Scaling agile portfolio management for large enterprises

Everybody seems to agree that agile methodologies are best practice. Pretty much all the customers I work with are agile to at least some degree, and typically have a multi-speed (or “bi-modal”) operating model consisting of entirely new businesses that have been built agile from ground-up and older legacy businesses that work with more traditional, slower clock speeds.

Agile portfolio management

However, after the initial enthusiastic wave of adopting agile methodologies is over, most companies seem to hit a stone wall. Agile just doesn’t seem to fit big businesses. And I’m not talking only about old giants, encumbered by legacy systems and large organizations. I see this even in new school technology companies.
There’s a gap between business strategy and what the agile teams are doing. Nobody seems to be able to link individual teams’ activities to the big picture of enterprise strategy. IT struggles to prove its alignment with business goals.

Interdependencies start creeping in and coordination between different, self-contained teams becomes difficult. For example, although your CRM development may be agile, its progress may be blocked by issues with the ERP – which has a one-year release cycle. The legal department may want a cumbersome regulatory acceptance process before go-live, which thus forms a waterfall gate in the process.

How do you scale agile from a bunch of small teams to larger, strategic projects and an enterprise-wide way of working – without losing agility?

Agile portfolio management

The answer is clear. You need a comprehensive agile portfolio management system reaching all the way from the company’s strategy to individual agile teams:

– The corporate strategy process clock cycle needs to be intensified (e.g. a rolling 3-month cycle), and there needs to be more constant feedback from both customers and operations back to decision-making.

– There needs to be a process for cascading the strategy to a portfolio of themes, within given financial and resource constraints, as well as a governance structure and portfolio-related ownership.

– If it doesn’t already exist, a clear program management layer must be built for the purpose of prioritizing projects arising from large, strategic initiatives into more operational projects, and bundling groups of e.g. 5-10 project teams under unified management (e.g. those with a shared vision and backlog, as well as common coordination).

The changes may be significant, but the benefits will be tangible. You’ll get more innovations and shorter lead times for testing new ideas. Employees will be happier, because they’ll understand the big picture and find purpose in what they’re doing. You’ll increase the alignment between IT and business. Due to the continuous updating of business cases, it will be easier to kill projects that aren’t delivering, or are no longer strategic. You’ll get more trust and transparency throughout the enterprise.

Many customers have adopted the Scalable Agile Framework (SAFe). It’s a robust approach, but only a part of the solution. It does not cover the full scope of changes required for an agile enterprise – in other words, how to make a high-level corporate strategy process more agile. And ultimately, all frameworks and governance systems require tailoring to your organization. You need a comprehensive system without gaps that fits the purpose and suits your needs. And that’s something you can’t just buy off-the-shelf.

Toni Heinonen works as a Senior Manager in KPMG’s Global Strategy Group. He has 17 years of experience in management consulting, ranging from growth strategies and M&A to large-scale transformation projects. Toni has worked extensively with technology, media, telecoms, consumer services and other industries that have been heavily disrupted by digitalization.

Outside of his work, Toni enjoys jogging, outdoor activities with his dog, playing musical instruments, and photography.