IT innovation contribution.
• No empowerment, lower motivation.
• Fine-grain reporting slows value delivery.
• Metrics do not reflect actual progress.
• Milestones report on intermediate artifacts.
• Milestones do not reflect actual progress.
• Project difficult to execute.
• Long-term program commitments to justify
team members are a year out.
Maximize
Utilization
Widget
Engineering
Order Taker
Mentality
Control through
Data
Control through
Milestones
Annual Plan for
Projects
Practices
Problems
Figure 3
Where Traditional Portfolio Management Practices Fail5
IT organizations must shift from a
traditional portfolio management
approach that is administration-focused
to a value-driven portfolio management
operating model that is inclusive,
lean and geared toward leveraging
decentralized decision-making.
The primary focus of LeAP is to
empower enterprise agility by limiting
work in process, prioritizing economic
value and promoting continuous
delivery through localized content
authority and decision-making.
4. cognizant 20-20 insights 4
oritized work, with near-constant value reprioriti-
zation within an ever-changing portfolio context.
The LeAP manifesto’s value and principles help
generate improvements that align the business,
portfolio and delivery arms of an organization.
The goal, as depicted in Figure 5, is to optimize
business value delivery, working in unison with
business priorities and the delivery team’s
capacity for execution.
In essence, LeAP is like a train with containers
full of products running on an agreed-upon
schedule to deliver the materials to designated
train stations along the route. When the train’s
containers are empty, it expects goods to be
delivered on a schedule that aligns with the
needs of the recipients. In LeAP terms, the train
is the portfolio, the containers are the programs,
the products are the minimum viable products
(MVP) released incrementally, the train stations
are the business units or end users, and the train
schedule is the roadmap. Every “station” submits
its demand request and expected timeline, based
on the available containers and expected cargo;
the train schedule is adjusted and finalized as
Priorities Rationale
Creating smaller,
good-enough plans
frequently.
OVER
Creating large
and overly precise
plans upfront.
Helps the organization keep pace with the speed
of business, and adapt to internal and external
change.
Delivering value
through stable and
predictable teams.
OVER
Focusing
on resource
utilization and
efficiency.
Enables prioritization of the highest-impact
work, and allocation of the right resources.
Budgeting
dynamically, with
fiscal governance.
OVER
Funding projects
over longer
periods of time.
Helps the business direct incremental funds
where they have the most impact, with frequent
re-balancing across the portfolios.
Delivering
customer value fast
and frequently.
OVER
Delivering on-time
and on-budget.
Enables fast delivery of prioritized work, with
value reprioritization according to changing
portfolio context.
Delivering frequent,
incremental value. OVER
Minimizing risks
and forecasting
returns.
Enables delivery of incremental value in
timeboxes, with features allocated to teams for
delivery.
The LeAP Manifesto
Figure 4
Figure 5
BUSINESS
Sense and Respond to Change
PPM leaders provide portfolio context
during portfolio strategy formulation.
• Define strategic themes aligned with enterprise
strategy, technology and financial constraints.
• Determine value streams and allocate budgets to them.
DELIVERY
Deliver Value Faster
PPM function supports and guides successful
strategy execution using programs and teams.
• Institute decentralized, rolling wave
planning.
• Develop self-managed Agile release trains.
• Use cross-program epic prioritization.
• Create lifecycle governance.
PORTFOLIO
Optimize Business Value
PPM drives program management
and governance.
• Define and prioritize portfolio epics.
• Measure and report progress on investment
spend.
• Manage WIP using portfolio Kanban system.
• Enable continuous improvements.
How LeAP Connects Business to Delivery via Portfolio Management
5. cognizant 20-20 insights 5
the train travels through the stations and delivers
its products.
As Figure 6 illustrates, LeAP begins with a
portfolio backlog consisting of strategic themes
derived from the enterprise business strategy.
Each portfolio epic is decomposed into program-
specific, implementable epics that are reviewed
and approved in an agreed-upon cadence, typically
every month or less.
The program epics are grouped into an MVP
that achieves the desired value with the shortest
possible increment. Epic scheduling across
multiple programs should undergo global epic
prioritization using the weighted shortest job
first (WSJF) technique. The highest ranked
epics drive the resources needed for implemen-
tation, which must be closely managed using a
pull-based Kanban portfolio system.
Two-Part LeAP Framework
The LeAP framework has two parts (A and B) to
simplify and address specific goals and challenges
faced upstream (Part A) and downstream (Part B).
