Scaled Agile Framework (SAFe) - Lean Portfolio Management

# Lean Portfolio Management

##### Scale Agile Framework (SAFe) 6.0

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Essential to achieving Business Agility

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## Scaled Agile Framework

Scaled Agile, Inc is a protected Brand. These slides / presentations are neither endorsed by nor affiliated.. This is not official training or materials.

[scaledagile.com ![External Link](../assets/icon-ext-link.svg) ](https://scaledagile.com/)

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## Purpose Here

**This is simply my way of learning.**

The purpose of these presentations are to help me apply these concepts and practices, and help teach/coach others.

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## SAFe Portfolio

* Is a collection of **Development Value Streams**
* Each DVS builds, supports and maintains Solutions
* Solutions are delivered to Customers
* (whether internal or external to enterprise)

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## Traditional Approach

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People organized in functional silos and temporary project teams.

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Fund projects and project-cost accounting. Slow, blame game, resource scramble, etc.

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Big up-front, top-down, annual planning and budgeting.

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Centralized, unlimited work intake. Project overload.

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Overly detailed business cases based on speculative ROI.

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Projects governed by phase gates. Waterfall milestones. Progress mesured by task completition.

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Value delivery in silos is inhibited by hand-offs and delays. Political boundares can prevent cooperation across silos. Communication across silos is difficult.

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## Project Cost Accounting

**Disadvantages**

* Utilization-based planning
* Complex budgeting process
* Cuts acrss multiple cost-centers

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## Lean-Agile Approach

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People organized in value streams / ART's for continuous value flow.

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Fund value streams, Lean budgets, and guardrails. Not affected by feature overruns or changing priorities.

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Value stream budgets adjusted dynamically through paricipatory budgeting.

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Strategic demand managed by Portfolio Kanban. Decentralized intake by value streams and ARTs.

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Lean business cases with MVP, business outcome hypothesis, Agile forecasting and estimating.

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Products and services governed by self-managing ARTs. Objective measures and milestones based on working solutions.

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Customers do not buy Features or Capabilities. Rather, they buy whole product Solutions that deliver desired outcomes, which make Solutions one 
of the central concepts in SAFe

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## Lean-Agile Budgeting

**Advantages**

* Effective financial controls with less overhead
* Adjusted over time to take advantage of opportunities

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# 1

## Strategy & Investment Funding

Ensures the entire portfolio is aligned and funded to create and maintain the solutions needed to meet business targets.

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## Roles

* Enterprise Executives
* Business Owners
* Enterprise Architects

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## Responsibilities

* Connect the portfolio to enterprise strategy
* Maintain the portfolio vision and roadmap
* Establish Lean budgets and guardrails
* Establish portfolio flow with the portfolio Kanban

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## Strategic Themes

Small set of business objectives that connect a portfolio to the enterprise strategy and guide the portfolio to the desired future state.

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## Strategic Themes shape...

* Portfolio Vision
* Portfolio Kanban and Portfolio Backlog
* Vision for Solution, ART, and Team Backlogs
* Value Stream Budgets
* Lean Budget Guardrails

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## Method: OKRs

Measure **portfolio performance** relative to **strategic themes**.

* Objectives are inspirational
* Objectives are clear and measurable
* Objectives have two to five key results

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## Portfolio KPIs

Portfolio KPIs measure how a **value stream** performs against its forecasted **business outcomes**.

[See More Here](#/performance)

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Strategic themes and Lean budgets are ***outputs*** of enterprise strategy formulation.

The **portfolio context** is an ***input*** to the evolving enterprise strategy.

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## Enterprise Strategy Formulation

* Enterprise vision, mission, and core values
* Enterprise business drivers
* Distintive (core) competence
* Financial goals
* Competitive environment
* **Portfolio context**

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## Enterprise Strategy Outputs

* Portfolio budgets
* Strategic themes

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## Portfolio Context

* Portfolio Vision
* Lean budget guardrails
* Outcomes, flow, competency
* Key Performance Indicators (KPIs)
* Qualitiative Data

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## Portfolio Vision

Long-term view for decision making

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## Destination Postcard

Book: Switch (link)

Aspirational, yet realistic and achievable. Motivational enough to engage others on the journey. Result: Everyone starts thinking about how to apply their strengths in order to get there.

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## Portfolio Canvas

**Business Model Canvas (BMC)** with additions of:

* Value Stream
* Solutions
* Lean Budget
* KPIs / OKRs

Plus BMC parts: customer segment, channels, customer relationships, key partners, key activities, key resources, cost structure and revenue streams.

