In today’s challenging business environment, Corporate IT is constantly asked to deliver more value with less and to optimize program and project delivery for the business. To do this, many IT organizations have created a Program or Project Management Office (PMO) to help manage and own program and project execution and methodology.
A recent Project Management Institute (PMI) survey found that 60 percent of respondent organizations have a PMO, with 4.5 years being the average age of the PMO.1 The Standish Group reports that 66 percent of projects fail or are challenged.2 In many organizations, a PMO is established to improve this and solve associated problems with program and project execution.
PMOs create additional value by providing standards, processes and policies that create an overall framework for more efficient project delivery. According to CIO Magazine, “PMOs can help CIOs by providing the structure needed to standardize project management practices and to facilitate IT project portfolio management, as well as determine methodologies for repeatable processes.”3
Still, there are many issues IT faces in choosing or designing the right PMO – corporate culture, size of the organization, acentralized vs. decentralized PMO, program and project management maturity, and the annual number of projects are just some of the factors that need to be considered when designing the PMO and its governance. The multitude of corporate attributes necessitates a customized approach to designing the right PMO.
The PMO can also act as a crucial communication hub, not only facilitating project team communication, but identifying and reporting on key data to business sponsors, executive stakeholders, resource and demand managers, and other project/program teams. PMOs create the standard by which program and project community members communicate, thus decreasing confusion and information misunderstandings. Our future research hopes to provide additional insight into how social media opportunities like community building can optimize program and project communication and interaction.
PMOs also provide fundamental guidance in developing a program and project management core competency and program and project management career development within the enterprise. Training schedules and curriculums can be developed through internal resources and external organizations in order to create this core competency within the enterprise. PMOs can also provide project management coaching and mentorship during current projects.
You cannot manage what you cannot measure. The PMO can help management by determining and communicating key project metrics – delivering the right information to the right people at the right time. PMOs will typically track enterprise-wide measures on the state of project or program management, delivery and the earned value being provided to the business stakeholders.
We challenge our clients to answer three fundamental performance questions regarding their existing PMO:
• Do you know how your PMO is performing versus your expectations?
• What are the objective standards for your PMO’s performance?
• How far away is your PMO from leading practices?
Despite the ubiquity and history of PMOs we find that very few organizations can answer these questions with confidence. We present a framework to answer them.
Our Perspective
In our experience, there are a common set of responsibilities across all PMOs. For example, most PMOs will develop and implement a set of project management processes to assist project team members. This commonality has helped us to create a “Leading to Lagging” assessment framework used in analyzing the PMO for our clients.
To help the enterprise with the evaluation, we developed a rigorous PMO assessment methodology grounded in these “Leading to Lagging” practices that enable a PMO to measure where it stands compared to a verifiable standard. In addition, the PMO is able to assess the gaps between its current performance and desired future performance and develop a roadmap for getting there. The following seven capability areas represent key components that a PMO will influence or manage directly within an organization and consequently the areas of focus during our assessment:
• Program/Project Management Office
• Project Management
• Resource Management
• Resource Capacity Planning
• Demand Management
• Financial Management
• Project Management Tools
We have developed Leading-Lagging framework tools for each of these seven capability areas based on what we see across our clients. We find these tools helpful in facilitating a deep discussion in the capability areas with our clients. Our PMO assessment methodology consists of four major phases: Current State Assessment, Future State Assessment, Gap Analysis and Recommendations and Roadmap.
Current State Assessment
The objective of the Current State Assessment is to understand today’s performance in each of the seven capability areas above. Each of the seven capability areas is assessed versus the Leading to Lagging framework. Within each area, key activities and their associated tasks and behaviors are defined along the continuum from Leading to Lagging. Information is gathered from a multitude of sources within the organization – subject matter experts, business and IT stakeholders, past and current project and program managers, and executive sponsors. This framework can be applied to PMOs with projects adhering to both agileand plan-driven practices although the agile project management capability area is typically customized to the specific organization’s Agile project management practices.
In addition to the self assessment interviews, the organization will typically provide current standards and process information, if any, for review. This approach tends to garner quick approval and the organization is able to rate itself given an objective framework of reference.
Future State Assessment
The Future State Assessment is performed after the current state analysis is finalized and communicated. The organization needs to determine the objectives for each of the core areas, and to identify opportunities for improvement. Feedback from current state interviews, workshop sessions, and future state interviews is aggregated and analyzed to form an accurate desired future state. In addition, a high-level understanding of effort and impact is assessed for each of the capability areas, in order for the organization to move from current to future state.
