Principle #3 of capacity planning, matching demand to supply, stresses the importance of making choices. It’s necessary to match overall portfolio demand with capabilities and capacity supplied by existing teams in the short-term, while shaping both the demand and supply sides of the portfolio for the long-term. Matching demand and supply looks deeper than just allocating resources to include the interactions between multiple sources of demand and the capabilities of the available teams. The result is more effective value delivery, aligned with overall business strategy by focusing on completing high-priority initiatives.
Successfully managing a technology portfolio is primarily about prioritizing choices that will deliver the most value for the business. This often means making trade-off decisions to match overall portfolio demand with available capabilities and capacity.
Portfolio demand isall the possible work the organization is asked to deliver and may come from different sources and be requested in many forms. Since balancing demand with supply is so important, it’s critical to understand all sources of demand. This means all opportunities must be considered as part of a technology portfolio including activities for business as usual and maintenance.
Let's refer to business demands as initiatives to simplify this discussion.
- A purpose and clear end result achievable in a meaningful timespan
- Business justification for funding and prioritization
- Forecasts for cost/effort and benefit/value
A “roughly right” match can be made to prioritize initiatives that fit current and future supply. Product managers or business owners create the list of marketable features needed to achieve an initiative.
The biggest constraint for technology portfolios in today’s highly competitive climate is the supply of effective knowledge workers, who can take 6-18-months to hire and train.
Portfolio supply is realized by the people, technology and other resources that, combined, have capability and capacity to deliver solutions to the business. Portfolio managers should also find hidden costs to conceive, justify, plan, launch and utilize new initiatives from product managers and business owners.
Matching Demand to Supply
Value streams are a useful concept from Lean thinking to help us understand better ways to match demands with supply. From a technology development perspective, a value stream is the process from concept to launch and measurement of the financial results--or “concept to cash”.
The business will also have other important value streams. End-to-end scenarios or workflows for how the business delivers value to customers and stakeholders represent business value streams. Optimizing value streams is often the focus of different business units within a larger enterprise. These business value streams help provide better understanding of customer and stakeholder problems and collaboration on solutions. Responsible business units are often demand sources--requesting new capabilities, enhancements, changes or just fixes.
In smaller organizations or isolated situations, it’s sometimes possible to directly align the “concept to cash” delivery stream with the business value stream.
Delivery streams are often aligned with software products, applications, or platforms that have a delivery group with assets such as a technology stack and its teams. In Principle #1 of capacity planning teams are the “currency”. When scaling up to the enterprise level, it’s useful to have a larger unit of “currency” by combining teams that work on a given delivery stream into a delivery group, similar to an Agile Release Train, as expressed in the Scaled Agile Framework® (SAFe®). Using Agle Release Train as a higher-level unit helps with longer-range planning.
Traditional project and portfolio management often focuses on the critical path and resource utilization for each project, without taking into account conflicts and collisions with other projects. Visualizing a value network exposes interactions across projects and programs to better match demand and supply.
Visualize a Value Network
Visualize a value network by separating delivery streams from business value streams and better match demand with supply by:
- Determining which delivery groups can best supply the marketable features requested for a given initiative
- Reality-checking that total demand from multiple initiatives fits the capability and capacity available across different delivery groups
- Preparing realistic feature backlogs for quarterly mid-range planning by each delivery group
- Supporting longer-term planning for how future hiring or contracting needs shape supply to meet demands, 6-18 months out
Continue Reading: Principle #4 of Capacity Planning