Delivering What Matters – A Case for PMOPMI –SV Trends & Viewpoints

Aug 26, 2013

Anita Merchant, PMP, CSM, CSPO, ITIL

2

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

3

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

4

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

5

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.

French multinational corporation providing IT services, professional

services and global management consulting.

Global management consulting, technology services and outsourcing

company enabling clients to become high performance businesses and

governments.

6

Exercise: Your View – PMO Newsflash

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.

Task

You have 5 minutes to produce your “Newsflash”.

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The Bad News

Over the last five years the PMO failure rate was

as high as 50% in the first year.

- Source: 2012 Gartner study

75% of PMOs fail in the first three years.

- Source: Forrester study (2011)

Less than 10% PMO are considered “high

performers”. Less than 1% PMOs are

considered “Best in Class”

- Source: The State of the PMO – 2007-2008. A Benchmark of

Current Business Practices Center for Business Practices (CBP)

Study)

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

In low performing organizations, PMOs face much 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

72% of organizations do not track benefits

beyond projects close. Benefits realization and supply and demand planning are expected to be the most challenging areas for PMOs over the

next two years.

-Source: 2011/12 PMO Trends Survey by PM-Partners Group

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)

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- Value / ROI not

justifiable

- Lack of business

alignment

- Lack of adaptability to

business change

- Not strategic

- Not tied to business

-No clearly defined

goals

-Lack of sponsorship

& mgmt support

-Doing too much

too soon

-Too academic

-Positioned at

wrong level

-Too much or too

little authority

Operation

Sin

gu

lar fo

cu

s

Maturation

Sta

tus Q

uo

- PM Police

(Command Control:

approve, reject, audit)

- Watchdog

-Administrative

-Focused on process,

tools & templates

Why have PMOs failed

Implementation

Po

or P

lan

nin

g

Strategy

La

ck o

f Vis

ion

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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!”

Why Does Business Need a PMO

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“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

Definitions - Traditional PMO

“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 changeleadership.”

Project Management Institute (PMI) Program Management Office Community of Practice (CoP)

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Business Delivery

Definition - Modern PMO

Execution Excellence

Strategy Drivers

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

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Department 4

Department 1

Department 2

Department 3

Current Scenario

Department 4

Department 1

Department 2Departments 3

Future Scenario

Breaking Down Barriers (Cross Functional Organizations)

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The Good News

Courtesy: Accenture

15

Companies with Successful PMOs

80%

RO

I

31%

Pro

ject

Failu

re D

ecr

ease

19%

Pro

ject

s on S

chedule

Perc

en

tag

e %

30%

Pro

ject

s under

budget

21%

Pro

duct

ivity incr

ease

17%

Cost

Savin

gs

13%

Reso

urc

e C

apaci

ty

Source: The State of the PMO 2010. PMO Value

Benchmarks. Courtesy Robert Goodman

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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

Setting Up a PMO

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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

Business /

Org mission

PM maturity

& org skill

levels

PMO drivers

& business

needs

Size: One Size Does Not Fit All

Organization

sizeNumber of

projects

Political &

cultural

environment

Involve

Educate

Inform

Assess

Change Management Cycle

All PMOs are not created equal

Champion

Sponsor

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

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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

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

Explanatory: Case for Change

Perspective:What the future

holds

Inspirational:Building desire

Enabling:Building capability

Catalytic:Building will &

momentum

Illustrative:Role modelling the

way

Celebratory:Rewarding success

Reinforcing:Measuring success

Institutionalising:Penalizing failure /

non-compliance

Supportive:Building a supportive climate and

mechanisms

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PMO Implementation Strategies

PMO Charter PM MaturitySponsor /

Mgmt SupportPerception of

Value

Political

EnvironmentCulture /

Value System

Strategy Drivers

Implementation Approaches

Evolutionary/Incremental

� Lower implementation risks

� Lower start up costs

�More suitable if high resistance to change

and low management support

�Will take longer to demonstrate ROI

Revolutionary/Wholesale

�May be able to demonstrate ROI

quicker

�More suitable if crisis or recognition at

high level that change is imperative

�Higher implementation risks

�Higher startup costs

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The Floor & Stairs – Goals & Roadmap

Understand pain points

and goals of the

organization. Agree on

what needs to be changed

PerformOrganizational Assessment

Define Goals &Create PMO Charter

Prioritize Goals& Create Roadmap

Develop BusinessCase

Define goals, services,

governance, KPMs,

funding model, etc in

the PMO Charter

Select top priorities

and build a short,

medium & long term

roadmap

Estimate costs of current wastes,

lost opportunities, failed projects,

redundancy, poor decisions and

compare against benefits of

future solution

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

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

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First Pillar - People

� PMO Director

� Portfolio Manager

� Process expert

� Trainer

� Project manager(s)

� Communications and Change

Mgmt Lead

� Resource manager

� Administrative Support

� Relationship/Account Manager

� Tools Support

Determine desired

skills and roles

� In-house resources

� Hybrid (In-house/contractors)

� Ad hoc contractors

augmentation

Consider Staffing

Approaches

�Staffing model based

on many factors

(budgets, labor

policies/strategies, in-

house skills,

technical expertise,

etc.)

