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Taking Your Pmo To The Next Level

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Project management offices (PMOs) evolve through the project, program and portfolio management stages as they mature to meet ever-increasing business needs. A project management office can reduce the …

Project management offices (PMOs) evolve through the project, program and portfolio management stages as they mature to meet ever-increasing business needs. A project management office can reduce the risk of project schedule slippage, cost overruns and scope creep by focusing on a standard project management process, basic tools and project manager development. A program management office can improve resource management across business and IT projects and programs by combining related business and IS projects into programs, as well as by implementing governance, communications programs and collaboration tools. A portfolio management office can contribute to business growth by optimizing the mix of project and program investments and focusing on benefits realization and knowledge management. CIOs must ensure that their PMOs master the basics of their current stage before they evolve them to the next stage


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  • Missing from this case study: The work concept implemented at the New York City Housing Authority that won a finalist designation for the 2007 PMO of the Year was conceptualized, designed and implemented by Helene Heller, formerly Senior Director of Project & Information Management at NYCHA and Faisal Hanafi of Cisco. Microsoft and PCubed were brought in for the automation of what had already been completely developed and implemented without automation by Ms. Heller and Mr. Hanafi, Ms. Heller led the automation implementation until the prototype had been completed.
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  • 1. march2006 Taking Your PMO to the Next Stage Contents Executive summary 4 PMOs evolve through three stages as they mature to meet ever-increasing business needs. CIOs must ensure that their PMOs master the basics of their current stage before evolving them to the next stage. Section 1 PMOs must evolve as business needs change 8 As business needs evolve from risk reduction to resource management to business growth, CIOs evolve their PMOs through the project, program and portfolio management stages. Section 2 Reduce business risk with a project management office 18 A project management office can reduce the risk of project schedule slippage, cost overruns and scope creep by focusing on a standard project management process, basic tools and project manager development. Section 3 Optimize resource use with a program management office 32 A program management office can improve resource management across business and IT projects and programs by combining related business and IS projects into programs, as well as by implementing governance, communications programs and collaboration tools. Section 4 Contribute to business growth through a portfolio management office 46 A portfolio management office can contribute to business growth by optimizing the mix of project and program investments and focusing on benefits realization and knowledge management. Appendix A Organizing the PMO 62 Appendix B Representative PMO tools and frameworks 66 Further reading 67 ®
  • 2. Layout/Production: Gartner Corporate Marketing Entire contents © 2006 Gartner, Inc. and/or its affiliates. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice. © 2006 Gartner, Inc.
  • 3. With 3,300 members worldwide, Gartner Executive Programs is the world’s largest membership organization specifically for CIOs. Designed to enhance senior-executive productivity and professional development, Gartner Executive Programs provides a single source of research expertise, one-to-one counsel and the shared intelligence of thousands of senior IT executives. Gartner EXP Premier is the ultimate one-stop shop for CIOs of medium-to-large businesses—a comprehensive, definitive resource that provides you with exclusive analysis and reports, preferential access to Gartner research specialists, inspirational roundtables and a variety of networking events. We know how difficult it is to keep up with technology. Gartner EXP Premier is the CIO’s gateway into everything Gartner has to offer. A dedicated relationship manager finds the answers you need and tailors them to your own context. The convenience of a single source of knowledge, one-to-one counsel, personalized service and the assurance of Gartner objectivity and insight—that’s Gartner EXP Premier. About Gartner Gartner, Inc. (NYSE: IT) delivers the technology-related insight necessary for our clients to make the right decisions, every day. Gartner serves 10,000 client organizations, including chief information officers and other senior IT executives in corporations and government agencies, as well as technology companies and the investment community. The Company consists of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 3,700 associates, including 1,200 research analysts and consultants in 75 countries worldwide. For more information, visit gartner.com. Taking Your PMO to the Next Stage 1
  • 4. Foreword PMOs are evolving. Shifting from the tactical to the strategic, PMOs are performing a widening range of work. They’re supporting business programs outside IS, such as product launches and post-merger integration. And they’re helping ensure that the enterprise invests in the best set of projects and programs—and achieves the most benefits. Their stakeholder set is broadening as well to include business partners and external resources. 2 Gartner EXP Premier
  • 5. PMOs evolve through three stages to perform Ken LeBlanc, EMC Corporation; Merissa a wider range of work. Each stage builds on Smith, Hallmark UK; Jan Cronje and André the prior stage. Moving from one to the next Michau, Metropolitan Holdings Ltd.; Avi depends both on the PMO’s maturity and the Duvdevani and Ron Rigores, New York City needs of the business. CIOs play a leading role Housing Authority; Richard Shapiro, Royal in this evolution. Caribbean Cruises Ltd.; Patrick Anglard, Thales Group; Ana Paula Keil, TIM Brazil; Chuck Tucker and Hilda Agopian led the and Valerie Adamo and Katherine McLean, research on Taking Your PMO to the Next Workplace Safety and Insurance Board Stage. This report answers the question, How (Ontario, Canada). can CIOs make their PMOs more effective? Fifteen CIOs, PMO heads and IS executives • Other members of the Gartner EXP research from 10 enterprises with established PMOs team: Dave Aron, Mark McDonald, Tina were interviewed as part of this research. Nunno, Andrew Rowsell-Jones and Gartner Their best practices and lessons learned are adjunct researcher, Barbara McNurlin. summarized in the report. • Other Gartner colleagues: Nicky Basset, Francois Bonnel, Lyne Bouchard, Ione de Many individuals from around the world Almeida Coco, Tim Goetz, Robert Handler, contributed to this work, including: Amanda Hatten, Matt Hotle, David Lentz, • Contributors to the case studies: San Retna, Matt Light, Anna Maria Nenna, Venessa AAA of Northern California, Nevada and Utah; Penov, Bridgette Randolph, Jonathan Rosen Garry Whatley and David McBeth, Corporate and Ruth Steinberg. Express Australia Ltd.; Mike McLaughlin and Taking Your PMO to the Next Stage 3
  • 6. Executive summary A PMO is a center of expertise that provides the organizational focus on improving the management of projects, programs and portfolios. PMOs evolve through three stages as they mature to meet ever-increasing business needs. CIOs play an important role in ensuring that their PMOs master the basics of their current stage, employ best practices and demonstrate results, before evolving them to the next stage. 4 Gartner EXP Premier
  • 7. PMOs must evolve as business supplying tools and centrally tracking status. needs change The project management stage is where project From the case studies it is clear that PMOs are manager training, coaching and mentoring have not static. They evolve over time through the the most focus. three stages—even though the term “PMO” is High-level governance programs and used to refer to all three. Through this evolution communications programs are most frequently the scope of work changes from tactical to implemented at the program management strategic, and the scope of initiatives changes stage to coordinate business and IT projects. from IT-intensive projects to combined business-IT programs and finally to The portfolio management stage is where enterprisewide initiatives (see figure below). benefits realization management and knowledge management most frequently take place. Disciplines established in previous stages don’t disappear. They provide the foundation CIOs play an important role in matching the to succeed in the current stage. PMO stage to business needs, and planning the evolution. Getting too far out in front of the PMOs at all three stages perform the basics of business or lagging too far behind have similar maintaining the project management process, disadvantages. PMO scope of work and scope of initiatives change across the three stages Strategic Portfolio management • Portfolio scope definition • Overall investment, benefit, risk optimization • Active portfolio performance monitoring • Business environment change adaptation Program management • Comprehensive program planning Scope • Change and risk management of work • Coordination of project delivery • Measurement of results • Business-IS collaboration Project management • Initiation • Deliverables • Budget • Scope • Schedule • Risks • Resources • Metrics Tactical Scope of initiatives IT Business-IT Enterprise Source: Adapted from New York City Housing Authority (NYCHA). Taking Your PMO to the Next Stage 5
  • 8. Reduce business risk with a management functions. A PMO cannot manage project management office complex functions if it still spends most of its time on the basics. Defining and implementing an end-to-end project management process is the first step At this level CIOs must focus on establishing in establishing a project management office. an effective governance structure and This requires implementing a flexible project communicating early and often with the management process and basic tools for programs’ extended stakeholder groups. project planning and reporting. In addition to being the communications hub, a CIOs should also devote resources to program office facilitates collaboration between developing competent project managers business and IS project teams that are working through formal training, coaching and in the same program. mentoring. Not all projects require the same CIOs with mature program management offices level of experience. Use a mix of internal and who can demonstrate improved program external hires, contractors and external service delivery and resource utilization should start providers to provide project manager staffing thinking about moving the PMO out of IS and flexibility. evolving to the portfolio management stage. Once you have best practice basics in place, demonstrated improvement in project delivery Contribute to business growth and gained credibility, consider broadening the through a portfolio management PMO’s scope beyond IT-intensive projects and office evolving to the program management stage. Portfolio management offices contribute to business growth by optimizing the enterprise’s Optimize resource use with a portfolio of projects and programs. They program management office allocate scarce resources toward enterprise The next stage in the PMO’s evolution is to objectives, while factoring in risk, desired become a program management office. returns and interrelationships between these Program management offices coordinate related investments. business and IT projects. Programs usually The portfolio management office typically impact multiple stakeholders, last longer and operates independently of IS, reporting to the involve external resources, so they are more CFO, COO or other senior executive. This gives complex to manage. Cross-project visibility and it the clout to raise portfolio management issues focusing on the interdependencies between to the highest levels and make decisions based related projects allow program management on the best interests of the entire enterprise. offices to ensure that the right business and IS resources are used at the right time. CIOs can help extend the portfolio management office’s influence by getting it involved in To move to the program management stage, an strategy formulation and benefits realization. enterprise must first institutionalize its project 6 Gartner EXP Premier
  • 9. They can upgrade governance to deal with The figure below summarizes best practices portfolio-level issues. for improving PMO effectiveness. The three- stage framework and the self-assessment at PMO staff now require new competencies, such the end of each section can help CIOs manage as strategic planning and investment analysis, expectations, fill in gaps and plan when and and more powerful tools to measure, manage how to take their PMO to the next stage. and report benefits realization, portfolio alignment and health, and PMO performance, See Appendix A to see how case-study as well as capture lessons learned and promote CIOs organize their PMO resources. Refer positive change. to Appendix B for representative examples of PMO tools and frameworks. Summary of PMO case-study best practices Reduce business risk with a Optimize resource use with a Contribute to business growth project management office program management office through a portfolio management office 1. Establish a flexible, end-to-end 1. Expand PMO oversight to include 1. Position the PMO organizationally project management process that business and IT projects, and outside IS to give it indepen- balances rigor with overhead projects sourced externally dence and senior management sponsorship 2. Support the process with 2. Institutionalize project manage- 2. Enlarge the breadth of PMO simple-to-use tools to plan, ment discipline into the culture influence to extend from strategy manage, track and report all to free up resources to focus formulation through benefits project activities on program management realization 3. Make the tools available over 3. Use program-level visibility to 3. Design governance to focus your intranet along with examples identify and alleviate resource senior management on strategic and instructional support contention issues issues 4. Provide formal training, coaching 4. Educate the business, IS and 4. Integrate benefits realization into and mentoring to both IS and the external stakeholders about their the entire life cycle starting with business to develop competent shared responsibilities for planning, and report on it project managers ensuring program success regularly 5. Be flexible in sourcing and 5. Expand governance body 5. Implement portfolio management providing project management membership to represent the tools that provide high-level resources expanded stakeholder set of visibility and analysis that inform programs decision makers 6. Provide project management 6. Establish communications 6. Broaden PMO staff competen- assistance, e.g., consulting, programs to keep all stakehold- cies to include strategic planning problem solving, audits and ers informed and committed to and investment analysis expertise program success 7. Provide collaboration tools 7. Implement knowledge manage- to facilitate the work of the ment tools to capture, categorize business, IS and external and distribute best practices and project teams lessons learned Taking Your PMO to the Next Stage 7
  • 10. PMOs must evolve as business needs change 8 Gartner EXP Premier
  • 11. 1 As business needs change—from risk reduction to resource management, to accelerating business growth—CIOs must help their PMOs evolve through the associated project, program and portfolio management stages in a planned fashion. Taking Your PMO to the Next Stage 9
  • 12. 1 PMOs change their scope as they evolve A PMO is a center of expertise that provides the organizational focus on improving the management of projects, programs and portfolios. This report is based on analysis of 10 case studies from enterprises with established PMOs, and review of the PMO literature. The analysis uncovered a three-stage pattern of PMO maturity, shaped by the PMO’s own capabilities and by the changing needs of the business. But there is no standard terminology. All 10 case-study PMOs use different names for the office (see figure below). They also have different reporting relationships and organizational structures, which may or may not include project and program managers (see Appendix A). This report is structured around the three stages. All PMOs must start at the initial stage, project management, before they can evolve to the program management and then the portfolio management stages. The scope of work changes from tactical to strategic, while the scope of initiatives broadens from IT-intensive projects to enterprisewide business and IT initiatives (see figure opposite). A project management office is usually created to solve a specific problem: generally, the IS organization’s inability to deliver IT projects on time, on budget and in scope. It focuses on implementing the basic project management process, introducing simple tools and developing competent project managers. Project managers may “live” in the PMO, or in different IT units, such as application development, or in the business. Seven of the 10 case-study enterprises have their project and program managers reporting into their PMO. The 10 case studies use varying names for their PMOs PMO name Case-study organization Enterprise Portfolio Management Office (EPMO) AAA of Northern California, Nevada and Utah Program Management Office (PMO) Corporate Express Australia Ltd. IT Project Management Office (IT PMO) EMC Corporation Program Management Office (PMO) Hallmark UK Project Support Office (PSO) Metropolitan Holdings Ltd. Virtual IT Project Management Office (VPMO) New York City Housing Authority (NYCHA) Program Administration (PA) and PMO Royal Caribbean Cruises Ltd. Program Office (PO) Thales Group IT Program Management Office (IT PMO) TIM Brazil Strategic Project Management Office (SPMO) Workplace Safety and Insurance Board (WSIB) 10 Gartner EXP Premier
  • 13. It can easily take two to three years for a project business and IS resources. management office to build a track record of delivery performance. The disciplines Evolving to a portfolio management office established at the project management stage starts when greater visibility into program costs underpin the two subsequent stages. Once the (provided by the program management office) PMO has earned credibility with the business, prompts senior executives to question whether it usually receives requests to help manage the enterprise is making the right investments business projects. At this point it needs to and getting the best returns. The portfolio evolve to the next stage. management office provides the information, analysis and oversight to answer these A program management office manages questions enterprisewide. Governance focuses programs as well as projects. A program is a group of related business and IT projects that senior management on strategic issues. The support a common goal. The PMO focus shifts PMO is supported by portfolio management to the more complex management of programs, and knowledge management tools. which are larger, take longer, require more For clarity and simplicity, this report assumes business-IS collaboration and involve a more a single PMO in an enterprise. In reality, large diverse set of stakeholders. Program-level enterprises may have many, both in the visibility and governance give a program management office a way to better coordinate business and IS, and at different stages. PMO scope of work and scope of initiatives change across the three stages Strategic Portfolio management • Portfolio scope definition • Overall investment, benefit, risk optimization • Active portfolio performance monitoring • Business environment change adaptation Program management • Comprehensive program planning Scope • Change and risk management of work • Coordination of project delivery • Measurement of results • Business-IS collaboration Project management • Initiation • Deliverables • Budget • Scope • Schedule • Risks • Resources • Metrics Tactical Scope of initiatives IT Business-IT Enterprise Source: Adapted from New York City Housing Authority (NYCHA). Taking Your PMO to the Next Stage 11
  • 14. 1 As they evolve, PMOs add new functions PMO characteristics change significantly at each stage. The disciplines established in previous stages don’t disappear; they provide the foundation, credibility and competencies to succeed in the current stage. Each stage builds on the accomplishments of the previous stage(s) (see top figure opposite). Four case-study PMOs are at the project management stage; four are at the program management stage; and two are at the portfolio management stage. But some are also planning their evolution, or are in transition, to the next stage. The bottom figure opposite lists the functions performed by all the case-study PMOs at the same stage, and shows which functions they retain from previous stages. But the commonalities and differentiators are clear: • All the case-study PMOs at all three stages perform the basics of maintaining the project management process, supplying tools and centrally tracking status. • The project management stage is where project manager training, coaching and mentoring most frequently take place. • The program management stage is where high-level governance, collaboration and communications programs are most frequently implemented. • The portfolio management stage is where benefits realization management and knowledge management most frequently occur. 12 Gartner EXP Premier
