What is agile portfolio management?

This method focuses on optimizing the flow of value through an organization by making sure that resources are allocated effectively, priorities align with strategic objectives and continuous improvement is emphasized. The core concepts of agile portfolio management include:

Flexibility: The ability to adapt quickly to changes.

Visibility: Enhanced transparency into project and portfolio progress.

Collaboration: Improved communication and teamwork across projects.

Value delivery: A continuous focus on delivering value to customers and stakeholders.

Created by a group of software developers in 2001, agile is a philosophy that elevates the values of efficiency, communication and flexibility in service of creating superior products. As described in the initial Agile Manifesto, the philosophy’s four values are:

-              Individuals and interactions over processes and tools

-              Working software over comprehensive documentation

-              Customer collaboration over contract negotiation

-              Responding to change over following a plan

Agile is not a specific methodology; instead, it’s more of an approach, and many different methodologies are frequently grouped under the umbrella of agile or agile-inspired management processes. These methodologies include Scrum, Extreme Programming (XP), Disciplined Agile, Kanban and more.

A portfolio is a group of projects and programs within an organization that are related and managed together to achieve strategic goals and business outcomes. Traditional portfolio management often involves a rigid, hierarchical approach with long-term planning and strict processes.

Older methods that predate agile often hewed to a system known as “waterfall,” which requires a strict set of steps that must be completed in sequential order. This method can be slow to adapt to new information or shifts in the business environment.

In contrast, agile portfolio management emphasizes flexibility, iterative planning and continuous feedback by using inputs such as advanced metrics and customer feedback. It prioritizes value streams and the rapid delivery of value, the ability to adjust based on new information, and a collaborative approach to project portfolio management (PPM).

The ability to adapt and respond to change is crucial in modern business. agile portfolio management enables organizations to pivot quickly and redirect resources to the most valuable and strategically aligned initiatives.

This focus on strategic alignment enhances efficiency by fostering better collaboration and streamlining processes, ultimately leading to quicker and more effective delivery of outcomes. Furthermore, by focusing on continuous value delivery in portfolio operations, organizations can better meet customer needs, leading to increased satisfaction and brand loyalty.

An agile philosophy can be applied to many kinds of work, at all organizational levels:

Agile project management is the application of agile principles to an individual project. This project might include multiple discrete tasks and multiple development teams all working in service of a single goal, whether that’s a single product, an update or a new feature.

Agile program management takes agile one step higher organizationally. Agile program management is the application of those same agile principles to a group of projects. This can require some new techniques and methodologies, such as the creation of new executive teams, a shared backlog of resources and increased communication between individual teams.

Agile portfolio management must coordinate different programs, potentially in different departments within an organization. Portfolio management is more concerned with overall strategic concerns and business agility than the other management types, and agile organizations must consider overall goals to help ensure that projects and programs align.

Agile portfolio management includes several key pillars that serve as the backbone of the philosophy. Keeping these principles in mind can help team leaders organize and strengthen portfolio plans.

Agile portfolio management is concerned with business directives from the top of the organization. It’s vital for agile portfolio managers to ensure that an organization’s strategy is aligned with the nuts and bolts of individual execution.

Agile portfolio management retains the agile philosophy’s proclivity for continuous planning and improvement through iteration. Strategies must be nimble, and stakeholders must be prepared for change, whether that comes from internal or external forces.

Empowerment, transparency and radical honesty are fundamental pillars of agile portfolio management. Ideas and guidance can come from anywhere, and a good portfolio manager is able to empower developers and project managers to speak up.

Continuously assessing the business value of projects and portfolios is one of an agile portfolio manager’s most important tasks. There are several ways to do this; one of the most common is called a cost of delay (CoD) analysis.

CoD is a simple calculation that provides a figure indicating the importance of timely completion for individual projects. From a portfolio manager’s point of view, CoD can be extremely helpful for prioritization.

Agile portfolio management itself does not include or require specific methodologies or tools, but there are several agile methodologies and frameworks that are commonly associated with or used in agile portfolio management. To implement agile portfolio management effectively, it is helpful to understand various agile methodologies, frameworks, tools and techniques.

