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pmo 2.o:

the changing ace o todays pmo

BackgroundTe world o project management has changed. Have you adapted? Management techniques historically

grounded in construction and manuacturing have quickly become obsolete in todays ast moving, technology-

oriented service organizations. For many PMOs, the message is clear: evolve or die.

PMO 2.0: Te Changing Face of odays PMO is part o a continuing series on the evolution o the PMO,

exploring concepts rst introduced in the PlanView white paper, Put Your PMO in Overdrive: Align Work,Resources and Business Objectives Across the Enterprise. In PMO 2.0, author erry Doerscher will explain the

changes needed or PMOs to not only adapt, but also thrive in todays environment. Tis paper will dene the

characteristics and challenges o a new type o organization (the echnology Service Organization), and deliver

best practices or successul project management within these dynamic new businesses. Finally, PMO 2.0will

present a logical case or expanding the responsibility o the PMO to include a host o related perormance

management services as well as work and workorce management.

contents

1. t l pj m tl............................................................2

2. i tl sv o (tso)....................................................23. pj m tso...................................................................................4

4. B p s: L Lv tso ev....................................5

5. Wk m v pj m..............................................................5

6. m tq t c o..................................................................7

7. evlv pmo w plVw e....................................................................7

005 plVw i. www.lv1

erry Doerscher has over 24 years o practical process development, project management,

PMO, business strategy, and work and resource management experience in construction,nuclear, and I elds. Mr. Doerscher is currently the Chie Solution Architect or PlanView,

responsible or developing PlanView PRISMS Adaptive I Management Best Practices,and coordinating its integration with PlanView Enterprise sotware unctionality. Prior tothat, he was Director o Proessional Services or PlanView, managing the implementationo PlanView or over 25 customers and supporting dozens more.

terry doerscherchie soLution architect or pLanVieW, i


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pmo 2.0: the changIng Face oF todays pmo

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the FaIlure oF project management In technology

Te quote above accompanied Te Standish Groups 1994 Chaos Report with research stating that a staggering

31% o application development projects will be canceled beore they ever get completed, and 53% will cost

189% o their original estimates. Te cost o these ailures and overruns are just the tip o the proverbial iceberg.

Te lost opportunity costs are not measurable, but could easily be in the trillions o dollars.

Protability. Value. Success. Achievement. Tese are the bottom line goals or all business organizations,

accompanied by words like innovation, change and, vision. Inside the company, however, there is another

equally distinct set o terms at play. oo oten, where planning meets execution, it is more common to hearterms like, restart, change in priorities, cost overrun, schedule overrun, and content deciency.

Over a decade later, there is still a huge disparity between the success rate o projects executed in more traditional

environments compared to those in the technology sector.

Surveys have shown staggering levels o ailure in technology project deployment:

51% o respondents to the 2001 Robbins-Gioia Survey elt their ERP implementation were, in

general, unsuccessul.

A 2001 Conerence Board survey showed 40% o projects ailing to achieve their business case withinone year o going live with implementation costs reaching, on average, 25% above original

projections.

Tese two gures are not alone. Statistics consistently show that project success rates in technology services have

continued to ace signicant challenges over the past decade. What we are dealing with is nothing short o a

project management crisis.

Where did things go wrong? Why is it that commonly accepted standards and methodologies that have worked

so well or so long in other scenarios seem to all at when applied to technology initiatives? More importantly,

what can organizations and PMOs do to reverse this unsettling trend?

IntroducIng the technology servIce organIzatIon (tso)

o understand the current project management crisis inside most technology companies, we must rst analyze

the evolution o these organizations as well as their undamental characteristics.

In the United States, we spend more than $250 billion each year on I application development o approximately

175,000 projectsA great many o these projects will ail. Sotware development projects are in chaos, and we

can no longer imitate the three monkeys -- hear no ailures, see no ailures, speak no ailures.

- the standish group


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For over 20 years, the business environment has been in the midst o its most radical transormation since

the industrial age. Te technology revolution that began in the 1980s set the stage or todays instantaneous

inormation access and truly global economy. Te new paradigm is constant change, a compressed time-to-

market, and on-demand expectations.

Tis change led to rapid growth in a unique sector dedicated to providing the technology services that enablethis transormation. While they could be stand-alone entities, most oten these tech services groups are

departments or business units embedded in virtually every large corporation. ypied by I, they also include

organizations such as engineering services, telecom, new product development, and R&D, to name a ew.

Instead o construction and manuacturing, it is now these knowledge-based organizations that largely drive

innovation and economic growth in global economies. I reer to these groups collectively as echnology Service

Organizations (SOs).

