SAFe Planning and Execution Series Overview

In the second post of our SAFe Planning and Execution Series, we will focus on Portfolio Management, a critical aspect of the SAFe framework. We’ll discuss its key inputs and outputs, governance, and events. Be sure to check the other posts in this series, which cover an

Introduction to SAFe Portfolio Management

In the first post of our four-part series on SAFe Planning and Execution, we introduced the concept and provided an overview of the topics we will cover. As a continuation, this second post delves into Portfolio Management in the Scaled Agile Framework (SAFe), a critical aspect of planning and execution that enables organizations to align their investments with business goals and deliver value across multiple Agile Release Trains (ARTs). We will explore the key components and processes of SAFe Portfolio Management, including strategy and investment funding, connecting the portfolio to the enterprise strategy, creating and managing the Portfolio Backlog, and the critical roles and responsibilities involved.

Defining Portfolio Management in SAFe

Lean Portfolio Management (LPM) is a crucial competency in the Scaled Agile Framework (SAFe) that aligns strategy and execution by applying Lean and systems thinking approaches to strategy, investment funding, Agile Portfolio Operations, and Governance. LPM is responsible for the highest decision-making and financial accountability for the solutions and development value streams in a SAFe Portfolio.

The individuals fulfilling the LPM function come from various roles and titles and are often distributed across different parts of the organization’s hierarchy. Executives and business owners who understand the financial, technical, and business contexts are accountable for the overall business outcomes, strategy, and investment funding and for addressing the challenge of aligning strategy with execution.

Portfolio Management is the highest-level planning process in SAFe, focusing on the definition, refinement, prioritization, and funding of business initiatives to be realized by programs and delivery teams. These initiatives, known as Epics in SAFe, are translated into implementable features once approved at the portfolio level.

LPM provides alignment and governance models for specific SAFe Portfolios, which contain a set of Development Value Streams (DVS) for a business domain within an enterprise. Each DVS is responsible for building, supporting, and maintaining solutions delivered to customers, whether internal or external to the enterprise.

Key Inputs & Outputs of Portfolio Management

Portfolio management is critical in aligning and funding strategies to create and maintain solutions that meet business targets. Several key inputs and outputs must be considered to ensure a seamless connection between Portfolio Management and the overall enterprise strategy.

Strategy and Investment Funding

This process guarantees that the entire portfolio is aligned and funded to achieve business objectives. The Portfolio strategy goes beyond prioritization and investment selection, requiring a deep understanding of the portfolio’s current state and plans for future development. Lean Portfolio Management (LPM) and stakeholders must create business and enabler Epics to feed the Portfolio Backlog.

Connecting the Portfolio to the Enterprise Strategy

The Portfolio strategy should support the organization’s broader objectives, making the connection between the portfolio and the enterprise strategy essential. The portfolio connects to the enterprise strategy through strategic themes and the portfolio budget and provides feedback via the portfolio context.

Portfolio Vision

Describing the future state of development value streams and solutions, the Portfolio Vision highlights the gap that LPM must address. To ensure effective collaboration across the portfolio, the vision, goals, ideas, and expectations must be communicated continuously and transparently.

Enterprise Architecture

This critical strategy and investment funding component translates the business vision and strategy into effective technology plans. Enterprise Architects promote adaptive design and engineering practices and facilitate the reuse of components and design patterns to expedite solution development.

Portfolio Roadmap

The Portfolio Roadmap integrates lower-level roadmaps into a comprehensive view, with initiatives in the roadmap influencing the direction and timing of solution roadmaps. The roadmap may span multiple years to account for longer-term initiatives, requiring Agile estimation methods.

By addressing these key inputs and outputs, organizations can effectively align their Portfolios with their enterprise strategies and pave the way for a successful future state.

Epics

Epics are significant solution development initiatives requiring a Minimum Viable Product (MVP) and Lean Portfolio Management (LPM) approval. There are two types of Epics:

  • Business Epics and
  • Enabler Epics.