LeAP Part A, which is focused on connecting
enterprise strategy to portfolio strategic themes,
consists of three key components (see Figure 7):
• Formulate business strategy.
• Plan portfolio strategy.
• Execute business strategy.
How
should we
deliver it?
Program
Epics
Approval
Strategic
Theme
Review
Portfolio Backlog
What are the
strategic theme
epics out there?
When will we
deliver it?
Revert to PPM
leadership for
approval
P
Program
epics review
LEAN-AGILE
1
MVP
Definition Global Epic
Prioritization2
3
Epics grouped
by MVP
Engagement
review
Risk and issues
reported to
PPM leadership
Cross-program
epics prioritized
QUARTERLY
CYCLES
1
2
34
5
6
KANBAN PORTFOLIO
PULL
Figure 6
LeAP Engagement: A High-Level View
LeAP Part A Model (Enterprise to Portfolio Processes)
Figure 7
Portfolio B
Return on
Investment
Net
Promoter Score
Profit and
Cost
Revenue vs.
Target
Customer
Satisfaction
PortfolioB…NPortfolioAEnterprise
Formulate Business Strategy
(Rolling forecast: quarterly)
Portfolio Strategy Planning
(Should we work on it?)
Execute Business Strategy
(Program increments: 10 weeks)
Enterprise
Strategy
What opportunities
exist?
Review
Checkpoint
Constant
Feedback
Enterprise
Enterprise
Business DriversFinancial Goals
Mission and Vision
Competitive
Environment
Portfolio
Context
Portfolio
Context
Enterprise Budget Strategic Intent
Portfolio A
Budget
Portfolio B
Budget
Strategic
Themes
Strategic
Themes
Portfolio B
Strategic Theme
New Products
Fiscal Governance
and Dynamic Budgeting
Need to adjust
portfolio budgets?
Solution Demo
Prioritize
Epic
Investment Tracking
and Reporting
Portfolio
Context
Strategic Theme
New Products
Strategic Theme
Enhancements
Strategic Theme
Maintenance
Strategic Theme Epics Strategic Theme Epics Strategic Theme Epics
Strategic Theme Epics Strategic Theme Epics Strategic Theme Epics
Gates
Strategic Theme
Maintenance
Strategic Theme
Enhancements
1
1
1
3
3
3
5
4
4
Market
Share
2
Return on
Investment
Net
Promoter Score
Profit and
Cost
Revenue vs.
Target
Customer
Satisfaction
Constant
Feedback
Market
Share
6. cognizant 20-20 insights 6
Formulate Business Strategy
9
Based on available opportunities, executives and
fiduciaries with direct accountability of business
performance centrally formulate the enterprise
business strategy. Each enterprise will have
multiple portfolios with their own budget and
strategic themes, which in turn reflect that unit’s
portion of the business strategy.
A key input into the business strategy is the
portfolio context in which it operates, reflected
in performance measures such as ROI, customer
satisfaction, net promoter score, profit and cost,
revenue vs. target, and market share. Every
portfolio context is different and has a different
impact on the business strategy.
Plan Portfolio Strategy
The input to this cadence-based crucial planning
exercise is the available enterprise budget;
enterprise business drivers and financial goals;
competitive environment, mission and core
values; and, most important, the portfolio context.
The output of this exercise is a breakdown of the
portfolio budget and a set of strategic themes.
Figure 8 reflects an example scenario.
Execute Business Strategy
Based on the prioritized strategic themes and
budget allocation from the aforementioned
process, the strategic theme epics are handed
over to the related programs. There, they are
decomposed into program-specific epics that
Figure 8
A Portfolio Strategy Planning Approach10
• Lead market through
innovation
• Drive growth through
new product streams
• Reduce investment in
custom projects
• Maintain share in
customer segments
45%
25%
15%
Strategic Theme Description FY
Workshop-Driven Approach Investments
Code refactoring to improve
software robustness.
New features development
that drive new sources of
revenue.
Required customizations to
protect existing customer
revenues.
Bug fixes and features to
improve product quality.
Technology Debt Reduction
New Product Development
Custom Projects
Sustaining
Portfolio stakeholders collaborating with executive leadership decision makers should
create a structured, repeatable process to drive strategic themes.
