I. AGILITY AGENTS

II. SPECIAL SNOWFLAKES VS. MAKING MAGIC

III. THE JOURNEY TO AGILITY IS A TRANSFORMATION UNTO ITSELF

Tricks of the Transformation Trade: Disruptive Disintermediation, Agility Agents, and PMO Networks

WHITEPAPER

by Gil Makleff and Ron Rubinstein

I. AGILITY AGENTSA vast majority of U.S multinational firms – 93% in fact, according to a recent survey – are at some stage of undergoing or preparing for business transformation initiatives. This is being driven by an unprecedented confluence of changes in customer behavior, disruptive technology and domestic competition, among other key triggers (Forbes Insights, 2014). It’s constantly “transform or wither” in today’s volatile global business, and agility is the executive imperative of the day, albeit an elusive one. An organization’s long term success or failure depends on its capacity to consistently identify opportunities and risks and renew itself faster than rivals do. Business leaders need to be more efficient and effective at updating and implementing strategies than ever before. If wielded correctly, an important weapon in their agility war chest is a new style of enterprise program management office (PMO) that is more comprehensive than in the past (Makleff, 2015).

Networked PMOs support agility

Analyzing the approaches recently adopted by a diverse group of Fortune 1000 and large non-for-profits in sectors such as healthcare, energy, manufacturing and even philanthropy, we’ve gained a better understanding of how these organizations create an enterprise-wide web of information sharing designed to facilitate better strategy decisions and their deployment to bridge the gap with execution. At its heart are functional agility agents networked across the enterprise that we identify as PMOs; some businesses might label them strategic planning groups, program centers of excellence, business transformation offices, etc. Nomenclature aside, extensive research has shown the potential for correctly structured intra-organizational networks to spur global competitiveness and facilitate innovation and knowledge creation, especially in highly disparate organizations such as multi-national, corporations (Nohria & Ghoshal, 1997).

Standardized data and processes drive agility

Case in point is a global manufacturing company that was in the midst of a strategic transformational effort to improve development productivity. The firm prides itself in innovation speed: roughly a quarter of its marketed products are less than a year old. After standardizing the scheduling and resourcing data across several dozen portfolios spanning multiple business units and divisions for innovation, NPD, and product maintenance projects – the organization was able to analyze product life cycle development processes and pinpoint prototype validation as a significant bottleneck. They were also able to identify a division with a best practice validation approach that cut the average validation time in half, shaving many weeks off planned delivery timelines. By leveraging a network of PMO-like organizational constructs at the divisional and functional level, leadership was then able to disseminate this best-practice process as a standard across the entire set of relevant portfolios within days. Their strategy of increased productivity was realized with agility through an effectively closed loop of impactful decision making and deployment.

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UMT Consulting Group Trick of the Transformation Trade: Disruptive Disintermediation, Agility Agents, and PM Networks 2

To improve is to change. To be perfect is to change often.-Winston Churchill

“I don’t see why you say a web is a miracle it’s just a web.” “Ever try to spin one?’ asked Dr. Dorian.-E.B. White, Charlotte’s Web

II. SPECIAL SNOWFLAKES VS. MAKING MAGICIt has been shown that combined process and data standards have a positive impact on business process performance in terms of the individual measured dimensions of time, cost and quality (Muenstermann, Eckhardt, & Weitzel, 2009). The example above illustrates the important role PMOs play in governing and disseminating data and process standards, as evident in the analysis of all the businesses we surveyed, and how this can be leveraged to increase agility. Whether it’s a major biopharmaceutical company looking to define key R&D milestones across all pipeline programs for their board to review and make funding and market-timing decisions; or the exploration & production arm of a major oil and gas corporation looking to schedule rigs with utmost efficiency across multiple geographies – organizations that aspire to “manage by data” recognize that standardizing information and processes across all layers of the enterprise is crucial to effectively identifying operational risks and opportunities faster. The true value of breaking down data siloes perpetuated by the business’s “special snowflakes” is in the disruptive disintermediation it enables – akin to that put in the headlines by companies such as Uber, Airbnb and their likes. Putting a universal, timely view of capital investments, projects, and assets across all portfolios directly in the hands of decision makers – this is when the “magic” happens.

