Are You Ready to Transform You PMO Complete

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April 8, 2011

Are You Ready To Transform Your PMO?by Margo Visitacionfor Application Development & Delivery Professionals

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For Application Development & Delivery Professionals

ExEcuTiVE SuMMARYAs the economy continues to recover, firms are looking at how to prepare for growth while maintaining a lean approach. Because of this, project management offices (PMOs) are continually evolving responsibility and focus to prepare for expanding demand and stay relevant. Today’s PMOs are moving away from traditional organizations that emphasize a rigid academic approach and toward more-flexible approaches that adapt to changing delivery models. Today’s office takes a more strategic, more bare bones approach. With executive support, the new PMO strips away inessentials and takes a less hierarchical approach to projects, embracing communities of practice (CoPs) to develop pragmatic methods that are consistent, measurable, and effective.

TAblE OF cOnTEnTSIt’s Time To Get Your Act Together

Executives See PMO Maturity As A business Differentiator

Adaptability Is The Hallmark Of Today’s PMOs

One Size Does Not Fit All

The ivory Tower is Dead

The Road Ahead: Opening The Door To Total Transparency

PMOs Must Keep One Eye On The Portfolio While Getting The Job Done

Are You Ready To Transform Your PMO?

REcOMMEnDATiOnS

Be Aggressive, But Be Pragmatic

nOTES & RESOuRcESForrester interviewed PMO leaders from 12 companies.

Related Research Documents“What’s Ahead For PPM?”March 15, 2011

“involve Your PMO To Find The Right Match For innovation Opportunities”november 11, 2010

“Making The case For The next-Generation PMO”October 16, 2009

April 8, 2011

Are You Ready To Transform Your PMO?Tackling Today’s challenges To Prepare For Tomorrowby Margo Visitacionwith Mike Gilpin and Adam Knoll

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Are You Ready To Transform Your PMO? For Application Development & Delivery Professionals

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IT’s TIMe TO GeT YOuR AcT TOGeTHeR

PMOs aspire to become next-generation PMOs but 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. Today’s PMO must transform to become a change agent for business technology, taking advantage of new opportunities by stripping away inessentials and creating a framework of practices that promote total transparency. Administrative PMOs are outdated. Today’s PMO must provide teams with the support they need to grow and develop the practices that maximize their creativity and efficiency.

executives see PMO Maturity As A Business Differentiator

Forrester interviewed 12 PMO leaders about the reasons behind their success. The interviews clearly revealed that they were able to excel when their senior management saw consistent project management practices supported by a strong PMO as a key business process. “Our CIO sees the value of strong project management,” says the PMO director of a North American healthcare company. “We have an intense need for good execution.” Firms recognize the need to set up standards and make them an organic part of the organization because (see Figure 1):

· Less-mature PMOs fight battles on many fronts. From project prioritization to value realization, low-maturity PMOs juggle many responsibilities. At this level, PMOs tend to be within a single organization (usually IT); therefore, education is critical, but so is action. The main challenge is establishing a support network among project stakeholders to create consistency in project-related practices in order to gain credibility with skeptical business partners used to political maneuvering over value-driven planning.

“IT understands the need, but managers are resistant to change. Our business partners aren’t really our customers yet[; it’s] a maturity issue. Our CIO is relatively new and wants to drive accountability. Our goal is to have a common understanding of project management and a common knowledge in how to [plan and deliver]. Our project managers are hungry for this, but management is still a bit resistant.” (PMO director, global energy company)

· Moderately mature PMOs have created the baseline; now they need to spread the word. Project organizations that have achieved moderate maturity have fought hard to establish consistent practices, and on a tactical level, they have created repeatable execution practices for larger, more-visible projects. Momentum for these PMOs is critical, and in order to sustain it, they must move from a singular focus to a cross-organizational one. Execution priorities include gaining more reliability in reporting and extending prioritization for high- and lower-visibility projects to achieve greater portfolio visibility, which helps transform the practices into an organic part of the process and makes value realization — measuring portfolio performance — more consistent.