  • 15. The characteristics of each PMO stage differ Project management Program management Portfolio management Benefit Reduce risk Optimize resource use Contribute to growth Focus Project mgmt. process, Program coordination, Investment optimization, project manager development governance, communications benefits realization Scope Individual IT projects Multiproject programs Proposals/projects/assets Typically CIO or application Usually CIO, but sometimes to Outside IS, e.g., CFO, COO reports to development the business Role Project manager Program coordinator, program Investment advisor, portfolio overseer overseer Engagement Primarily IT project managers Business leaders, external Senior management decision and project owners partners, ESPs makers Tools Time tracking, project Program management, Portfolio management, management, risk mgmt., resource management, knowledge management deliverable templates collaboration Skills Process implementation Change management Benefits realization Metrics Project and project manager Program performance and Portfolio and PMO performance resource utilization performance PMOs add functions as they evolve, while retaining most functions from previous stages PMO functions Case-study frequency Knowledge management Portfolio management Benefits realization management Project portfolio management Communications programs Program Governance body support management Management and delivery of programs Project manager mentoring and coaching Project manager training coordination Project Standards, methods and best practices management Centralized tracking/reporting for all projects Tool selection/implementation/support Process development/implementation/support Taking Your PMO to the Next Stage 13
  • 16. 1 Corporate Express Australia Ltd.’s PMO provides a wide range of services Corporate Express (CE) Australia Ltd. is one of Australia and New Zealand’s leading suppliers of business supplies and services. CE’s PMO is in transition from the program management stage to the portfolio management stage. The PMO manager and 15 project manager contractors currently oversee 54 active projects with costs of AU$300,000 (US$221,000) to AU$5 million (US$3.7 million). The figure below shows the wide range of functions the PMO provides. CE’s PMO services range from tactical to strategic: 1. Operational Services handles the methodology, tools and actual running of projects. 2. Competency Services provides education and training services for both the business and IS and acts as the center of excellence and repository for project management knowledge. 3. Strategic Services handles portfolio management, strategic alignment of projects and operational and management reporting. Corporate Express Australia Ltd.’s PMO services range from tactical to strategic PMO Operational Services Competency Services Strategic Services • Provides PMO methodologies, • Provides project management • Reports at a strategic, templates, tools and governance expert assistance executive level • Project managers directly “run” • Offers project management • Manages strategic priorities projects training to project managers and and milestones for projects the business • Prioritizes and aligns projects • Acts as central repository of to the business strategy and project management knowledge objectives Tactical Strategic Source: Adapted from Corporate Express Australia Ltd. 14 Gartner EXP Premier
  • 17. Case Study: Corporate Express Australia Ltd.—Moving from program management to portfolio management Corporate Express (CE) Australia Ltd., headquartered in steering committee will be able to select projects that Sydney, is one of Australia and New Zealand’s leading support the business strategy and stop or reorient suppliers of business essentials, such as office and those that don’t.” computer supplies, business furniture and print management services. Its 2,100 staff in 42 locations CE is expanding its PMO education to business generate revenues of AU$1 billion (US$750 million). people, to help them be better project sponsors, team members and system testers. The PMO CE’s IS organization faced similar issues as other IS methodology is also expanding to include a detailed organizations: how to better deliver infrastructure and change management strategy and its associated development projects, how to more effectively use communications plans and computer-based training. existing operational resources and how to maximize business benefits in an environment of too many PMO management is evaluating using the enterprise projects. To meet business expectations, IS needed content management systems as the central repository greater control over its projects, which meant instituting for all project documentation. And the PMO is governance. implementing a scorecard that initially measures the overall performance of the PMO and all projects, the CE’s business culture was not project-oriented. In fact, progress of each individual project, the performance of the business executives feared that a PMO would add each project manager and the effectiveness of risk bureaucratic overhead and reduce their entrepreneurial management. success. But CE’s need to comply with Sarbanes- Oxley and the PMO’s success in delivering projects The long-term aim is to measure each competency changed management’s mind; they saw the PMO’s area in the Project Management Institute Project value and became its advocates. Management Book of Knowledge (PMBOK). Benefits realization will also become a new and central focus of the PMO. Moving toward portfolio management The CIO formed a PMO steering committee, Lessons learned comprising himself, the CEO, COO, CFO, chief logistics officer and the general managers of major The following factors have contributed to the success regions and strategic supply. The committee’s charter of CE’s PMO: is to prioritize and align all proposed projects against • Getting the basics implemented quickly and matching the organization’s strategic plans to ensure maximum project management methodology and approach to benefits realization from investments, enforce the CE’s maturity level project management process and identify and eliminate roadblocks to project success. • Improving the delivery on a few very visible projects, to demonstrate value, earn credibility and develop To consolidate projects and provide the basis of key business advocates to help sell the concept portfolio management, the PMO is implementing enterprisewide Microsoft Project Server and the Enterprise Project Management (EPM) tool suite. “It is critical that all • Investing in tools ahead of the need, to deal with projects align with the business strategies to ensure expected challenges, such as managing resources control and the delivery of business benefits,” says across multiple projects David McBeth, manager, PMO. “This will help us identify potential resource contention and give us an Based on interviews with, and material from, Garry enterprise-level view of the project portfolio and the Whatley, CIO, and David McBeth, manager, PMO, organizational resource commitments. The PMO Corporate Express Australia Ltd., December 2005. Taking Your PMO to the Next Stage 15
  • 18. 1 “Understand the role Plan to evolve your PMO to meet changing the business wants business needs the PMO to play. Don’t Because of the long lead time required to set up a project management deliver a battleship office and to demonstrate results, planning should start as soon as the solution you can’t need is recognized. This is the job of the CIO because the initial work of support and that the PMOs is typically with IT-intensive projects. From there, though, the business doesn’t need.” PMO can evolve. — Mike McLaughlin Director New York City Housing Authority (NYCHA) is the largest housing IT PMO and cross- authority in the U.S., serving 417,000 tenants. It has a three-year functional services EMC Corporation plan to provide more PMO functions as both the business and IS mature (see box opposite). CIOs play an important role in matching the PMO stage to business needs. Getting too far out in front of the business or lagging too far behind have similar disadvantages, as shown in the bottom figure opposite. The PMO and the business need to evolve and mature together. CIOs must ensure that their PMOs are responsive to business needs: 1. Begin with a project management office to improve project delivery and develop competent project managers—to reduce business risk. 2. Move to a program management office to coordinate business and IS project teams—to better manage resources. 3. Evolve to a portfolio management office to optimize the enterprise’s project portfolio and its realization of benefits—to contribute to business growth. The next three sections of the report discuss best practices for each PMO stage. 16 Gartner EXP Premier
  • 19. NYCHA’s plan to enhance its IT PMO and governance model Q1 2006: Portfolio prioritization and management Q3 2006: IT procurement standards and processes Q2 2007: Knowledge management capability Q4 2007: Capability Maturity Model (CMM) assessment Q3 2008: IT governance model, version 2 Q3 2009: Enterprise content management system Don’t let your PMO get too far ahead of, or behind, the business needs PMO stage PMO is seen as overkill Portfolio PMO has capabilities the ds management business does not value nee ness usi et b to me ties Program pabili management t ca righ the O has PM PMO is seen as ineffective Project PMO does not have the capabilities management to meet business needs Enable Reduce resource Contribute risk management to growth Primary PMO benefit Taking Your PMO to the Next Stage 17
  • 20. Reduce business risk with a project management office 18 Gartner EXP Premier
  • 21. 2 CIOs in enterprises with weak project management capabilities need to focus on the basics. By implementing a standard project management process, providing basic tools and developing competent project managers, a project management office can reduce the risk of project schedule slippages, cost overruns and scope creep. Taking Your PMO to the Next Stage 19
  • 22. 2 Project management offices develop the process, tools and managers CIOs can improve project delivery to reduce business risk by getting the basics right and building a strong foundation for subsequent PMO stages. The basics include a repeatable project management process, simple tools for project planning and reporting, and competent project managers—usually developed initially for IT-intensive projects (see top figure opposite). The PMOs in all four case studies at the project management stage focus on the same six basic functions: 1. Process development, implementation and support 2. Tool development, implementation and support 3. Centralized tracking and reporting for all projects 4. Standards, methods and best practices 5. Project manager training and coordination 6. Project manager mentoring and coaching All concentrate on improving the delivery of individual IT projects and developing the competencies of the project managers (see bottom figure opposite). 20 Gartner EXP Premier
