The Hackett Group released a study in early November 2012 on the failure of Project Management Offices (PMOs) as an IT strategy, read the report here. The result of the study, which is based on benchmarks at more than 200 companies over two years, contradicts the belief that PMOs reduce IT cost. In some cases, PMO utilization can increase cost and does not necessarily lead to drive better business outcomes. Nevertheless, the study did show that a world-class IT organization that achieves meaningful cost savings over the long run does rely in a PMO for application development and infrastructure projects.
Most telling from the study are four key practices that were evidenced by effective PMOs in IT Organizations, namely:
“i) centralized IT demand management; ii) accountability for business benefits; iii) standardization of processes and architecture; and iv) program and project reviews”
The practices were believed to be enablers of a world-class IT organization to effectively utilize PMOs to lower the complexity in IT, increase ROI, and focus on the delivery of projects on time and on budget. While the results are not news to most executives, they do point to the need to focus on outcomes from a PMO. In order to drive outcomes, the PMO structure and tools need to be as simple as uncomplicated as possible. For the past 5 years, the emphasis of EPM Live has been to achieve simplicity and drive value for PMOs from the use of its Portfolio and Project Management (PPM) platform. Without understating the need for sound fundamental processes, the capabilities of the EPM Live PPM platform allows an organization to focus on the four key practices shown by the Hackett Group IT PMO study.
Centralized IT Demand Management
Work is generated from multiple sources in the organization. Project, service, and support work have to be taken into account when considering resource allocation and investment decisions. EPM Live can centralize demand from multiple sources in the organization and allow for the analysis for selecting and assigning all different types of work. Here, the value is not only from the selection of projects on their merit, but also on the capacity of the organization to execute the work based on resource availability.
Accountability for Business Benefits
This is perhaps the most ignored area of portfolio and project management in organizations. Business cases often detail the benefits to be obtained from the project in terms of financial and non-financial benefits. The main issue is post-project delivery benefit attainment tracking. Simply put, did the project deliver its intended benefits? The PMO can support this by tracking post-delivery benefits and engaging the end customer, in most cases the business, in benefit attainment. EPM Live provides the capability of tracking post-delivery project success. Its cost and benefit tracking capabilities, as well as its strong collaborative features, can follow project benefits post closure.
Standardization of Process and Architecture
In most PMOs, standardization of process and architecture is common. The problem arises when process and architecture are the primary mandate for the PMO. What can be observed from successful PMO implementations is that process and architecture need to be commensurate with the readiness of the organization for Project Management Process. In addition, the process and methodologies must be flexible while maintaining a common foundation. Finally, the process must be supported and integrated by a PPM tool. In this regard, the EPM Live platform supports the basic requirements. EPM Live is flexible enough to accommodate simple and sophisticated project management processes that can evolve with an organization. Also, the platform can easily integrate one or multiple project management /delivery methodologies, such as waterfall or agile, all under one platform.
Program and Project Reviews
The review of project performance is also a standard PMO practice; however, reporting for reporting’s sake does not provide value. Successful program and project reviews focus on strategies to make project delivery successful. The emphasis is on supporting rather than monitoring. Even for projects doing well, the dialogue is on anticipating future issues and overall risk mitigation. EPM Live provides the ability for the Project Manager and execution team to collaborate and surface existing and potential project issues. At the same time, the standard project status reporting capability allows for communication with the PMO and other stakeholders to promote effective program and project reviews from multiple perspectives.
Despite evidence of IT PMOs that struggle, IT can derive value from PMO as a strategy. IT Leadership has to focus on the right approach for the implementation of an IT PMO in the organization in order to drive the desired outcomes of less cost, reduction of complexity, and better project performance. With EPM Live as a PPM platform, the four key practices of i) centralized IT demand management; ii) accountability for business benefits; iii) standardization of processes and architecture; and iv) program and project reviews can be achieved in order to make an IT PMO an effective strategy.