Many organizations have Long Range Planning (LRP) during the spring, and this may be sometimes a source of confusion and also – frustration.
Here a few typical questions and concerns: Why do we need to do this? Who needs this information? We already have our roadmap, so why use the planning template? What, no template provided this year? We do not yet know the details of next year, as we are working with agile methods. Our strategy will be updated this year, so we cannot yet do planning for the next strategy round… Really, do we start the budgeting already in April this year, we just finally concluded this year’s funding details!!!
Yes, creating future plans is never easy, but the whole process can be made a bit smoother. I try to summarize 5 tips for Smoother Longer Range Planning for Development Portfolios! Would you have other tips to share?
What is this LRP?
When discussing with different teams, a common question is, what does LRP actually mean. Here is how I usually explain it:
Many organizations have bi-annual planning cycles – first looking into long range plans (LRP) during Q2, and budgeting at the end of the year. The idea is not to do detailed budgeting in the spring but to identify big development initiatives, which would create significant business benefits, and also require investment funding. And also to make prioritization decisions of what is not in the plans, to create focus and alignment.
The long range planning process is focusing on the future – what are the key development initiatives and programs, new product lines, or offerings planned? Typically the planning horizon for LRP is 1-5 years – plans are more accurate for the next year, and more indicative for the next 2 or 5 years.
Long range planning (LRP) is typically lead by the finance function, although development portfolios contribute significantly by providing planning scenarios.
Long range planning scenarios
One of the tools for Long range planning is building different kinds of scenarios. Here are few scenarios, which might be interesting to look into:
- If we can do all we want -scenario – what would we develop?
- If we keep the current investment level – scenario – what would be included in our plans?
- If we need to do budget cuts of x% scenario – which items are must haves?
- If we invest into new offerings or business models scenario – where would we invest in?
- If we do this huge ERP renewal consuming a lot of resources – what should we leave out?
So depending on the portfolio, different planning scenarios may be good openings for discussion and prioritization. Also many portfolio management tools provide support for scenario planning.
How about agile teams?
For agile teams, backlog and features are often prioritized quarterly, or monthly. However, it is good to have also high level roadmap and vision. Let’s review what LRP could me for different agile teams?
- Agile Program teams – what is the high level roadmap or vision for the program? What key business outcomes planned? Big epics or themes part of the future vision?
- Continuous development teams – will the development need be stable, or is there a need to grow the team due to increased demand? Or is the solution already in a mature phase, and less development is needed?
- Agile product teams – what is the high level roadmap and vision for the product line? Developing new products or launching new offerings? Retiring some products? Changing a technology platform or building strategic partnerships?
But let’s have a loot at the 5 tips to make LRP process smoother:
1. Start early enough
Align with your finance team on schedules and start early enough, so that you will have enough time to prepare for LRP.
If the time for creating the plan is very short, key stakeholders get stressed, and the end results may not reach your quality standards. Typically also several iterations and discussions are needed.
2. Find the correct level of detail – top down or bottom up approach?
Think about what is the correct level of detail for your LRP – would a high-level understanding be enough, and use a top-down approach for collecting the development ideas with the leadership? Or would you like to involve smart team leads, program managers, and owners in the discussion, as they know the content best?
If you involve all teams for collecting the ideas, and do the planning bottom-up, the work may be quite heavy and take a lot of time across the organization.
So my recommendation would be to keep it as simple as possible, but involve the people, who have the vision!
3. Use a tool or simple template for consolidating the information
If every team provide the information in a different format, it is impossible to see the big picture. Apples are compared to bananas and what ever fruit salad.
If you have a portfolio management tool in use, look into options to utilize the scenario planning functionalities. When using the same format for roadmaps tools provide, pulling information together is also easier. I have been looking into the ideas module and road mapping of our portfolio management tool this year and will try to utilize those for data consolidation.
If you do not have a tool available, simple template may be helpful to keep the development plans in a similar format. Some people hate the templates, others just need to have them to provide guidance.
4. Schedule reviews and prepare for iterative alignment
Schedule reviews and prepare for iterations – typically the discussions related to LRP may take several iterations, as it may be the first time to bring the plans from different teams together.
Long range planning is a great time to create alignment across business and technology units and in the enterprise level:
- What are our development portfolio focus areas for the next years? What planning scenarios do we have?
- What are other business units focusing on? Can we find synergies? Do we have dependencies?
- What would be the investment funding need for the next years?
- Is our portfolio balanced? (See the previous blog post: Is your development portfolio balanced across different time horizons?)
- What support would we need from other units and functions, e.g. from R&D or IT to be successful?
- And other way around, what demand do we get from different business units? Do we need new technology investments or build up new capability areas?
- What new content will be deployed to our sales organizations from different global portfolios?
- What run cost impacts would we expect from the development roadmaps?
- And in enterprise level – can we afford to do all of this development? Should we sequence some of the big initiatives?
This is actually really important, and for me, in the heart of the LRP process. It is not only about the finances, it is about the content.
5. Keep portfolio pipeline up-to-date and adapt to change!
If you have a portfolio pipeline up-to-date throughout the year, LRP would focus more on prioritization and look further into the future. Read more about the portfolio pipeline from the previous post!
If your portfolio data gets out of shape during the year, it will always be a big effort to create your plans. First for LRP, and then for budgeting, and again next year…
Also typically first changes or surprises happen already in January – a new must have project or M&A, or something similar happens. The past years have been full of big surprises from the market and political environment – and impacting also the plans. When you have transparency on your current plans, it is easier to also change the plans. Quarterly reviews and rolling planning are also great approaches (see previous blog post: Time for Quarterly Portfolio Review? and From managing past cost to rolling forecasting). I would love to learn more about integrated business planning (IBP) and how it works in the big complex organizations, too.
Strategic Portfolio Management 
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