For modern companies, efficiently managing and prioritizing business needs is crucial for successful project portfolio management. Demand management is a framework that helps organizations collect, prioritize, and facilitate the planning of business requirements. In this blog post, we will explain in detail how demand management works, its benefits, and challenges, as well as provide practical tips for its effective application.
If you’re interested in exploring the topic further, we highly recommend the latest episode of the PMO Club podcast, in which Balázs Federi, the IT Portfolio Manager at Red Bull, shares his extensive experience in the field. Balázs has a broad background in IT Governance, IT Service Management, IT Project, and Portfolio Management, and was involved in the implementation of demand management at Red Bull.
LET’S START FROM THE BEGINNING
To delve deeper into the topic, it’s important to clarify at the outset what demand management actually is. The IT world realized in the last 10-15 years that something was needed to approach the business side, and that’s when this field emerged. It is an essential part of the project portfolio management framework, occurring at the very beginning of every process, and serves as one of the main elements of business interaction, supporting the work of business partner colleagues. Its goal is to collect, prioritize, and approve business requirements in a structured way. It’s like a funnel that allows companies to shape the process according to their needs. After collecting and grouping the business requirements, the next step is prioritization, which facilitates project planning.
You might not realize how helpful it can be! Multinational companies often have multiple business areas that IT can approach in different ways, which may not be efficient. Demand management helps with prioritization, decision-making, and collecting business needs within a unified framework, thus avoiding misunderstandings. Its structure allows for assessing what resources are needed based on incoming demands. Additionally, it guides aligning business needs with the company’s strategy.
FRAMEWORK
A typical demand management framework consists of three significant steps plus an additional one:
1. **Collecting business requirements**
It’s important not to think in solutions immediately but focus first on a deeper understanding of the needs. IT business partners should participate in brainstorming to determine when an idea is mature enough for demand management and provide guidance on what key points need to be discussed with the business side.
2. **Elaborating on requirements**
Various stakeholders, such as business analysts, architects, and senior experts, collaborate to expand the requirements. After gaining a precise understanding of the needs, the teams begin to explore the options available on the market, not relying solely on internal experiences but considering external sources as well.
3. **Approval and prioritization**
During prioritization, different models can be used to rank the needs. Values are assigned, and a ranking is formed based on these. A line must be drawn to determine what can stay in the project, as not everything will fit. This is an objective system, so it’s necessary to seek input from decision-makers and experts on the established ranking, and it’s worth regularly redoing the prioritization. Financial and human resources must also be considered here.
+1. **Handover to implementation** – During the handover, it’s crucial that all information and decisions are properly documented; this helps avoid problems in later phases.
This framework provides an objective view to the business and helps resolve conflicts. However, it’s essential to emphasize that the process needs to be flexible and as simple as possible. It’s not necessary to confine colleagues within this system.
LESSONS AND EXPERIENCES
1. It is essential to have frequent discussions with representatives from different areas during the process to help everyone reach a common understanding.
2. Clear directions from senior management are important, and these should be aligned.
3. One must confidently know what is expected of demand management.
4. No one in the system should expect such a level of detailed information that is not currently available; this needs to be clarified thoroughly.
5. Demand management can only succeed if there is a good relationship between IT and the business in the company culture.
6. The development of AI presents new challenges and legal questions, which may involve many non-IT stakeholders in the future of demand management. Be prepared for this!
7. Innovation and market research are also gaining ground, and they will certainly play a role in demand management.
Overall, this structured approach allows the different stakeholders to better understand each other’s needs and expectations, ultimately leading to project success, while also strengthening communication and collaboration between organizations.
You can listen to the episode here:
Spotify
Here
Apple Podcast
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