EPMO: A Strategic Enabler? by Steven McLaren EPMO or pmo - whats the difference? I am sure you have been asked as many times as I have - what is the difference between an EPMO (Enterprise Program Management Office) and PMO (Program Management Office)? For me, the focus is on the word enterprise or what I like to refer to as the enterprise principle. The enterprise principle underpins and connects the strategic mind-set and the leadership philosophy common to culturally aware organisations. The principle differs from management models that emphasise decentralisation. It creates autonomy and empowerment. The principle emphasises interdependence and alignment with a common enterprise strategy. An enterprise strategy is a single, integrated master plan embraced and executed by all parts of the organisation. An EPMO needs to focus on a portfolio of initiatives that collectively deliver against the enterprise strategy, transforming the organisation in the process. There is no greater influence on the success of initiatives than the commitment of the senior leadership team to a single strategy for the entire organisation. About the author Steven McLaren is a highly qualified Business amd Program Management Practitioner with over 20 years experience in project management in both advisory and delivery roles including PMO Management, business and IT governance and compliance, e-business development and extensive QA, Compliance and Governance program. Designed, developed & implemented Compliance frameworks, Assessment tools amd health check programs for Government, Banking, Retail and Defence clients. EPMOs align strategically with the organisation to provide a holistic management service over enterprise-wide programs and projects. In doing so they provide direction, oversight and coordination across multiple PMOs within the organisation and its subsidiaries.
EPMO - A Strategic Enabler? Figure 1: EPMO Organisational Fit...continued Whilst PMOs can be operated at a department, region, branch or program levels; EPMOs need to be empowered by executives to operate at an organisational level. The EPMO is a key enabler for the delivery of an organisation s strategic plan across the portfolio of projects. It will align to (and often be the owner or a major stakeholder of) lower level strategies within the organisation including the ICT strategy. EPMOs are often charged with the responsibility of being an organisation s Centre of Excellence; setting the standards in compliance, quality assurance and governance. They also provide an umbrella service across the organisation in program and project management disciplines. This creates high level operational visibility, governance and management accountability in areas that endorse, sponsor or facilitate programs and projects. the PMO DIFFERENCE PMOs operate at a lower level than an EPMO. They are often aligned to a department or branch, and have a clearly defined purpose including resource management, reporting (budgets, risks and issues), process, methodology training, and providing SME support. PMOs provide reporting up to the EPMO on its programs and projects. The EPMO can then provide consolidated reporting to stakeholders and executives as required. An effective PMO should work for the project teams first and management second if they want to deliver real results. Effective PMOs provide the project team with the tools and practices that enable the team members to hit the ground running from day one. When established for specific programs of work, PMOs often need to define their own requirements and standards for risk, issue management, governance, budgeting and other reporting obligations. These PMOs have a limited life span linked directly to the life of the specific program. Organisations that encourage a proliferation of program specific PMOs without common governance can create fragmentation of standards, processes and procedures. Whilst PMOs can exist and be effective at a branch, department or program level - it is often not clear who is in effective control, who has accountability, who is coordinating with other major programs, and who is monitoring success or failure. Page 2
The company s project success rate has soared from 54% in 2002 to 88% percent today. Improved project management has had a dramatic impact on the company s financials. John Parker, CTO AG Edwards PM When Failure is Not An Option CIO Magazine - 1st June, 2006 Why Organisations are interested In recent years, boards and senior executives have placed increasing scrutiny, focus and expectation on their organisations to deliver tangible benefits from project initiatives, in accordance with those approved in associated business cases. With the onset of the current economic downturn and the reduction in program budgets; this focus is expected to increase significantly as organisations strive to deliver against business strategy with a reduced portfolio of project investments. EPMOs are likely to be a key initiative for organisations attempting to improve project delivery, whilst optimising their enterprise project portfolio and delivering on strategy. This is best achieved through the implementation of Project Business Management (PBM) methodology and practices. These enable a top-down integrated blend of strategic, tactical, portfolio, program, project planning and execution processes (refer to figure 2.) PBM is a framework that combines project management, general business management and business operations management practices and processes, which are applied on an enterprise-wide basis through an EPMO to enable delivery on business and ICT strategies. Risks and Issues EPMO implementations can be complex, political, and often require significant change within the organisation. The establishment of a EPMO requires the creation and endorsement of a charter that defines the EPMO accountabilities and empowers the EPMO to provide core functions such as centralised governance, compliance monitoring, standards definition and delivery oversight across the enterprise. As part of its role in over-sighting