IT Owes Much to PMOs

IT Owes Much to PMOs Doing More with Less Doing more with less is the mantra of IT organizations reuse and productivity, and nowhere recently have these principles been more effectively applied than in Program Management Offices (PMOs). The PMO is a strategic entity employed at the corporate level; as such, it sets project standards across the enterprise and is supported by upperlevel management. PMOs promote program management goals including: Standardizing project management practices, methods and tools Increasing project success rates (time, budget, stakeholder satisfaction) Centralizing visibility of project status and risk management Increasing coordination of resource management (e.g., staffing, budgets, schedules) Aligning IT and business strategy with improved communication across the organization Establishing a foundation for Enterprise Project Portfolio Management processes For over three decades, IT organizations (ITOs) have struggled to deliver projects on time and within budget, and with today's economic environment and the emphasis on getting more from IT, companies must manage projects more closely than ever. That challenge has led many organizations to turn to PMOs as a way to increase IT efficiency, cut costs, and improve on project delivery. Over 60% of ITOs are implementing PMOs, and are experiencing improved project performance while ensuring ongoing quality of product delivery. Establishment, evolution, and proper staffing of PMOs is arguably the single most productive IT best practice of the last decade. In fact, experience has shown that companies that have aligned IT projects with business goals are more likely to operate a PMO, and the longer they have been in operation, the better both the company and the projects perform. For many organizations, however, limited funds, lack of necessary resources, and internal politics have prevented PMOs from being established or attaining a position of authority within the organization. It s time for these organizations to take a closer look at the potential benefits of PMOs and to re-examine their culture to overcome the roadblocks to establishing a successful PMO. PMOs are no panacea for all project challenges. Companies seeking more efficiency and tighter monitoring of IT projects are opening PMOs in growing numbers. But, they should not expect a quick fix, easy metrics or immediate return on their investment (ROI). PMOs can certainly lead to reduced expenses and fewer unnecessary projects, but the primary motivation for creating a PMO is to ensure that strategic IT project products

are delivered through a more disciplined approach, achieving greater consistency and efficiency within and across projects. In a survey conducted by CIO Magazine and the Project Management Institute (PMI), 74% of respondents said that lower cost was not a benefit of their PMOs. The CIO/PMI survey showed PMO age had an increasing positive effect on project success improvement. At the same time, the percent of respondents not tracking project success rates decreased two signs that PMOs help instill project discipline. Figure 1 - Source: CIO Magazine / PMI Survey Measuring Success Success can be hard to measure. For one thing, there is no uniform recipe for success it's important that the PMO structure be closely tied to an organization s corporate culture, and companies with PMOs report that they don't necessarily yield easy-to-use cost-saving benchmarks and performance metrics at least early on. There is also a strong link between the length of time a PMO has been operating and project success rates: The longer the better. While 37% of those who have had a PMO for under 1 year report increased success rates, those with a PMO operating for over 4 years report a 65% success rate increase. It's inherently difficult to pinpoint project success rates for PMOs less than 3 years old simply because there's no track record of completed projects. PMOs can help CIOs by providing the structure needed to both standardize project management practices and facilitate IT project portfolio management, as well as determine methodologies for repeatable processes. The Sarbanes-Oxley Act which requires companies to disclose investments, such as for large projects, that may affect a

company's operating performance is also a driver, since it forces companies to keep closer watch on project expenses and progress. Delivering Rapid Value Other positive benefits are reported by organizations with PMOs even if early quantifiable returns are elusive. PMOs offer these distinct business advantages: Increased strategic focus: enables managers to focus on growing the business, and not getting bogged down with daily operations Maturity advancement: brings in or develops expertise that will institute best practices and bring about organizational changes that optimize performance and project management maturity Increased business agility: improves visibility and accountability for proactive management decision-making Cost saving: avoids project office deployment mistakes, cuts down on unnecessary projects, and reduces the training costs required to bring internal staff up-to-speed on project management techniques Productivity gains: empowers experienced project managers, planners, and control experts who develop the skills needed to have an immediate impact on future projects There are a few basic models of PMOs shown in Figure 2. Some PMOs act in a consulting capacity, providing project managers in business units with training, guidance and best practices, and other PMOs centralize control, with project managers on staff who are loaned out to business units to work on projects. How a PMO is organized and staffed depends on a myriad of organizational factors, including targeted goals, traditional strengths and cultural imperatives. When deployed in line with an organization's culture, PMOs help CIOs deliver strategic IT projects that satisfy both the CFO and internal customers. Over time (i.e., about 3 years) PMOs save organizations money by enabling better resource management, reducing project failures and supporting those projects that offer the biggest payback. Strategic PMO Level 3: Enterprise Control Figure 2 Levels of PMOs Planning Business PMO Level 2: Program Control CEO Finance Business Areas Project Offices Level 1: Project Control Operations IT Department Project Project D C Project B Project A