  • 23. Project management focuses on the delivery of individual IT-intensive projects Strategic Project management Portfolio management Benefit Reduce risk Focus Project management process, project manager development Scope Program management Scope Individual IT projects of work Typically CIO or application development reports to Role Project manager Project management • Initiation • Deliverables Engagement Primarily IT project managers and • Budget • Scope project owners • Schedule • Risks Tactical • Resources • Metrics Tools Time tracking, project management, risk management, deliverable templates Scope of initiatives Skills Process implementation IT Business-IT Enterprise Metrics Project and project manager performance Project management offices develop the process, tools and managers that deliver projects Project management office functions Project management office case-study frequency Project manager mentoring and coaching Project manager training and coordination Standards, methods and best practices Most common project Centralized tracking/reporting for all projects management office functions Tool development/implementation/support Process development/implementation/support Project management office Taking Your PMO to the Next Stage 21
  • 24. 2 “We’d like our IT PMO EMC Corporation’s IT PMO is driven by the business’s need for toolset to function cost and resource control and SOX compliance like an MRP for IT.” EMC Corporation is a leader in information storage and management — Mike McLaughlin products and services. Its IT project management office (IT PMO) Director focuses on process compliance, reporting and training. IT PMO and cross- functional services It aims to improve compliance by implementing project management EMC Corporation standards, increasing the use of project management tools and improving the accuracy of project information for the business, senior management and the CIO. “We’re driven by the business’s need for better cost and resource control, as well as SOX compliance,” says Mike McLaughlin, director, IT PMO and cross-functional services. He has a staff of three project managers and two business analysts who support and track approximately 300 projects and 1,000 enhancements. 22 Gartner EXP Premier
  • 25. Case Study: EMC Corporation—Focusing on process compliance, reporting and training Based in Hopkinton, Massachusetts, U.S.A., EMC accurate project status information. Then they will be Corporation is the world leader in products, services comfortable canceling projects that are not meeting and solutions for information storage and its criteria. “Being able to establish get-well plans early on management. EMC had 2004 revenues of US$8.2 and track progress can make all the difference in billion and employs nearly 23,000 people worldwide. ensuring timely and cost-effective delivery of solutions to our customers,” says McLaughlin. EMC’s IT PMO has a staff of three project managers (PMs) and two business analysts (BAs). It is part of the The BAs handle project reporting and support cross- IT group that handles central operations and IT portfolio functional IT projects. They report project status and and process management. PMOs in other parts of performance to the CIO for shared services, application EMC are responsible for very large projects and development and client services. Information tracked corporate initiatives such as Six Sigma. includes the number of projects and the number of business cases reviewed, approved and rejected. The IT PMO handles work typical at the project Service-level statistics include applications uptime and management stage. It is responsible for supporting and service desk statistics, such as time-to-answer and enforcing technical process standards, tracking project time-to-resolve. Annually, the IT PMO reports on total and portfolio metrics and providing core training for spend and resource allocation. PMs and BAs. One PM is managing the initial definition and design Project manager training is key phase for a project and portfolio management (PPM) EMC developed its project manager training with system. The new system will augment five systems a local college. The training covers such topics as the IT PMO currently uses: Documentum’s eRoom, business case development, business case financial which is used for project tracking and collaboration; an and risk analysis and management, estimating internally developed time-tracking system; Excel, which techniques, requirements gathering, project is used for project and portfolio management; and two management methodology and client engagement. systems used to track smaller maintenance and Some BAs are involved in training PMs and BAs in enhancement projects. other EMC IS departments. The system will answer questions such as: “What will “People will operate under the radar if they don’t see the next project gate require?” and “What is the real the IT PMO’s value,” says McLaughlin. “So we offer status of a project based on milestones, spend and training. Our approach is to influence and direct, rather estimates-to-complete?” than dictate. I also expect to use more industry- standard approaches and tools, such as supporting The other two PMs are currently working on Project Management Institute training and certification.” implementing IT Infrastructure Library (ITIL) processes. Based on interviews with, and material from, Mike Timely and accurate reporting builds trust McLaughlin, director, IT PMO and cross-functional services, and Ken LeBlanc, senior director, IT business To improve the IT PMO’s processes, Mike McLaughlin, operations and IT portfolio management, EMC the office’s director, is working on gaining the trust of Corporation, November 2005. business management by giving them timely and Taking Your PMO to the Next Stage 23
  • 26. 2 “Because the Implement a flexible project management process toolset enforces and basic tools the methodology Defining and implementing an end-to-end project management process and standards, I is the first step for a project management office. Being flexible and don’t have to be having “just enough process” is a best practice. To ensure consistency the bad cop. I many enterprises use a standard methodology, like the one from the have more time to Project Management Institute (PMI). But they develop a “lite” version to coach and advise achieve a balance between process rigor and overhead. to increase project management skills.” Corporate Express (CE) Australia Ltd. provides a good case in point. — Ron Rigores When David McBeth was hired as the manager to set up the PMO in IS, Program manager he focused initially on improving IT project delivery. During the first year, Virtual IT project he developed a streamlined project management methodology, with a management office New York City toolset and controls to support it. “Because CE is a fast-growing, Housing Authority entrepreneurial enterprise, we wanted ‘just enough’ methodology to improve project delivery, but not so much to slow it down,” says McBeth. The “lite” version is based on the PMI’s Project Management Book of Knowledge (PMBOK) and rapid application development (RAD) techniques. The supporting tools for standard project proposals, project plans and project status dashboards are based on Microsoft Office. Microsoft Project is used for project scheduling and reporting. New York City Housing Authority (NYCHA) facilitates process compliance with tools The New York City Housing Authority’s IT PMO took a different approach to gain flexibility. Its methodology is risk-driven. Low-risk projects have less stringent deliverables and reporting requirements than higher-risk projects. The office provides Web-based tools to encourage process compliance. NYCHA’s IT PMO has taken its tools to the next level. The toolset not only provides templates, examples and procedures, but also enforces process compliance and delivers just-in-time training for project managers over the intranet. See the key features of NYCHA’s toolset in the figure opposite. The IT PMO is virtual, in that none of the project managers report to it. Its program manager, aided by consultants, supports 12 enterprise projects, 12 infrastructure projects and proposed business projects. 24 Gartner EXP Premier
  • 27. Key features of NYCHA’s IT PMO toolset “Smart” templates and electronic project management forms • All project management forms and templates, such as project charter and change control forms, are available online for one-time data entry. Simple and route-specific workflow automation • All project management processes are available online as “clickable” processes that provide online help for the phase and required forms. • Each form has built-in business rules that reinforce the process, including executive review and approval, e-mail notifications and reporting. Integrated reporting • An executive dashboard includes project reporting using specific criteria, such as schedule and budget health. • Common reporting processes are automated and simplified by pre-loading data from project schedules or issues/risks lists into a weekly or monthly status report form. Source: Adapted from New York City Housing Authority (NYCHA). Taking Your PMO to the Next Stage 25
  • 28. 2 “To develop project Develop competent project managers through management skills, we formal training, coaching and mentoring use and support the CIOs should plan on devoting resources to developing competent Project Management project managers to ensure long-term success. Case-study enterprises Institute methodology, use many kinds of training. The Project Management Institute (PMI) is membership, an often-used source. Many of the case-study enterprises use PMI for professional professional development and certification. development and certification for our Project management education and training are critical to Corporate project managers.” Express Australia Ltd.’s success. The focus is on two areas. One is how — Katherine McLean to use the methodology and tools, develop clear business requirements Director, strategic and track benefits realization; both project managers and the business program management receive this training, but the project managers receive more detailed office and business advisory services training. The second area is understanding what a PMO is and how it Workplace Safety and achieves buy-in; the business receives this training. Insurance Board One of the most difficult changes that Mike McLaughlin, director of EMC’s IT PMO and cross-functional services, has experienced while coaching and mentoring project managers is helping them overcome the fear of marking their projects yellow (at risk) or red (in trouble). Yet doing so escalates the problem, gets management’s attention, resolves issues and can gain additional support. By identifying problems and getting help early, project managers can get their projects back to green status while they still have time and budget to recover. 26 Gartner EXP Premier