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## Evaluate Alternatives

1. Current State Portfolio Canvas (PC)
1. SWOT and TOWS analysis
1. Divergent thinking ➡️ Multiple potential PCs
1. Convergent thinking ➡️ Future State PC
1. Identify Epics

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## SWOT & TOWS

* **Strengths** (Internal Origin)
* **Weakness** (Internal Origin)
* **Opportunities** (External Origin)
* **Threats** (External Origin)

Opportunities identify strategic options to create a better future state.

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* SO = How can your **S** be used to exploit **O**?
* ST = How can you apply your **S** to overcome **T**?
* WO = How can your **O** be used to overcome **W**?
* WT = How can you minimize **W** as to avoid **T**?

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## Lean Budgets

The Enterprise establishes the total portfolio budget, which is allocated to Development Value Streams to develop Solutions.

Funding value streams instead of projects allows the portfolio to plan, invest, and manage capacity based via a **product delivery approach**.

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## Advantage of Funding by VS

It is easier to forecast expenses for a Program Increment (PI).

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## Lean Budget Guardrails

Purpose is to describe budgetary, governance, and spending practices of the portfolio.

* Guide investments by horizons
* Apply capacity allocation 
* Approve significant initiatives
* Continuous business owner engagement

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## Capacity Allocation

* To optimize value and solution integrity. 
* Should be allocated for each type of activity. 
* Business epics vs Enabler epics. 
* Prioritization trade in / out of capacity. 
* Tech debt and maintenance.

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## Investment Horizons

* Horizon 0 - Retiring
* Horizon 1 - Extracting & Investing
* Horizon 2 - Emerging
* Horizon 3 - Evaluating

**R-EI-EE**

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## Roadmaps

* Portfolio Roadmap: 1 - 3 years
* Solution Roadmap: 1 - 3 years
* PI Roadmap: 1 - 3 PIs
* Current PI Plan: 8 - 12 weeks
* Iteration Plan: 2 weeks
* Daily Plan: 1 day

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## Portfolio Roadmap

Purpose is to indicate the interaction across value streams.

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## Solution Roadmap

* Coordinated within a value stream

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# 2

## Agile Portfolio Operations

Coordinates and supports decentralized program execution and foster operational excellence.

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## Roles

* Value Management Office (VMO)
* Lean-Agile Centre-of-Excellence (LACE)
* Release Train Engineers (RTE)
* Scrum Masters / Team Coaches CoP

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## Responsibilities

* Support **program** execution

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## Value Stream Management

* Lean thinking is the foundation of VSM
* Lean principles provide a shared mindset
* LPM is ulimately accountable for establising VS's
* VSM ensures Lean thinking is applies across VS's

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## Coordinate Value Streams

Make them as independent as possible.

While connecting them to the enterprise's larger purpose.

Creates portfolio-level opportunities.

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## VS Coordination

1. Coordination roles
2. Apply cadence and synchronization
3. Intoducing new portfolio work
4. Ensured integration points
5. Portfolio roadmaps
6. Release on demand

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## Value Management Office (VMO)

* Operates within LPM function
* Cultivate successful program execution
* Establish objective metrics and reporting
* Support **Communities-of-Practices** for RTE/STE

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## LACE

**Lean-Agile Community-of-Excellence**

* Stand-alone or part of VMO
* Drive the necessary organizational changes
* Improve ability to achieve goals predictably

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## LACE Operating Models

For funding of LACE roles, tools, coaching

* Centralized
* Decentralized
* Hub-n-spoke

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# 3

## Lean Governance

Oversees and manages spending, audit, compliance, forecasting expenses, and measurement.

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## Roles

* Value Managemetn Office (VMO)
* Business Owners
* Enterprise Architects

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## Responsibilities

* TBA

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## Agile Estimating & Forecasting

* Total of epics forecasted size in story points
* Historical velocity of the ARTs
* Capacity each ART can dedicate to an epic

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## Epic Estimating

* T-Shirt sizes simplifies est. in early stages
* Use historical data to define cost ranges
* Cost ranges reflect uncertainty of est.

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## Epic T-Shirt Estimates

* **XXL** = $2M+
* **XL** = $1M - $1.5M
* **L** = $500k - $800k
* **M** = $250k - $400k
* **S** = $100k - $200k

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## Lean Business Case

**Anticipated 'full' implementation cost**

Refine based on learnings from MVP

**MVP cost**

Considered a hard limit. Value stream will not spend more than this in building and evaluating the MVP without additional approval from LPM.

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## Managed-Investment Contracts

**"Agile contract"**

Buying fixed development capacity from vendor rather than a product. Buyer may be internal.

