Understand the Basics

Investment and Capacity Planning Adoption Pathway

What is investment and capacity planning?

Investment and capacity planning is a collection of capabilities that supports portfolio planning.

It takes into consideration three main dimensions: capacity, demand and time.

Investment and capacity planning brings these dimensions together for review and analysis and allows for data-driven decisions on where and when to invest in money and resources to achieve the desired outcomes.

Where does the data come from?

Investment and capacity planning uses data from financial planning.

Two sets of financial data must exist that represent both capacity and demand. 

The capacity comes from entities in the organization that store budgets, targets, and resource capacity. The demand comes from entities that are "demanding" from those financial budgets or resource capacity, and are expected to deliver on the specified targets. 

Note that on each financial plan, the accounts are the same between capacity and demand. This is important because to be able to analyze and balance demand against capacity, you need to be looking at the same categories of data on both sides of the scale. 

The five principal steps of investment and capacity planning

These steps represent the full usage of investment and capacity planning:

1. Determine capacity: Identify what you want to achieve (targets), the budgetary limits, and resource capacity constraints. This data will then be captured in a financial plan version for your capacity entity or entities.  
2. Identify demand: Define the set of investments you want to make decisions for. Use a standardized categorization, scoring and estimation process to capture relevant financial planning data and any additional attributes that help set the priority for your demand entities (for example, priority score, strategic alignment, and regulatory).
3. Prioritize and rank: Bring all decision-making factors into a single place for data-driven analysis, prioritization and ranking.
4. Model alternatives as scenarios: understand the "what ifs" – model changes to demand, budgeting, staffing and investment to understand the impact on portfolio decisions. 
5. Choose and publish a plan: Compare and contrast different scenarios to understand the tradeoffs before choosing the best course of action. 

However, not every step is required for it to be meaningful and beneficial. Some customers start with simply determining capacity and demand, then ranking and prioritizing investments without using the more advanced scenario analysis and reporting options. 

There is flexibility, especially when getting started. Think about the key steps that your organization needs to take in order to make decisions about your portfolio plan and focus on those as your initial process. 

Options for defining the investment planning portfolio

In investment and capacity planning, a planning portfolio defines the capacity and demand entities to be used in analysis.

To start using investment and capacity planning, you must first determine which capacity and demand elements you want to evaluate. Capacity can be derived from cost centers, strategies, work, or outcomes. Demand can be derived from strategies, work, or outcomes.

The image below shows some best practice examples of planning portfolios: