Accelerating Organizational Project Management Maturity at Siemens

Accelerating Organizational Project Management Maturity at Siemens Joseph A. Sopko, PMP, MSP, OPM3 Consultant Senior Consultant, Siemens Corporate Research, Princeton, NJ Kevin McDevitt, MSP PMO Director, Siemens Industry, Inc., Industry Automation Division, Springhouse, PA Session #ADV03

Agenda Introduction PM@Siemens OPM Maturity Acceleration Initiative in Siemens US Case Study Siemens Energy and Automation Summary

Siemens Organization Executive Board Sectors Cross Sector Businesses Corporate Units Industry I Energy E Healthcare H Siemens IT Solutions and Services Industry Automation Fossil Power Generation Imaging & IT Drive Technologies Renewable Energy Workflow & Solutions Siemens Financial Services Building Technologies Osram Oil & Gas Energy Service Dia agnostics Cross Sector Services Corporate Technology CT Industry Solutions Power Transmission Mobility Power Distribution Regions Regional Clusters

Siemens Corporate Technology Idea Mega trends Profit Experts in Project, Program, and Portfolio Management PMO Development Six Sigma Implementations Business Consulting CMMI OPM3 People Competency Innovation Management

Global presence Americas 97,600 20.1 68 23% 26% Germany 32% Europe, 23% CIS, Africa (excl. Germany) 28.0 132,000 118,400 12.8 48 54 31% 17% 28% 36% Asia, Australia, Middle East 79,000 16.4 49 18% 21% As of September 30, 2008 Employees Revenue (billions of euros) Major facilities

More than 60% of turnover originates from project business

Challenges of the project business The project business for external customers has a significant importance for Siemens Challenges of the project business Project business is relevant for nearly all divisions and regions Numerous projects deteriorate during implementation phase Too many crisis projects reduce EBIT significantly More than 60% of the problems in the projects are caused in the early phases PM capabilities are regarded crucial within Siemens PM @ Siemens Initiative

A Siemens initiative improves operational excellence in PM

Optimizing Quantitatively Managed1 Defined Managed Initial 1 2 3 4 5 MPM assessment benefits from multiple models SEI Assessment & Capability Maturity Model Integration (CMMI ) + Recommendations of PM@Siemens + Elements of PMI: PMBoK and OPM3 Independent and external view Confidentiality Siemens wide standardized methodology + Siemens extensions: Practical experiences & feedback Comparable results = MPM Assessment Methodology References to best practices

MPM Process Model Process Project Management Planning & Controlling Supplier & Subcontractor Management Project Quality Management Project Configuration Management Change and Error Management Project Life Cycle Project Acquisition System Engineering Integration and Test Project Installation Process Management Process Definition and Maintenance Organizational Training Process and Product Measurement Process & Technology Improvement

MPM assessment process area alignment with OPM3 alignment with Process Project Management Project Life Cycle Process Management Planning & Controlling (L2/3) Supplier & Subcontractor Management (L2/3) Project Quality Management (L2/3) Project Configuration Management (L2) Change and Error Management (L2/3) Project Acquisition (L2/3) Process Definition and Maintenance (L3) System Engineering (L2/3/4) Organizational Training (L3) Integration and Test (L3) Process and Product Measurement (L4) Project Installation (L2/3) Process & Technology Improvement (L5) * Sub areas that have significant alignment with areas that have significant alignment with OPM3 * Sub areas that have partial alignment with areas that have partial alignment with OPM3

MPM assessment process area alignment with CMMI Process Project Management Project Life Cycle Process Management Planning & Controlling (L2/3) Supplier & Subcontractor Management (L2/3) Project Quality Management (L2/3) Project Configuration Management (L2) Change and Error Management (L2/3) Project Acquisition (L2/3) Process Definition and Maintenance (L3) System Engineering (L2/3/4) Organizational Training (L3) Integration and Test (L3) Process and Product Measurement (L4) Project Installation (L2/3) Process & Technology Improvement (L5) * Sub areas that have significant alignment with areas that have significant alignment with CMMI * Sub areas that have partial alignment with areas that have partial alignment with CMMI

MPM Evaluation of Process Theory and Practice Questions about Theory Questions about Practice OPM3 Capabilities defined? documented? available? Procedures Guidelines Methods Sample Documents Tools Procedures Guidelines Methods Sample Documents Tools well known? accepted? in use? Maturity level of documented process (Theory) Maturity level Total coverage of Theory and Practice Maturity level of implemented process (Practice)