SOs have the following common characteristics:

Tey generally serve multiple internal and/or external customers with virtually unlimited needs,

resulting in an opportunity-rich environment

Tey have transormational as well as operational responsibilities

Tey deal with a high volume o inbound work o dierent types, rom strategic projects to ad hoc

support requests

Teir primary mechanism o producing deliverables is through the talents o a limited number o

highly skilled, specialized knowledge workers

Oten times project work cannot be ully planned in advance, due to the iterative nature o the work

or use o new technology

Tis sta generally multi-tasks across a range o dierent assignments and responsibilities

Tey operate in a matrix environment, with various groups interdependent upon one another to

achieve most deliverable results

Tey operate within a highly dynamic business environment, where strategies and priorities are

constantly being adjusted in response to the ever-increasing pace o business, new opportunities, and

rapidly evolving technology

Given these circumstances, is it any wonder that executing projects on time, under budget, and as promised issuch a signicant challenge? Lets compare and contrast this to the typical classic project environment that

gave birth to most accepted project management standards:

otal organizational ocus on a single large project, or a small number o related projects under a

program umbrella

Most o the workorce is a variable commodity o temporary labor - managed, hired, and released in

groups as project needs dictate, but 100% dedicated to the work in question while employed


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Deliverables are derived rom tangible materials to provide physical results, such as a building, bridge,

road, ship, or new product

Oten times, the initial project planning horizon is through to completion, or at least many months in

advance, requently drawing upon a solid history o experience as an estimating oundation

Tese scenarios are almost unheard o in a SO environment. In act, unlike their parents many o whom were

actory or skilled trade workers todays younger knowledge workers have likely never had a ull day at their

job when they came in knowing exactly the single thing they were to do, were let undisturbed to do it, and

recognized it as denitively complete at the end o the day.

Tis has seriously impacted on the role and operational eectiveness o the traditional PMO.

project management In the tso

In a world now dominated by SOs, project managers and PMOs ace a very dierent set o challenges compared

to their classical project counterparts. In this multi-work type, multi-tasking work environment, independentplanning techniques applied at the project level as the sole management approach crumble under stress. Te key

concerns o project management within a SO include:

Managing a portolio o endless demand vs. xed organizational capacity

Balancing project management vs. work management, and the resulting competitive pressures placed

on assigned sta

Executing deliverables when requirements, sponsorship, and risks take on ethereal, ghost-like

qualities

Coordinating diering priorities between contributing groups to achieve a common result

o succeed in this new project management environment, project managers and PMOs must update their

management approach to embrace the SOs unique challenges. Tey cannot aord to operate in a totally

reactive manner, nor can rely on classical management techniques alone to be successul.

Respondents to a recent Computerworld survey identied project management as the No. 1 management

challenge or 2006.

-computerWorLd magazine


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Best practIces For success: learnIng to love the tso envIronment

Tere are three key characteristics that dene successul project management in a SO. Organizations looking

to drive process improvement should ocus on the ollowing areas:

1. Flexibility: o address the business dynamics o a SO, exibility must be an integral part o the internalculture o the PMO. Martial arts teach us that it is oten better to leverage the opposing orces momentum than

bluntly resist it. Similarly, the realities o todays ast-moving business environment must be embraced rather

than opposed; no amount o denial will overcome the internal and external inuences that orces change on a

SO.

2. ake a Resource-Centric Approach: Tis is the key to moving rom chaos to success. Avoid reactive juggling

o sta, the creation o inefcient starts and stops, and overloading critical skills. Instead, actor in total workload,

instead o just the needs o a ew major projects. Te end result is greater control over assigned work and higher

morale or workers who are able to maintain greater ocus, be more efcient, and meet realistic expectations.

3. Operate Within Te Limits of Your Planning Horizon: Given the incredible uncertainties placed uponthe SO, planning and management techniques must be accomplished in iterations o increasing granularity as

dictated by the availability o reliable supporting inormation. As these plans are utilized in the decision-making

process, everyone must also recognize such plans or what they really represent best-estimate, point-in-time

projections subject to continuous renement based on time, emerging impacts, and incremental discovery.

Work management versus project management

All o the changes weve described have had a signicant impact on the role the PMO plays. Formal project

management now represents only a small portion o the overall workload. According to industry analysts,

ormally managed projects make up only 12-20% o the total SO workload. Tese projects must compete

or the same pool o resources that are assigned collateral duties or the other 80% o the mission. As a result,PMOs must elevate their management perspective to include total workload as well as comprehensive resource

management.