Outlines a common vision, roadmap, backlog, and architectural guidance.

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## Managed-Investment Contracts

Progress is measured by demonstrating working systems each iteration and at the end of the PI.

Based on the results, the buyer has full control to 'pivot or persevere' with increased or decreased funding.

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## Managed-Investment Contracts

link to tool?

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## Buyers Responsibilities

* Paricipating in SAFe training
* Committing to the availability of key stakeholders
* Defining program objectives and strategic themes
* Providing non-functional requirements

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## Suppliers Responsibilities

* Deliver solution that meets buyers need
* Define estimates based on info from buyer
* Establish resource availability
* Providing qualified stable Agile teams

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## Shared Responsibilities

* Solution vision and roadmap
* Defining fixed and variable solution intent
* Parameters for solutions economic framework
* Responsibilities and contract boundaries
* Mutual collaboration and transparency
* Creating and prioritizing the backlog
* Clearly defining the MVP

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## CAPEX / OPEX

(link)

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## Strategic Portfolio Review

* Focus on advancing the Portfolio Vision
* Continuous strategy, delivery, and budget alignment
* Investment guidance with decentralized decisions
* Done at least one month before next PI

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## SPR Agenda

* Review / update the Portfolio Context
* Review / update the Portfolio Vision
* Review / update the Strategic Themes + OKRs
* Review results of MVPs for pivot / persevere
* Review portfolio performance
* Review / update the Portfolio Roadmap

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## Portfolio Sync

* Monthly
* Focused on portfolio operations
* Visibility on how portfolio is progressing
* Typically held weekly to monthly

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## PS Agenda

* Review / decide on new Epics and Lean Business Cases
* Review epic, value stream, and ART execution
* Addressing cross-product dependencies
* Escalating and removing impediments

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## Participatory Budgeting

* Focused on managing Lean Budgets
* Provides forum for budget decisions
* Including budget across Solutions and Epics
* Typically held every two PIs

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## Adjust budget allocation

* Changes to strategic themes
* Enterprise & portfolio performance
* Market changes
* Product feedback
* Economic conditions

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## Value Stream Budgets

**Includes 'Run the Business'**

Baseline Solution Investments (BSI)

**Includes 'Grow the Business'**

Proposed Solution Initiatives (PSI)

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## PB Forums Agenda

* Current Value Stream Budgets
* Changes in Business Context
* Total Portfolio Budget and Guardrails
* Baseline Solution Investments (BSI)
* Proposed Solution Investments (PSI)
* New Value Stream Budgets

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## Participatory Budget Event

(link to LPM Execution Kit)

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## PB Benefits

* Empower VS stakeholders via inclusive decision-making
* Resulting VS budgets are more realistic / achievable
* Ownership improves morale and collective efforts
* Better agreement and buy-in on trade-offs made

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## LPM Portfolio Metrics

* Employee engagement: ⬆️ satisfaction ⬇️ turnover
* Customer satisfaction: ⬆️ NPS
* Productivity: ⬇️ cycle times
* Improvement: ⬆️ maturity
* Time-to-Market: ⬆️ deployment frequency
* Quality: ⬇️ defects ⬇️ support calls
* Partner health: surveys
* Alignment: OKRs

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## Continuous Compliance

Validate **ongoing** compliance with relevant standards and regulation (as opposed to at the end).

Build solutions and compliance **incrementally**.

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## Portfolio Flow

* Kanban is a visual tool monitor/manage workflow
* WIP limits promote faster flow
* Epics are **pulled** across the Kanban board
* **Pulled** as WIP limits and other policies permit

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## Value of Portfolio Flow

* Improve time-to-market
* Resolve systemic overload
* Avoid delayed ROI and burnout
* Faster customer feedback
* Validate MVPs before investing in full

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## Portfolio Kanban

1. **Funnel** - Capture all new big ideas
2. **Reviewing** - Epic hypothesis, calculate WSJF
3. **Analyzing** - Alternatives? MVP. Lean business case
4. **Portfolio Backlog** - Pulled in by ARTs as ready
5. **Implementing** - Deliver MVP. Pivot/Persevere?
6. **Implementing** - Persevere
7. **Done** - LPM governance no longer required

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## Portfolio Kanban Benefits

* Makes the largest business and technical initiatives visible
* WIP limits ensure teams review and analyze responsibly
* Brings structure to Epic analysis and no / no-go decisions
* Helps drive collaboration among key stakeholders
* Transparency in evaluating the outcome hypothesis