�Charter will drive

skills needed

�Skills do not

necessary have to

reside in the PMO

�Typical size: 3 - 8

Start Small and Grow

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Second Pillar – Services & Interfaces

Catalog of Services

PortfolioManagement

StatusReporting &Dashboards

ResourceManagement

FinancialAnalysis

Project Process Development

Training &Support

Project ManagementServices

ProjectExecutionServices

Best PracticesRepository

Define Scope

Determine

Relationships &

Interfaces

�Business and functional groups as customers

�PMO seen as a credible “go-to” source of information by

management

Start Small and Expand

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Third Pillar – Tools & Templates

�

�

�

�

� 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

Lessons

LearnedProject

Dashboard

Project

Report

Project

ScheduleRAID LogProject

Budget

Project

LifecycleProject

Charter

Project

Requirements

Example Toolset

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INITIAL

Ad-hoc and

disorganized

MASTERED

Best practices, automation,

continuous improvements

DEFINED

Documented, repeatable

CONTROLLED

Measured and monitored

MANAGED

Consistent, enables decision

making

Walls – PMO Maturity Model

Identify Capabilities

DetermineScale

“As is” Analysis

“To Be” Goal

Create Roadmap

Financial analysis,

risk analysis, project

planning, resource

allocation, etc.

Define rating criteria

from initial to

mature

Current state

assessment

Target rating for

capabilities

Current -> Next

� Define vision of fully

functioning PMO in 2 – 5 yrs

� Compare against best

practices

� Different models (CobiT,

OPM3, ISO 15504, CMM/CMMI)

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Doors & Windows – Metrics & Success Measures

Less that 15% of PMOs employ formal

metrics program (Source: Forrester

Research)

Project vs PMO metrics - PMOs should

be willing to subject itself to the same

types of measures it require of a project

or program

Metrics are essential for growth &

support – demonstrate progress, value,

& productivity

Types of Metrics (Examples)

No such thing as typical metrics (driven

by PMO Charter)

How do you want to look to the outside world?

•ROI achieved from early delivery

•Cost savings

•Revenue increase

•Percent of projects subjected to decision analysis

•Spending eliminated due to prioritization

Value Metrics

Executive focus -measure and demonstrate

value to business

•Number/percent projects completed on/ahead of schedule

•Number/percent projects completed on/below budget

•Number projects managed – increase over year (target vs. actual)

•Percent of resource utilization

•Percent of billable versus non-billable time

Functional Metrics

Internal focus –performance & quality of PMO

functions

•Turn around time on business cases

•Turn around time on responding to stakeholder request

•Customer satisfaction

•Issues turnaround time

•Quality of information

•Reduction in issues

Service Level Metrics

Customer focus –service level, QoS

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Roof – Communication

PMO as a hub of Communication

SAMPLE COMMUNICATION MATRIX

Focus Area / Communication Item ClientProject

Managers

Functional

Managers

Resource Management

Skills Matrix

Forecast

Execution Excellence

Project Dashboards

Change Management Reports

Define what

info is

needed by

whom &

when

Devise

efficient ways

of collecting

info

Simple &

efficient

reports

Validate &

improve data

reported

Show value of

info to

providers &

receivers

Adapt to

need for

info

changes

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Success Drivers for a new PMO

Top Down Support

Bottoms-upBuy-in

Strong LOB / Client representation

KPIs Measured & Reported

Executive Sponsorship

Clear Charter

Communications & PR

Governance & Priorities

Time to Derive Benefits

Evolution of a Modern PMO

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Elements of Maturing a PMO

Resource

Management

Business

Value

Management

Benefits

& Cost

Management

Performance

Management

Portfolio

Management &

Governance

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

business impact

Has to be much more than a keeper of processes,

standards and lessons learned

Focus on strategic rather than tactical activity

Understand enterprise value chain & how projects

in portfolio can make a difference at each link

Must be part of decision making and successful

contributor to enterprise value creation

Discussions go beyond the level of projects, tools

and processes to business value, investments

and performance

Must grow in skill, not in numbers

Be valuable business partners in the enterprise

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Portfolio Management & Governance

PROJECT MANAGEMENTDo Projects Right

PORTFOLIO MANAGEMENTDo The Right Projects

PROGRAM MANAGEMENTDo Projects Together

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

PMO Maturity

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

Clarify business objectives

DetermineValuationCriteria

CreateInventory

Rate Projects

Select Projects

Validate &

Initiate

Manage&

Monitor

� Strategy Map

� Org Objectives

� Based on objectives

� Financial or Scoring

� Limit to 4 - 10

� Poor criteria =>

wrong projects

� Projects

� Requests

� Ideas

� Use valuation criteria

� Early estimates:

� Dependencies

� Constraints

� Resources

� High Impact

� High Value

� Meet teams / mgrs

� Portfolio feasibility

� Refine:

� Dependencies

� Constraints

� Resources

� Performance Mgmt

Maximize

Balance

Align

Execution -> Strategy

No pet projects!