Standardized portfolio selection drives alignment

Consider a major energy utility whose enterprise PMO is standardizing the intake, prioritization, budgeting and tracking of multiple billions in capital investment across three business units. All proposals are presented using a uniform business case, thus reducing the political leverage in investment decisions (understanding the political implications of this type of transformation is key in laying the groundwork for change.) Throughout the year, projects’ budget utilization will be tracked and funding reallocated from lagging projects to other, deserving ones – based on objective assessment of alignment to strategy.

This example again illustrates the use of standards and governance to drive agility, this time with a focus on financials. This dimension, along with schedules and resourcing alluded to earlier, combine to form the “core content cube” of portfolio data that drives decision support.

UMT Consulting Group Trick of the Transformation Trade: Disruptive Disintermediation, Agility Agents, and PM Networks 3

Figure 1- Data and Process flows in a PMO network

STRATEGY

PROCESSSTANDARDS

PROCESSSTANDARDS

STANDARDDATA

STANDARDDATA

PROJECT PORTFOLIO

DECISION SUPPORT

DECISION SUPPORT

PROCESSES

CORPORATE PMO

BUSINESS UNIT PMO

BUSINESS UNIT PMO

PRODUCT LINES REGIONS

While it is sufficient for a network of portfolios to be interconnected to disseminate this type of information holistically, it is the network of PMOs that comes into play to disseminate data and process standards that can drive rapid process change across the organization. Thus, the organizational maturity curve from a project and portfolio management (PPM) perspective can be viewed as a parallel progression as depicted in figure below. One can contemplate a positive network externality effect driven by the deployment of common standards across the organization and increasing as more PMO “agents” participate in the network (Katz & Shapiro, 1985). Meaning, business units benefit not only from having their own PMO but also from other groups PMO efforts as they increase information sharing and cross-BU collaboration.

LIFECYCLE MANAGEMENT

FINANCIAL MANAGENENTRESO

URCE

MAN

AG

EMENT

Project Scheduling

Project Planning

Project EstimatingProject Tra

cking

Financial Track/StratResource Allocation

Budget Plan & Track

Integrated Financials

Resource

Tracking

Capa

city P

lannin

g

Reso

urce

As

signe

ment

CORE CONTENT

Figure 2 - Core content cubes of financials, scheduling and resourcing data

UMT Consulting Group Trick of the Transformation Trade: Disruptive Disintermediation, Agility Agents, and PM Networks 4

Figure 3 - The PPM-Agility maturity curve

PROJECTS

NETWORK OF PORTFOLIOS

NETWORK OF PORTFOLIOS

NETWORK OF PORTFOLIOS

PMO1.0

EPMO2.0

SCOPE

M ATUR I T Y

TIME

PORTFOLIOSPORTFOLIOS

PORTFOLIOS

NETWORK OF PMOsNETWORK OF

PMOsNETWORK OF

PMOs

III. THE JOURNEY TO AGILITY IS A TRANSFORMATION UNTO ITSELFHow one goes about designing and constructing this network highly depends on the structure of business units, divisions, and functions within and the extent of collaboration and communication between them; and more importantly on the organizational span of control at play. Centralized “monarchies” or more distributed “federations” might be preferred depending on the organization’s focus on growth or profitability (Weill & Ross, 2005). The company’s operating model and enterprise architecture will determine the appropriate level of business process standardization and engagement model with linkages to at various levels in the organization (Ross, Weill, & Robertson, 2006). Where change starts, depends on the driving forces: is it a bottom-up groundswell with grassroots activists, a top-down executive sponsorship, or perhaps, somewhere in the middle. In the example provided earlier, efforts were piloted on the utility’s $200M shared services portfolio before expanding to the entire, multi-billion-dollar portfolio across multiple business units, exemplifying an approach to gain buy in from a continuously broadening group of internal stakeholders that ensures adoption. The expectation is that as executive managers better understand the connection between successful PMO deployment and agility, top down transformation efforts will be the method of choice to ensure consistency across the organization.