  • 29. Case Study: New York City Housing Authority (NYCHA)—Benefiting from its virtual IT PMO and governance NYCHA is the largest housing authority in the U.S., their strategic importance all visible. Projects are more with 13,300 employees overseeing 36,700 residential consistent, and the project management process is buildings and 181,000 apartments, as well as 86,000 continually improving. leased housing units. NYCHA serves 417,000 tenants. NYCHA has realized significant benefits from its virtual NYCHA recently developed an enterprisewide IT PMO. First, it has avoided spending US$1.2 million governance model (see page 38) and virtual IT project hiring additional project managers. Second, it has management office (VPMO). Together they align increased business unit satisfaction and collaboration NYCHA’s business and IT strategy and address four with IT. Third, it has streamlined the business-IT five- major IT shortfalls: year strategic planning process. Fourth, it has improved the quality, timeliness and cost-effectiveness of its • High project failure and slippage rates strategic IT programs. And fifth, it has increased IT • High rates of projects over budget capital spending because the business is confident the work will be well managed. • Senior management inability to mitigate delays, failures and financial losses in a timely fashion Five factors have contributed to success • Lack of transparency/visibility of project plans and CIO Duvdevani attributes PMO and governance status reports success to five factors: The PMO is virtual in that the project managers report 1. Negotiating and developing an IT governance model elsewhere. “The PMO integrates process flows, that supports the use of a consistent and repeatable templates, online tools and collaborative techniques project management methodology to standardize IT project selection and management throughout the organization,” said Ron Rigores, PMO 2. Aligning business and IT strategic initiatives by program manager. He reports to Avi Duvdevani, CIO fostering a strategic partnership with senior and deputy general manager for IT. management The PMO toolset makes the virtual PMO possible. 3. Allowing the governance framework to guide the Rigores leverages the toolset, which uses mainly the business through the project management life cycle, Microsoft Enterprise Project Management (EPM) suite, developing a project management tool to enforce delivering it via a Web-based project management compliance and letting the business determine the application integrated with Microsoft Project Server. technology portfolio 4. Meeting frequently to review the IT project portfolio Via its IT governance framework and toolset, the PMO transfers project management skills to NYCHA staff, 5. Investing in project management training and including the business units and IT strategic partners. mentoring Projects are managed by NYCHA staff, not the PMO. The PMO assists and mentors these dispersed project “Together with the business, we can identify new managers in using the toolset, often on a just-in-time revenue-generation and cost-saving opportunities. basis. Creating a partnership between IT and the business owners leads to a more effective use of technology and more successful projects,” says Duvdevani. PMO benefits are evident The PMO procedures and toolset have fostered Based on interviews with, and material from, Avi organizational collaboration, document management Duvdevani, CIO and deputy general manager for IT, and control over standard reporting. The PMO has also and Ron Rigores, virtual IT project management office improved governance of IT projects by making the program manager, New York City Housing Authority, projects, the issues and risks surrounding them and November 2005. Taking Your PMO to the Next Stage 27
  • 30. 2 “We have seen a Provide flexible project management staffing direct impact on Demand for experienced project managers varies. Not all projects project success require the same level of experience. A PMO best practice is to be rates as a result of flexible by providing project manager resources from internal sources, implementing the hiring externally and using contractors and external service providers. PMO. Early warning and intervention in Corporate Express Australia Ltd.’s PMO selects qualified contractors as troubled projects project managers to get the right expertise and experience for each have really begun project, as well as to flex staffing levels based on demand. Initially, to pay off.” finding the hands-on, jack-of-all-trades type of project manager for its — Ken LeBlanc mid-size business was challenging. The PMO learned to avoid selecting Senior director project managers from very large companies because their approach IT business was “overkill.” operations and IT portfolio management TIM Brazil has outsourced part of its PMO EMC Corporation TIM Brazil provides mobile phone service to 20 million subscribers. Ana Paula Keil, senior manager of its IT program management office, has outsourced part of the office to a large IT consulting firm. Of her 25 staff, 13 full-time equivalents are consultants. By using external resources she has increased her staffing flexibility, added specialized project management expertise and taken advantage of some of the consultants’ tools. Her staff supports approximately 300 projects. The project managers reside in other IT departments, such as application solution delivery. Best practice PMOs do more than just provide project managers and tools. They provide other types of resources, such as consulting, problem solving, audits and specialized expertise to ensure project success. 28 Gartner EXP Premier
  • 31. Case Study: TIM Brazil—Upgrading its IT program management office TIM Brazil, headquartered in Rio de Janeiro, is a • Commenced weekly follow-up on all projects in the IT subsidiary of Telecom Italia S.p.A. It provides mobile portfolio phone services to 20 million subscribers in Brazil. • Developed the ToDoList application to manage Its 7,500 employees generate revenues of over project follow-up US$1 billion. • Worked with the presidential-level PMO to define an TIM Brazil created its first PMO to manage the rollout of IT portfolio aligned with company strategies its GSM network. Now it has seven PMOs. A strategic PMO reports directly to the president. The six major • Managed special projects for IT organizational lines of business, including IT, each have their own change and balanced scorecards PMO. • Customized the Microsoft Enterprise Project The IT PMO’s mission is to ensure that the IT portfolio Management (EPM) suite to support the new aligns with company strategy, all the way through methodology project follow-up. Its budget is 2 percent of the total IT In 2005, Keil created 10 task forces to focus IT capital expenditure, which includes PM tools and resources on important company problems. Their resources to follow up on projects. The IT PMO is work is reviewed daily. At midyear she transferred responsible for: portfolio management, to ensure responsibility for demand management to a newly alignment between IT projects and company strategies; created relationship management function. project follow-up, to ensure on-time, on-cost, quality project delivery; selection and support of PMO tools; This PMO function consolidates and reports all methodology, skills and coaching of project managers; information about IT projects, including: and metrics and reports. • Weekly reports to the IT steering committee and to its Italian parent The IT PMO is upgrading its capabilities and tools Ana Paula Keil became senior manager of the IT PMO • Monthly status reports for all IT projects and task in mid-2003, reporting to the head of business IT. Her force work staff of 25 includes external consultants but excludes • Semiannual and annual performance summaries project managers who reside in the other IT departments, such as application solution delivery. She • On-demand presentations about IT projects or IT also draws on external resources to gain staffing strategic plans flexibility, project management expertise and tools. In 2006, Keil expects to be more involved in developing the IT strategic plan and reporting the status of the Her first priority was to develop a complete project project portfolio to the board. She will work with the management methodology. What she developed is presidential-level PMO to extend EPM to the other based on the Project Management Institute Book of PMOs, and to include non-IT projects. “We will Knowledge (PMBOK), which transformed TIM Brazil’s integrate projects into programs and develop high-level view of PMOs from managing IT projects to managing company views of all programs, not just IT, for senior business projects. management,” says Keil. During 2004, Keil rapidly upgraded the PMO’s Based on interviews with, and material from, Ana Paula capabilities and tools: Keil, senior manager, IT program management office, • Implemented a subset of the new PM methodology; TIM Brazil, November 2005. divided the IT PMO team into strategic and operational activities Taking Your PMO to the Next Stage 29
  • 32. 2 Assess your project management office against best practices Focusing on IT projects is the universal starting point for project management offices. CIOs should ensure that they have the basics in place before attempting to broaden the PMO’s scope beyond IT projects. If you’re starting from scratch, plan to recruit an experienced PMO leader and to spend at least two years establishing a consistent process, gaining compliance, improving delivery and measuring results. Use the self-assessment opposite to determine if you have best practices in place and to develop a plan to fill in any gaps. CIOs with high-scoring project management offices can start building management support for the next stage—a program management office—by demonstrating project management office successes and having business leaders advocate for the PMO by communicating why they value it. This will create momentum for expanding the PMO’s scope to include business projects and integrated programs comprising related business and IT projects. The program management office is the topic of the next section. 30 Gartner EXP Premier
