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Topics Included in This Paper? Introduction

The Imperative for Better Project Management: Performance and Profitability

Pitfalls in Program and Project Management

What is a PMO?

The Program/Project Management Office

The Pain Points that Make Companies Turn to PMOs: Are Any of These Challenges Yours?

For Organizations Dependent on Service, PMOs Deliver Client Value

Conclusion

A Strategic Guide to the PMO (Project/Program

Management Office)

What a PMO is, and How it Could Keep Projects from Destroying Your

Organization’s Budget and Sanity

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Introduction

In this whitepaper, we cut through the buzzwords and consultants' jargon to give

leaders a clear-eyed view of what a PMO (Program/Project Management Office) is,

and how PMOs help organizations in many industries better manage their initiatives

and run multiple projects profitably.

Organizations that must manage multiple initiatives with wide-ranging implications in

cost, human resources, impact on customer relationships and profitability are

beginning to explore and implement PMOs. If your company could benefit from a

unified, high-level method for proposing, budgeting, forecasting, and giving leadership

an actionable strategic view into all company projects, then you need to learn about

PMOs. This primer is intended to distill the facts from the noise and help you evaluate

what a PMO is and what it could mean for your company.

The Imperative for Better Project Management:

Performance and Profitability

Leadership teams across the globe are realizing that achieving increased

performance and profit means taking a new look at how they plan multiple initiatives,

manage them, and measure their success. The pressures of today’s economic

environment have driven managers to realize that they need a new kind of rigor to

manage the successful execution of important projects and initiatives across an

organization.

The success of strategic initiatives, both at the organizational level and within

business units or functions, can dramatically impact the underlying value of an

enterprise, its cash flows, its relationships with customers, and the morale of its

employees.

Smart leaders also understand that programs and projects can generate significant

levels of business risk if not executed on time and on budget. In some cases, a poorly

managed transformation can even lead to business failure. Many sleepless nights for

managers and their teams can be attributed to an initiative’s failure to deliver on its

promised benefits. Nobody wants to be in charge of projects that lead to stagnation or

that negatively impacts the business’ competitive position.

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Pitfalls in Program and Project Management

For leaders taking a hard look at program and project management across their

organization, a few recurring pitfalls manifest themselves time and time again:

Lack of uniformity and rigor in how initiatives and projects are proposed, budgets requested and assigned, and impacts supported and justified.

Forecasting and planning activities not synchronized with project execution and management. Too often, a bottom-up approach is taken, rather than top-down.

Senior management has no visibility around project execution, including milestones, issues and benefits realization. This can lead to unpleasant surprises.

Individual projects and initiatives are not synchronized with activities elsewhere, causing critical dependencies to be overlooked or ignored – sometimes leading to adverse impacts to customers and employees.

These conditions are leading to the creation of PMOs to introduce and enforce good

project methodology, continually measure the progress of various initiatives and

deliver a clear, organization-wide picture of performance for senior management, and

to help more projects deliver on their promise.

Once only found at the largest companies, PMOs and their practices are now being

embraced by medium and smaller organizations. This trend will only accelerate as the

methodology and strategy becomes better understood and easier to apply in a wide

range of industries.1

1 Cornelius Fichtner, Host, The Project Management Podcast;“7 PMO Trends”;

http://www.gantthead.com/discussions/discussionsTopicContainer.cfm?ID=7662

What is a PMO?

PMO vs. PMO

As with any emerging practice, there are currently differences in how people

understand the definition of a PMO. For some, PMO means “project management

office”; for others, the acronym signifies “program management office.” In general,

overlap between the two ideas is large, and differences subtle.

Strictly speaking, a project is a unique start-to-end event not repeatable in same

format; a program is a group of projects that are linked by strategy, technology, or

other drivers. For purposes of this white paper, the “P” in PMO can stand for either

project or program. Why? Because each organization will implement the PMO

function in a way that makes the best sense for their size and strategy. In the end, the

“M” — management — matters more than worrying about which variety of “P” is

being employed.

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The Program/Project Management Office

PMOs are primarily conceived to establish organization-wide discipline for projects,

helping more of them come in on time on budget. Additionally, the PMO function has

evolved to monitor how well projects, individual and aggregate, are delivering value to

the business.

PMO offices ideally sit atop a layer of project managers and leaders, reporting to the

C-suite and functioning as a dashboard for leadership to quickly evaluate performance

and make decisions based on intelligence crystallized from all projects in the company

portfolio — current and planned. The PMO will also have a broad span of control

extending beyond the purview of project managers, taking a hand in vendor selection

and contract management, for example.

The PMO is also tasked with making sure that all projects align with the master plan

and evaluating resources and dependencies from a high-level, strategic perspective.

This PMO will not prescribe how the work gets done or establish milestones within

individual projects. That is the concern of the individual project manager. The true

PMO’s role is to gather and interpret strategic project information and to advance

governance standards across all projects.

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The Pain Points that Make Companies Turn to PMOs:

Are Any of These Challenges Yours?

