It s all about the results Moving from process to outcome management for strategic project execution with the Results Management Office

It s all about the results Moving from process to outcome management for strategic project execution with the Results Management Office

Why do 90% of organisations fail to effectively execute their strategies? Most business strategy authorities agree that the majority of organisations fail to effectively execute their strategies. In fact, research indicates that 90% of organisations fail at strategy execution, losing the competitive advantage identified during the strategic planning process. When analysing the strategic management process, it becomes clear that a lot of energy and focus is placed on the definition of strategic imperatives, with little focus on the execution and measurement of these initiatives. Typically organisations do not have comprehensive, disciplined systems for managing the implementation of their strategies. Strategy implementation requires a different approach to the typical IT project management; however, it still does not dispute the need to build a rigorous system to support and monitor the implementation. Deloitte has identified four main areas that typically impact the success of strategy execution. Limited people management and organisational readiness Organisations often underestimate the importance of organisational factors in translating a growth strategy into reality. Strategic projects are the engines of growth, while people are the engine of projects. The strategic importance of human capital has grown exponentially as the workforce has changed to knowledge workers. Most project problems are not technical problems. They are people problems! That is not because project teams and stakeholders comprise difficult personalities, but rather because they are subjected to organisational processes and policies that are counterproductive and they are naturally conservative to embrace change. We have found that communication, stakeholder management, change management and training are often forgotten or have a low priority when implementing complex strategy projects. Heavy programme and project administration and governance Programme Management Offices are perceived as adding administrative costs and bureaucracy without a clear correlation to business benefits. Research indicates that even effective PMOs are designed to have limited reach or mandates to manage and embed change within organisations. These PMOs are essentially paper tigers or post offices and have little understanding of inter-dependencies, competency requirements and the complexity of managing strategic change or influencing the outcomes of programmes outcomes. Skills shortage and competency gap In the South African context, the skills gap in programme management environment is significant. The Chaos report shows that two out of three projects fail to deliver their full scope, with the most frequent cause being the lack of project management skills. Many organisations utilise the contractor model to staff projects; however, this has a major impact on the institutional knowledge and initiative sustainability. Alternatively, employees are allocated project management responsibility in addition to their normal delivery. These resources have limited or no training on how to effectively manage projects and align the performance management process. Limited Strategic alignment The ability to achieve strategic alignment and integrate results from programmes has proven to be very challenging. In-flight projects often continue even though it is difficult to understand the strategic intent and despite benefits not being delivered or measured.

The end of the road for the administrative Programme Management Office While many organisations have made significant investments in the establishment and the ongoing management of PMOs, they often fail to deliver their intended business value. Programmes run over budget, miss timelines and disappoint sponsors and customers, ultimately resulting in organisations being unable to execute on strategic plans. PMOs continue to struggle to make the transition from bureaucratic entities drowning in document overkill to strategic visionaries driving portfolio change, while removing barriers to delivery. In today s environment, the PMO must transform to become a change agent for business, taking advantage of new opportunities by stripping away inessentials and creating a framework of practices that promote total transparency and delivery. For many companies, the PMO has emerged as the central weapon in the battle to improve the way programmes are managed. Private companies and governments spend billions to establish and sustain these initiatives year after year. However, with nearly half of all projects still missing their timeline or budget, there is clearly room for further progress. An outcomes-based approach The RMO is a move away from the traditional rigid academic approach towards a more flexible approach that adapts to changing delivery models and outcomes management. The RMO approach takes the traditional functions of scope, schedule, cost and issue and risk management to another level through: A deeper understanding of an organisation s business objectives and the alignment of a programme s goals with those of the organisation The incorporation of domain-specific knowledge to achieve integration The emphasis of the importance of organisational dynamics and human factors in programme success A lean programme and project management approach These enhancements allow the RMO leaders to focus on strategy execution, outcomes and results in addition to outputs and efficiencies. As the economy continues to recover, firms are now looking at how to prepare for growth while maintaining a leaner approach. As a result, the PMOs have had to evolve to prepare for expanding demand for their services and stay relevant. This paper introduces the Results Management Office (RMO) an expanded approach designed to address the limitations of ineffectively designed PMOs and to better enable programme and project success. What is meant by results? Certainly technical or financial performance thresholds or targets define results. The RMO approach goes beyond these traditional measures, however, to include the realisation of benefits against key performance indices (KPIs) as defined with, and set by, the appropriate executive leaders for the specific programme.

Moving from process to outcomes management with the RMO The RMO offers a service that can provide not only the day-to-day management needed to keep projects on track and on budget but also the strategic guidance and direction, technical domain expertise and the people focus required to achieve long-standing results. Furthermore, it strips away the inessentials and takes a less hierarchical approach to projects, embracing communities of practice (CoPs) to develop pragmatic methods that are consistent, measurable and effective. The RMO provides a foundation to deliver integrated and strategy-aligned programmes and projects, through improved strategic and tactical decision-making, as well as greater transparency to business benefits and decisions using the Deloitte enterprise value management methodology. The project managers will remain responsible for execution; however, the RMO will actively support execution by providing delivery assurance, risk management, domain authority, execution frameworks, the tracking of benefits and driving organisational readiness. Organisational readiness A robust approach to actively manage the strategic journey, including stakeholder management, strategic change management, communication and leadership alignment. RMO leadership coordinates the overall change communications plans that establish how, when and what change interventions are required by the projects throughout its lifecycle. Programme management Programme Management makes use of the extended visibility and reach provided by the functional areas above to enhance effectiveness of traditional PMO processes. The Programme Management area manages the execution of a Programme and is accountable for overall Programme success, reporting and monitoring and ensuring outcomes management. Strategic vision Adopting a structured and standardised approach to Value Management across initiatives maximises opportunities to identify, appropriately evaluate, invest in and realise benefits. The four key focus areas of the RMO are: Domain authority A combination of subject matter expertise and programme leadership skills, working together to ensure the final solution matches what was described in the business case or scope document.