MPM Maturity Scale Level: Characteristics: Benefits: M C I OPM3 S 5 Optimizing 4 Quantitatively Managed 3* Defined 2 Managed Continuous improvement utilizing statistical process control Systematic defect prevention processes Predictions of costs, deadlines, quality as well as project control are backed by statistically evaluated historical data Systematic management of reference solutions Organizational standard d process established Standard process owned by the organization Project specific tailoring rules in place Disciplined project management Process owned by project manager Process varies from project to project Quality 1 Initial Procedures not defined; ad hoc methods are used Success depends on few specialists Costs, quality, and deadlines are hardly predictable Risk According to Capability Maturity Model Integration (CMMI) of the SEI * MPM Level 3.0 is PM@Siemens Goal

Siemens CT has conducted more than 150 assessments globally

Organizational Project Management (OPM) The application of knowledge, skills, tools, and techniques to organizational activities and project, program, and portfolio activities to achieve the aims of an organization through projects PMI Organizational Project Management Maturity Model (OPM3) Second Edition (2008)

Project Delivery vs. Maturity Level: 5 Optimizing 4 Quantitatively Managed Target Due Dates, Costs, s, Quality Benefits: Quality 3 Defined 2 Managed 1 Initial Target Due Dates, Costs, Quality Risk

Value of Increasing OPM Maturity Lower Non Conformance Costs, Better Quality, Better Bottom Lines Business Scalability Top Line Growth/Bottom Line Improvement Improved/sustained margins Employee/Project Management Effectiveness Ramp up Reliable Project Performance Predictability Less RED projects Improved and Measurable Project Performance Capability (SPI, CPI) Improved Employee Satisfaction, Ra amp up, and Retention Superior Customer Satisfaction => Competitive Edge Predictable delivery, costs and quality Less risk exposure Better Referrals Embed change and achieve benefits through Program Management

Where we were PM@Siemens Initiative (2000) MPM Assessment Model (2002) OPM improvements managed as projects MPM assessment conduc cted Recommendations used to create improvement projects Re assessments to update measures and next steps Benefits are implied

Barriers to progress Resource limitations (financial and human) Lack of PMO structure and business relevance Lack of understanding of OPM maturity concept OPM not formally aligned with or measured against business objectives (e.g.. maturity level focused) Improvement programs were multiple projects without formal program management governance Business excellence programs often overlapped with OPM improvement efforts

What we learned Critical success enablers were not universally present Cultural differences cloudedd assessment and implementation execution Gap analyses and desk asses ssments may be better alternatives in early stages Project processes => Process management maturity => Business benefits

What we learned Improvement by comprehensive assessment alone may not be the best alternative: OPM Training needed What does good look like? Understanding the role of maturity models Focus on business objectiv ves (benefits) to be achieved Increase focus on businesss change management Assessments must be conducted at the proper organizational level

OPM Maturity Key Enablers To achieve maturity beyond Standardized): Executive Support Program Management Best Practices Organizational Project Management Office (PMO) Process Management Infrastructure MPM Level 2 (e.g. OPM3 Support the Business Units in establishing these success factors and accelerating organizational project management maturity.

OPM3 Organizational Enablers Organizational Project Management Policy and Vision Strategic Alignment Resource Allocation Management Systems Sponsorship Organizational Structures Competency Management Individual Performance Appraisals Project Management Training Organizational Project Management Communities Organizational Project Management Practices Organizational Project Management Methodology Organizational Project Management Techniques Project Management Metrics Project Success Criteria Benchmarking PMIS and Knowledge Management PMI Organizational Project Management Maturity Model (OPM3 )

Why use a program approach? Executive support encouraged by link to business benefits Formal program management organization and best practice methodology Commitment to and manage ement of business change MPM maturity assessment tool identifies gaps Maturity improvement initiatives are business change programs and should employ formal program management to deliver expected benefits.