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## 1. Funnel

* All big ideas are welcomed
* Only potential Epics go in the funnel
* Smaller work for ARTs to consider

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## 2. Reviewing

* Refine understanding of the Epic
* Create the Epic hypothesis statement
* Preliminary cost estimates and WSJF
* WIP limited

Pull when an Epic Owner is available

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## 3. Analyzing

* Consider solution alternatives
* Refined costs estimates and WSJF
* Define MVP
* Create Lean Business Case
* Go / no-go decision
* WIP limited

Pull when an Epic Owner has capacity

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## 4. Ready

* Epics approved by LPM
* Sequenced using WSJF

Pull highest priority Epic once approved by LPM

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## 5. Implementing - MVP

* Build and evaluate MVP
* Pivot or persevere decision made
* Pulled by Teams
* Reserve capacity (if persevere)

Pull when ART capacity and budget available

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## 6. Implementing - Persevere

* Affected ARTs reserve capacity for the Epic
* Continue feature implementation
* Until WSJF determines otherwise

Pull when MVP hypothesis proven true

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## 7. Done

* Done if outcome hypthesis proven false, or
* Done when LPM governance no longer required

Pull when Epic is no longer a portfolio concern

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## LPM Practices

* **Funnel** - Is this really a portfolio epic?
* **Review** - Is the Epic align to a Strategic Theme
* **Analyze** - Should we approve the Epic?
* **Ready** - What are the Epic priorities
* **Implement** - Did we prove the hypothesis?

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## LPM Events

(move?)

* Strategic Portfolio Review - **Quarterly**
* Portfolio Sync - **Monthly**
* Participatory Budgeting - **Bi-annually**
* Sequence Epics with WSJF

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## Connected Kanban Systems

1. Portfolio Kanban
2. Solution Train Kanban
3. ART Kanban
4. Team Kanban

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## Portfolio Epics

Title, Epic Owner, Funnel Entry Date, Elevator Pitch, Business Outcomes, Leading Indicators, NFRs

In Jira equates to **Initiatives** (top-level)

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## Epic Types

**Business Epics**

Directly deliver business value

**Enabler Epics**

Support the Architectural Runway and future business functionality.

Consider potential of increating risk by sequencing Epics incorrectly.

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## Epic Elevator Pitch

* **For** (customers)
* **Who** (Do something)
* **The** (solution)
* **Is a** (the "how")
* **That** (provides value)
* **Unlike** (competitor / current solution / gap)
* **Our solution** (the "why")

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## Business Epic Owners

* Product Management
* Solution Management
* Business Owners

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## Enabler Epic Owners

* Systems Architect
* Solutions Architect
* Enterprise Architect

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**Business Owners**

Synchronize w/ LPM & ARTs

**Product Management**

Prioritize business features and capabilities

**Architects**

Align w/ tech standards and roadmaps

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## Business Owners

Actively engage

* Communicating the Portfolio Vision
* Assisting in prepping for upcoming PI
* Attending PI Planning
* Attending Inspect * Adapt sessions

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## Minimum Viable Product (MVP)

As opposed to story boards, prototypes, mockups, and other exploratory techniques, the MVP is an actual product that can be used by real Customers to generate validated learning

**MVPs enable faster learning, less risk, better decisions, and improved time-to-market.**

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## Lean Startup Cycle

1. **Hypothesize** - Lean business case
2. **Build an MVP** - To test the hypothesis
3. **Evaluate MVP** - Against the hypothesis

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## Then...

* **Pivot** - New epic, new hypothesis in backlog
* **Persevere** - Continue, provided is WSFJ
* **Stop** - Discontinue any further work on epic

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## Types of Pivots

* **Customer segment** pivot
* **Customer need** pivot
* **Value capture** pivot
* **Zoom-in** (Feature) pivot

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## Sequencing Epics

**For optimal economics**

Epics that can deliver the most value and are of the shortest duration are selected first for implementation.

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## WSFJ

**Weighted Shortest Job First**

Cost of Delay (Value)

*divide by*

Duration (Cost)

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## Cost of Delay

* User Business Value
* Time Criticality
* Risk Reduction / Opportunity Enablement

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## Relative Rating

On a scale of 1-to-10 rate each Epic. Go column by column.

Identify lowest Epic and rate against other Epics being prioritised.

Tally the CoD for each Epic

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## Normalise Costs

Give the lowest cost Epic a 1.0 then divide the **$** cost of the other Epics by the **$** cost of the this Epic

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## WSFJ Priority Order

Implement the Epic with the **highest WSFJ first**.

