Delivering What Matters – A Case for PMO

PMI –SV Trends & Viewpoints

Aug 26, 2013

Anita Merchant, PMP, CSM, CSPO, ITIL

My Guiding Principles – Making Change for the Better

“We’re here to put a dent in the universe. Otherwise why else even be here?”

“Here’s to the crazy ones — the misfits, the rebels, the troublemakers, the round pegs in the
square holes. The ones who see things differently — they’re not fond of rules.…….They push
the human race forward, and while some may see them as the crazy ones, we see genius,
because the ones who are crazy enough to think that they can change the world, are the ones
who do.”

-Steve Jobs

2
A Bit About Me

Career Since 1998

Software Engineer

Business Analyst

Project Manager

Sr Program Manager

PMO Manager

Lean Change Agent

Focus Areas

PMO, Portfolio & Program
Management

Organizational Change
Management

Business Process
Improvements

Training & Coaching

3
 Objectives of this Workshop

By the end of this presentation you will understand…

Why does Business need a PMO?

How to set up a PMO

Evolution of a modern PMO

Path Ahead for PMO success

4
Acknowledgements

Provides IT solutions to the Global 2000 through change and release

management solutions. Credit due to Jane Walton.

Portfolio management market leader, enabling decision makers

across the enterprise to balance strategy with people and money.

Global management consulting, technology services and outsourcing

company enabling clients to become high performance businesses and
governments.

French multinational corporation providing IT services, professional

services and global management consulting.

5
Exercise: Your View – PMO Newsflash

Task

In your groups, take a sheet of paper and create a

“PMO Newsflash” on the subject:
What is a PMO?
Your “Newsflash” must contain no more than ten
words.

You have 5 minutes to produce your “Newsflash”.

6
The Bad News

Over the last five years the PMO failure rate was
75% of PMOs fail in the first three years.
as high as 50% in the first year.
- Source: Forrester study (2011)
- Source: 2012 Gartner study

Less than 10% PMO are considered “high 72% of organizations do not track benefits
beyond projects close. Benefits realization and
performers”. Less than 1% PMOs are supply and demand planning are expected to be
considered “Best in Class” the most challenging areas for PMOs over the
next two years.
- Source: The State of the PMO – 2007-2008. A Benchmark of
Current Business Practices Center for Business Practices (CBP)
Study) -Source: 2011/12 PMO Trends Survey by PM-Partners Group

In low performing organizations, PMOs face much

60% of all organizations could benefit from
improving the maturity of their PMO
- Source: The State of the PMO – 2007-2008. A Benchmark of Current
Business Practices Center for Business Practices (CBP) Study
greater difficulty in being accepted as a real
value-adding proposition, when compared to
high-performers
- Source: The State of the PMO – 2007-2008. A Benchmark of Current
Business Practices Center for Business Practices (CBP) Study

It has been shown that deploying a PMO does not lead to performance improvement itself. It is
only when the PMO increases maturity that tangible improvement occurs.
(Source: Value of Project Management, Center for Business Practices (CBP) Study) 7
Why have PMOs failed

Strategy Implementation Operation Maturation

Status Quo
Singular focus
Poor Planning
Lack of Vision

- Value / ROI not

- Not strategic -Doing too much - PM Police
justifiable
- Not tied to business too soon (Command Control:
- Lack of business
-No clearly defined -Too academic approve, reject, audit)
alignment
goals -Positioned at - Watchdog
- Lack of adaptability to
-Lack of sponsorship wrong level -Administrative
business change
& mgmt support -Too much or too -Focused on process,
little authority tools & templates 8
Singular Focus

“Process and tools do not add value in themselves.

Outcomes and results add value”

“Throwing a process or tool at a business problem can

sometimes only make you do wrong things faster.
Speed up your failure!”

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Why Does Business Need a PMO
Definitions - Traditional PMO

“An organizational body or entity assigned various responsibilities related to the

centralized and coordinated management of those projects under its domain. The
responsibilities of the PMO can range from providing project management support
functions to actually being responsible for the direct management of a project”

PMI. (2003) Guide to Project Management Body of Knowledge (2003) PMI

“A Project Management Office (PMO) is a group or department within a business,

agency or enterprise that defines and maintains standards for project management
within the organization. The PMO strives to standardize and introduce economies of
repetition in the execution of projects. The PMO is the source of documentation,
guidance and metrics on the practice of project management and execution. “
Wikipedia

“Strategic driver for organizational excellence, which seeks to enhance the practices
of execution management, organizational governance, and strategic change
leadership.”