Characteristics of Programs vs. Projects Program Management Achieves benefits Broad scope Broadly defined objectives Specifics not clear at the start Complex threads of work Often 3 5 years long Usually major investments Uses senior staff Project Board members Project Management Creates a capability Tightly focused Clear objectives Clear deliverables Often single threaded Often 3 months 2 years Can be small, cheap, fast Uses less senior staff Project Manager & teams Programs are not just large projects. They deliver enabling capabilities, embed business change, and achieve benefits Source: Core I.S., 2007 28

Program Management Model Sponsoring Group Senior Responsible Owner Program Manager Business Change Manager Program Office Delivering Capability Dossier of Projects Embedding Change Realizing Benefits Source: Managing Successful Programmes Standard, UK OGC, 2007

Why we need PMOs Organizational Project Management maturity is difficult to achieve without organizational level support, ownership, and governance Lead and manage the OPM improvement program PM Center of Excellence lesson ns learned and best practice models (e.g. OPM3, CMMI) Business performance measurement and benefits realization Process management and optimization (e.g. OPM3, CMMI, Lean Six Sigma) => ROI

Successfully Defined Program Conducted SEP 07 NOV 08 Sponsored and led by Siemens Corporation US Business change program embed best practices to accelerate OPM maturity goal achievement (above MPM Maturity Level 3) Work with all three Siemens sectors in Industry, Energy, and Healthcare (over 20 Business Units from $10 Million to $4 Billion)

Successfully Defined Program An iterative approach Provide gap analyses, coaching, and training regarding organizational maturity Introduce and support formal Program Management best practices Leverage lessons learned from maturity assessment experience => key successs enablers

Successfully Defined Program Benefits Centralized funding model Utilization of OPMM subject matter experts increased by 3 4 times revitalized PM community in Siemens US Focus on business benefits for executive engagement removes financial barriers realization was a positive factor Business change approach involved the business as usual parts of the organizations => embed improvements and process ownership by business stakeholders Siemens Industry Automation was the early adopter

Siemens Energy & Automation Automation and Motion Division (SEA AMD) Preliminar ry Case Study Data

Sectors and Divisions: Industry Industry Divisions Drive Technologies Industry Automation Building Technologies Mobility Lighting (OSRAM) Industry Solutions Sectors Energy Divisions Fossil Power Generation Renewablee Energy Oil & Gas Energy Service Power Transmission Power Distribution Healthcare Divisions Imaging & IT Workflow & Solutions Diagnostics Page 36 July 2009 Copyright Siemens AG 2008. All rights reserved. Corporate Communications

PM@AMD Program Management Model Sponsoring Group Manages the project portfolio and achievement of benefits Program Manager (PM) Senior Responsible Owner (SRO) Business Change Manager (BCM) Sales, Customer Support, Operations, etc. Program Office Delivering Capability Embedding Change

PM@AMD Program Or ganizational Char t PM@IA/DT PMO IA & DT Policy, Requirements, Best Practices PM@AMD Program Sponsoring Group Sponsor: Senior Responsible Owner: Program Manager Successfully Defined Program (SDP) Siemens Corporate Research Process Automation Motion Control Simatic ITS Automotive Projects Sensors & Communication Sales BU Manager BU Manager BU Manager BU Manager BU Manager Business Change Manager (BCM) Business Change Manager (BCM) Business Change Manager (BCM) Business Change Manager (BCM) Business Change Manager (BCM) Business Change Manager (BCM) Technical Working Groups Technical Working Groups Technical Working Groups Technical Working Groups Technical Working Groups Technical Working Groups

PM@AMD Program Mandates Goals Vision Implement appropriate PM@Siemens methodologies which achieves Maturity Project Management Level 3 in order to exceed customer expectation and manage AMD projects profitably with transparent results. Increased customer and employee satisfaction, managed profitable growth, and standard processes. Realized benefits from achieving goals: Standard processes and tools for creating project phase artifacts (outputs) Financial accountability through measurable results which keep a project on a positive course Greater value to our customers

PM@AMD Identifying and Defining Program Goals Defined Deliverables Standard Processes and Tools: Project Acquisition/Execution Change Management Information Management Measure Business Benefits (KPIs): Improve Customer Satisfaction Improve Project Margin Improve Delivery Reliability Improve Delivery Reliability AMD Project Management Office: Project process support Analytical tools and services