Stakeholders must agree on the intent and definition of Epics developed and managed through the Portfolio Kanban system. Epics require analysis and the creation of a Lean business case, which the LPM reviews to make a go/no-go decision. Defining the MVP is essential for proving or disproving the Epic hypothesis. Estimating the costs of an Epic, both for the MVP and the full implementation, is crucial for understanding the potential investment required. T-shirt sizing is a simple way to estimate Epics, especially in the early stages.

It’s essential to clarify the difference between the term “Epic” in SAFe and its usage in the broader Agile world. In SAFe, Epics have a specific meaning, representing significant solution development initiatives requiring MVP and LPM approval. However, in the general Agile context, such as in Scrum, an Epic is often seen as a large user story with indeterminable size. This difference in terminology can lead to confusion when discussing Epics within the context of SAFe and other Agile frameworks. To avoid misunderstandings, ensure stakeholders know the specific definition of Epics in SAFe and how it contrasts with its meaning in other Agile methodologies.

Forecasting an Epic’s duration is crucial for proper portfolio functioning, though it can be challenging due to various components. To forecast duration, consider the Epic’s estimated size in story points, the historical velocity of impacted ARTs, and the percent capacity allocation dedicated to the Epic. Implementing Epics follows the Lean startup strategy of the build-measure-learn cycle, allowing for incremental investment and risk management. Depending on the hypothesis result, Epics can enter the persevere state or be dropped. ART and Solution Train Epics may also warrant LPM attention, requiring a Lean business case and review through the Portfolio Kanban system.

Creating and Managing the Portfolio Backlog

The Portfolio Kanban

The Portfolio Backlog is a crucial component in the SAFe framework. It captures and manages business and enabler Epics intended to create and evolve the portfolio’s products, services, and solutions. Lean Portfolio Management (LPM) is responsible for developing, maintaining, and prioritizing the Portfolio Backlog.

  1. Building and Refining the Backlog: LPM applies a flow-based approach to build and refine the backlog, ensuring Portfolio Epics are ready for implementation with an appropriate level of discovery and risk. Some activities involved in refining the Portfolio Backlog include reviewing new Epics, evaluating the Epic Hypothesis Statement, and prioritizing the backlog using Weighted Shortest Job First (WSJF) and other factors.
  2. Managing the Backlog with Kanban: The Portfolio Kanban system visualizes and facilitates the flow of Business Epics and enablers from idea through implementation. Portfolio Epics are developed and managed through the Portfolio Kanban system, where they proceed through various process states until they are approved or rejected. Epic Owners take responsibility for the essential collaborations needed for this task, while Enterprise Architects typically guide the enabler Epics that support the technical considerations for business Epics.

The Portfolio Kanban helps align strategy and execution by identifying, communicating, and governing the selection of the largest and most strategic initiatives (Epics) for a SAFe Portfolio. LPM is responsible for the Portfolio Kanban, which is often used during the strategic portfolio review and portfolio sync events to manage and monitor the flow of Epics.

Achieving a better future state requires the Development Value Streams to adopt a ‘one-portfolio’ mindset, where they cooperate to achieve the portfolio’s higher-level objectives and the broader aim of the enterprise. The Kanban’s design should evolve to match the needs of a specific portfolio and reflect continuous improvements to the process. These improvements may include adjusting WIP limits, splitting or combining Kanban states, or adding service classes to optimize Epics’ flow and priority.

Portfolio Kanban Workflow States

The workflow states describe an Epic’s stages, from initial ideation to completion. These states ensure that Epics are systematically analyzed, prioritized, and implemented based on their alignment with strategic themes and potential value.