Scrum is a framework for collaborative teamwork, named for the rugby play in which all players unite and make one big push. It promotes iterative development through short, manageable cycles called sprints, which can be scaled to manage multiple projects within a portfolio.

Scrum typically includes daily meetings, or stand-ups, and “sprints,” which are coordinated stretches of work. At the end of each sprint, the sprint’s work is reviewed and discussed, and plans for future sprints are adjusted as needed to meet the needs of the organization and its customers.

Kanban is a methodology for tracking individual tasks within a project, usually presented as a board—either physical or digital. It focuses on visualizing workflows and managing the flow of work to identify bottlenecks and improve continuous delivery.

A Kanban board includes multiple columns: at its most basic, “to do,” “in progress” and “completed.” On a physical Kanban board, sticky notes are moved continuously from one column to another as tasks go through the process of completion.

SAFe (Scaled Agile Framework) is a knowledge base of organizational and workflow principles, practices and competencies that integrates principles from Scrum, Kanban and Lean to scale agile practices across large enterprises. It is designed to align multiple projects and help ensure cross-functionality and interoperability. SAFe provides a structured approach to managing extensive portfolios of work.

These methodologies help align projects with business strategy and strategic goals, enhance communication and collaboration across agile teams, and promote efficient resource allocation based on priority. 

Various techniques and terms are used to support agile portfolio management. These techniques facilitate task tracking, sprint management and backlog organization, driving transparency and collaboration within and across teams.

To understand project backlogs and progress, agile teams should be familiar with the following concepts:

Features: A specific function of a product that delivers value to users.

Epics: Large bodies of work that can be broken down into smaller tasks or user stories. They help in organizing and prioritizing high-level work within the portfolio.

User story: A general description of a feature from the user’s perspective. It describes what the feature is and why the user needs it.

Themes: Broad areas of focus guiding the organization’s strategic initiatives. They help align projects and programs with overall business objectives, making sure that the portfolio delivers maximum value.

A familiarity with these concepts is a good primer for organizations beginning their agile transformation journey.

Adopting agile portfolio management offers numerous advantages that enhance an organization’s ability to manage projects and programs effectively. By focusing on flexibility, collaboration, efficient resource allocation and transparency, organizations can achieve better outcomes and drive continuous improvement across their portfolios.

Enhanced flexibility: Quickly respond to changes and reallocate resources as needed to align with strategic goals.

Improved collaboration: Foster enhanced communication and cooperation across multiple projects and teams.

Better resource allocation: Optimize the use of resources, making sure that they are directed toward the most valuable initiatives.

Increased transparency: Gain clear insights into overall portfolio progress and health, enabling better decision-making.

While agile portfolio management offers significant benefits, organizations might face several challenges in its implementation. Understanding and addressing these challenges is crucial for successful adoption and sustained effectiveness.

Cultural resistance: One of the primary challenges is overcoming cultural resistance within organizations. Agile methodologies require a shift in mindset and practices, which can be met with skepticism and reluctance from employees accustomed to traditional approaches. Addressing this resistance involves effective change management and fostering an agile culture throughout the organization.

Alignment with organizational goals: Promoting the alignment of agile practices with overall business objectives and strategy is critical. Without this alignment, there is a risk of misdirected efforts and resources. It is essential to maintain a clear link between portfolio management activities and the strategic goals of the organization to promote cohesive progress and value delivery.

Skill gaps: Implementing agile portfolio management often reveals skill gaps within the organization, particularly at the portfolio management level. Teams might require additional training and development to effectively adopt agile practices. Investing in continuous education and skill development is necessary to build a competent and agile-focused workforce.

Tool integration: Integrating agile tools with existing enterprise systems can be a complex process. Driving compatibility and seamless integration is vital to avoid disruptions and maximize the benefits of agile tools. Organizations must carefully plan and execute the integration process, considering both technical and operational aspects to achieve a smooth transition.