Portfolio management – CSPs financial agility
October 20, 2020
RESEARCH REPORT
In brief
In brief
- Financial agility is key to enterprise agility - reducing time to market, shortening release cycles, making organizations leaner.
- Organizational structures in IT-near business areas must be aligned with agile ways of working in order to unlock the added value of agile delivery.
- Resource allocation along value streams reduces admin work and shifts the efforts into real value and impact discussion.
- Value realization frameworks foster agile financing through transparency on benefits, entrepreneurial accountability and closed feedback loops.
Unlocking true enterprise agility
Our clients across the globe are embarking on digital transformation journeys. At some point all of them feel the need to become nimbler and able to react faster to changing customer needs – Lean Portfolio Management (LPM) is a way to foster this. Within LPM, financial agility is a core pillar and the backbone of an agile enterprise.
Today’s point of view of focuses on 3 levers to drive financial agility:
- Organizational structures from the past often lack the modularity and flexibility to enable new ways of working that are built around the idea of quick iterations and fast-moving feedback cycles.
- Traditionally, organizations fund projects. However, to unlock enterprise agility, funding and budgeting needs to support continuous flow of value.
- Transition into incremental value delivery requires adjustments to value management in order to retain transparency on progress on scope and benefit realization.
Today, functional silos and project setups guide budgeting. Tomorrow, resource allocation and controlling follows value streams and agile release trains aiming to enable a continuous value chain.
Why is this relevant for you?
Lean Portfolio Management (LPM) is a multifaceted approach to embed agile ways of working deeply into your organization – inter alia and particularly business units adjacent to your IT organization. Thus, LPM and primarily financial agility must be a priority for any business and IT leader pursuing enterprise agility.
Traditional ways of working and agile enterprise
Traditional ways of working
- Linear value chains lead to lengthy decision making and slow iteration cycle speed.
- Old school ways of working are built around centralized decision making.
- Yesterday’s way of working is characterized by fixed scope projects, long-term planning and rigid budget.
Agile enterprise
- Non-linear value chains unlock financial agility which enables quicker decision making and a build, test learn mindset.
- Decentralised decision making ensures buy-in of all relevant parties – essential for transformational projects.
- Rapidly changing customer needs require adaptable planning and the ability to quickly change focus.
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What pain points are addressed?
While basic agile transformations of IT delivery organizations are regularly done successfully, holistic enterprise agility is seldomly achieved.
Agile business processes, especially financial structures seem to be among the most challenging pieces on the way to unlocking enterprise agility.
The benefit of agile delivery can only come into full effect when combined with agile business processes. When newly introduced, agile ways of working allegedly cause a lack of transparency on business benefits achieved. LPM respectively financial agility is not only an enabler to enterprise agility but serves also as an instrument to create full transparency on value realization.
Decentralised working and decision-making
is supported by lean portfolio management
Focus on business value
Use of developmental resources in close coordination with the strategy and a focus on business value
Rapid adaptability
in reaction to changing business priorities and plan deviations
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Value management
Managing and realizing value in an agile context is a key component of lean portfolio management. The non-linear value chains in the new, agile context require and update to our understanding of value and how to manage it.
1. Define value
- Define value driver trees
- Build top down business case
- Identify key performance indicators
2. Commit value
- Assign value
- Get commitment
- Create value roadmap
3. Track value
- Track & report value
- Intervene
- Continuous improvement
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Today, funding and cost accounting is project focused. Tomorrow, value stream budgets are adjusted dynamically, and participatory budgeting is applied.
What is the benefit of applying LPM?
Harvesting the value of enterprise agility through financial agility” cards?
1. Organizational Structure
Organizational structures in IT-near business units are aligned to the agile ways of working to unlock the added value of agile delivery.
2. Financing
Resource allocation along value stream reduces admin work and shifts the efforts into real value and impact discussion.
3. Business cases and value management
Tools like value realization office foster agile financing with transparency on benefits, entrepreneurial accountability and closed feedback loops.
4. Summary
Lean portfolio management offers a broad set of concepts to drive business agility and bring IT and business agile ways of working into sync.
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Meet the team
filter result
Stephan Schneider
Managing Director – Communications, Media and Technology Lead for Switzerland
Thomas Knuchel
Senior Manager – Strategy and Consulting Communications & Media Industry Consulting Lead Switzerland
Dominik Zurbuchen
Consultant – Strategy and Consulting Communications & Media Industry Consulting Switzerland
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