An iterative infrastructure deployment approach

The organizational agility end-game described in this paper is a transformational change of significant magnitude. It has to support the robust needs of an enterprise, which in many instances spans multiple geographies and business units, all of which must ultimately be aligned and convinced of the value of change. Change is difficult at best and consistent management towards enterprise maturation is a critical success factor. From a capabilities and content perspective, the initial focus might be on enhancing financial governance, as in the example described above, where capital planning and budgeting were fundamental to all functions in this organization, and executive motivation to improve there was the greatest. Other organizations might have a propensity to focus first on resourcing, or perhaps scheduling, e.g. in the biopharma sector where time-to-market delays can impact hundreds of millions of potential revenue dollars. Thus, rather than adopting a monolithic ‘big bang’ approach, an iterative one where the most pertinent content dimensions are included initially is highly recommended. As PMOs and the organization mature, additional capabilities and connectivity can be added and enhanced. Failure to focus on resolving challenges most critical to the enterprise results in PMOs that are perceived as ‘theoretical’ and those that deliver very little value (Schoen & Fitzgerald, 2014).

Having covered people, process and content considerations, it’s worth adding a final footnote on tools and technology. Key IT considerations in the context of agility are: support for collaboration, robust visualization and workflow flexibility. The advent of software as a service (SaaS) / cloud-based PPM tools is well aligned with the agility transformation paradigm, as it de-risks change by removing large infrastructural investments from the process. Iterative seems to apply more aptly to SaaS — that is, defining initial specs upfront and then evolving the system as it matures. From an architectural point of view, cloud-optimized SaaS is attractive in that it allows for a level of flexibility and gradual improvement (Handler, Jones, & Stang, 2015). Many large enterprise environments might choose the path of the custom cloud solution since it allows for maximum flexibility in delivering solutions to a diverse user base while maintaining low overhead and minimal infrastructure investments.

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SUMMARYIn the words of historian Lynn White, Jr., “We live in an era when rapid change breeds fear, and fear too often congeals us into a rigidity which we mistake for stability.” To thrive in the face of today’s growing competitive pressures, exponential technology changes, and rapidly shifting consumer preferences, businesses must overcome this fear with a bold resolve to eschew the comfort zone of efficiency in favor of recalibrating their DNA for agility. The alternative is an existence of marginal survival at best. Achieving this organizational transformation is no small feat, and requires careful consideration, iterative change and a new way of thinking. In this regard, building a network of organizational enablers - towards fluid, pervasive and disintermediated information and process knowledge sharing - is key to unlocking and enterprise’s agility potential.

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REFERENCES Forbes Insights. (2014). Business Transformation and the Corporate Agenda. KPMG. Handler, R. A., Jones, T., & Stang, D. B. (2015). Best Practices for PPM Tool Implementation. Gartner. Katz, M. L., & Shapiro, C. (1985). Network Externalities, Competition, and Compatibility. The American Economic Review, pp. 424-440. Makleff, G. (2015). Portfolio Agility– From Elusive Imperative to Practical Reality: Seven Dimensions of a World-Class PMO Roadmap. New York: UMT Consulting Group. Muenstermann, B., Eckhardt, A., & Weitzel, T. (2009). Join the standard forces - Examining the combined impact of process and data standards on business process performance . Proceedings of the 42nd Hawaii International Conference on System Sciences. IEEE. Nohria, N., & Ghoshal, S. (1997). The Differntiated Network: Organizing Multinational Corporations for Value Creation. Jossey-Bass Publishers. Ross, J. W., Weill, P., & Robertson, D. (2006). Enterprise Architecture As Strategy: Creating a Foundation for Business Execution. Harvard Business Review Press. Schoen, M., & Fitzgerald, D. (2014). PMOs: One Size Does Not Fit All. Gartner.

Weill, P., & Ross, J. (2005). A Matrixed Approach to Designing IT Governance. MIT Sloan Management Review.

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