Fixing Project Management: A Must-Have


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Top-performing organizations increasingly recognize that effective program and project management is essential to today’s complex operational environments. This ISG white paper examines common issues around project management, and discusses steps that organizations can take to design and implement an effective Program/Project Management Office (PMO) to address these issues and ensure consistent oversight of critical operational projects.

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Fixing Project Management: A Must-Have

  1. 1. www.isg-one.comFIXING PROJECT MANAGEMENT:A MUST-HAVEConsistent Standards are Key to Multi-Vendor Operating ModelsBy Michelle Mack, Principal Consultant
  2. 2. FIXING PROJECT MANAGEMENT: A MUST-HAVE ■ MICHELLE MACK 1INTRODUCTIONToday’s complex multi-source operating models are characterized bynumerous suppliers that provide infrastructure, applications and businessservices. At any given time, multiple concurrent projects are in flight and inthe pipeline. These projects can range from updates to infrastructurecomponents, systems interfaces or application functionality, to businessinitiatives around new product roll-outs and marketing campaigns. Projectmanagers are typically drawn from a mix of suppliers, service providers andcontractors (with a corresponding mix of management processes) to augmentclient staff and oversee development.In such environments, Project Management (PM) standards and discipline areoften inadequate, inconsistent or non-existent. The result is a significantnegative impact on operational performance as measured by cost efficiency,productivity and service quality. Moreover, PM challenges manifestthemselves at both a micro level, in terms of individual projects, as well as amacro level, in terms of multiple interrelated projects in the context of abroader operational strategy.Top-performing organizations increasingly recognize that effective programand project management is essential to today’s complex operationalenvironments. This ISG white paper examines common issues around projectmanagement, and discusses steps that organizations can take to design andimplement an effective Program/Project Management Office (PMO) toaddress these issues and ensure consistent oversight of critical operationalprojects.
  3. 3. FIXING PROJECT MANAGEMENT: A MUST-HAVE ■ MICHELLE MACK 2ORGANIZATIONAL ISSUESA combination of factors accounts for the lack ofeffective PMO structures or project managementprocesses in multi-sourced environments. One is theinherent complexity of organizations with multiple third-party suppliers. Moreover, while most organizationsgenerally recognize the benefits of project management,budgets are limited and priorities are endless, so PMimprovement is often pushed toward the end of thequeue of initiatives by more pressing issues.Gaining organizational buy-in for project managementalso presents a challenge. Imposing a standard set ofprocesses, tools and reporting requirements across awide range of clients, stakeholders and suppliers requiresovercoming the formidable obstacle of, “But we’vealways done it this way.” More specifically, processdiscipline and standardization can be perceived asthreatening to “heroes” within provider organizationswho are valued for their skills and responsiveness.Business users, meanwhile, bristle at the need to followprocesses rather than relying on informal networks andpersonal relationships. (For more on this topic, downloadthe ISG white paper, “Heroes vs. Process Discipline.”)Moreover, many organizations have had negativeexperiences with project management disciplineinitiatives. In these cases, strict, inflexible standards areimposed and are perceived as structure for structure’ssake rather than a means to operational improvement.Acknowledging mistakes can be essential to overcomingbad impressions. When rolling out a new PMO initiative,one ISG client acknowledged that past projectmanagement processes were too casual and ineffectivelyapplied, and had failed to meet the organization’s needs.To gain stakeholder support, the client emphasized thatthis time change was to be taken seriously.PM CHALLENGESTo a large extent, PM problems result not from a lack ofprocesses, but rather from a multitude of standards.Project managers from a variety of companies andbackgrounds apply a variety of different processes andtracking and reporting tools. The result is confusion andinconsistent results among and between suppliers andbusiness stakeholders. With every supplier using aunique process to report on specific project deliverables,the result is an inability to track the project in its entirety,or to subsequently gauge the benefits delivered.For example, ISG worked with an organization where twokey suppliers on a project could not agree on a commonstandard for reporting milestones and deliverables. Theclient was forced to add resources for the sole purposeof consolidating reports into a common format.Implementing consistent standards from the beginningwould have provided the same benefit at littleincremental expense.Without standardization and cross-training, covering forabsent project managers becomes a nightmare.Knowledge management suffers without libraryfunctions for shared project artifact repositories andstandards for document routing and version control.Inconsistency and multiple standards also limit the abilityto acquire “line of sight” into portfolios and track andmanage the inter-dependencies of different projectswithin a portfolio and how they impact overallperformance.Another fundamental problem is a lack of basic metricsto gauge efficiency, productivity and quality, as well as adearth of clearly defined standards and processes forproject methodologies, deliverables or staffperformance. Common templates or schedules aroundprojects and change control management are rarelyestablished or followed. Charters, plans for qualitymanagement and communication, project stakeholderanalyses and knowledge transfer reports are similarlysparse.Similar problems characterize reporting of projectworkloads, resources, risks, issues or status. Projects lackcommon controls, tracking mechanisms or dashboards,or integrated escalation processes.While the management of individual projects is oftencharacterized by dysfunction, organizations also struggleto gain visibility into project portfolios. Rather thantaking a big picture view that considers theinterdependencies of multiple projects and manages theoverall program of services, organizations typically treatprojects in isolation as discrete, stand-alone efforts. As aresult, resource utilization and planning capabilities arediminished, as ebbs and flows in demand can’t beanticipated.