  • Funnel : The Funnel is where all significant business and technology ideas are initially collected. Epics are described in the Epic Hypothesis Statement and are not WIP limited. If an idea doesn’t exceed the Epic threshold, it moves to the ART or Solution Train Kanban.
  • Reviewing: In this state, an Epic Owner refines and elaborates the Epic Hypothesis Statement with stakeholders. A WIP limit is typically specified. If the Epic isn’t viable or aligned with the portfolio’s strategic themes, it moves to the Done state.
  • Analyzing: Epics with high potential are further analyzed in this state. This involves collaboration among various roles, including Business Owners, Enterprise Architects, and Product Management. Activities include identifying solution alternatives, defining the MVP, establishing cost estimates, and creating the Lean Business Case.
  • Ready: Epics with the highest WSJF are pulled into the Ready state, periodically reviewed, and prioritized.
  • Implementing: Epics are implemented based on Participatory Budgeting or a similar process. The implementation step has two sub-states, MVP and Persevere.
    • MVP: Epics with the highest WSJF advance to the MVP state. Work on the MVP continues until the money allocated for the MVP has been spent or the hypothesis can be evaluated.
    • Persevere: If the hypothesis is proven true, the Epic advances to the Persevere state, and teams will continue implementing additional features and capabilities.
  • Done: An Epic is considered Done when sufficient knowledge or value is achieved, or it is no longer a portfolio concern.

Portfolio Flow

Portfolio Flow describes a state where Lean Portfolio Management provides a continuous flow of new Epics to Solution Trains and ARTs to achieve the portfolio’s vision and strategic themes. The LPM competency aligns strategy and execution by applying Lean and systems thinking approaches to strategy and investment funding, Agile Portfolio Operations, and governance. Improving the flow of customer value through the portfolio is a key economic driver for the enterprise.

This article explores eight flow accelerators that can address, optimize, and debug issues with achieving continuous value flow in the portfolio:

  1. Visualize and Limit WIP
  2. Address Bottlenecks
  3. Minimize Handoffs and Dependencies
  4. Get Faster Feedback
  5. Work in Smaller Batches
  6. Reduce Queue Lengths
  7. Optimize Time in ‘The Zone’
  8. Remediate Legacy Policies and Practices

By understanding these key flow metrics and using them with qualitative analysis, enterprises can identify improvement opportunities and further understand the portfolio’s current state.

Portfolio Operations

Agile Portfolio Operations coordinate and support decentralized ART execution and operational excellence, involving the Value Management Office (VMO), Lean-Agile Center of Excellence (LACE), Release Train Engineer (RTE), and Scrum Master/Team Coach CoP.

Key Activities

  1. Coordinate Value Streams: Manage dependencies and exploit opportunities that exist in the interconnections between value streams.
  2. Support ART Execution: LPM and LACE help cultivate and apply successful ART execution patterns, optimizing and addressing issues from Agile Teams, ARTs, and value streams.
  3. Foster Operational Excellence: LPM plays a leadership role in operational excellence, helping the organization achieve its business goals.
  4. Value Stream Management (VSM): LPM is accountable for establishing value streams and fostering operational excellence, with everyone playing a role in VSM.
  5. The Lean-Agile Center of Excellence (LACE): LACE facilitates Value Stream identification, communicates the business need for SAFe, integrates practices, provides coaching and training, and establishes objective measures for progress.
  6. From PMO to VMO: Transitioning from a traditional PMO to a Value Management Office (VMO) helps leverage specialized skills while adopting Lean-Agile practices. VMO activities include facilitating portfolio events, fostering decentralized PI Planning, and establishing objective metrics.
  7. Accelerating Flow: Focus on flow-based guidance, addressing impediments to flow, and fostering operational excellence. The LACE coaches RTEs and Scrum Masters/Team Coaches, while the VMO focuses on improving portfolio flow.

