Agile Project Portfolio Management Challenges

Abstract: Globalization allows companies to reach a larger customer base and to focus on niche markets, driving specialization. Conversely, it also lets customers choose from a wider array of options on any given market, which all together leads to increased competition. Such global scale competition is straining profitability and urges companies to innovate both strategy and operations in search of competitive advantages. The ensuing increased rate of change has placed an emphasis on achieving flexibility to ensure alignment with market needs, with companies successful in quick modifications flourishing even in face of unpredictable and unceasing turbulence. The trend toward increasing turbulence is acutely experienced by the automotive industry. Due to the commoditization of hardware in light of digitalization, the automotive industry is undergoing a shift in profitability toward software. The adaptation of strategy to the market is vital to survival, which in turn means that the operationalization of the strategy is crucial. One way to actualize the strategy is through project portfolio management (PPM). As corporate strategy and project portfolios are tightly connected, PPM is essential to implementing the strategy. It is of interest to study the flexible qualities of PPM in an individual industry moving from stable to turbulent, in order to gain insight into the challenges of that industry. The flexible properties of PPM in the automotive industry is thus of utmost importance to the survival of companies. The built-in flexibility of PPM is however not always enough and there is an increasing interest in agile PPM (APPM). So far, there is little advancement on the topic of APPM, and the need for further understanding is obvious with consideration to recent market developments, especially in the automotive industry. This thesis has employed a single case study to understand what challenges traditional companies in the automotive industry face when trying to become more agile in their project portfolio management in order to align their organization around agile practices on the team level and increase responsiveness to external changes. Adopting an abductive approach, empirical data was collected using interviews, observations, documents as well as a survey. The results of this study are twofold. Firstly, an exhaustive mapping of a major automotive company’s PPM process is presented. Secondly, this mapping is utilized to establish what PPM processes could be made more agile and what the main challenges are.