  • 33. Do you have the basic project management elements in place? Done poorly/ Done somewhat Done Done well/ not at all poorly somewhat well completely 0 1 2 3 1. We have established a flexible, end-to-end project management process that balances rigor with overhead 2. We support the process with easy-to-use tools to consistently plan, track, manage and report all projects 3. We make tools available over our intranet along with supporting materials to increase adoption and compliance 4. We provide formal training, coaching and mentoring to both IS and the business to develop competent project managers 5. We are flexible in sourcing and providing project management resources 6. We provide project management assistance, such as consulting, problem solving, audits and resources Scoring: 14 – 18 You’re in good shape; start planning for the next stage Total score 7 – 13 Determine what else stakeholders need and fill in the gaps 0 – 6 Focus on the basics; get the process and trained project managers in place Taking Your PMO to the Next Stage 31
  • 34. Optimize resource use with a program management office 32 Gartner EXP Premier
  • 35. 3 CIOs can improve resource management and ensure that the best resources are available for the most important projects by combining business and IT projects with common goals into programs that are managed by a program management office. Taking Your PMO to the Next Stage 33
  • 36. 3 “As the project and Program management offices focus on system managers coordinating related business and IT projects become more skilled CIOs increase the scope of their program management offices in project management, by integrating business projects and focusing more on the the PMO will shift interdependencies between related projects, to ensure that the right focus from ensuring business and IS resources are used. Programs usually impact multiple delivery to improving stakeholders, last longer and include external resources, so they are project integration more complex to manage. CIOs should provide leadership in setting and planning for up governance bodies and communications programs because both interdependencies at are needed to make coordinated decisions across the organizational the program level.” boundaries that programs cross (see top figure opposite). — Ana Paula Keil Senior manager All four case-study PMOs at the program management stage focus on IT program the management and delivery of programs, governance body support management office TIM Brazil and communications programs. All also retain three of the most common project management functions (see bottom figure opposite): 1. Centralized tracking and reporting for all projects 2. Tool selection, implementation and support 3. Process development, implementation and support Metropolitan Holdings Ltd., a South African financial services organization, distinguishes between project and program management not by size or cost but by scope and breadth of change. For example, some programs may have low cost, but have a huge impact on the business—affecting a few thousand people or spanning multiple disciplines. Some large programs are subdivided and managed as individual projects but report at a program level. Ultimately, the project board decides “program” or “project.” 34 Gartner EXP Premier
  • 37. Program management coordinates both business and IT project resources Strategic Program management Portfolio management Benefit Optimize resource use Focus Program coordination, governance, communications Scope Program management Scope Multiproject programs of work • Comprehensive program planning • Change and risk management Typically Usually CIO, but sometimes to the • Coordination of project delivery reports to business • Measurement of results • Business-IS collaboration Role Program coordinator, program overseer Project management Engagement Business leaders, external partners, ESPs Tactical Tools Program management, resource management, collaboration Scope of initiatives Skills Change management IT Business-IT Enterprise Metrics Program performance and resource utilization Program management offices support program delivery with governance and communications Program management office functions Program management office case-study frequency Communications programs Most common program Governance body support management office functions Management and delivery of programs Centralized tracking/reporting for all projects Most common project management Tool selection/implementation/support office functions retained by a program Process development/implementation/support management office Program management office Taking Your PMO to the Next Stage 35
  • 38. 3 “Our project Program management requires an institutionalized management office project management culture success is due to our To move to the program management stage, an enterprise must establishing a culture, first institutionalize its project management functions. A program not a project office.” management office cannot manage complexity unless these skills — Jan Cronje are widely dispersed throughout IS and the business. A program Executive manager Shared solutions management office cannot focus on managing complex programs Metropolitan Holdings Ltd. if it must spend much time training, coaching and mentoring. Metropolitan Holdings Ltd. has institutionalized its project management culture Metropolitan reports success in establishing a project management culture companywide. By 2003 it had entrenched its “managing by project” (MBP) culture by using it to successfully deliver projects, and training people on the methodology and mentoring them. Everyone understood that all projects had to use the program support office (PSO) and be monitored by it. In mid-2004, business units began forming their own project offices, independent of the PSO. The PSO’s main challenge then became establishing clear project frameworks and reintroducing the concept of project portfolio management throughout Metropolitan. Today, Metropolitan’s project management culture is mature. “Project management is just another management tool. It is a normal discipline that each and every manager in the organization uses. It’s the way we do business—an everyday event. It’s not something special that we do,” says Jan Cronje, executive manager, shared solutions. As a result, the PSO is not always involved in delivering projects. It only provides project management resources when requested. Otherwise, it does not actively drive project management, training or adherence to Metropolitan’s MBP methodology. Consequently, PSO head count has dropped from 55 to 10. The six project managers and four project administrators currently support 27 projects. “The business units are self-governing and self-driven. They are deriving the benefits to such an extent that we don’t have to use a whip anymore,” says Cronje. 36 Gartner EXP Premier
  • 39. Case Study: Metropolitan Holdings Ltd.—Making project management part of the enterprise culture Founded over 100 years ago and headquartered The PSO currently provides five tools on its Web in Cape Town, South Africa, Metropolitan Holdings site: Managing By Project, which it developed Ltd. has grown from a life insurance company to in-house using the PMI PMBOK, X-Pert, Word and a full-fledged financial services organization. Today, Excel; Microsoft Project; Time Sheet Professional; Metropolitan is the third most recognized brand in Documentum, for storing project documentation; the insurance industry, employing approximately and Project Register. 7,000 people and insuring the lives of 4.3 million South Africans. For low-impact, low-risk projects, Metropolitan uses a “lighter” version of X-Pert project management. Its CEO Peter Doyle sponsored Metropolitan’s project two methodologies are essentially the same. The initial support office (PSO) in 1999. His primary goal was to scoping and reporting differ, and the lighter version develop an enterprisewide “managing by project” contains only the absolute minimum requirements a (MBP) culture and discipline. The PSO reports to project must meet. shared solutions in the IS organization. “The PSO has brought great value to Metropolitan,” says Cronje. “It has been a huge turnaround for The project support office is flexible the company, with great impact. In the past, Metropolitan’s PSO was never meant to have a large group executives wasted time discussing project number of project managers. Rather, its staff is non-performance. Today, projects are generally not supplemented, as needed, with consultants and discussed at the executive level because they are being contractors. While it looks favorably on project delivered on time, within budget and per requirements. management credentials, such as PMI certification, As a result, group executives can now focus on project management experience carries more weight. organizational strategy.” The PSO provides five services: project portfolio “We plan to implement project and portfolio management, project management, project management to track the health of projects and administration, project resourcing and project ensure that they deliver the critical success factors management training. needed by our business strategies,” says André Michau, acting head of the PSO. “Information such The office plays different roles in different types of as implementation status, risks and performance projects. For business change projects, the PSO plays will provide our executives with a quarterly, rather a leadership role, encouraging business participation than annual, view of implementation progress.” and ensuring alignment with group strategy. For proof- of-concept projects, the PSO uses a consultative Based on interviews with, and material from, Jan approach to align the project with business-critical Cronje, executive manager, shared solutions, and success factors. For strategic projects, the PSO uses a André Michau, acting head of the project support flexible methodology to fit the projects’ deliverables to office, Metropolitan Holdings Ltd., November 2005. business-critical success factors. And for maintenance projects, the PSO uses Metropolitan’s MBP framework. Taking Your PMO to the Next Stage 37
  • 40. 3 “The PMO and Make governance and communications key governance structure program management functions are achieving buy-in The broader scope of programs requires that CIOs support their program and support from management offices properly to ensure effective joint business-IS the business. This governance, as well as communicate early and often with the extended creates more stakeholder group. opportunities to leverage technology, New York City Housing Authority governance ensures business re-engineer existing alignment business functions, automate processes NYCHA’s governance structure ensures that projects align with the and drive greater business’s mission and strategy—and gives the PMO teeth. The general efficiencies.” manager’s operations committee (GMOC) has the people to provide the clout—all the deputy general managers, including the CIO and the CFO, — Avi Duvdevani and other directors who report directly to the authority’s general manager CIO Deputy general (see figure opposite). manager for IT New York City Housing The GMOC reviews project status quarterly and determines which Authority projects will be funded and their priority. “We can now align priorities, projects and resources with business priorities to meet organizational needs,” says Avi Duvdevani, CIO and deputy general manager for IT. NYCHA’s CIO also linked his PMO to the architecture review board (ARB). Review gates ensure that the ARB provides input on new project design, beginning at the concept stage and extending throughout the project life cycle. “Linking the PMO with the ARB helps stop external service providers from introducing nonstandard architectural components into our environment,” says Ron Rigores, program manager. The diversity of stakeholders and the high level of project interdependencies typical of programs demand that communications programs keep everyone informed and synchronized. 38 Gartner EXP Premier