  4. 4. FIXING PROJECT MANAGEMENT: A MUST-HAVE ■ MICHELLE MACK 3CHARACTERISTICS OF AN EFFECTIVE PMOMicro ViewFor individual projects, the PMO establishes consistent processes todefine the project charter, requirements, business and technicalteams, and metrics and standards around quality management,communications and meetings. Consistency across these activities isessential to prevent confusion among both suppliers and the business.A Benefit Realization Report ensures that each project is assessedbased on its requirements and business benefit as established in theproject charter, enabling the goal of continually assessingperformance and alignment to business strategies such as reducing amarketing campaign’s lead time or speeding up a productdevelopment cycle. Control and change management processesinclude a service request process integrated with contract governance,allowing for seamless hand-off of service requests within the businessworkflow. Contract governance ensures that all supplier projectactivities are integrated and appropriately scoped and priced in thecontext of the overall supplier contract.Macro ViewThe Program Management component of the PMO manages specificbusiness initiatives that entail multiple related projects, includingsupplier-led projects, to coordinate and integrate activities in order toensure business objectives are met.Specific functions of the PMO include creating dashboard views fortracking and reporting multiple projects across multiple stakeholders,with defined milestone highlights. Stakeholder and client priority rulesare established and applied to each project, as are metrics aroundproject complexity, effort, risk and interdependency.These aggregated views of workload, resources, risks, issues andstatus enable tracking and reporting on the performance of the overallportfolio.ManagementA PMO can be managed by a client or service provider team, or by anindependent third party. The latter approach is typically optimal, as anobjective and unbiased perspective on often conflicting agendas andpriorities is an essential component of an effective PMO. As such, aPMO managed by a third party is generally more likely to providetransparency and insight and to fairly represent the interests ofmultiple suppliers.BenefitsAn effective PMO removes the onus of project management from theclient’s functional organization. Rather than managing individualprojects and overall portfolios, the functional organization determineswhich projects are “in scope” for the PMO to manage and definesbusiness priorities. The PMO then matches the core competency andexperience of a project manager with the business needs of theprojects to ensure that the project and business deliverables receivethe proper level of expertise and understanding.PROGRAM VS. PROJECT?The term “Program Management” and“Project Management” can beinterpreted in different ways, and areoften used interchangeably. Strictlyspeaking, the terms can be defined asfollows:Program Management involves takingthe “big picture,” macro view thatassesses the overall portfolio of projectswithin an enterprise, and requiresmanaging multiple interrelated projectsin the context of a broader operationalstrategy. Effective program managementrequires prioritization and coordination;namely, ensuring that adequate andappropriate resources are committed tothe most important projects, which areexecuted with an understanding of theirinter-relationships in the overallportfolio. Another key is utilizationplanning, and anticipating resources thatwill be required as major new projectscome through the pipeline.Project Management is the micro-levelview of individual projects, and aims toensure that each project aligns tobusiness requirements and is deliveredefficiently, as measured by KPIs aroundcost efficiency, productivity and quality.Consistency, documentation and processdiscipline are key success factors toeffective project management. “ProjectManagement” can also be used as ageneric term to encompass bothindividual project performance as well asthe broader endeavor of managing theenterprise portfolio of projects.
  5. 5. FIXING PROJECT MANAGEMENT: A MUST-HAVE ■ MICHELLE MACK 4KEYS TO SUCCESSEffective Project Management requires a delicatebalance between paying attention to the big picture, andat the same time focusing on detail at a granular level.Specifically, organizations need to balance businessdemand and priorities against available resources acrossthe entire portfolio, while ensuring that individualprojects are efficiently managed.Communication between the functional organization andthe PMO is essential to addressing this challenge. At ahigh level, the PMO must track resource requirementsfor ongoing and future projects to ensure that criticalinitiatives are properly staffed and that resources are notbeing absorbed by low-priority projects.Buy-in from executive leadership is another criticalsuccess factor. As with any organizational change,resistance – whether in the form of “not invented here”or simple inertia – can be difficult to overcome withoutleadership and support from the top. Executive supportcan take different forms depending on the organization,but one of the most effective means is participation inProgram Management reviews and decisions, especiallyearly on, where executive involvement signalscommitment to the PMO and the processes inherentto it.Important and UrgentImplementing effective PMO initiatives has traditionallybeen a struggle. However, businesses are recognizingthat, in today’s complex multi-vendor environments, theissues related to ineffective project management are notonly important, but also increasingly urgent, as they havea significant impact on operational performance and,ultimately, achieving business priorities.ISG has observed that effective management teams areresponding to the challenge and taking steps toimplement effective PMO initiatives that provideoversight to project portfolios and at the same timeinstill rigor and discipline to individual projects.
  6. 6. 062013© Copyright 2013 Information Services Group – All Rights ReservedFor further information, please contact Alex Kozlov, Director of Marketing, Americas, at alex.kozlov@isg-one.comor +1 617 558 3377Information Services Group (ISG) (NASDAQ: III) is a leading technology insights, market intelligence and advisory servicescompany, serving more than 500 clients around the world to help them achieve operational excellence. ISG supports private andpublic sector organizations to transform and optimize their operational environments through research, benchmarking, consultingand managed services, with a focus on information technology, business process transformation, program management servicesand enterprise resource planning. Clients look to ISG for unique insights and innovative solutions for leveraging technology, thedeepest data source in the industry, and more than five decades of experience of global leadership in information and advisoryservices. Based in Stamford, Conn., the company has more than 800 employees and operates in 21 countries. For additionalinformation, visit FOR A STRATEGIC PARTNER?