Mastering this need or an elevated view requires recognition in the dierent types o work the organization

aces. By virtue o their size, cost, complexity, duration, and other attributes, each type o work has unique

requirements or both appropriate process controls and assigned responsibilities. Tere are ve general work

types ound in the SO environment:

1. Strategic projects: Tose projects that are rigorously managed to ormal project management standards, have

strategic signicance, and thus are overseen at the highest levels o the organization.

2. Major projects: Other ormally managed projects o signicance that have oversight at senior levels o the

organization.

3. Other planned work: Te collective o relatively small, quick-hit planned work that results in unique

deliverables but does not warrant the same level o ormal controls as Projects. Tese are typically deliverables

that take anywhere rom days to weeks to achieve, and are rarely visible as individual eorts above the manager

level.


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4. Support work: Te continuum o services and support provided to customers. Managed as a collective, oten

under ormal customer agreements such as Service Level Agreements.

5. Ongoing work: Te continuum o internal work necessary to maintain the viability o the SO itsel and its

inrastructure. Generally managed by operations leads and managers.

Combined with administrative overhead, these ve work types add up to the total SO resource burden.

Recognition o this cumulative demand is the rst step in empowering the PMO to proactively manage projects

in relation to other resource commitments. By managing this overall work structure, at least in terms o shiting

capacity requirements, PMOs can avoid ailures in assessing true sta availability one o the biggest contributors

to project ailure in a SO environment.

However, work management is not the PMOs only consideration. Managing the SO requires an integrated

approach to process management. With thousands i not tens o thousands o activities going on inside aSO at any given time, both resource and work managers must careully orchestrate assignments and progress

and consider interdependencies to make valid decisions in a collaborative manner.

2006, PlanView. All rights reserved.

FIgure 1:t fv l wk tl sv o v.

20% o all projects are over 3 months late. - orrester research


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more technIques to turn chaos Into order

In this paper we have discussed evolution in the types o organizations ueling our current economic prosperity.

As the managers entrusted with the success or ailure o the business innovation, we must remember that the

project manager and PMO are a critical component that enables companies to succeed. I they are indeed to

overcome the current marginal rate o project success, project managers must conront their responsibilityarmed with more eective management approaches.

In our continuing series on the changing ace o the PMO, PlanView will outline a management processes that

enables:

Dynamic management o project portolios

Adopting a resource-centric approach

Best practices or iterative planning and resource assignment

Organizational capacity management

Integrated priorities

Te result is a PMO that not only thrives in the SO environment, but gains greater control over its own

destiny and ability to serve the organizations long-term vision.

evolve your pmo WIth planvIeW enterprIse

o succeed in todays ast-moving, technology-

oriented work environment, an organization needs aoundation o proven process. PlanView recommends

a structured approach to process maturity through the

application o best practices.

PlanView PRISMS delivers adaptive management

best practices that have been developed with

experience gained over the past 17 years at hundreds

o organizations across the globe. Tese best practices

are designed to help dene, measure, analyze, improve,

and control perormance while incorporating the latest

industry standards with PlanViews unique insights.

PlanView oers an extensive library o best practices or incorporating project management techniques into an

integrated approach to perormance management. Tese best practices are integrated into PlanView Enterprise

and driven by automated liecycles to drive continuous process improvement throughout your organization.

Ideas Requests External

Influences

Changes

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PlanView Enterprise is a combination o enterprise sotware and proven best practices that enables organizations

to achieve greater levels o control over their ever-changing environments by dynamically managing money and

resources. Using a unique portolio management discipline, PlanView Enterprise delivers unprecedented, real-

time visibility into the trade-os involved in key business decisions.

PlanView PRISMS Best Practices provide the oundation your PMO needs to thrive within a SO.

next:

Te Next White Paper in this series will be: Beyond Project Management: Elevate Your PMO to Manage

Financials, Demand, and Organizational Capacity.

COMMENS?:

Email author erry Doerscher at [email protected].

Since 1989, PlanView has been a market leader and trusted partner in sotware or comprehensive I management. Our agship product line brings the most comprehensive I management solution

to the market, combining adaptive I management best practices, best o breed resource management, and portolio management sotware. PlanView enables business leaders to integrate the decision

making process to improve alignment o I resources with business strategies. We serve an active and growing global customer community o over 400 organizations in nancial, insurance, healthcare

government, and other industries. PlanView is privately held and has been protable or over a decade. For more inormation visit www.planview.com.

2006 PlanView, Inc. All rights reserved. PlanView is a registered trademark o PlanView, Inc. All other trademarks are acknowledged. PlanView reserves the right to vary specications and availabilit

o these products and services without notice

Every company has inormation, but having control o your inormation delivers a competitive advantage.

- pmo director, ceridian

Planview-PMO-2.0-Part1-Changing-PMO

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