© 2011, Forrester Research, inc. Reproduction Prohibited April 8, 2011


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“We’ve learned that you can’t shoot from the hip anymore. For us, project management has come to the forefront of business. [The PMO] has trained VPs how to be project sponsors. We’re showing them that project management expertise doesn’t slow things down. We’re showing them that you can get more done by working on fewer projects with greater deliberation[;] you’ll get more done than [by] continually changing direction.” (PMO leader, North American healthcare company)

· Very mature PMOs drive standards to encourage efficiency, not bureaucracy. The most-mature PMOs focus on how companies need to execute as a whole. Multiple PMOs are the norm to drive consistency throughout the organization. Federated or latticed approaches enable the enterprise project management office (EPMO) to focus on optimization practices while still maintaining an advisory relationship with the business units it supports. Strategy drives investment in innovation as well as techniques for managing maintenance and operations activities. PMO involvement in these mature organizations emphasizes optimizing project management practices and extending them to cover nontraditional project tracking to provide realistic views of resource capacity as well as continued portfolio alignment. These mature organizations establish fully supported governance, metrics, and portfolio standards.

“We are seeing an increase in productivity because the PMO is making huge strides to remove redundancies and duplicative activities and locate them in a single place. Now that we are driving consistency and see a standard process for reporting, [it’s] improving project productivity.” (Managing director, global program management office, global financial services company)



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Figure 1 Executives Recognize That Mature PMOs Are critical To Sustained Success

Source: Forrester Research, Inc.58510

Lower-maturity PMO• Prioritization challenges• Projects are not always

aligned with strategy.• Inconsistent project

performance• Unable to measure

project value post-implementation

Moderately maturity PMO• Prioritizes high-visibility

projects• Some alignment with

portfolio• Improving project

performance• Resource planning begins.• Higher-visibility projects

are measured forperformance.

Mature PMO• Integrated portfolio/

program/projectmanagement

• More work is projectized.• The methodology is flexible, with

an emphasis on frameworks.• Standard measures for

performance and value are in place.

• A resource managementstandard is in place.

• A communities of practicestandard is in place.

• A suite of tools is in place.• Teams are incented to

optimize performance.

ADAPTABIlITY Is THe HAllMARk OF TODAY’s PMOs

Organizations today quickly realize that the cycles of business rarely slow down to allow them to retrofit practices; if you’re not adaptable, you’re dead. The days of doggedly bureaucratic PMOs are starting to fade: If PMOs cannot adapt to accelerated or Agile practices, they become the problem, and the organization dismantles them.

One size Does Not Fit All

Successful PMOs quickly learn that no single prescription for a PMO exists. Project needs, corporate structure, and culture force PMO directors to adapt their approach to support their organization’s specific project and portfolio management needs (see Figure 2). However, there are some basic types of PMO you can use as a starting point as you work to decide which model will best fit your organization’s needs:

· Tactical PMOs target the basics. Projects are the most-visible work initiatives, and they often carry the most risk and benefit. Tactical PMOs focus on getting the job done for the processes supporting project delivery by integrating the project management methodology with



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project-specific activities such as development and deployment. Tactical PMOs’ primary goal is consistency — and as these PMOs’ maturity level tends to be lower, establishing pragmatic project governance is crucial to achieving that objective. Tool use is another tactical focus for these PMOs; while project portfolio management (PPM) tools may be evident, most organizations rely on Excel or SharePoint to communicate project information.

The tactical PMO is organizationally static: It has clearly defined role responsibilities and manages the traditional activities of best practices development, project reporting, and administration. Tactical PMOs typically support a single area, such as IT. Hands-on command-and-control project management is becoming more prevalent, with about half of PMOs having project managers as direct reports.1

· Strategic PMOs look at the big picture. Strategic PMOs don’t abandon tactical PMOs’ responsibilities; however, except for corporate or cross-organizational projects, they take a less-hands-on approach regarding actual project delivery. Because strategic PMOs tend to be more mature and have wider organizational support, their organizations usually already have basic best practices in place. Portfolio management alignment and selecting the right projects at the right time become a greater focus in these more-mature PMOs. Tools are in active, if not consistent, use. Organizationally, project managers are more likely embedded within the business or technology groups they serve. Communities of practice become more commonplace and collaborate with PMO training to foster project management as a profession and to refine best practices.

