Lean Budgeting

We are delighted to announce the introduction of a new suite of solutions that encompasses the Lean Budgets approach provided by the Scaled Agile Framework.

The initial release of the solution does not incorporate the Participatory Budgeting event, but it does encompass the following significant aspects of Lean Budgets:

1. Funding Value Streams through Planning Intervals
2. Epic Hypothesis Statement (EPH) and Lean Business Case (LBC)
3. Calculation of Portfolio Epic Minimum Viable Product (MVP) Cost
4. Lean Budget Guardrails

For comprehensive information on all the solutions within the Lean Budgets set, please refer to the corresponding articles.

Funding Value Streams by Planning Interval

A crucial aspect of Lean Budgets is the capacity to fund Value Streams by Planning Interval, rather than funding Projects on an annual basis. This concept is facilitated by the Budgeting by Custom Period solution that was introduced some time ago. This solution enables the funding of Value Streams based on Agile Release Trains (ARTs) Proposed Budgets within custom Periods (Planning Intervals), while also providing the capability to track Actuals for each Period.

Epic Hypothesis Statement (EPH) and Lean Business Case (LBC)

Since Portfolio Epics are some of the most significant enterprise investments, stakeholders must agree on their intent and definition. The solutions enable a Portfolio Epic Hypothesis Statement (EHS) and Lean Business Case (LBC) templates for capturing, organizing, and communicating critical information about a Portfolio Epic, such as Funnel Entry Date, Key Stakeholders, Epic Hypothesis Statement, Business Outcomes and Leading Indicators, MVP Scope, Non-Functional Requirements definition and more:

Work Estimated Cost and MVP Cost

With these solutions you can get an Epic or Feature Estimated Cost based on its Initial Estimate in points and an assigned Agile Release Train's (ART) or Team's Cost per Point. For example, if a Team estimates a Feature as 100 points, and this Team's Forecasted Cost per Point for the is 300 USD, the Estimated Feature Cost will be 100*300=30000 USD.

And further calculate the MVP Cost of a Portfolio Epic.

Lean Budget Guardrails

Lean Budget Guardrails describe the policies and practices for budgeting, spending, and governance for a specific Portfolio.

There are the following Lean budget guardrails supported by the solution:

• Guiding investments by horizon
• Applying capacity allocation 
• Approving significant initiatives

Guiding investments by horizon

Portfolio investments are organized by investment horizons that reflect four-time horizons. The amount of budget a given Value Stream allocates to Solutions in these horizons determines the near- and long-term health of both the Value Streams and Portfolio.

Now you can set Horizon Targets for each Portfolio and calculate actuals based on Features planned by Agile Release Trains in PIs to make sure you are focusing on the right Horizon Products:

Applying capacity allocation

Balancing business features and enablers complicates prioritizing work since different forces can pull the teams in different directions. One solution to this challenge is that Value Streams (and ARTs) apply capacity allocation as a quantitative guardrail to determine how much of the total Effort can be allocated for each type of activity for an upcoming PI - Business, Enabler or Technical Debt. Each value stream should adapt the capacity allocation categories.

By establishing Capacity Guardrail Targets and assessing the Actual percentage of Features planned of each Value Type in PIs, you ensure that you prioritize the work that aligns with your preferences, while avoiding tasks you are not interested in.

Approving significant initiatives

While each Value Stream is funded to promote empowerment and local decision-making authority, it is reasonable to ensure that significant investments are governed responsibly. Portfolio Epics go through a decision filter to determine whether or not it exceeds the Portfolio Epic threshold, which LPM establishes.

Approving Significant Initiatives guardrail allows to clearly see the Portfolio Epics which require LPM approval based on their Total Allocated Cost, Estimated Duration and Strategic Importance.

You may find some of the solutions in the Solution Library, some of them need to be enabled by Apptio Targetprocess PS Teams or Partners.

Here is the overview of Lean Budget solutions:

• Budgeting by Custom Period
• Requirement Enablement
• Work Estimated Cost
• Epic Hypothesis Statement (EPS)
• Lean Business Case (LBC)
• Value Stream Enablement
• Lean Budgeting: Portfolio Epic MVP Cost
• Work Allocation Forecasted Cost based on Estimate and Cost per Point
• Capacity allocation by value type: Business, Enabler, Technical Debt
• Lean Budget Guardrails