bimodal-portfolio-management

Bimodal Portfolio Management And Why It Matters For Your Business

Bimodal Portfolio Management (BimodalPfM) helps an organization manage both agile and traditional portfolios concurrently. Bimodal Portfolio Management – sometimes referred to as bimodal development – was coined by research and advisory company Gartner. The firm argued that many agile organizations still needed to run some aspects of their operations using traditional delivery models.

Understanding Bimodal Portfolio Management

Here, Gartner notes that “marrying a more predictable evolution of products and technologies (Mode 1) with the new and innovative (Mode 2) is the essence of an enterprise bimodal capability.”

Put differently, the enterprise does not need to choose solely between an agile approach or a traditional waterfall methodology. Both can be used interchangeably to achieve agility and stability, allowing businesses to successfully expand agile practices into other operations.

Bimodal Portfolio management principles

BimodalPfM combines principles from several existing approaches including DA, SAFe, and SfPfM. 

Here are some of the more pertinent principles:

  • Senior management commitment. Upper management must champion the value of BimodalPfM by backing up their words with actions and not delegating their obligations to others.
  • Alignment of governance, customer, and strategy. Active involvement of key stakeholders is encouraged, but portfolio governance must remain aligned with the wider organizational structure
  • Simplicity. The larger or more complex the project, the higher the chance that it will fail. Businesses should use the iterative and incremental nature of agile principles to their advantage.
  • Flexibility. To continuously re-evaluate opportunities, decision-makers should implement a rolling wave over an annual plan. Too many organizations create an annual plan in the knowledge that major changes are likely to render it obsolete. Agility in this area reduces costs associated with delays, losses, and plan revisions.

Five key components of Bimodal Portfolio Management

While BimodalPfM is an effective strategy, many advocates concede that the bimodal approach can create obstacles to delivery speed.

However, these obstacles can be overcome by considering five key elements:

  1. Dependency management. If a team with the right to prioritize its own work is dependent on others for an outcome, a dependency management strategy should be created to reduce delays. 
  2. Work and delivery teams. How do teams engage with other teams across delivery methods to achieve desired outcomes? Is the process efficient? Saving time here means that teams clearly and concisely articulate the terms of engagement.
  3. Culture. In the context of BimodalPfM, culture means that staff have respect for alternative delivery models – regardless of whether they are agile or traditional. There should be more of a focus on practicality and less debate on which method is superior.
  4. Funding. Before beginning, it’s important to clarify funding agreements for work that is being shared by both models. Recognize that Project Funding and Capacity Funding are different models and as a result, require different decisions.
  5. Decision making. Agile methodologies favor de-centralized decision making which invariably challenges the centralized governance structure common in many organizations. To increase decision-making speed, it is once again important to clarify the most effective model beforehand. Furthermore, businesses should always remember that it is in their best interests to make fast and accurate decisions.

Key takeaways

  • Bimodal Portfolio Management allows a business to de-risk agile change management initiatives by utilizing a mix of agile and traditional methodologies.
  • Bimodal Portfolio Management borrows concepts from many other agile frameworks. Primarily, BimodalPfM works best when there is complete buy-in from upper management and alignment of governance, customer, and strategy
  • During implementation, Bimodal Portfolio Management can create delivery speed issues. Some of these issues can be overcome by determining whether agile or traditional approaches are best suited to a particular context.

Connected Business Concepts

Double-Entry

double-entry-accounting
Double-entry accounting is the foundation of modern financial accounting. It’s based on the accounting equation, where assets equal liabilities plus equity. That is the fundamental unit to build financial statements (balance sheet, income statement, and cash flow statement). The basic concept of double-entry is that a single transaction, to be recorded, will hit two accounts.

Balance Sheet

balance-sheet
The purpose of the balance sheet is to report how the resources to run the operations of the business were acquired. The Balance Sheet helps to assess the financial risk of a business and the simplest way to describe it is given by the accounting equation (assets = liability + equity).

Income Statement

income-statement
The income statement, together with the balance sheet and the cash flow statement is among the key financial statements to understand how companies perform at fundamental level. The income statement shows the revenues and costs for a period and whether the company runs at profit or loss (also called P&L statement).

Cash Flow Statement

cash-flow-statement
The cash flow statement is the third main financial statement, together with income statement and the balance sheet. It helps to assess the liquidity of an organization by showing the cash balances coming from operations, investing and financing. The cash flow statement can be prepared with two separate methods: direct or indirect.

Capital Structure

capital-structure
The capital structure shows how an organization financed its operations. Following the balance sheet structure, usually, assets of an organization can be built either by using equity or liability. Equity usually comprises endowment from shareholders and profit reserves. Where instead, liabilities can comprise either current (short-term debt) or non-current (long-term obligations).

Capital Expenditure

capital-expenditure
Capital expenditure or capital expense represents the money spent toward things that can be classified as fixed asset, with a longer term value. As such they will be recorded under non-current assets, on the balance sheet, and they will be amortized over the years. The reduced value on the balance sheet is expensed through the profit and loss.

Financial Statements

financial-statements
Financial statements help companies assess several aspects of the business, from profitability (income statement) to how assets are sourced (balance sheet), and cash inflows and outflows (cash flow statement). Financial statements are also mandatory to companies for tax purposes. They are also used by managers to assess the performance of the business.

Read Next: Business AnalysisCompetitor Analysis, Continuous InnovationAgile MethodologyLean StartupBusiness Model InnovationProject Management.

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