· Transformational PMOs take it to the next level. Transformational PMOs fully integrate into the company’s project planning and delivery. The EPMO transforms from an enterprise project management office into an enterprise program management office because its emphasis shifts from separate, distinct project planning to holistic, integrated initiative planning and execution.2 Organizations with transformational PMOs integrate methodologies, metrics, and tool usage, recognizing that business and IT must work together to deliver effectively. CoPs are imperative at this level, because while the PMO places great emphasis on standardization, the community must recognize and refine individual practices to enable extended support from stakeholders and to continuously drive project management as a professional role and as a stakeholder in business success.

Maturity and cultural attitudes play a role in determining a PMO’s location and style. Though most organizations have various flavors of PMOs, mature, forward-thinking companies are consistently adopting a transformational view of project and program management.



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Figure 2 PMO Models Range From Tactical To Transformational


Target: Tactical PMO Strategic PMO Transformational PMOFocus Project Portfolio • Strategic planning

• Value-driven delivery

Methodology Project only • Portfolio• Project framework• Some life-cycle

management

• Enterprise portfolios• Adaptable project management• Life-cycle management

Emphasizes • Tools• Governance• Reporting• Some hands-on project

management

• Tools• Governance• Reporting• Hands-on program or

corporate projectmanagement

• Some tools• Governance• Reporting• Project management

professionalism• Compliance• Risk

Managementstyle

Command and control • Command and controlportfolio

• Collaborative projectmanagement

• Collaboration and communitiesof practice

• Portfolio oversight and reporting

Size Static Static Adaptable

Organizationalstructure

Reports to director ofIT/LOB

Reports to VP or C-levelexecutives

Reports to C-level executives

The Ivory Tower Is Dead

Today’s PMO lives, although perhaps not in a familiar form. Today’s PMO isn’t as concerned with traditional labels or structures, as long as the job gets done. Bureaucracy has no place in today’s PMO; business executives realize that while standardized practices bring accountability and consistency, they cannot allow this to slow down progress or the ability to react to critical business changes. Adaptability is crucial, and today’s PMOs:

· Transform PMO structures to fit company culture and delivery style. Organizational structures play a large role in determining project delivery styles. Highly centralized or federated organizations benefit from a strong centralized EPMO, while decentralized companies may take a decentralized or latticed approach to their PMOs.3 Labels are not important; sustained practices are an organic part of the company’s delivery methods. Successful organizations analyze what works and make it standard.

“Eight months ago we disbanded our central PMO and placed [it] within the individual brands. We blended project management in with the business. My job is to build know-how worldwide — how to run projects the right way. We’ve built communities of practice, training, and mentoring. Everything is voluntary, and everyone is excited by that.” (Global PMO director, food industry)



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· Integrate best practices from the ground up. Today’s PMOs are not relying only on training as a way to drive project management best practices into their organizations; mentoring and communities of practice (CoPs) are increasingly finding their way into companies as a way to foster greater visibility and executive support for PMOs. Participation ranges from voluntary to a required part of management development. PMOs using CoPs as a training mechanism find that the approach brings additional benefits, including visible executive support.

“We bring our PMO managers together for two hours every month as part of the forum and governing body — it’s part of the job description, and they are chartered as part of the council. We have a multiyear agenda that focuses on governance, capabilities reporting, and tools. We have project managers on task[s that] force [them] to build [continuous improvement]. We measure it closely and make it part of their career path.” (Global director program management office, financial services industry)

· Bring the business in to build a global project approach. Companies committed to a holistic approach to portfolio and project management continue to tear down the walls between technology and business execution. To these organizations, business direction, key applications, and technology initiatives are of equal importance to overall success. They take a transformational approach to project management — working to understand the specific requirements of different projects while holding them to equal standards and requirements for accomplishment. Whether a project’s goal is constructing a branch office or delivering customer-facing web applications, it must use proven methods to achieve success.

“We’re focused on getting faster and more effective. We have a global EPMO that provides standards to every PMO, but we’re a hybrid model. We have program managers that focus on cross-functional programs that affect the company, but then we leverage CoPs to drive out the standards. We are not going to manage every project, but we’re giving everyone the processes and tools they need to be successful.” (Global EPMO director, international beverage company)

THe ROAD AHeAD: OPenInG THe DOOR TO TOTAl TRAnsPARencY

Regardless of its maturity level, structure, or methods, every PMO strives to maximize transparency for the organization it supports. Executives require confidence in the data they see in order to make strategic decisions. Managers need visibility into progress and capacity in order to drive effective practices within their ranks, and financial officers need insight into costs to guide their work in budget control and compliance. PMOs find themselves tasked with the responsibility of gathering that data and distributing information. As a result, PMOs are taking on more portfolio management responsibilities, a move that highlights that effective planning and delivery cycles require sustained support.



