White Paper Seven Secrets of Successful PMOs
Introduction Establishing a PMO is a popular approach taken by many organizations to facilitate project portfolio management or project management capability improvements. Despite the value that a PMO can provide, most are shut down within three years of their being established. PMO 101 At the most basic level, a PMO is an organization entity that is responsible for providing oversight over a portfolio of projects. There are a number of variants on the PMO theme: Portfolio Management Office: Usually common in organizations that have adopted Project Portfolio Management (PPM) practices. A significant part of this type of PMO s time is spent in facilitating executive management decision making. Program Management Office: This term is used in organizations that run very large collections of interrelated projects. There may be more than one such PMO within an organization, and each PMO may be a temporary entity that is disbanded once the program has been completed. Project Management Office: This term is common in organizations who are mainly interested in improving project success rates PPM practices are a future consideration. The focus of these types of PMOs is on coaching and mentoring project managers and on providing project delivery assurance audits. Organizations establish PMOs for a variety of reasons as illustrated in the following table: Communicated Reason To improve project success rates Un-stated Reason To centralize accountability (with little authority) To streamline & focus communications To reduce administrative effort across the organization To improve the consistency of project planning & execution To create a watchdog to keep an eye on distributed project teams To support a career path for project management staff To support project portfolio management or enterprise resource planning improvement initiatives To provide a place to dump project management staff To make it easy to shutdown these initiatives if they don t appear to be succeeding by reducing the organization impacts of the termination 2 White Paper: Seven Secrets of Successful PMOs uplandsoftware.com
PMOs can provide a variety of useful services, these being the most common: Providing different levels of management with centralized visibility into project status and decision-support data for resource supply and demand Providing resources to either manage projects directly, or to provide consultative advice to project teams Development, ongoing maintenance, and training on PPM or project management methodologies Providing delivery assurance services for active projects these could be built-into the organization s PM methodology as defined steps or could be performed as spot audits. Common Causes for PMO Failure Based on the previous list, one would assume that PMOs must generally be very successful. Unfortunately, a survey conducted in 2005 of 750 organizations worldwide revealed that 75% of these organizations had shut their PMOs down within three years of their inception because they could not demonstrate any added value. The following list covers the most common factors that can lead to PMO failures: Lack or loss of executive sponsorship Establishing a PMO is a strategic organization change project, and like any such project, requires a strong sponsor that can champion the cause of the PMO. Change management or organization culture fit issues PMOs are often initiated to address cultural issues around accountability and project success rates. If the PMO rolls out project management processes that are too much of a shift from existing practices, or does not employ proper change management practices while making these changes, it can encounter strong resistance. This resistance will reduce the perceived benefits of the PMO and if combined with other factors could make it easy to shut the PMO down. PMO setup issues if the PMO was setup without a clear mandate or scope, or if insufficient stakeholder involvement occurred, expectation gaps or resistance could reduce its perceived value. Additionally, if an organization entity that is supposed to improve project delivery consistency was launched in an ad hoc fashion, the overall credibility of the initiative will be impacted. As PMOs often have to satisfy the needs of multiple stakeholders with different objectives, another common issue is trying to do too much, too soon. This can compound the organization change management issue from the previous point. Lack of a tangible value proposition given the costs involved with setting up and running a PMO, if there be no metrics to demonstrate that the value generated outweighed these costs, there is little justification to support the PMO if any of the previously stated issues are also present. Even if the PMO does demonstrate some benefits, if the administrative effort required to achieve these is greater than the perceived value of the benefits, the PMO is likely to fail. 3 White Paper: Seven Secrets of Successful PMOs uplandsoftware.com