Greatest ROI

Biggest bang for the buck

Not lopsided

Not too risky

Short vs long term results

User Balance Displays

Popular Balance Displays: (1) risk vs reward bubble charts (2)

strategy vs tactical range (3) market vs product line segmentation

(4) time-to-completion (5) time to profit)

Review and update regularly

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Strategy

implemented

Portfolio Management & Governance

Best Practices

Benefits

Portfolio Process Maturation

Real-time portfolio analysis, reporting and planning, structured investment decision

making

Continuous portfolio reviews and planning

Inventory of projects

Scoring� Customer request, � Break-fix� Resource capacity� Innovation� Risk mitigation� Compliance� Cost savings� Market share� Alignment to company goals� Competitive advantage� Technical feasibility

Valuation Criteria (examples)

Financial� Time to profit� Time to market� ROI� NPV� Payback period� IRR� Margin / revenue

growth

Portfolio

Value

Analysis

Less chaos

Strong

governanceFaster time to

market

Say “no” to

projectsHigher

productivity

No loudest

voice wins

� Organize PMO along customer lines

� Train org on portfolio mentality

� Constantly inprove decision valuation criteria

Portfolio

Maturity

� Involve Voice of Customer (VOC) in decision making

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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)

•Project-level: tradeoff between delivering on time and delivering value. Late is acceptable sometimes 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

Schedule Performance

•Transition from on-budget to strategic cost / ROI analysis

•Tradeoff between costs and value, utility, functionality and benefits

•Lifecycle costs (end-to-end solution)

•Provide tools for cost-analysis

•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

Cost Performance

•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

•Continuous Improvements

•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

Process Performance

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

•Use risks to estimate variance in a project

•Risk profiles of investments in a portfolio

•Balancing risks between projects in a portfolio to maximize value

Risk Management

•Decision focused reporting

•Culture of managing from data

•Inferring / interpreting data and not just deliver reports (decode what the data means)

•Engage customers (end users and business) to identify data to measure

•Identify the right KPIs (measure what matters to business), set credible targets, automate data collection

Performance & Risk

Reporting

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TEXT

CAPACITY

PLANNINGDEMAND MANAGEMENT

Resource Management

SUPPLY 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

• Skills matrix

• Skill levels

• Develop skills inventory –

real capabilities of the

organization

• Balance skills availability

with customer demand

• Assess demand to

evaluate constraints

• Constrained resources

inside and outside the

org

• Predict future capacity

• Tools for matching supply

and demand

• Develop capacity before

producing products, even

before demand exists

• Prof development,

training, recruitment,

flexible supply sources,

cross-functional staffing

• Match available resource

with needs of org within

set timeframe & budget

and with minimum use of

resources

• balance of cost, value and

risks

• system view for global

effectiveness of resource

allocation

• Bill for services based on

value rather than cost

RESOURCE OPTIMIZATION

Demand Management Supply Management Capacity Planning Resource Optimization

Investing the right human capital and other assets in portfolio projects and activities

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Life-cycle

thinking

Build foundation for

understanding

&measuring value

and reporting

continuously on

value of activities

(not just value of

projects

Benefits & Cost Management

True Value

Of

Portfolio

� Spending on a new

infrastructure may

relieve future

maintenance costs and

increase performance

and capacity

� Investing in a new

technology may give

competitive advantage

� Investing in SaaS may

reduce infrastructure

and

support/maintenance

costs

Examples

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Putting it Together

Path Ahead for PMO Success

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PMO Agility

Continuous

Improvements

Adaptive to Change:

Learn-Unlearn-Relearn

Periodic reviews of the

PMO objectives against

the needs of the businessMeasurements of the

processes and tools such as

effectiveness, adoption and

consistent use

Data-driven

performance analysis

Light-weight

processes

Change Agent for

business

Demonstrable

results

Center of

Excellence

Value driven

Capacity

development

“Change is inevitable, except from a vending machine”

42

Evolution of Project / Program Managers in a Modern PMO

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

• Deliverables-oriented• Objectives• Building the big picture• Integration• Strategy• Cross-functional• Catalyst• Liaison / Partner• Shared Planning• Trust• Governance• Servant Leader• Guide• Future-oriented• Project-Pathfinder

• Task-oriented• Directives• Individual line items• Components• Tactics• Engineering-focused• Broker• Go-between• Private planning• Control• Punish• Police• Gopher• Present-focused• Project Tracker

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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

Serve as a change agent across a wide array of operations, elements,

products, programs, services, and assets

Steps of Increased Value Creation

Valu

e P

ro

vid

ed

Steps to Success

� Minimize Risk

� Maximize Value at Inception

� Accelerate Speed to Value

� Adaptable to changes; agility

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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.

45

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.

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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

47

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

48

Exercise: Takeaways

Take 5 minutes to think about your takeaways and feel

free to share and discuss with the group

Task

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

notes:

What are your Takeaways from the presentation today?

Thank You !