PM@AMD Program Flow Identifying the Program Defining the Program Managing the Phases Produce Program Brief Vision Statement Desc. of Benefits Risks Business Case Initial list of projects Assessment of Current State Develop of Program Preparation Plan Resources required Desc. of deliverables Schedule of activities Team members Establish Infrastructure Identify Stakeholders Develop Communication plans Develop Blueprint Develop Benefits Profiles (including dis benefits) Design project dossier Identify Phases Develop Governance Develop Program plan Confirm Business Case Prepare for 1st Phase Direct & Manage work Manage risk and issue Monitor and report out Transition and stable operations Delivering the Capabilities Engage stakeholders Align project with: Benefits realization Program objectives Governance: manage and control delivery Realizing the Benefits Embed benefits to business as usual Manage Pre transitions Transitions Post transitions Measure benefits Monitor and report benefit realizations

PM@AMD: Identifying and Defining Phases Successfully Defined Program (SDP) Kickoff Meeting Maturity in Project Management (MPM) Gap Analysis Program Acceleration through Coaching and Teamwork (PACT) Workshop Program Management Training for Team Strategic Alignment with organization

Compliance Controls PM@AMD: Phase 1: Project Sales Manage the Phases Deliver the Capability PM@Siemens Global LoA Tool Training, Integration of PM@IA/D DT global Work Breakdown Structure Project Calculations standardized on EBIT Develop & Deliver training for LoA, Project Acquisition, & Compliance Transition & Measure the Benefits

PM@AMD: Phase 2: Organizational Enablers Design project KPIs across BUs Adopt Customer Satisfaction Surveys Process Create Change Management Tool Create PM@AMD Sharepoint Project Portal with TDPs Charter AMD Project Management office Adopt PM Profiles, Training, & Competency Mgmt MPM Theory (Desk) Assessment Manage the Phases Deliver the Capability Transition & Measure the Benefits

PM@AMD: Phase 3: Project Execution Standardize Process Asset Libraries PM and Engineering processes Process Definition & Maintenance Process Create Process Asset Library Viewer with Tailoring for Project Categories Process Tailoring Definition MPM Comprehensive Assessment Manage the Phases Deliver the Capability Transition & Measure the Benefits

PM@AMD Improvement Results Program Benefits Achieved: MPM Level 5 4 3 2 1 One MPM maturity level improvement achieved MPM Level 2006 MPM Level 2007 2008 2009 PM@AMD Program Customer satisfaction improved 5% Project Margins (delivered vs. booked) improved by 6% of Sales Project delivery reliability improved by 3% High commitment within the organization towards a continuous process improvement

Summary Formal program management and OPM3 OEs are essential for OPM maturity improvement, relevance, and success: Executive support PMO business relevance Delivering benefits and business change Programs and related organizations (e.g. PMO) that are not business relevant do not survive.

Summary Establish the PMO at the correct organizational level with: PMO Charter with periodic review for relevance Program leadership best practices Link PMO goals to business strategy Conduct the OPM improvement program at the right organizational level Multiple maturity models (MPM, OPM3, CMMI, ITIL) are beneficial for system solution businesses

Summary OPM maturity improves business perform mance!

References Lebsanft, K., Strausser, G., Sopko, J. (2007). OPM3 utilization at Siemens. OPM3 Users Forum, PMI. PMI Global Congress 2007 North America, Atlanta, GA. Sopko, J., & Strausser, G. (2008, November). Case study Program management and the PMO critical success factors in improving organizational PM maturity at Siemens. PMO Symposium, San Antonio, TX. Keuten, T. (2009). OPM3 and CMMI Breaking new ground in organizational maturity, a White Paper prepared for the Project Management Institute. Newtown Square, PA: Project Management Institute. Sopko, J., & Husemeier, S. (2009, May). Improving organizational project management maturity: A Siemens Case Study. PMI Global Congress 2009 EMEA, Amsterdam, The Netherlands. Strausser, G. (2009, October). Business Change Management Using Program Management. PMI Global Congress 2009 North America, Orlando, FL.

Contact Information: Thank You! Joseph Sopko, PMP, MSP, OPM3 Consultant Email: joseph.sopko@siemens.com, Telephone: +1 609 933 8327 Kevin McDevitt, MSP Email: kevin.mcdevitt@siemens.com, Telephone: +1 484 686 1043 Session: ADV 03

Contact Information Name: Joseph Sopko, PMP, MSP, OPM3 Consultant Email: joseph.sopko@siemens.com Phone: +1 609 734 6595 (W) +1 609 933 8327 (C) Session Number #ADV03