  • 41. NYCHA’s PMO plays an important role in project and program governance NYCHA board NYCHA general manager (GM) Input & Provide feedback membership GM’s operations Deputy general CIO/CFO committee (GMOC) managers Architecture review board Monthly executive project status reports Business PMO unit staff Project Project Project Project repository, PM Provide reporting manager or team or steering consulting & advice liaison structure committee • PM standard methodology & tools • PMO reporting standards • Assistance & coaching Weekly/monthly project manager status reports Dept. project managers Governance body Source: Adapted from New York City Housing Authority (NYCHA). Taking Your PMO to the Next Stage 39
  • 42. 3 “Don’t view the program Thales Group’s program offices keep all stakeholders informed office as just a way to Thales is a global aerospace, defense and security contractor. It has long provide visibility and been in the program management business for its customers, managing metrics, but a way large, multiyear defense and aerospace programs. The divisions fully to increase program understand and use this discipline. success. Governance, sponsorship and But there is no central program management office. Instead, specific resources are all part program offices are established for large initiatives, such as of the program office enterprisewide ERP rollouts and the rationalization and outsourcing of solution.” voice and data networks. Each has its own dedicated program office and governance structure. Besides planning, budgeting and quality — Patrick Anglard Group CIO assurance, each program office is responsible for: Thales Group • Providing all stakeholders with global visibility into budget, resources, schedule and functional and technical contents • Communicating all major events and disseminating general information Help business and IS project teams coordinate their work In addition to being the communications hub, a program office can facilitate collaboration between business and IS project teams that are working on the same program. The PMO can schedule both parties’ resources to ensure that the best resources are assigned to the most important programs at the right time. The PMO can also provide collaboration tools. NYCHA’s PMO uses Microsoft Windows Share Point Services. EMC’s PMO uses Documentum eRoom. It is important to capture the outcomes of collaboration activities so they can be used elsewhere in the enterprise. PMOs in the next stage (portfolio management offices) support knowledge management systems for this purpose. Educating the business about its program management responsibilities is also a best practice. 40 Gartner EXP Premier
  • 43. Case Study: Thales Group—Linking multiple program offices via a consistent process and tool The Thales Group is headquartered in Paris and has Program offices play an important role in providing revenues of 10 billion euros (US$12.3 billion). It visibility for informed decision making and keeping develops advanced technologies for its customers, communication channels open. Each program office is leveraging a global network of 60,000 experts and the responsible for: providing all stakeholders global highly complementary nature of its aerospace, defense visibility into budget, resources, schedule and functional and security businesses. and technical contents; planning delivery dates, deadlines and resource requirements; managing The Thales Group is in the process of simplifying its budget and resources; ensuring quality for all projects; businesses and centralizing IT. Ten business groups and communicating all major events and disseminating (lines of business) have been reduced to six divisions, general information. each with its own divisional CIO. Patrick Anglard, group (corporate) CIO, is responsible for centralizing control of A consistent process unifies the program offices IT enterprisewide. He reports to the COO and has 20 direct reports: six staff executives, six divisional CIOs CIO Anglard is unifying project and program and eight executives for IT domains such as ERP, management processes across the enterprise to infrastructure and geographic regions. improve project execution performance, make risks transparent and managed and ensure consistency To enable centralized control of IT, Anglard created a between program and financial views. governance structure that makes decisions on IT budgets, project priorities and central funding to Group IT spent 18 months designing the standard develop technologies. The divisions submit their IT PMO process and selecting Primavera as the tool to budgets to Anglard for approval. After approval the support it. Eighty percent of the effort involved process divisional CIOs manage their own projects, architecture design, and only 20 percent was spent on tool and contracts, and subcontract to the Thales Group selection and establishing parameterization. Funding Services division for recurring services, such as came from Group IT and the COO. application maintenance, desktop, local area networks and data center operations. The Thales Group Services Thales Group will use a single instance of Primavera division provides IT services to Thales units, as well as parameterization for program planning and tracking to the open market. across all programs. The ERP system will provide time and cost reporting. To institutionalize this new PMO process, the company is undertaking a major change Each major initiative has a dedicated program management and user training program because office program management changes the way program staff Divisions temporarily transfer program managers to and finance staff cooperate. manage the design, build and roll-out phases of major transverse initiatives. These program managers “Having a standard process and tool will reduce the are coached by the corporate IT domain managers risk of divergence. By being able to measure progress in charge of the enterprisewide initiative. Program in a standard way across divisions, we expect to managers come out of the divisions and return to the improve project execution,” says Anglard. “We are divisions once the programs are delivered. Much of the being explicit in formally defining and documenting who actual implementation work is outsourced to the Thales does what in the process to ensure we have no role Group Services division. ambiguity.” Based on interviews with, and material from, Patrick Anglard, group CIO, Thales Group, November 2005. Taking Your PMO to the Next Stage 41
  • 44. 3 Hallmark UK’s program management office fosters business-IS collaboration Educating business executives about the need for program management has been a challenge at Hallmark UK. PMO management therefore took small steps, first showing the benefits of basic project management discipline, then getting business management to think about selecting the right projects and their desired outcomes. Hallmark’s culture had to shift in five areas: • Change had to become a joint business IS-responsibility, not just an IS responsibility. • IS had to have a seat at the table when business changes were planned. • Teams had to explore interdependencies and overlaps among business and IT projects. • Management had to integrate different parts of the business and IS when considering projects. • Management had to consider projects to rationalize previous acquisitions. An early success combined three projects with common objectives and close start dates into one program. The PMO also held cross-functional workshops for the three projects to jointly define their common requirements. In another case, the executive board challenged the strategic misalignment of an in-progress project. The project was stopped, its scope was realigned, and the revised project was restarted. 42 Gartner EXP Premier
  • 45. Case Study: Hallmark UK—Moving its PMO out of IS into the business Hallmark UK was established in 1958 and through their practitioner qualification, a professional a series of mergers and acquisitions is now the certification based on the Managing Successful U.K.’s leading greeting card publisher, representing Programs (MSP) curriculum. 60 percent of Hallmark’s international business. Headquartered in Bradford, Yorkshire, U.K., the The PMO is also responsible for methodology. It uses company’s 3,100 employees produce approximately Microsoft Project on the desktop and Visio as its basic 2 billion cards a year, with almost 20,000 designs. project management tools. Its project management methodology is adapted from Prince 2. It is considering Established in January 2005 by Merissa Smith, using PlanView as its portfolio management and European program delivery manager, Hallmark UK’s workflow tool; it is used by its parent company in the program management office (PMO) is responsible for U.S. delivering strategic business initiatives. Its four project managers support 24 projects. In the past, benefits estimates were used solely to gain funding approval for projects. But recently the PMO began reviewing actual benefits achieved six and 12 The PMO began in IT, with accountability to the months after project delivery, to improve return on board investment. The PMO has been part of the IT organization. Smith reports to the CIO for international IT, but she also The PMO is moving from IT to the business has had dotted-line accountability to Hallmark UK’s improvement organization executive board. This board comprises the managing directors of the lines of business and the functional The PMO is transitioning from the international IT heads of finance, human resources, international IT organization into a new central function called business and operations. These executives are the business improvement, chartered to deliver strategic programs. sponsors for most of the PMO’s major projects. Smith’s It reports to Hallmark’s PLC board. The move will put dual reporting structure fosters business-IT project ownership and accountability squarely in the collaboration. business. Smith initially recommended that the board use nine Quality management is also part of the business project-prioritization criteria in its decision making: improvement department, as is the business benefits, risks, impact on people, and support for each improvement team, which challenges current of the six key business strategies. At first, executives processes, and documents, maps and analyzes presented the PMO with lists of the projects they them to identify improvement opportunities. wanted. But over time Smith has gotten them to As part of this reorganization, Smith became director consider the interrelationships among projects, of business improvement. She plans to make the Hallmark UK’s collective goals and the realities of costs PMO more formal and structured. “Combining the and resources. three groups will focus the conversation on business The executive board has taken ownership for the entire strategy first, before discussing projects or programs. portfolio of PMO projects. Small projects—which only The new department is expected to drive best impact a single function and require less than a month practices, develop a better understanding of priorities of work—are managed by a business user, mentored and influence the business on how to become a by the PMO. world-class organization,” says Smith. The PMO is responsible for mentoring all program Based on interviews with, and material from, Merissa and project team members and managers. Smith Smith, director, business improvement, Hallmark UK, encourages all program and project managers to get November 2005. Taking Your PMO to the Next Stage 43