A robust mechanism to initiate and effect strategic change The RMO serves as much as a mechanism to initiate and effect change as it does to manage the intricacies and dependencies of a set of related projects. In addition, the right focus can be placed on the decisions required to achieve results the programme s ability to meet its objectives rather than simply on tracking and reporting cost, schedule and scope information. Some of the key outcomes of a RMO include: Strategic alignment against organisational imperatives Integration across divisions, projects and programmes to ensure benefits realisation and project embedment Provision of skilled resources to support project execution through domain authority Intelligent reporting to provide visibility across the project portfolio Provision of a simple, streamlined project and programme management process and governance including tools, approaches aligned to the organisational requirements The ability to maximise opportunities and minimise risk A focus on ensuring the organisation is receptive to embed strategic change Here are some insights that can make the RMO more successful for your organisation: Find The Right Team: The RMO approach requires the ability to tap into resources from a variety of experiences to provide domain knowledge when it is required. A small team of individuals can establish the foundational elements, such as the strategic alignment and enterprise standards, change management and benefits tracking and then grow as the programme progresses. Focus on integration: The RMO is often the only group within the organisation that has visibility to provide an integrated perspective on programme objectives, resources, outcomes and benefits. Keep it flexible: An effective RMO does not impose monolithic standard processes on a programme. Instead, processes are customised and tailored to the requirements of the programme and the organisation. While discipline is important, it should not become all-consuming. Be aggressive, but be realistic: The RMO needs to aggressively drive delivery and outcomes within the context of the organisational culture and programme management skills level, within an organisation. Sponsorship and mandate: Without the correct executive sponsorship and mandate, the RMO will untimely become another monitoring structure. It is important that the RMO has the credibility to advise, drive and terminate initiatives, if benefits are not being realised. Leverage communities of practice: Project managers can learn from one another about how to be successful and also where to apply the appropriate governance and processes. Invest in a pragmatic PPM solution: By using enabling programme and portfolio management technology the RMO can minimise reporting requirements and administration and promote transparency of the portfolio.

Conclusion We believe the RMO approach can be used to extend the traditional role of the PMO and introduce complementary functions that drive outcomes. It does not mean shuffl ing paper. It does mean: Driving efforts to closure Aligning programme objectives with organisation goals and missions Focusing on meeting these objectives throughout the lifecycle Integrating domain-specifi c expertise across the programme to help ensure that what is delivered meets those objectives Preparing the organisation and its members for change Optimally managing risk, to help programmes achieve success The need for an RMO approach is clear As organisations continue to struggle to achieve success with their programmes, we believe the RMO approach offers a solution that facilitates the day-to-day leadership, guidance and management needed to make ends meet, all with the strategic direction, technical expertise and people focus required to achieve long-standing results. Contact information Vanessa Vermeulen Executive Lead Strategy and Innovation Results Management Unit Email: vvermeulen@deloitte.co.za Tel: +27 (0)11 806 5400 Nomzamo Ntuli Lead Consultant Results Management Unit Email: nntuli@deloitte.co.za Tel: +27 (0)11 806 5400 The Deloitte Strategy & Innovation practice helps clients to solve their most complex business challenges. Ranked by Kennedy as the leading strategy business in Africa, it is the largest, with an enviable track record of partnering with both private and public sector clients. We pride ourselves on the breadth and depth of our skills, and in developing executable strategies for our clients. References: 1. The Execution Premium. Robert S. Kaplan and David P. Norton, Harvard Business Press, 2008. 2. Are You Ready To Transform Your PMO? Margo Visitacion. April 8, 2011. Forrester. 3. Optimizing Human Capital with a Strategic Project Offi ce; J. Kent Crawford and J Cabanis-Brewin 4. Chaos Report. The Standish Group. 2006. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte is the brand under which tens of thousands of dedicated professionals in independent firms throughout the world collaborate to provide audit, consulting, financial advisory, risk management, and tax services to selected clients. These firms are members of Deloitte Touche Tohmatsu Limited (DTTL), a UK private company limited by guarantee. Each member firm provides services in a particular geographic area and is subject to the laws and professional regulations of the particular country or countries in which it operates. DTTL does not itself provide services to clients. DTTL and each DTTL member firm are separate and distinct legal entities, which cannot obligate each other. DTTL and each DTTL member firm are liable only for their own acts or omissions and not those of each other. Each DTTL member firm is structured differently in accordance with national laws, regulations, customary practice, and other factors, and may secure the provision of professional services in its territory through subsidiaries, affiliates, and/or other entities. 2011 Deloitte & Touche. All rights reserved. Member of Deloitte Touche Tohmatsu Limited Designed and produced by BICS at Deloitte Consulting, Johannesburg