Horizontal and vertical capacity allocation in SAFe®

In the Scaled Agile Framework (SAFe®) capacity allocation is an instrument used to balance short-term business value with long-term sustainability. With capacity allocation the work for Agile Teams, Agile Release Trains, Solution Trains and even in Portfolio is divided into different categories.

Balance between business value and sustainability

Capacity allocation in the Scaled Agile Framework (SAFe) is an essential tool for ensuring the balance between short-term business value and long-term sustainability. Agile organizations often focus heavily on implementing new stories, features, capabilities, and epics because these generate directly measurable customer benefits. However, if technical debt, architecture work, or even exploratory enablers receive too little attention and are therefore often neglected in the prioritization of team, ART, solution, or portfolio backlogs, an imbalance will arise sooner or later: innovation is inhibited, systems age faster, and flexibility decreases.

Categories of capacity allocation

Assuming that we cannot complete all tasks, capacity allocation is used to distribute the available capacity of a team, an Agile Release Train (ART), a large solution, or the portfolio in advance of the respective planning to different categories of work – typically the following categories (without claiming to be exhaustive):

• Stories, features, capabilities, or epics
• Enablers at all levels (exploration, architecture, infrastructure, and compliance)
• Technical improvements and reduction of technical debt
• Maintenance
• Operational support
• Incident management

This conscious control ensures that teams, agile release trains, solution trains, or portfolios are not exclusively caught up in the “urgencies of day-to-day business,” but can invest in different categories of work in a balanced and meaningful way without having to prioritize them against each other.

Transparency and governance through capacity allocation

A clearly defined capacity allocation approach increases transparency by making this segmentation explicit and promotes discussion between business and technology regarding the health of the product. Instead of fighting over resources in every planning session, a framework is created that facilitates prioritization and enables continuous development. It is important that the selected quotas are reviewed and adjusted at regular intervals, as markets, technologies, and corporate goals and requirements are subject to change.

When applied correctly, capacity allocation makes the difference between a reactive feature factory and a learning, resilient organization that delivers sustainable value.

Horizontal capacity allocation

I call this area of application “horizontal capacity allocation” because categories of work are structured according to capacity at the respective levels in SAFe®. This agreement is usually made by the respective leadership trio (content authority, design authority, way of working):

• Team
  • Content authority: Product owner
  • Design authority: Agile team
  • Way of Working: Scrum Master/Team Coach
• Agile Release Train
  • Content Authority: Product Management
  • Design Authority: System Architect
  • Way of Working: Release Train Engineer
• Solution Train
  • Content Authority: Solution Management
  • Design Authority: Solution Architect
  • Way of Working: Solution Train Engineer
• Portfolio
  • Content Authority: Solution Portfolio Management or as part of the Strategic Portfolio Review
  • Design Authority: Enterprise Architect
  • Way of Working: Solution Train Engineers/Release Train Engineers/Lean Agile Center of Excellence/Value Management Office

Note: The slight variation in the portfolio is due to the implementation of the Lean Portfolio as a function.

Challenge: Lack of capacity for strategic initiatives

In the past, I had to deal with a different problem with several of my customers, but it was resolved with the help of a modified capacity allocation approach.

As described in the previous section, there is a leadership trio at each level, and within this leadership trio there is a role with responsibility for content authority. Among other things, this role is linked to the ability to add stories, features, or capabilities to the respective backlogs:

• Team: Team Backlog
• Agile Release Train: ART Backlog
• Solution Train: Solution Backlog

These clients repeatedly encountered a phenomenon whereby strategic initiatives were typically supposed to be launched from the Lean Portfolio (i.e., the respective epic and lean business case had been prioritized and approved by Lean Portfolio Management). As is well known, the next step is then to implement the epic's minimum viable product (MVP). The policy associated with this step in Portfolio Kanban is as follows: “Pull when train capacity and budget available.”

These customers then experienced a conflict between Lean Portfolio Management and the roles responsible for content authority, as they responded with: “Sorry, we unfortunately do not have the capacity to implement these strategic initiatives (epics with MVP) because we have extensive locally prioritized tasks to complete that have a high priority.”

Vertical capacity allocation – a solution approach

Of course, this was an undesirable anti-pattern, but as already mentioned, such cases can be remedied with a modified capacity allocation approach. I call this approach “vertical capacity allocation.” What does this approach look like?

Similar to horizontal capacity allocation, categories of work are also formed:

• Capacities for strategic initiatives from the Portfolio/Large Solution/Agile Release Train
• Capacities for local initiatives

These agreements can no longer be made within the respective management trios, but must be negotiated across the various levels of portfolio, large solution, agile release train, and team.

Two approaches to vertical alignment

This negotiation can take place in two ways:

• Cascading
  •  The Lean Portfolio management trio negotiates with the management trio of the Large Solution
  • The Large Solution management trio negotiates with the management trio of the Agile Release Train
  • The Agile Release Train management trio negotiates with the management trio of the Teams
• Integrative
  • The management trios of the Lean Portfolio, the Large Solution, the Agile Release Trains, and the teams negotiate in a joint session

The cascading approach has the advantage of manageable negotiation rounds, but it is time-consuming and carries the risk of loops occurring in the negotiation rounds.

The integrative approach is difficult to moderate and facilitate due to the number of participants, but it has the advantage of preventing loops in the negotiation rounds. Depending on the size of the portfolio, it may be possible to work with related segments of the portfolio in order to make the size of the integrative negotiation round more manageable.

Here, too, vertical capacity allocation must be reviewed at regular intervals and updated if necessary. A good rhythm is based on the frequency of participatory budgeting in the portfolio, i.e., every 6 months.

This conscious control with vertical capacity allocation ensures that teams, agile release trains, and solution trains are not exclusively caught up in the “urgencies of day-to-day business,” but can invest in strategic, future-oriented initiatives at the same time.

Conclusion: Sustainable value creation through conscious capacity management

Both horizontal and vertical capacity allocation are helpful tools for creating transparency, managing expectations, ensuring a healthy product throughout its life cycle, balancing the various categories of work in the system, ensuring the balance between local content authority and the need to implement strategic initiatives, generating focus on the things that really matter, and making limitations transparent. To this end, the respective capacity allocation should be reviewed and adjusted at regular intervals throughout the product lifecycle.