Strategic Intent
55%
5%
15%
FY + 1
15% 25%
Figure 9
The Epic Lead
Synchronize
strategic
themes
Split portfolio
epics,
prioritize features
Ensure runway readiness
Initiate
development,
report progress
Establish dynamic
budgeting across epics
PRODUCT
MANAGEMENT
AGILE
TEAMS
ENTERPRISE
ARCHITECT
BUDGET GOVERNANCE
LEAD
ENTERPRISE
PPM
EPIC LEAD
Synchronize
portfolio
priorities
7. cognizant 20-20 insights 7
can be implemented by delivery teams within
the programs.
As we see in Figure 9, each strategic theme epic
has an epic lead who drives it from identification
through portfolio prioritization and approval,
initiates epic development based on available
program capacities, and provides continuous
feedback on its progress to the portfolio
leadership.
LeAP Part B
Figure 10 illustrates LeAP Part B,11
which focuses
on connecting portfolio programs to the delivery
teams. The strategic theme epics queued in
the portfolio backlog are reviewed by portfolio
leadership and prioritized. The output is a
sequence of program epics based on priority and
grouped into MVPs.
During global epic prioritization, the high-level
scheduling of MVPs is conducted based on the
capacity of available teams within the chartered
programs. During program increment planning,
the teams decompose the epics into team-spe-
cific user stories that are sized and slotted into
upcoming iterations, which take into account the
inter-dependencies of the team.
Theseuserstoriesareimplementedandintegrated
across teams by the system team at the program
level, and the integrated system is demonstrated
to stakeholders at higher pre-production environ-
ments. The feedback is looped back through the
programs into the portfolio strategy formulation
and planning process.
Looking Forward
To meet today’s demand for faster and more busi-
ness-aligned delivery of software and services,
enterprises must define and institute LeAP
program management practices that are built
on continuous planning cycles and data-driven
feedback. In our experience, this can help enter-
prises achieve greater visibility into the impact of
changing demands on operational performance
and keep pace with today’s dynamic digital
economy.
Our proposed LeAP framework promotes best
practices and helps portfolio management teams
build the right product features, reduce in-flight
project activities, and more effectively prioritize
opportunities and capacity allocation.
Figure 10
LeAP Part B Model (Portfolio to Programs Stage)
Operational
Retrospective
Operational
Review
Shared
Services
ScrumTeamsProgramPortfolio
Portfolio Program Planning Value Delivery
Strategic
Theme
Review
Program Epics
Approval
Global Epic
Prioritization
Epic
Decomposition
&
User Story
Elaboration
Release
Certification
Deploy and
Launch
Portfolio Epics
Epics Grouped
By MVP
Cross-program
epics prioritized
System
Demo Day
Delivery
Sprints
MVP
Definition
User story
backlog
Release
queue
Cross team sprint
dependencies
Escalated
impediments
What are the
strategic theme
epics out there?
How should
we deliver
it?
How will be
the work be
done?
How will we
coordinate across
teams and
resolve
impediments?
Are we
ready to
deliver?
Engagement
Review
When will we
deliver it?
Continuous
Integration
Testing
Cross Scrum
Sprint
Impediment
Removal
Scrum of Scrums
Risk and Issues
reported to PPM
leadership
Revert to PPM
leadership for
approval
Program
epics review
UAT
How can we
improve as
an Agile
organization?
How are we
doing as an
organization?
Are we
improving?
Design (As
Needed)
User Story
Review
(PBR)
Launch Gate
Review
Checkpoint
Gates
5
6
7
8
10
11
12
Sea-level
stories for
scrum team
9
During program increment planning,
the teams decompose the epics into
team-specific user stories that are sized
and slotted into upcoming iterations,
which take into account the inter-
dependencies of the team.
8. cognizant 20-20 insights 8
In addition, the LeAP framework helps IT organiza-
tions achieve rolling-wave planning at appropriate
levels, from enterprise-level strategy planning to
team-level daily planning. This requires a unified
PPM and lifecycle management tool as a single
source of truth to achieve full transparency within
and outside the portfolio to every stakeholder.
The LeAP framework is a disciplined approach
for translating strategic aspirational goals into
realistic execution plans that can be implement-
ed as a set of best practices (see Figure 11).
Companies can begin the transition to LeAP
program management by focusing on the four
quadrants depicted in Figure 11 and following
them clockwise, beginning with portfolio pri-
oritization and alignment with value streams;
moving to building a portfolio Kanban system
for complete transparency and tracking; then on
to integrating vision and ownership; and finally
to establishing KPIs that report results against
enterprise strategic goals.