delivery, the EPMO will need to take on a variety of roles including report coordination, quality control, education, coaching and mentoring. The EPMO charter must ensure that the criteria for project prioritisation are clearly defined and allowed to be consistently applied. If prioritisation is allowed to be unduly influenced by aggressive business units or individuals with financial or political strength, the project investment portfolio is at risk of being out of alignment with the organisational strategy. To achieve this, the EPMO must be championed by executives at the most senior level, ideally by the Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Information Office (CIO) and/or the Chief Operating Officer (COO). Without a defined charter, and strong senior executive commitment, the EPMO may not be able to control, or effectively influence the behavior of other projects, programs and PMOs. If this event, it is unlikely that the EPMO will be able to achieve cost reductions from the establishment of an integrated PMO structure. It may also struggle to ensure that the organisation s project portfolio is appropriately balanced and optimised to deliver against the strategic plan. Page 3
ENTERPRISE-WIDE PLANNING The diagram below illustrates the relations and dependencies from strategic planning through to tactical planning (commonly known as ICT strategy) and the project business management vehicles used to deliver. Figure 2: Enterprise-wide planning relationships and dependencies Page 4
IMPLEMENTING EPMO in six steps Figure3: Six Steps (and 2 years) - adapted from Project Partners International, 2006 WHAT TO STRIVE FOR WHEN IMPLEMENTING 1. Focus on developing a centre of excellence that adds value, NOT bureaucracy. 2. Develop the EPMO in stages, focusing on addressing pain-points and demonstrating value by solving problems at each stage (refer figure 3). 3. Establish strong commitment from senior executives. 4. Define the charter, and have it endorsed. 5. Define the capability for achieving strategic objectives. 6. Leverage and align to external triggers or events. Implementation Triggers example 1 There are often many projects oversighted by a PMO. Each of these may have its own Project Board or Project Committee that meet regularly to review project status. Often these boards comprise the same people, and when you cumulate the hours invested in attending different review meetings; it is apparent that refinement of the governance structure can yield significant savings in time and money. example 2 If an organisation has multiple PMOs running multiple projects without common governance: Who has clear sight of delivery conflicts from vendors and developers? Who has adequate detail on risks with potential impact to the organisation as a whole and not just within that department or branch? Who has sight of inter-project dependencies and go to market conflicts or delays? Who is providing enterprise oversight on privacy, data security and integrity across the disparate projects? Page 5
In Closing In Summary EPMO An organisational entity empowered to enable the effective implementation of organisational strategy through engagements, portfolios and/or projects Value Proposition Providing strategic direction in line with the organisation s strategy and goals Maintaining an optimum balance in the enterprise project portfolio aligned to the strategic plan Delivering optimisation through the establishment of an integrated enterprise-wide project governance framework Providing the realisation of benefits across the project portfolio through effective governance, tracking and management Core Functions Effective stakeholder management Effective resource utilisation across the portfolio of projects/programs Central point of coordination and consolidation of project and program reporting (budget, schedule, risk) To champion and facilitate cultural change Support innovation Proactive business project management, not reactive Define and maintain project and program management standards, tools, processes and methodologies Ensure that PMOs have effective tools, processes and resources to execute their projects Tangible Benefits Improved time to market of project initiatives Improved consistency and predictability in project delivery Structured framework for capturing, managing and escalating project risks across the enterprise Centralised funding processes and budget management Improved consistency and accuracy in cost and resource and timing Critical Success Factors Defined charter Endorsement from CEO, CFO, CIO and/or COO A results versus tasks focus Clear and open communications EPMOs are required to ensure that an organisation s project portfolio comprises the right projects (aligned to the strategic plan), and the projects are appropriately prioritised, sequenced, managed and governed in accordance with agreed standards. They compliment and enhance the use of PMOs and deliver maximum benefit when utilising project, business and operational process on an enterprise-wide basis. With strong executive level endorsement and agreed governance; EPMOs have the capability to be a key enabler of the strategic plan and ICT strategy. Q 1. Why is it essential for an EPMO to be empowered and operate at the executive level? 2. Have you experienced increased levels of scrutiny around the financial components of the project business case benefits? Before the project, after the project? 3. What do you see as the biggest constraints and risk for an organisation deciding to implement an EPMO? 4. What effect do you think an EPMO would have on you and your role? 5. How might an organisation improve the likelihood of success of an EPMO implementation? Statements, information and opinions expressed herein are those of the author, not DignusGroup. While every care to present up-to-date and accurate information, DignusGroup cannot guarantee that inaccuracies will not occur. InnerCircle will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site. All copyright and trade marks are owned by the respective owners or their licensors. Page 6