Avoiding PMO Failure The following seven factors address the previously stated issues and hence, should reduce the probability of PMO failure. 1. Active involvement of a sponsor that is at the right level of the organization for the PMO. If the PMO has enterprise-wide project responsibility, it should report to the COO or CEO. 2. The PMO and its services need to fit the culture and structure of the organization. If the culture of the organization is relaxed, any changes that the PMO rolls out should take this into account. The role of the PMO itself in such an organization is likely to be focused on coaching, mentoring and reporting as opposed to auditing. 3. The PMO should be initiated as the approved outcome of a business case that quantifies expected benefits and considers alternatives to establishing the PMO. As part of the launch, the PMO needs to define key metrics that will measure its success and should capture a baseline for these as soon as possible so that improvement rates can be demonstrated in a reasonable timeframe. Examples of such metrics could be: number of projects that were delayed by more than 25% of their original duration, number of projects that went over budget by more than 10%, or number of projects that were cancelled due to poor project management. 4. The scope and authority of the PMO needs to be formally defined, approved and communicated to the organization. The scope needs to define the services provided by the PMO as well as the projects and resources that will be under the PMOs influence. The authority of the PMO needs to be defined in terms of specific scenarios and roles. For example, in some organizations, the PMO has the authority to place a project on hold based on a defined set of criteria. It is critical to communicate the scope and authority to the organization to reduce expectation gaps. 5. Changes made by the PMO need to follow proper organization change management practices. To reduce resistance to the changes, the PMO project team (during its inception) or the PMO staff (once it is operational) should involve user groups that will be impacted by the changes in the development of the changes, and may want to work with Human Resources to develop appropriate communication messages and training collateral supporting the need for these changes. It is also crucial that the PMO s sponsor regularly communicate the need for these changes to the organization. 6. The PMO needs to be implemented in a similar fashion to any other strategic project. A project manager should be assigned, a charter should be developed and approved, a project plan should be created and approved (including schedule, cost, scope, risk and resource details), all key stakeholders need to be involved and managed, and proper tracking procedures should be followed to monitor the health of the project. 7. The PMO needs to utilize technology effectively to reduce the administrative effort of gathering and reporting on project data and to increase the likelihood of compliance with the changes it rolls out. It is possible to manage a handful of projects and resources on paper or using MS Office templates, the value that a true PPM solution can provide will rapidly outweigh its costs once the portfolio grows. 4 White Paper: Seven Secrets of Successful PMOs uplandsoftware.com
There is usually a single senior manager that has indirect reporting responsibility over a departmentally-distributed team of resources who deliver the PMO s services. Given the distributed (both organizational and geographic) nature of the PMO s staff, the need for a supporting PPM technology is even greater than for a normal PMO. How Eclipse Supports a PMO Eclipse Project Portfolio Management provides a number of functions to aid PMOs in the delivery of their services. Some of these are illustrated in the following screenshots. Eclipse can provide visibility into key performance metrics across a subset of the project portfolio. Eclipse can also provide a graphical view of overall schedule and key milestone status across a number of projects. 5 White Paper: Seven Secrets of Successful PMOs uplandsoftware.com
Eclipse can help with resource allocation and capacity planning decision making by providing visibility into who is working on what and helping to identify which resources are over allocated. Finally, Eclipse s template capabilities reduce the effort required for project teams to plan and manage projects, while increasing planning consistency. 6 White Paper: Seven Secrets of Successful PMOs uplandsoftware.com
About Eclipse PPM Eclipse Project Portfolio Management software delivers a simplified, quick-to-market project and resource-management application that allows organizations to leverage cost saving tools now and deliver instant business value, all while providing a low-risk approach to scale as they grow. Upland s Eclipse PPM focuses on three key areas: Portfolio Management, Project Management, and Resource Management. Eclipse PPM combines powerful top-level reporting with simple user interfaces. For executives, realtime strategic reports are available with a few clicks. For project managers, keeping projects up-todate is a quick and efficient process. It s easy to use and easy to implement, so your projects can be handled smoothly and professionally anywhere, anytime. Easy to implement, use, and support Eclipse PPM was created with the end user in mind. Executives, Project Managers, and Resources can all access relevant information quickly and easily. Organizations are successful because user adoption is high, making Eclipse PPM a normal part of the working day. Leading-edge technology Eclipse PPM is a Rich Internet Application (RIA) that is incredibly easy to use. The RIA interface allows users to customize dashboards with the ease of drag-and-drop technology, and edit project financials, schedule information, and time tracking as if they were working in a spreadsheet. The Eclipse PPM interface also includes convenient tabs that allow users to switch between projects, dashboards, searches, and reports with speed and simplicity. Low total cost of ownership Eclipse PPM is hosted in a highly secure data center. This fact, combined with our streamlined implementation process and scalable licensing fees, results in low total cost of ownership for organizations of all types and sizes. The Upland Product Family Upland s family of cloud-based Enterprise Work Management software helps every team in your organization do their best work. See what you can do with Upland. Contact us at 855-944-7526 or info@uplandsoftware.com.