The proposed LeAP framework has been suc-
cessfully applied at many of our Fortune 500
financial services and insurance clients. The
best approach is to perform a global assessment
at the enterprise level of current portfolio
management practices to identify immediate
challenges and gaps in the LeAP framework
building blocks. The next step is to define the
LeAP portfolio management strategy roadmap
to address the identified gaps in iterations.
By doing so, organizations can customize the
framework and enable continuous improvement
through constant feedback from portfolio stake-
holders, program management and teams. Agile
offers many benefits and opportunities for the
digital age, and adopting a LeAP framework can
help organizations realize those goals through
better decision-making and improved Agile
project ROI.
Figure 11
LeAP Framework Best Practices12
• Define KPIs for each level of
planning and their relationship
to execution KPIs to close
feedback loop.
• Actively use performance data to
make adjustments on an objective,
fact-driven level.
• Establish scalable enterprise-wide
PPM tool standards for decision
making and transparency.
• Base prioritization on capacity,
cross-organizational impact and
value.
• Derive strategic themes from
enterprise strategic intent.
• Articulate portfolio epics for each
strategic theme as unit of atomic
business value.
• Implement portfolio epics to deliver
value.
• To achieve an optimum, sustain-
able pipeline of value flow, apply
WIP limits and make work in
process visible.
• Collaborate with development
teams to break down portfolio
epics into program-level epics and
user stories.
• Continuously prioritize approved
epics using WSJF.
• Executives engage in holistic
planning and base their decisions
on corporate value.
• Directly link strategy to the plan
and provide bi-directional
traceability.
• Promote shared responsibility,
authority and accountability.
• Define portfolio views by capability
or service.
Integrate Vision and Ownership
Establish Contextual KPIs
Traceable to Strategy
Lean-Agile Portfolio
Management
Align Portfolio with Value Streams Build Portfolio Kanban System1 2
4 3
9. cognizant 20-20 insights 9
Footnotes
1 “Agile Plus Portfolio Management: Bridging the Gap Between Agile Teams & Management,” Innotas, 2014,
https://www.innotas.com/wp-content/uploads/2014/09/Final-WP-agile-portfolio-management_050614.
pdf.
2 “The Standard for Portfolio Management, Third Edition,” Project Management Institute, 2013, http://mar-
ketplace.pmi.org/Pages/ProductDetail.aspx?GMProduct=00101388901.
3 Jochen Krebs, “Agile Portfolio Management,” Microsoft Press, 2008, https://www.amazon.com/Agile-Port-
folio-Management-Jochen-Krebs/dp/0735625670.
4 “Agile Project Portfolio Management,” KPMG, May 2016, http://agilesummit.harrisburgu.edu/lib/pdf/Agile-
ProjectPortfolioMgt_Presentation_May-6-2016-to-HU.pdf.
5 “Agile PPM in the Scaled Agile Framework: Eight Transformational Patterns,” Leffingwell LLC, https://scal-
ingsoftwareagility.files.wordpress.com/2011/12/agile-portfolio-management_rally-keynote-pptx.pdf.
6 Kenny Rubin, “Agile 2013: Strategies for Agile Portfolio Management,” Innolution, Aug. 6, 2013, http://www.
innolution.com/resources/presentations/agile-2013-strategies-for-agile-portfolio-management.
7 Agile Portfolio Management for a Fast Paced World,” CA Technologies, https://www.ca.com/us/collateral/
ebook/agile-portfolio-management-for-a-fast-paced-world.register.html.
8 Ibid.
9 “SAFe 4.0 for Lean Systems and Software Engineering,” Scaled Agile, http://scaledagileframework.com/.
10 “Agile Project Portfolio Management,” KPMG, May 2016, http://agilesummit.harrisburgu.edu/lib/pdf/Agile-
ProjectPortfolioMgt_Presentation_May-6-2016-to-HU.pdf.
11 “Agile PPM in a Scaled Agile Framework: Eight Transformational Patterns,” Leffingwell LLC, https://scaling-
softwareagility.files.wordpress.com/2011/12/agile-portfolio-management_rally-keynote-pptx.pdf.
12
“Agile Project Portfolio Management,” KPMG, May 2016, http://agilesummit.harrisburgu.edu/lib/pdf/Agile-
ProjectPortfolioMgt_Presentation_May-6-2016-to-HU.pdf.