Gap Analysis
The organization must identify the performance gaps that exist between the current state and desired future state. The Gap Analysis outlines how the organization can move to the future state and what is needed to enhance those areas identified as opportunities for improvement and bring them up to a desired future state of operation. For each PMO capability area, gaps are classified in terms of system, process, and technology. Specific metrics and change management guidance is provided for each gap to form the basis for “how the gap is filled.”
At this stage, the organization can begin to assess the true impact and effort for each identified work activity within each PMO capability area. These are then rated on an Impact-Effort Matrix to begin to formulate an initial picture of the roadmap for implementation. Figure 3 is a sample Impact-Effort Matrix. At one end of the matrix are “Hares” – activities and tasks that have been identified as having a low impact and high effort in terms of time and money; at the other end of the matrix are the “Cheetahs” – activities and tasks that will produce a high impact to the organization with a relatively low effort.
A further analysis of any core area will reveal specific areas of improvement and the associated relative impact and effort. This impact and effort analysis is performed for all initiatives within each of the seven capability areas and for each of the seven capability areas overall.
Recommendations and Roadmap
Once the Gap Analysis is completed, the organization can begin to create a future state PMO roadmap. Benefits and critical success factors are also defined for each activity at this stage. As a result of our earlier analysis, we know that there are quick win opportunities or “Cheetahs” that may be launched in a short time period these can be specifically called out to improve ROI. Prioritization of work activities is the final task performed so that a comprehensive work plan can be developed, consistent with the organization’s overall priorities.
Conclusion
The PMO is not a cure-all for the challenges of Corporate IT. PMOs are becoming more common place with greater responsibilities. It is imperative that organizations are able to answer the three fundamental performance questions about the PMO. Implementing a PMO and hoping for success is insufficient. Organizations need to know how their PMO is performing and how far from best-in-class this performance is. Our experience is that being able to answer the fundamental questions and then creating a roadmap to close specific performance gaps is a path to a best-in-class measured and managed PMO, delivering successful programs and projects to the organization.
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1PMI Today, May 2009
2Standish Chaos Report 2009: Are Projects Failing or are Project Managers Failing
3Santosus, Megan, “Why you need a Project Management Office (PMO)”, CIO.com, July 2003
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About Slalom
Slalom Consulting (www.slalom.com) is a national business and technology consulting firm, founded in 2001 and headquartered in Seattle. Slalom’s services range from broad areas including program and project management, business process improvement, and software development, to specialized solutions such as ERP, business intelligence, CRM and more. As a winner of Consulting Magazine’s “Top Ten Firms to Work For,” Slalom is best known for its highly-experienced, locally-based teams and consultants who consistently take client projects from strategy through successful implementation. In addition to Seattle, Slalom has offices in Atlanta, Chicago, Dallas, Denver, Portland, San Francisco and Southern California.
About the Authors
Michael S. Kenny (michael.kenny@slalom.com) BComm, MBS, PMP is the Managing Director of Slalom Consulting, San Francisco. Mr. Kenny has more than 18 years of consulting experience across industries including High-Tech, Aerospace and Defense, Communications, Automotive and Healthcare and has led IT Strategy, Business Process Reengineering, Enterprise Architecture, Business Intelligence, and Supply Chain engagements for a wide array of Fortune 500 companies. Originally from Ireland, Mr. Kenny holds a Bachelors of Commerce and a Masters of Business, Strategic Management and Planning from University College Dublin, National University of Ireland.
Will Yen (will.yen@slalom.com) is a Senior Consultant at Slalom Consulting, San Francisco. Mr. Yen has 8 years experience delivering business solutions for Fortune 500 companies. He has a deep knowledge of PMO and Project Management Methodology, Social Media, Marketing and IT Strategy. Mr. Yen holds a Master’s of Science in Applied Economics from University of Georgia, Athens and an MBA from Duke’s Fuqua School of Business.
The views and opinions expressed in this article are provided by Slalom Consulting to provide general business information on a particular topic and do not constitute professional advice with respect to your business. The names of companies and products used in this article may be trademarks of their respective owners. Their use in this article is not an assertion of ownership and does not imply any association between Slalom and the owners of such trademarks.
©2009 Slalom Consulting. All rights reserved.
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