Some organizations get into PMOs by establishing a PMO prototype with limited scope, for example, establishing a PMO that is responsible for a single project that offers a particular management challenge. This Level 1 PMO offers an opportunity to develop an effective PMO methodology, apply tools that increase productivity, and establish procedures for maintaining consistent project data and delivering the reporting needed to monitor project performance. Level 2 PMOs apply PMO principles across multiple projects and enable organizationwide cross training. Level 3 PMOs raise visibility and accountability for project control and productivity to strategic levels. So, PMOs vary in scope and control functions depending on the level and breadth that they provide project support in the organization and what opportunities for reuse and efficiency are leveraged. There's no faster way of setting up an effective PMO than bringing in experts who can help kick off a successful program. EM&I brings immediate program management understanding and capabilities directly to your organization, creating short-term productivity gains and long-term business value. We complement your project management expertise, processes, and technologies to effectively manage project initiatives. It is important to decide up front what kind of PMO best suits your organization. Our experience with PMOs shows that creating a top-down PMO that is primarily administrative, with roles centered around either approving and rejecting projects, or auditing projects for compliance to processes and metrics is likely to create organizational resistance. So, a bottom-up approach may be more accepted in many organizations. However, sometimes a centralized and dramatic change in control is just what is needed to move the organization forward. To determine the appropriate level for your organization, we must examine the roles that PMOs may play in an organization and assess the organizational culture to determine what role is most likely to succeed in your organization. Just What Do PMOs Do? PMOs leverage project best practices across the enterprise: Project support: Provide policies, project management guidance, and planning templates to project managers in business units.

Project management process/methodology: Develop and implement a consistent and standardized process with guidance on how to tailor it. Training: Conduct training programs or collect requirements for an outside company to provide training. Home for project managers: Maintain a centralized office and a skills database from which project managers are loaned out to work on projects. Internal consulting and mentoring: Advise employees about best practices Internal auditing: Perform audits and reviews on projects and local project control offices to verify compliance. Project management software tools: Select and maintain project management tools for use by employees. This augments both training and project support. Portfolio management: Establish a staff of program managers who can manage multiple projects that are related, such as infrastructure technologies, desktop applications and so on, and allocate resources accordingly. EM&I offers PMO support. PMO support can encompass PMO design and creation (e.g., of program and project Charters, Strategic Framework or Plans for Communications and Change Management, Risk Management, Performance Management, Quality Assurance, Configuration Management, Acquisition, etc.). Support can be more operational in defining and controlling the above areas and in managing shared services (e.g. document management, IV&V, quality control, training, product delivery). Assessing Your Organization s Culture Understanding the level of PMO and support that an organization desires to implement in accordance with business goals and opportunities is only half of the planning effort. Organizations must also understand the environment and history within the organization that has created the need for a PMO. Without this awareness mistakes will be repeated, but more importantly, action plans cannot be constructed that effectively target the appropriate strategic enablers to produce efficient returns. For example, before acquiring appropriate project managers and resources, organizations must identify existing project management skills and categorize ongoing projects to understand the current opportunities and their risk profile. Benchmarking project performance establishes the stability of existing practices and identifies current alignment. Defining and documenting standard practices enables communication and supports training as the PMO evolves. Proactive management as shown in Figure 3 brings a predictable process and better quantification of returns. Initially, each of the maturity levels illustrated in Figure 3 may be indicative of existing projects, but PMOs will enable more consistent project control, and predictable results as assessments and continual improvement are applied.

Maturity Level Management Focus Strategic Enabler Scope Optimized (Quantitatively) Managed Defined Stable Aware Portfolio Management Value Management Program Management Center of Excellence Outsourcing Program Management Performance Measurement Risk Management Customer Relationship Management Independent Auditing Vendor Management PM Workforce Management Quality Management Change Management Project Planning Project Estimating Project Scheduling Project Budgeting Procurement Management Project Budgets Resource Management Defects Figure 3 PMO Maturity Business Agility and Alignment Organizational Change, Performance Evaluation and Accountability Collaboration Training, Centers of expertise, standardization Benchmarking and Assessments Enterprise Business Units Cross-projects Key projects Isolated projects Staffing the PMO Staffing an effective enterprise-level PMO is a challenge for most organizations. Even when a PMO is a localized, single-department entity, finding the right project managers and support staff can be difficult. Identifying and assigning roles and responsibilities is a critical first step whenever projects are a significant source of revenue, innovation, or value. Consider the role of a PMO Director. The existence of a PMO director shows a commitment to focus on the consistent use of the project management process throughout the organization. This position provides project oversight in virtually all areas of the organization, managing corporate-level projects, and overseeing corporate-wide resource