Roles and Responsibilities in Portfolio Management

In Portfolio Management, the Epic Owner (EO) is crucial in coordinating Epics through the Portfolio Kanban system. They work with stakeholders to define the Epic, create the Lean business case, and determine the Minimum Viable Product (MVP). Their main responsibilities include:

  1. Guiding Portfolio Epics: The EO guides Epics through the Portfolio Kanban system, collaborating with stakeholders and subject matter experts in various stages.
  2. Creating the Lean Business Case: EOs collaborate with various roles, such as Business Owners, System Architects, Solution Architects, Product and Solution Management, and Agile Teams, to size the Epic and provide input for economic prioritization based on Weighted Shortest Job First (WSJF).
  3. Supporting the MVP’s Development: After an Epic is approved, the EO works with Agile Release Trains (ARTs) to initiate the MVP’s development, following the SAFe Lean Startup Strategy to evaluate the business outcome hypothesis.
  4. Coordinating the Epic’s Development: If the Epic hypothesis is proven, EOs often play a significant role in coordinating its implementation across value streams. They collaborate with various stakeholders, participate in PI Planning, System Demo, and Solution Demo, and work with Agile Teams that perform research spikes, create proofs of concept, and mock-ups.

Epic Owners are essential for facilitating the implementation of the Epic, understanding its progress, and reporting to key stakeholders and Lean Portfolio Management (LPM).

Portfolio Governance

Lean governance supports oversight of spending, audit, compliance, expenditure, measurement, and reporting, involving the VMO, LACE, Business Owners, and Enterprise Architects.

Key Responsibilities

  1. Forecast and Budget Dynamically: Utilize a Lean approach to budgeting, replacing fixed, long-range budget cycles with a more fluid process. Adjust budgets on a cadence or when significant events warrant.
  2. Measure Portfolio Performance: Establish minimum metrics to measure portfolio performance, ensuring progress with strategy implementation, alignment of strategy and execution, spending within agreed boundaries, business outcomes improvement, and LPM competency improvement.
  3. Measure and Grow: Evaluate progress toward business agility and determine improvement steps with three measurement domains: Outcomes, Flow, and Competency.

Measurement Domains

  1. Outcomes: Measure business outcomes by defining Objectives and Key Results (OKRs) for Strategic Themes and Value Stream Key Performance Indicators (KPIs).
  2. Flow: Assess and improve the portfolio’s ability to deliver innovative business solutions quickly. Focus on flow time, load, and distribution.
  • Flow time: Measure the interval needed for all steps in the portfolio workflow.
  • Flow load: Monitor the number of Epics in the system by process state.
  • Flow distribution: Measure the amount of each type of work in the portfolio for a given time.

Lean Portfolio Management Events

The effective operation of LPM relies on three significant events: Strategic Portfolio Review, Portfolio Sync, and Participatory Budgeting. These events are usually held on a cadence.

  1. Strategic Portfolio Review: Provides ongoing strategy, implementation, and budget alignment, focusing on achieving and advancing the portfolio vision. Typically held quarterly, at least one month before the next PI Planning event.
  2. Portfolio Sync: Offers visibility into the portfolio’s progress toward meeting its objectives. With a more operational focus, topics include reviewing Epic implementation, KPI status, addressing dependencies, and removing impediments. Generally held monthly, it may be replaced with the strategic portfolio review on a given month.
  3. Participatory Budgeting: An LPM event where stakeholders decide how to invest the portfolio budget across solutions and Epics, finalizing adjustments to value stream budgets. Budgets are usually adjusted twice annually using Participatory Budgeting.

Conclusion

In conclusion, effective Portfolio Management in the Scaled Agile Framework is a vital element of planning and execution that ensures an organization’s strategic investments are aligned with its vision, objectives, and architecture. By implementing the key processes and practices of SAFe Portfolio Management, organizations can effectively prioritize their investments, optimize the flow of value across Agile Release Trains, and maintain the right balance between governance and agility. As we continue our series on SAFe Planning and Execution, stay tuned for the next installment, where we will explore additional concepts and best practices that enable organizations to navigate the complexities of the modern business landscape and deliver value to their customers consistently.