Project Management Institute (PMI) Program Management Office Community of

Practice (CoP)
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Definition - Modern PMO

“An integrator and enabler for better decision-making, helping business leaders apply
limited resources to the right projects at the right time.focusing the organization on
work that matters and serves as the glue that keeps an organization aligned in times
of change.”
- Planview

Execution Excellence

Business PMO Delivery

Strategy Drivers

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Breaking Down Barriers (Cross Functional Organizations)

Departments 3
Department 2 Department 4
Department 1 Department 3 Department 1
Department 2 Department 4
Future Scenario
Current Scenario

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The Good News

Courtesy: Accenture
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 Percentage %

80%
ROI

31%
Project Failure Decrease

30%
Projects under budget
Companies with Successful PMOs

21%
Productivity increase

19%
Projects on Schedule

17%
Cost Savings
Benchmarks. Courtesy Robert Goodman
Source: The State of the PMO 2010. PMO Value

13%
Resource Capacity
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A Horror Movie Set

Lack of morale

Projects popping up everywhere like weeds – voice wins

No visibility on what is coming

Resources assigned to 10-15 projects at a time

Resources shared between operations and projects

Project startup took an average of 2 – 3 months

Less than 50% on-time / on-budget

Lack of resource planning and visibility of who was working on what

No visibility on portfolio health, dependencies, & resource conflicts

Inadequate accounting for project budgets, billing disputes

High PM turnover

Penalizing contractual terms

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Setting Up a PMO
PMO Structure

Building a successful PMO has structural components similar to any other construction
project: - a strong foundation and floor, solid structural supports, and a strong exterior are
essential components of building your PMO

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Foundation – Cultural Fit

PMO Model: Driven by Org Culture

Centralized vs Decentralized
Internal vs. external focus (outsourcing)
Departmental vs. enterprise
Single vs. multiple
Staff vs. line organization
Special–purpose PMO

Size: One Size Does Not Fit All Champion Change Management Cycle
Sponsor
PMO drivers PM maturity
Business /
& business & org skill Involve
Org mission
needs levels
Educate

Inform
Organization Number of Political &
size projects cultural
environment Assess

All PMOs are not created equal 19

Change Management

“Change is a marriage, not a one-night stand. Change

requires thoughtful planning and sensitive
implementation”

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 The Emotional Cycle of Change

Institutionalising:
Explanatory: Penalizing failure /
Case for Change non-compliance

Perspective:
What the future
holds Reinforcing:
Measuring success

Inspirational:
Building desire

Celebratory:
Enabling: Rewarding success
Building capability

Catalytic: Illustrative:
Building will & Role modelling the
momentum way

Supportive:
Building a supportive climate and
mechanisms

Not everyone will be in the same place at the same time. Navigating the
collective journey is key to success 21
PMO Implementation Strategies

Strategy Drivers

Sponsor / Perception of Political Culture /

PMO Charter PM Maturity
Mgmt Support Value Environment Value System

Implementation Approaches

Evolutionary/Incremental Revolutionary/Wholesale

Lower implementation risks
May be able to demonstrate ROI

quicker

Lower start up costs

More suitable if crisis or recognition at

More suitable if high resistance to change
high level that change is imperative
and low management support

Higher implementation risks

Will take longer to demonstrate ROI

Higher startup costs

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 The Floor & Stairs – Goals & Roadmap
Perform Define Goals &
Prioritize Goals Develop Business
Organizational Create PMO
& Create Roadmap Case
Assessment Charter
Understand pain points Define goals, services, Select top priorities Estimate costs of current wastes,
and goals of the governance, KPMs, and build a short, lost opportunities, failed projects,
organization. Agree on funding model, etc in medium & long term redundancy, poor decisions and
what needs to be changed the PMO Charter roadmap compare against benefits of
future solution

PMO goals should be based on business needs/drivers or pain points

Issue Goal / Focus
Project failures Execution Excellence
Cost out of control Financial Accountability
No decision framework; insufficient visibility Portfolio Management
Resource bottleneck; planning delays; inconsistencies Resource Demand Management
Poor PM practices Standard Processes
High PM turnover Professional Development
No accountability Performance Management
Delay in project approvals Governance

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First Pillar - People

Staffing model based

on many factors
(budgets, labor

PMO Director policies/strategies, in-

Portfolio Manager
house skills,

Process expert
technical expertise,

Trainer
etc.)