The customer and competitive landscapes have pressured many a company to turn

inward in a thorough search for ways to better utilize resources. Regulatory burdens

are another driving factor. The imperative for establishing PMOs include:

Failed or Stalled Business Transformation Initiatives

Reducing the risk of transformational initiatives is a major reason that companies turn

to PMOs. The organizational stakes in such initiatives are high; stalled efforts can

result in negative market perceptions, business interruption or failure, loss of

management tenure, cost overruns and damaged customer-supplier relationships.

PMOs give leaders who want to achieve step changes in business performance a way

to help their transformational initiatives deliver on their promised benefits.

Frustrated Project Teams

PMO leaders can help individual project managers and their teams be more effective

by seeing how their activities tie to the wider vision, and to ensure that their efforts are

being invested in valuable projects. As projects of questionable feasibility start to bog

down, running late and over budget, a sense of futility can infect project teams. This

can result in spiraling morale, which in turn can hurt individual performance and

accelerate talent flight.

Late and Over-Budget Projects

Completing more projects on time with fewer resources is a challenge faced by many.

Rolling global recessions got many an organization focused on maximizing resource

usage in the face of hesitant markets and shrinking budgets. A PMO can solve this

problem by establishing repeatable, effective management methodologies that, over

time, curb the number of resource-swallowing problem projects and improve the

performance of project teams.

No Executive Visibility into Projects

In the 21st Century, more companies have come to the realization that upper-level

management has no visibility into project performance across the organization. PMOs

give companies a tool for proactive decision-making on a wide array of company

projects from a high level, rather than a reactive stance that only focuses attention on

problem projects as they surface.

No Systematic Way to Spot Underperforming Projects, Nurture

High-Potential Projects

Correctly prioritizing all projects in the company portfolio has major implications for the

bottom line. PMOs help everyone in an organization spot suspect projects that should

be rethought or abandoned, and place a higher resource priority for executing projects

that are more likely to be successful.

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Sarbanes-Oxley Act

Since large projects fall into the category of investments that must be reported, public

companies have a definite stake in keeping tabs on expenses and progress across all

initiatives. The significance of this driver multiplies for the company executing multiple

projects internationally — having centralized documentation and oversight into all

projects can help leadership more easily prepare for and weather regulatory scrutiny.

For Organizations Dependent on Service, PMOs Deliver

Client Value

Professional Service Organizations (PSOs) from IT to advertising have started to see

revenue return to pre-2007 levels, giving them the opportunity to capitalize on Service

Execution and Human Capital Alignment, two of the five Service Performance

Pillars™ identified in SPI Research’s 2012 Professional Services Maturity™

Benchmark.

The service execution pillar is where the rubber meets the road and client value is

created. Regardless of strategy, sales, and talent, if services are not executed with

high levels of quality, on time and in an orderly process, the organization will fail. Our

research shows PSOs with high levels of quality execution share common traits,

which include:

Resource management, with visibility from prospect to project to ensure the right resources with the right skills are available when needed;

Structured or standardized service delivery processes, where all employees understand their role and what is expected of them;

Solid project management, which provides visibility into the schedule, resources, deliverables and risks to ensure projects are delivered on time and on budget;

Accurate and timely project accounting, where all financial information, including time and expense capture and billing are accurate and timely to ensure revenues and costs are kept in balance.

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PMOs can positively impact every critical factor identified above, and the benefits are

in no way limited to PSOs. Industries from auto manufacturing to pharmaceuticals —

any organization with multiple, broad-spanning projects — can see performance

improvements from successful PMO implementation.

1 Service Performance Insight, LLC; 2012 Professional Services Maturity™ Benchmark

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Conclusion

Too often senior executives and stakeholders become frustrated when they are

unable to manage the level of risk associated with the execution of strategically

important change programs and the high cost associated with the over-reliance on

external consulting firms. Likewise, numerous individual project teams peering at

Gantt charts and thousands of separate Excel documents are unlikely to see a

strategic path to improved performance. The ever widening execution gap that

separates strategic decision making from project related activities means that

leadership can quickly lose sight of progress, and issues that accumulate almost

daily go unresolved.

It is your company’s culture, size and goals that must determine how a PMO is

chartered. Implemented successfully, a PMO provides greater executive visibility,

reduces the cost of projects, enables repeatable success, reduces dependency on

outside consultants, helps reduce organizational strain, and drives positive ROI on

all your initiatives.

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About KeyedIn Solutions

KeyedIn Solutions was founded by veteran ERP industry executives to transform the

traditional enterprise software systems market through a suite of integrated business

applications delivered on a true SaaS platform and a consulting organization rich in

business, industry and IT expertise.

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from KeyedIn SaaS Solutions represent the next generation of enterprise systems for

specialized vertical and micro-markets.

The KeyedIn Consulting Group provides strategic and tactical consulting services

around existing or planned systems, helping organizations achieve a strong return on

their IT investment and realize a true business advantage in their market. Whether

engaged independently, or in conjunction with the company’s leading-edge

technology platform, the KeyedIn Consulting Group delivers results for a wide range

of businesses and industry types worldwide.

This winning combination of industry expertise and transformative technology has

positioned KeyedIn Solutions for rapid growth. Customers look to KeyedIn Solutions

for innovative, integrated business applications and results-driven consulting services

delivered with integrity and a laser-focus on their needs.

You should too. Keep up with us at www.keyedin.com.

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