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PMOs Must keep One eye On The Portfolio While Getting The Job Done

Taking a holistic approach supports stronger linkage between the project portfolio and the overall IT portfolio.4 As PMOs continue to build out stronger delivery processes, they must ensure that while focusing on an organization’s new initiatives, they don’t lose sight of how all IT work affects the project portfolio (see Figure 3).

To do this, a PMO must:

· Build a robust and consistent demand management and prioritization process. IT organizations are quickly learning that when taking a portfolio approach to managing areas other than projects — namely, application and service portfolios — they must broaden visibility because of the impact this approach will have on shared groups of resources. PMO disciplines lend a natural hand to organizations building out the sourcing process. The PMO helps consolidate demand, allowing the owners of IT’s various portfolios to see the resource impacts across the board.5 Prioritization is a tougher process but is equally critical in helping the organization drive a consistent method of selecting the right projects at the right time. Using scorecards and other best practices, PMOs become stewards of the prioritization process.6

“We needed to have a central portfolio — to see the projects and to manage change caused by new projects. Our project portfolio consists mostly of new projects and business change; however, if it’s a big enough maintenance project such as an upgrade to PeopleSoft or [salesforce.com], it’s a project. That way we can control the impact of demand on the portfolio. We are constantly discussing prioritization. Everyone thinks their [project] is most important. We’ve become the de facto prioritization group because we manage how resources are allocated.” (PMO director, global energy group)

· Use appropriate measures to demonstrate and guarantee continued executive support. PMOs must continuously justify their value to garner sustained support for the structure and the processes needed to do project planning and delivery. By selecting the appropriate goals and publishing them, the PMO can demonstrate that the organization is reaching portfolio objectives or that it is at risk due to poor support. PMOs should focus on issues such as change, project cost, and value — all common and important metrics.

“We manage change; we help everyone become more focused on building a better foundation for systems and projects. It’s helped us establish better architecture, better security levels, and better applications. We’re still going through growing pains, but we’re moving in a positive direction. We publish this in our portfolio, and we’ve seen quality improvements.” (Director of the EPMO, US state government)



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Figure 3 The PMO And its Role in Portfolio Management


I T PMOLOB PMOePMO

Portfolio

Projectportfolio

Projectportfolio

Services

Maintenance

Operationalprojects

Projectportfolio

Are You Ready To Transform Your PMO?

External change more often spurs PMO transformation than internal change, and today’s business environment is a rich source of inspiration for foundational changes. Every PMO representative we interviewed for this report saw systemic change opportunities driven by regulatory changes, economic shifts, or business opportunities. To prepare the PMO to become a change agent for the organization, PMO leaders must:

· Find a champion to support necessary changes. PMOs buried in the organization face too many barriers to drive real change — they lack the authority and visibility to work beyond a narrow frame of reference. PMOs that have been able to bring change report directly into senior management. The most-successful PMO leaders we interviewed report to C-level executives with a program or project management background. Others are able to work closely with a senior executive who sees value in a holistic approach to project management that is closely tied to the portfolio. This support gives the PMO authority to enforce changes as well as accountability for supporting practices that drive company success.

· Create a clear career path for project managers. All but one of the individuals we interviewed worked at a company that had established or was in the process of establishing a clear career path that formalized the project management career. Formal training and career development with a visible growth path attracts excellence to the PMO and builds credibility with business leaders and management.



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· Establish communities of practice — now. Formal training is important, but to foster the project management mindset, project managers and stakeholders have to have a sense of ownership and a say in how the firm manages projects. Professional frameworks such as the Project Management Body of Knowledge (PMBOK) and PRINCE2 provide guidance, but real-world experience and team-driven problem solving provide greater support in driving sustained growth. “When everyone has a sense of ownership,” said one PMO director, “people stop looking for a way around the system.”