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## Tools

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## LPM Assessment Tool

(link)

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## Business Agility Assessment

(link)

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## VS & ART Identification Workshop

(link)

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## Epics

**Epics are not Projects**

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Implemented by stable, cross-functional Value Streams and ARTs.

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No definitive start or end dates. Scope is variable. Continue until WSJF says otherwise.

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Progress is measured as outcomes against the benefit hypothesis.

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Lean business case, based on benefit hypothesis and definition of MVP.

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Implementation follows the build-measure-learn SAFe Lean Startup Cycle.

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After the Lean business case is approved, commitment is to the evaluation of the MVP.

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## Projects

**Epics are not Projects**

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Implemented by temporary teams, which disband after work is completed.

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Definitive start and end dates. Scope is fixed. All scope must be implemented.

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Progress is measured on task completion.

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Overly detailed business case, based on speculative ROI.

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Implementation typically follows phase-gated, sequential (waterfall) process.

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After business case is approved, up-front commitment is made to the entire project scope.

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## Portfolio Performance

Includes **value stream KPIs**

and a broader set of **portfolio metrics**.

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## 1. Employee Engagement

Improved employee satisfaction. Lower turnover.

* Employee survey
* HR statistics.

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## 2. Customer Satisfaction

Improved net promoter score (NPS)

* NPS Survey

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## 3. Productivity

Reduced avereage feature cycle time

* Feature cycle time

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## 4. Relentless Improvement

Measureable improvements in team, program, and portfolio performance.

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## 5. Time-to-Market (TTM)

More frequent releases.

* Deployment frequency

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## 6. Quality

Reduced defect counts and support call volumes.

* Defect data
* Support call volumes

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## 7. Partner Health

Improved ecosystem relationships

* Partner and vendor surveys

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## 8. Alignment

Improved progress against key results for strategic themes

* OKRs

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## Implementation Roadmap

**Lean Portfolio Management**

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## 1. Align

* Gain executive buy-in
* Agree on portfolio definition
* Establish the LPM team
* LPM kick-off event
* Develop LPM implementation plan
* Schedule LPM events
* Communicate LPM change vision

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## 2. Organize

* Run the VS & ART Identification Workshop
* Take action from VSAIW

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## 3 Strategize

* Identify strategic themes
* Define the portfolio vision
* Establish lean budgets and guardrails

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## 4. Operate

* Establish and evolve the portfolio kanban
* Facilitate LPM events
* Prepare VS participants for LPM implementation

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## 5. Govern

* Establish portfolio and VS metrics
* Explore: Compliance
* Explore: Software capitalization
* Explore: Agile contracting
* Explore: Tech Business Mgmt (TBM)

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## 6. Measure & Grow

* Evaluate progress towards **business agility**
* Determine improvement actions.
* Run assessments
* Take necessary steps to improve

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## Measure & Grow

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## Business Agility

The goal of Business Agility is clear: quickly respond to **market changes** and **emerging opportunities** with innovative, digitally-enabled business solutions.

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## Three Measurement Domains

1. Outcomes
1. Flow
1. Competency

Applicable at every level of an organisation.

(Portfolio, Solution, ART, Agile Team)

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![SAFe - Measure and Grow](../assets/safe-measure-grow.svg)

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## Flow Metrics

* Flow Distribution
* Flow Velocity
* Flow Time
* Flow Load
* Flow Efficiency
* Flow Predictability

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## Flow Distribution

Proportion of work items by type in a system

Example: Business vs Enabler epics

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## Flow Velocity

Number of items completed in a given timeframe

Also known as the system's throughput

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## Flow Time

Total time elapsed for all steps in a workflow

Measure fo efficiency of the entire system

Example: Code commit to deployment

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## Flow Load

How many items are currently in the system

Often a leading indicator of excess work-in-progress

Measuring and reducing flow load is of critical importance

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## Cumulative Flow Diagram

Is common tool to visualize **flow load** over time. Shows rate at which items are accepted into the work queue (arrival curve) and the rate at which they are completed (departure curve). At a point in time, flow load is the vertical distance between curves.

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## Flow Efficiency

How much of the overall flow time is value-added work vs waiting between steps

Equals: **Total Active Time / Flow Time** (Active + Wait Time)

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## Flow Predictability

How well teams, ARTs, and Solution Trains can plan and meet their PI objectives.

**Planned value achieved / Actual value achieved**

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## LPM Events

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## Strategic Portfolio Review

* Cadence: TBA

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### Portfolio Sync

* Cadence: TBA
* Visiblity into portfolio progress towards objectives

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### Participaotory Budgeting

* Cadence: Twice per year

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