Partner Article

Principle #4 of Capacity Planning: Continuous planning cadence

Previous capacity planning posts have covered “the team as the resource unit,” “getting it roughly right,” and “matching supply to demand.” In this blog we’ll focus on the importance of adopting a continuous planning cadence to more effectively adapt to changing business demands. Establishing a continuous planning cadence improves business performance because you are much more likely to hit your targets by steering than by following a predetermined plan. Plans become less certain over time; this is especially true in the complex and fast-paced world of technology and software development. When following a predetermined plan, many businesses waste considerable time and effort tracking variance from an annual plan when they would be better-served by steering to the changing nature of the market and taking advantage of learning to make better decisions.

Continuous Planning Leverages Natural Rhythms

Incremental and iterative planning/development cycles are a core characteristic of Agile development. By adopting a continuous planning cadence, organizations can leverage the natural rhythms of their existing calendar and become more effective and responsive. Most organizations do monthly and quarterly financial statements; most plan an annual budget for the coming year. Many departments and workgroups have regular status meetings or even daily standups. Adopting a continuous cadence changes the nature of planning and budgeting from a series of events, where a plan or budget is “done,” to a recurring and ongoing activity. This principle improves capacity planning in both the near-term and long-term: when existing delivery groups and teams do continuous planning, they optimally prioritize capacity for the highest value in the near-term; and over the long-term, plans for reshaping capability and capacity to meet future demands support growth strategies.

Traditional annual planning can be a major roadblock to improving business performance when it’s the predominant time that resources are allocated to specific projects or programs. It’s a bit like having a small business with an exciting new opportunity that needs a loan to fund it, but then the local bank says, “Come back in October when we make that kind of loan.” Unfortunately, by October, the opportunity has passed.

Forecasting for the next 12 months is another purpose of annual planning. Unfortunately the traditional once-a-year planning and budgeting event doesn’t light the road ahead as clearly as a continuous planning cadence. At the beginning of the year you have 12 months of forecast visibility; but as you drive further into each year, your forecast visibility gets shorter and shorter. A continuous planning approach can always light the road ahead at least 12 months.

Continuous Planning Cycles

Instead of annual or quarterly events where “The Plan” is locked in, it’s more effective to think of planning cycles with a rolling time horizon for how far out you want to look.

Sample planning cycles and typical time spans:

• Strategic Vision: 3-5+ Years
• Long-range Business Commitments: 1-3+ Years
• Forecasting and Budgeting: 12-18 mo.s
• Prioritization: 3-6 mo.s
• Value Delivery: < 3 mo.s

Planning cycles imply different levels of decision-making. It’s important to clarify the purpose of planning within each time span. One of the primary purposes of forecasting and budgeting is to make high-level investment decisions. The prioritization planning cycle is more tactical where its purpose is to deploy available resources to achieve quarterly goals that best serve the overall organization.

Having a continuous planning cadence means these different planning cycles run concurrently. What used to be a once-a-year annual budget can become a continuous forecasting and budgeting cadence that’s updated on a quarterly basis, to always look 12 months into the future. You can also be working a continuous cadence for the quarterly prioritization planning cycle, with more detailed feature requirements ready for delivery groups and teams to pull when they’re ready to work on them.

Planning cycles with longer or shorter time spans require different levels of detail. The “roughly right” threshold for elaborating details changes from one level of decision-making to the next. Much more is known about the next quarter than about next year, so it makes sense to include more tactical details when prioritizing available resources for the coming quarter than to try and guess the same level of detail in an annual plan.

General Guidelines for Steering Planning Cycles

• Gather just enough information to make necessary decisions
• Don’t force unknowable details to be elaborated up front
• Plan for discovery—instead of locking-in a plan, create options to make better decisions later when you know more
• Whenever possible, defer decisions until the last responsible moment

Adopting a continuous cadence optimizes capacity planning by allowing a better match of supply and demand, using the level of detail that’s just right for each planning cycle time span.

This was posted in Bdaily's Members' News section by Rally Software .