Most strategy dialogues end up with executives talking at cross-purposes because … nobody knows exactly what is meant by vision and strategy, and no two people ever quite agree on which topics belong where. That is why, when you ask members of an executive team to describe and explain the corporate strategy, you frequently get wildly different answers. We just don’t have a good business discipline for converging on issues this abstract.
—Geoffrey Moore, Escape Velocity
Lean Portfolio Management
Lean Portfolio Management (LPM) is a function that represents the individuals with the highest-level of decision-making and financial accountability for a SAFe portfolio. This group is responsible for three primary areas: strategy and investment funding, Agile program guidance, and Lean governance.
Typically, LPM represents a set of responsibilities, rather than a separate organization, team, or entity. These tasks are often fulfilled by collaboration among portfolio Lean-Agile Leaders, Business Owners, enterprise executives and others who have the knowledge and authority to execute them.
Each SAFe portfolio has an LPM function that is responsible for strategy and investment funding, Agile program guidance, and lean governance, as illustrated in Figure 1.
While organizations use differing titles and roles, effective fulfillment of the LPM function and responsibilities is essential for SAFe success. Business managers and executives who understand the enterprise’s business strategy, technology, and financial constraints foster and guide the implementation of software and systems, which help the enterprise meet its business objectives.
Traditional Portfolio Mindsets Impede Enterprise Agility
Traditional governance mindsets and practices applied to portfolio management can severely inhibit the transition to enterprise agility. In response, SAFe recommends seven transformational patterns to move the organization to LPM, as described in the Implementation Roadmap article, Extend to the Portfolio.
Using a more effective Lean-Agile approach, these transformational patterns can help us better understand how to fulfill the primary LPM responsibilities of strategy and investment funding, program management, and governance. SAFe’s Lean Portfolio management practices are shaped by these transformational patterns. Each of the primary tasks is described in the sections below.
Strategy and Investment Funding
The purpose of strategy and investment funding is to support the implementation of the business plan. This includes communicating the strategy and providing investment funding to the Value Streams that develop and maintain the portfolio of value-added products and services.
Figure 2 illustrates the collaboration needed for these activities. The portfolio budgeting process allocates budgets to value streams and ensures alignment in accordance with the overall enterprise strategy.
Primary participants in the process include anyone with LPM responsibilities, such as enterprise executives, Agile Release Train (ART) Business Owners, and other portfolio stakeholders. Enterprise Architects assist them by providing the longer-term view of the technology necessary to support the evolving business strategy. The functions supported by this collaboration include:
- Development and communication of the Strategic Themes that align the portfolio to the larger enterprise strategy
- Identification and organization of the portfolio’s value streams
- Allocating funds to implement Lean Budgeting to value streams in accordance with business strategy and current strategic themes, avoiding the need to establish a “project” for each new initiative
- Introducing new business and enabler Epics, the larger initiatives needed to support the evolving business strategy
- Development and operation of the Portfolio Kanban, which brings visibility to upcoming work
The Kanban also helps manage Work in Process (WIP) and assures that demand is matched actual implementation capacity.
Agile Program Guidance
Agile program guidance supports successful program execution. While program execution lies primarily with ARTs and Solution Trains, the LPM function can help develop, harvest, and apply successful program execution patterns and guidance across the portfolio.
Figure 3 illustrates the collaboration required to provide this support. The LPM function, Release Train and Solution Train engineers, the Lean-Agile Center of Excellence (LACE), and, typically, an Agile Program Management Organization (APMO) are the key participants.
The functions supported by this collaboration include:
- Strategy and execution of the implementation roadmap
- Support for program execution and standard Metrics
- Communication of standards, practices and global Nonfunctional requirements (NFRs) for ART and Solution Train execution
- Agreements for cross-ART, Solution Train and Value Stream Coordination
- Decentralized, rolling-wave planning via the routine, cadence-based Program Increment (PI) Planning activity
- Agile estimating and planning, using the currency of Story points, applied consistently through all levels of SAFe
The Role of the Agile PMO
Even though ARTs and Solution Trains are largely self-organizing and self-managing, many organizations benefit from having an Agile PMO, which harvests and communicates practices that can be applied throughout the portfolio. But as we described earlier, and in the Extend to the Portfolio article, this is not a traditional PMO. Rather, it often leads the transformation, and can play an active role in the implementation of SAFe. In addition, the Agile PMO may serve as an ongoing Community of Practice (CoP) for Release Train Engineers (RTEs) and Solution Train Engineers (STEs), providing a forum for sharing Agile program execution practices and cross-program reporting.
Governance functions still exist in Agile, and SAFe provides portfolio-level oversight on investment spending, program reporting and NFRs for security, compliance, quality, and releasing, as well as policies for approving Epics.
Figure 4 illustrates the collaboration required for Lean Governance.
The functions supported by this collaboration include:
- Establishing and reporting Key Performance Indicators (KPIs) for each value stream, and for the portfolio as a whole
- Empowering decentralized decision-making and program execution
- Reporting actual spending to budgets
- Fostering and supporting innovation accounting
- Assuring Compliance to relevant standards and regulations
- Establishing criteria and policies for approving Epics using Lean business cases and the concept of Minimum Viable Products (MVPs)
Lean Governance participants include the LPM, portfolio-level Business Owners, Value Stream stakeholders, enterprise executives, and the Agile Program Management Office (PMO).
Taken together, strategy and investment funding, Agile program guidance, and Lean governance anchor each SAFe portfolio in a set of values, principles and leadership behaviors that will set an example for others. They assure the full business benefits of a SAFe implementation.
Learn More Leffingwell, Dean. Agile Software Requirements: Lean Requirements Practices for Teams, Programs, and the Enterprise. Addison-Wesley, 2011.  Thomas, Joseph and Steven Baker, DTE Energy. Establishing an Agile Portfolio to Align IT Investments with Business Needs. 2008.
Last update: 5 June, 2017