Project manager(s)
Determine desired
Communications and Change
skills and roles Mgmt Lead

Charter will drive

Resource manager
skills needed

Administrative Support

Relationship/Account Manager

Tools Support
Skills do not
necessary have to

In-house resources reside in the PMO
Consider Staffing
Hybrid (In-house/contractors)
Approaches

Ad hoc contractors
augmentation
Typical size: 3 - 8

Start Small and Grow

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Second Pillar – Services & Interfaces
Project Project Project
Training &
Process Management Execution
Support
Development Services Services

Status Best
Financial Resource Portfolio
Reporting & Practices
Analysis Management Management
Dashboards Repository

Define Scope
Catalog of Services

Determine
Business and functional groups as customers

Relationships &
PMO seen as a credible “go-to” source of information by
Interfaces management

Start Small and Expand

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Third Pillar – Tools & Templates
Example Toolset

Project Project Project

Requirements Charter Lifecycle

Project RAID Log Project

Budget Schedule

Project Project Lessons

Report Dashboard Learned

Implement standardized tools, templates, and processes

operate a central data repository and/or a central planning system

Find out what is already there and working well, and institutionalize it.

Create a timeline for adding to the tool suite.

Start Small and Build

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Walls – PMO Maturity Model

Identify Determine “As is” “To Be” Create

Capabilities Scale Analysis Goal Roadmap

Financial analysis, Define rating criteria Current state Target rating for Current -> Next
risk analysis, project from initial to assessment capabilities
planning, resource mature
allocation, etc.

MASTERED
Best practices, automation,
continuous improvements
 Define vision of fully
MANAGED
Consistent, enables decision
functioning PMO in 2 – 5 yrs
making
 Compare against best
CONTROLLED
Measured and monitored practices

DEFINED  Different models (CobiT,

Documented, repeatable OPM3, ISO 15504, CMM/CMMI)
INITIAL
Ad-hoc and
disorganized

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Doors & Windows – Metrics & Success Measures
Types of Metrics (Examples)

Value Metrics • ROI achieved from early delivery

• Cost savings
Executive focus - • Revenue increase
measure and • Percent of projects subjected to decision
analysis
demonstrate
• Spending eliminated due to prioritization
Metrics are essential for growth & value to business
support – demonstrate progress, value,
& productivity
Functional • Number/percent projects completed
Metrics on/ahead of schedule
Less that 15% of PMOs employ formal • Number/percent projects completed
metrics program (Source: Forrester on/below budget
Internal focus – • Number projects managed – increase over
Research) performance & year (target vs. actual)
quality of PMO • Percent of resource utilization
functions • Percent of billable versus non-billable time
Project vs PMO metrics - PMOs should
be willing to subject itself to the same
types of measures it require of a project •Turn around time on business cases
or program Service Level •Turn around time on responding to
Metrics stakeholder request
•Customer satisfaction
No such thing as typical metrics (driven Customer focus – •Issues turnaround time
by PMO Charter) service level, QoS •Quality of information
•Reduction in issues

How do you want to look to the outside world?

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Roof – Communication

PMO as a hub of Communication

Define what Show value of Adapt to
Devise Simple &
info is Validate & info to need for
efficient ways efficient
needed by improve data providers & info
of collecting reports
whom & reported receivers changes
info
when

SAMPLE COMMUNICATION MATRIX

Project Functional
Focus Area / Communication Item Client
Managers Managers
Resource Management
Skills Matrix
Forecast
Execution Excellence
Project Dashboards
Change Management Reports

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Success Drivers for a new PMO

Executive
Sponsorship

Strong
LOB / Client Governance &
representation Priorities

Top Down Clear Time to

Support Charter Derive
Benefits

Bottoms-up
Buy-in Communications
& PR

KPIs Measured
& Reported

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Evolution of a Modern PMO
 Elements of Maturing a PMO
Bridge gap between traditional ideal of project
success and business impact

Must be plugged into business

Project measures used most often -such as on-

time, on-budget – are not necessarily relevant to Performance Resource
business impact
Management Management
Has to be much more than a keeper of processes,
standards and lessons learned

Focus on strategic rather than tactical activity Portfolio

Understand enterprise value chain & how projects Management &
in portfolio can make a difference at each link Governance
Benefits
Must be part of decision making and successful Business
& Cost
contributor to enterprise value creation
Management Value
Discussions go beyond the level of projects, tools Management
and processes to business value, investments
and performance