· Gain consensus on the metrics that matter, and apply them often. Traditional measures such as cost and schedule will always be part of the process, but transformational PMOs also look to quality measures such as reduced rework, resource allocation levels, and customer satisfaction as ways to demonstrate the PMO’s effectiveness. Practices such as polling key stakeholders to find out what’s important to them and coaching project managers to set metrics at the start of each project enable the PMO to get a realistic view of portfolio and project progress as well as how effectively the process is working.

· Realize that tools are necessary, and work to find the right ones for the organization. It’s critical to drive standards and consistency, and finding a tool set that helps instead of hinders the process enables the PMO to guide changes faster than it could without tools. PMO leaders realize that PPM tools enable them to roll out reporting and project standards; once these capabilities are in place, PMO leaders can allow project managers more flexibility at the individual project planning level, as long as they use the standardized reporting, resource, and cost management activities.

· Show value quickly to make sustained changes. All of the PMO leaders we interviewed had held their position for less than four years, and most less than two. Each leader knew that the PMO had to demonstrate real but incremental value within the first six months to retain executive support. To do this, the PMOs focused on specifics first — such as starting in a single organization or with particular portfolios — and then broadened changes as project management became a systemic part of the company. One PMO leader from a global energy company noted that the PMO started with the IT department; about a year later, when it became clear that IT was the only operating group that could demonstrate success, business leaders started asking for PMO help to build their project management practices.



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R E c O M M E n D A T i O n S

Be AGGRessIVe, BuT Be PRAGMATIc

While every PMO leader wants a transformational PMO, the reality is that not every organization is ready for one. However, PMO leaders can make substantial changes to how the PMO supports project delivery in order to bring greater value to the broader organization. PMO leaders should:

· start with a project plan. Realize that this is a project in itself. Many of the PMO leaders we interviewed stated that their transformation was a planned project with clear objectives and deliverables. Without this guidance, PMOs will quickly run off track. Drink your own champagne, and make it a successful project.

· Get a champion. While you can’t pick your boss, it’s important to realize that buried PMOs don’t work — and they don’t last long. Approach business executives to find out what they expect and understand about project management in their organizations. Show them the impact of resource management and inconsistent practices, followed by your improvement plan. Get their feedback about what works and what doesn’t, and use that in your transformation plans.

· start communities of practice. no one wants to fail at managing projects. by providing a sense of ownership, formal and casual project managers can learn from each other about how to be successful. incent project managers in their career plans to mentor junior or casual project managers to help build bench strength for project management expertise.

· Invest in a pragmatic PPM solution. Successful project and portfolio reporting relies on accurate data, and that means that there must be a central location for all project information. PPM tools support standardizing practices and reporting — use them for managing resources and planned work. While it’s important to load current project information, think about the long run to make sure you’re not continually retrofitting the tool as you mature. Phase the implementation by focusing first on the critical aspects: projects, resources, and portfolios.

enDnOTes1 According to The State of the PMO 2010 report issued by PM Solutions, approximately 50% of the surveyed

PMOs have project managers as a direct report. Source: “The State of the PMO 2010,” PM Solutions (http://www.pmsolutions.com/collateral/research/State%20of%20the%20PMO%202010%20Research%20Report.pdf).

2 You can support achieving a holistic planning approach to delivery by adopting program management practices that provide visibility into the impact of cross-project planning on achieving business and technology objectives. See the December 31, 2009, “Leverage PMO Skills To Build Program Management Competency” report.





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3 The advent of the latticed PMO enables organizations to share best practices without the danger of incurring bureaucracy. See the April 9, 2010, “The Next-Generation PMO: The Latticed Model Enhances Enterprise IT Visibility” report.

4 As organizations increasingly call IT to show its alignment to business objectives, the project portfolio plays an important role in demonstrating how new initiatives fit into the IT portfolio. See the December 9, 2010,

“Forrester’s Best Practices Framework For BT Portfolio Management Leadership Maturity” report.

5 Consolidated demand and prioritization processes can help an organization optimize all its portfolios. See the January 14, 2009, “Four Steps To Optimize Your Application And Project Portfolios In Volatile Economic Times” report.

6 Project prioritization is difficult, but creating a consistent practice and using it across the business groups requesting projects can simplify it. See the July 25, 2008, “Who’s On First — A Simple Model For Project Prioritization” report.








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