We’ve talked elsewhere about how EAP can provide sophisticated strategic resource planning and capacity planning. In those cases, the concerns were mostly around staffing—making sure key projects had the right people at the right time and anticipating and addressing staffing shortages. But other resources can benefit from this approach as well. Money, for instance—always needed and often in short supply. EAP’s strategic portfolio planning capabilities can help you figure out the best way to deploy a defined budget. The process isn’t far different from the kind of holistic portfolio review we generally advocate, but it is tailored to accommodate the strictures of a budget-driven R&D program.
Funding a Six-year Plan
One of our clients had a particularly well-defined investment cycle. Because it was federally funded, the organization worked on a six-year funding schedule. Each year, the government provided a budget detailing how much money would be available to the organization in each of the coming six years. With that information in hand, the organization’s yearly portfolio review involved prioritizing its technology initiatives and determining which ones it could afford to support given the promised funding. In the ideal process, the organization would create a plan for the entire funding period, which would then be updated and adjusted each year to account for the actual progress made by each initiative as well as changes in the actual funding, and then extended as the six-year plan rolled forward.
In reality, though, both the planning and updating processes had become seriously bogged down. Managers struggled with all three aspects of the process—collecting information about active initiatives from technologists across the organization, prioritizing the initiatives, and determining how to fit the initiatives into the funding schedule. With incomplete data, consensus on what set of initiatives to pursue was elusive, and the decision process dragged on for months. The lack of decision delayed new projects and left existing projects in a state of limbo. The impact was felt in confusion, frustration, and delays across the organization.
Clearly, a streamlined process was needed, both to ease data collection (and ensure data were complete and accurate) and to facilitate prioritization and portfolio planning. When the client came to us for project prioritization software, we created an instance of EAP specifically tailored to the organization’s budgeting process.
Aligning the Solution with the Problem
We began the customization process by developing a set of scoring criteria for the initiatives being considered. The review process began when technologists logged in to the tool and submitted proposals for new initiatives. Then, each senior manager logged in to individually review and score each proposal against the criteria, which were integrated into the interface. This meant that the final review meeting could be very focused, first on resolving scoring discrepancies and then on assessing the portfolio as a whole. As a result, it was much easier to gain consensus on a prioritization of the initiatives. The outcome of the meeting was a ranked list of all active and proposed projects.
The EAP software allowed managers to prioritize projects and then to see how those rankings interacted with funding schedules.
That ranked list was then assessed in the context of the available funding. EAP tools were helpful in streamlining this assessment. Using an optimization algorithm, EAP identified how many initiatives could be supported within the funding schedule, taking into consideration required completion dates for particular initiatives and dependencies on outcomes of other initiatives. EAP’s “what-if” tools allowed the management team to consider the impact of changing government funding on its plans by creating and evaluating portfolios for a variety of funding scenarios. The optimization and what-if analyses, taken together, gave the team the tools it needed to determine the best set of initiatives to fund, and the scheduling of these initiatives, to meet the organization’s strategic goals.
The Payoff
The result was a much smoother and shorter decision process that generated consensus much more quickly. EAP’s capabilities also provided other important, if unanticipated dividends: Project managers appreciated the increased transparency of the new process, which helped them understand why cancelled initiatives were not funded. And the insights generated by our project prioritization software tools helped the organization to more clearly justify its choices to the funding agency. Impressed with the rigor of the process, the agency signed off on the organization’s proposed agenda more quickly and with fewer questions.
This organization’s story shows how even an apparently straightforward prioritization exercise—matching projects to available funding—can benefit from a holistic approach. A robust process, paired with the power of EAP, can not only streamline portfolio reviews, but also support strategic decision making in other ways.
About Enrich
Each year, tens of billions of dollars in R&D investments are shaped, allocated, and refined with the help of Enrich’s EAP. Are you interested in learning how we can help streamline your portfolio reviews, turning months of long nights and frustration into a value-enhancing, confidence-affirming exercise for your R&D organization? Contact us, and learn what our clients already know about the value of the Enrich Analytics Platform.