Must grow in skill, not in numbers

Be valuable business partners in the enterprise 32

Portfolio Management & Governance

PROJECT MANAGEMENT PROGRAM MANAGEMENT PORTFOLIO MANAGEMENT

Do Projects Right Do Projects Together Do The Right Projects

PMO Maturity

Portfolio management is about doing the right projects, at the right

time, using the right resources by selecting and managing projects
as a portfolio of investments

Portfolio governance is about sharing power and decision making at

management level. Stakeholders include Executive Governance
Board, IT Steering Committee and PMO

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 Portfolio Management Process
Review and update regularly

Clarify Determine Validate Manage

Create Rate Select
business Valuation & &
Inventory Projects Projects
objectives Criteria Initiate Monitor

Strategy Map
Based on objectives
Projects
Use valuation criteria
High Impact
Meet teams / mgrs
Performance Mgmt

Org Objectives
Financial or Scoring
Requests
Early estimates:
High Value
Portfolio feasibility

Limit to 4 - 10
Ideas
Dependencies
Refine:

Poor criteria =>
Constraints
Dependencies
wrong projects
Resources
Constraints

Resources

Not lopsided
Not too risky
Short vs long term results
User Balance Displays
Balance Execution -> Strategy
No pet projects!
Align

Maximize
Popular Balance Displays: (1) risk vs reward bubble charts (2)
strategy vs tactical range (3) market vs product line segmentation Greatest ROI
(4) time-to-completion (5) time to profit) Biggest bang for the buck 34
Portfolio Management & Governance
Portfolio Process Maturation Best Practices

Real-time portfolio analysis, reporting and
Organize PMO along customer

planning, structured investment decision lines
making
Involve Voice of Customer
(VOC) in decision making Portfolio
Continuous portfolio reviews and planning

Train org on portfolio mentality Maturity

Constantly inprove decision

Inventory of projects valuation criteria

Valuation Criteria (examples) Benefits

Scoring Financial No loudest

Customer request,
Time to profit voice wins

Break-fix
Time to market Faster time to Strong

Resource capacity
ROI market governance

Innovation
NPV

Risk mitigation
Payback period Portfolio

Compliance
IRR Value
Cost savings Margin / revenue Say “no” to


Higher Analysis

Market share growth projects
productivity

Alignment to company goals

Competitive advantage

Technical feasibility Strategy
Less chaos implemented

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Performance & Risk Management Positive Neutral Negative

•Transition from project on-time to deliverables and milestones on time (deliver smaller chunks of
value)
Schedule •Project-level: tradeoff between delivering on time and delivering value. Late is acceptable sometimes
Performance if delay is required to deliver full value
•Portfolio-level: time is only one component to optimization of net value. Some investments are
delayed so others can create value more quickly
•Transition from on-budget to strategic cost / ROI analysis
•Tradeoff between costs and value, utility, functionality and benefits
•Lifecycle costs (end-to-end solution)
Cost
•Provide tools for cost-analysis
Performance •Cost analysis (cost vs value tradeoff) at portfolio level - Sometimes a project may cost less compared
to another project but may not be able to create value for the customer
•Sometimes going over-budget may be necessary for innovation or long-term benefits

•Design process with the objective of delivering value to the enterprise

•As processes grow, they must be lightweight, adaptive and easy to follow
•Measure performance of the process to ensure it is working efficiently
Process •Continuous Improvements
Performance •Demonstrate results of processes and share improvement stats to ensure adherence
•Provide streamlined and supportive tools for processes
•Emphasis on business performance rather than just project performance

•Identify risks -> score/assess risks -> actively manage

Risk •Use risks to estimate variance in a project
Management •Risk profiles of investments in a portfolio
•Balancing risks between projects in a portfolio to maximize value