distribution and allocation on all projects that cross-divisional boundaries, as well as some large projects performed within a department. The PMO Director will sit at the director or vice-president level with other senior executives in the organization. As the expert on project management, the PMO director also serves as an ad hoc consultant and advisor to project leaders and teams. The PMO director must possess many skills, and have enough stature and respect throughout the organization to champion projects from start to finish and to recommend canceling projects whose objectives either can't be met or are no longer valid. He or she must have the demonstrable backing of senior management, especially critical early in the transition to the PMO structure. The PMO Director is a relationship manager, a communicator, a liaison to executive and functional management, a process integrator, a staff manager, a project resource coordinator, a standards and methods coordinator, a mentor, training coordinator, and point of interface between projects, programs, and the executive staff. This is a role that must be filled with the same care that companies take in assigning a CIO or a CFO. The broad range of potential activities creates a broad range of PMO services to consider when establishing PMOs or when selecting consultants to kick-start the program. Service Area Description Level 1 Enterprise Assessment Organizational Change Management PM and PMO Training Project Portfolio Management PM and PMO Methodology PM and PMO Performance Measurement Project and Program Managers Maturity analysis and gap assessment to identify opportunities Assessing organizational readiness and existing barriers to change; Support for action planning for improved project management strategy and practices Identification of training vehicles; Briefings and facilitated discussions; Mentoring and coaching to reinforce methodologies Support in selecting and monitoring an optimum set of projects that maximize value and minimize risks; Support for dashboard development Subject matter experts and templates for policies, strategies, plans, processes, etc. Metrics program established to measure tangible benefits of PMO and PM practices Identify scope of work; coordinate with business sponsors Project Control Level 2 Program Control Project Planning Build and tailor plans and strategies that provide Level 3 Enterprise Control

Controls Specialists PMO Auditing PM Tools PMO Lessons a framework for processes Work with project managers to monitor critical issues, risks, and status reporting Independent verification and validation of Project management and PMO compliance to standards and established practices Microsoft Project Office Microsoft Project Server 2003 Table 4 PMO Services To create a PMO that is a good cultural fit and effective, start out with well-defined pilot projects, and get senior management involved either in terms of sponsorship or a direct reporting relationship. Obtain expertise to facilitate getting started, leverage existing strengths, and sustain momentum. Ensure that all selected projects support a business goal or strategy. Provide a process for resource allocation and capacity management. Provide a standard methodology for managing projects. Have the information needed to make effective decisions. Designate responsibility for process and project reporting and tracking. As metrics mature, ensure that similar projects are executed in a similar way. With tailoring and cooperation, creating a PMO that works for your organization is a matter of discipline and getting started on the right path. Instead of more from less PMOs enable more from more reuse, more improvements, more resource flexibility, more consistency, etc. EM&I can supply the methods and direction to make PMOs an efficient and effective success for any organization with the will to do more with much more. About the Author: Dr. Donn Di Nunno CCP, CDP. is an expert in metrics for software process and product improvement with over 29 years in software engineering. Mr. Di Nunno s areas of specialization include: IT Metrics & Measurement, Quality Management and Process Improvement, Data analysis, Systems Re-engineering, Design Recovery and IT Portfolio Management. Donn joined EM&I as a Chief Engineer in 2002. From 1997, he worked at META Group as a Program Director and Sr. Research Analyst in performance measurement. He was also a Sr. Consultant with Computer Sciences Corporation s (CSC) Center for I/S Asset Management. He examined, integrated, and deployed emerging technologies for improving productivity and quality in legacy system environments. He established the quality assurance department and was the QA Manager for CSC s contract on the National Flood Insurance Program in 1986. About EM&I: Engineering, Management & Integration (EM&I) Incorporated is a client-focused, management-consulting firm bridging the gap between business and technology. Our teams of highly skilled specialists provide clients engaged in technology intensive business situations with solutions geared to reduce risks and ensure successful results. In an ever-changing business environment, we support our client agencies in four key areas: Strategy, Architecture, Business Solutions, & Governance. Please visit http://www.em-i.com for more information. Contact EM&I: If you are interested in hearing more about EM&I's services to the government and private sector or would like to discuss potential teaming arrangements, please contact Dr.Malcolm Slovin at 703.742.0585. 2005 All Rights Reserved.