•Decision focused reporting

Performance •Culture of managing from data
•Inferring / interpreting data and not just deliver reports (decode what the data means)
& Risk •Engage customers (end users and business) to identify data to measure
Reporting •Identify the right KPIs (measure what matters to business), set credible targets, automate data
collection
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Resource Management
Investing the right human capital and other assets in portfolio projects and activities
DEMAND MANAGEMENT
Demand Management
• Demand forecast by
categories (skills, projects,
function)
• Institutionalize forecast
• Continuous planning
• Associate demand with
resource utility
• One demand may be
delayed for another valuable
one
• Utility and cost tradeoff
• Opportunity cost
RESOURCE OPTIMIZATION
CAPACITY
PLANNING
TEXT
Supply Management
• Skills matrix
• Skill levels
• Develop skills inventory –
real capabilities of the
organization
• Balance skills availability
with customer demand
• Assess demand to
evaluate constraints
SUPPLY MANAGEMENT
Capacity Planning Resource Optimization
• Constrained resources • Match available resource
inside and outside the with needs of org within
org set timeframe & budget
• Predict future capacity and with minimum use of
• Tools for matching supply resources
and demand • balance of cost, value and
• Develop capacity before risks
producing products, even • system view for global
before demand exists effectiveness of resource
• Prof development, allocation
training, recruitment, • Bill for services based on
flexible supply sources, value rather than cost
cross-functional staffing 37
Benefits & Cost Management
Build foundation for
understanding
&measuring value
and reporting
continuously on
value of activities
(not just value of
projects Examples

Spending on a new
infrastructure may
relieve future
maintenance costs and
increase performance
and capacity
True Value

Investing in a new
Of technology may give
Portfolio competitive advantage

Investing in SaaS may
reduce infrastructure
and
support/maintenance
costs

Life-cycle
thinking

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Putting it Together

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Path Ahead for PMO Success
PMO Agility

“Change is inevitable, except from a vending machine”

Periodic reviews of the

Measurements of the PMO objectives against
processes and tools such as the needs of the business
effectiveness, adoption and Center of
consistent use Excellence
Light-weight
processes
Continuous
Improvements
Capacity
development
Demonstrable
results Value driven

Change Agent for

Adaptive to Change: business
Learn-Unlearn-Relearn
Data-driven
performance analysis

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Evolution of Project / Program Managers in a Modern PMO
• Deliverables-oriented
• Objectives
• Building the big picture
• Task-oriented • Integration
• Directives • Strategy
• Individual line items • Cross-functional
• Components • Catalyst
• Tactics • Liaison / Partner
• Engineering-focused • Shared Planning
• Broker • Trust
• Go-between • Governance
• Private planning • Servant Leader
• Control • Guide
• Punish • Future-oriented
• Police • Project-Pathfinder
• Gopher
• Present-focused
• Project Tracker

A catalyst speeds up reactions that otherwise would take a long time. They promote visibility and
collaboration to empower high performing teams to create shared plans

“A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will
say: we did it ourselves.” — Lao Tzu 42
Steps to Success

Minimize Risk

Maximize Value at Inception

Accelerate Speed to Value

Adaptable to changes; agility

Steps of Increased Value Creation

Refocus the organization on outcomes, benefits and

value, thus ensuring the best use of limited
resources

Improve the organization's portfolio management capabilities

as a way to manage innovation and change events and to drive
alignment

Value Provided
Serve as a change agent across a wide array of operations, elements,
products, programs, services, and assets

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PMO Skills Inventory – Spider Diagram

There is no time like the present

to set new goals and direction for
your PMO. An easy but effective
way to do this is to take the
“spider diagrams” in Figure 1 and
enter your self-assessment for
each maturity dimension by
making a colored dot on the
cross-hatch that best matches
your current state. Connect those
dots with lines, and you’ve made a
picture of your current “coverage”
of the maturity dimensions. Then
place another colored dot for
where you want to be a year from
now, and yet another dot for
where you want to be two years
from now. Use that diagram as a
simple representation of your
PMO business plan, and flesh it
out with how you will get from
point A to point B.

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Entrepreneurial PMO Leadership Attributes – Spider Diagram

Identify the areas for

personal growth and
improvement for a PMO
Manager in an
entrepreneurial and
business facing PMO.

45
Leadership for Success

“PMOs don’t succeed or fail…PMO is just a structure.

What succeeds or fails is the organization or the leaders
who try.”
- Adapted from Mark Graban, Lean Enterprise Institute

46
Final Thoughts
“Things don’t have to change the world to be important.”

“That’s been one of my mantras — focus and simplicity. Simple can be harder
than complex. You have to work hard to get your thinking clean to make it
simple. But it’s worth it in the end because once you get there, you can move
mountains.”

“Details matter, it’s worth waiting to get it right.”

-Steve Jobs

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Exercise: Takeaways

Task

Based on what you have heard today, list on separate post-it

notes:

What are your Takeaways from the presentation today?

Take 5 minutes to think about your takeaways and feel

free to share and discuss with the group

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Thank You !