  • 46. 3 Assess your program management office against best practices If you’re already at the program management stage, or planning to evolve there soon, compare your PMO with the identified best practices by scoring yourself on the self-assessment opposite. Determine what needs to be done and where you can help the most. CIOs must lead in establishing effective PMO governance and ensuring clear communication channels with all stakeholders. CIOs with mature program management offices should start thinking about evolving the PMO to the portfolio management stage. That’s the subject of the next section. 44 Gartner EXP Premier
  • 47. How effective is your program management office? Done poorly/ Done somewhat Done Done well/ not at all poorly somewhat well completely 0 1 2 3 1. We have combined related business and IT projects into programs, including those sourced externally 2. We have institutionalized our project management discipline; our PMO focuses on program management 3. We use program-level visibility to identify and reduce resource contention and improve resource utilization 4. We educate business, IS and external stakeholders about their shared responsibilities for ensuring program success 5. We have expanded the PMO governance board membership to represent the wider set of stakeholders 6. We have established communications programs to keep all stakeholders informed and committed to program success 7. We provide collaboration tools to facilitate the work of internal and external project and program teams Scoring: 17 – 21 You’re in good shape; prepare for the next stage Total score 10 – 16 Determine what else stakeholders need and fill in the gaps 0 – 9 Focus on the basics; educate the business and get buy-in for program management Taking Your PMO to the Next Stage 45
  • 48. Contribute to business growth through a portfolio management office 46 Gartner EXP Premier
  • 49. 4 CIOs can contribute to business growth by evolving their PMO to the portfolio management stage. By optimizing the mix of project and program investments, a portfolio management office can increase the benefits the enterprise realizes from these investments. Taking Your PMO to the Next Stage 47
  • 50. 4 Portfolio management offices focus on enterprise portfolio optimization As members of the enterprise’s senior management team, CIOs use portfolio management as a way to optimally allocate resources toward an organization’s objectives, factoring in risk, desired returns, resource availability and interrelationships between investments. Portfolio management can drive business-IS alignment, consistent justification, risk management, disciplined execution and benefits realization. Portfolio management contributes to business growth by optimizing the enterprise’s portfolio (see top figure opposite). The case-study PMOs at the portfolio management stage focus on actively managing the project portfolio, ensuring that benefits are realized and making project management knowledge easily available. At the same time, they retain the most common functions from both their previous project management and program management stages (see bottom figure opposite). Ontario, Canada’s Workplace Safety and Insurance Board (WSIB) oversees Ontario’s workplace safety education and training system, provides disability benefits, monitors the quality of healthcare and assists in early and safe return to work. WSIB’s strategic PMO has responded to changes in business needs and evolved to the portfolio management stage. 48 Gartner EXP Premier
  • 51. Portfolio management focuses on optimizing the mix of enterprise initiatives Strategic Portfolio management Portfolio management • Portfolio scope definition Benefit Contribute to growth • Overall investment, benefit, risk optimization • Active portfolio performance monitoring Focus Investment optimization, benefits • Business environment change adaptation realization Scope Program management Scope Proposals/projects/assets of work Typically Outside IS, e.g., CFO, COO reports to Role Investment advisor, portfolio overseer Project management Engagement Senior management decision makers Tactical Tools Portfolio management, knowledge management Scope of initiatives Skills Benefits realization IT Business-IT Enterprise Metrics Portfolio and PMO performance Portfolio management offices focus on portfolio optimization and benefits realization Portfolio management office functions Portfolio management office case-study frequency Knowledge management Benefits realization management Most common portfolio management office functions Project portfolio management Communications programs Most common program management office functions Governance body support maintained by a portfolio management office Management and delivery of programs Centralized tracking/reporting for all projects Most common project management office functions Tool selection/implementation/support maintained by a portfolio management office Process development/implementation/support Portfolio management office Taking Your PMO to the Next Stage 49
  • 52. 4 “The entire WSIB’s PMO has evolved to the portfolio management stage organization is Over five years’ time, WSIB’s CIO evolved the PMO’s role, organizational maturing faster now. placement and name: The controllership framework, including • In 2000, Valerie Adamo, WSIB’s CIO and vice president of business governance, has technology services (BTS), formed a program management office improved as a result (PMO) to manage the complexities of a large transformation initiative. of widespread • In 2002, the PMO transitioned out of BTS, and became the enterprise exposure to project PMO (EPMO) in the agility program led by its vice president. The intent management was to expand into project portfolio management. discipline.” • In 2003, EPMO returned to BTS to focus on improving project — Valerie Adamo CIO execution. Vice president Business technology • In late 2003, management increased the EPMO’s strategic focus to services managing all business change projects. It was transferred to a new Workplace Safety and Insurance Board division called Corporate Strategy, in the Prevention Services cluster, and renamed the strategic PMO (SPMO). • In late 2005, the SPMO moved under the chief corporate services officer as part of the Strategic Communication, Policy and Research group. The benefits of this evolution are clearly stated in the PMO’s value proposition (see figure below). WSIB’s strategic PMO charter communicates its value proposition Charter Services Benefits SPMO’s mandate is to assist in • Expert project management • Informed decision making: Facilitate creating and managing an effective • Project portfolio selection and consolidate project proposals to portfolio of projects that: facilitation and oversight enable senior management decision • Are well managed • Project management support making • Realize their deliverables and guidance • Strategic alignment: Ensure that the • Create value (ROI) • Project management compliance project portfolio is strategically aligned with the organization’s The SPMO exists to facilitate project objectives success by enabling informed and effective decision making by senior • Quality assurance: Ensure that management project deliverables meet customer expectations Source: Adapted from Workplace Safety and Insurance Board (WSIB). 50 Gartner EXP Premier
  • 53. Case Study: Workplace Safety and Insurance Board—Accomplishing much with a small PMO staff Headquartered in Toronto, Ontario, Canada, the To attract PMs, WSIB uses a “hot market” concept, Workplace Safety and Insurance Board (WSIB) initially implemented for Y2K work. Project managers oversees Ontario’s workplace safety education and can temporarily work as program managers and training system, provides disability benefits, monitors receive additional compensation. the quality of healthcare throughout the province and assists in early and safe return to work. Its 4,400 The PM specialists in the SPMO provide portfolio employees administer a budget of C$4.5 billion selection facilitation and oversight and report project (US$3.9 billion) and operate a network of 14 offices. status monthly and quarterly to WSIB’s executive committee and project owners. The accountant “Our strategic project management office has resulted analyzes projects costs and oversees the portfolio in the business asking for fewer projects,” says Valerie from a financial perspective. McLean also draws on Adamo, CIO and vice president of business technology professional contractors and part-time employees to services, “and those requests are better justified and handle peak workloads. planned. Project execution and results are enhanced because the business owns the work. We have The SPMO is improving its processes increased collaboration between the business and IS, and we enforce our project management discipline.” With the basic disciplines implemented, the SPMO is working to streamline its processes. Katherine McLean, director, strategic program management office and business advisory services, WSIB’s executive committee maintains an absolute has 12 full-time staff on her SPMO team: eight “override capability” so that for specific situations, project/program managers (PMs), two project senior management can exercise its judgment and management specialists, a chartered accountant override assigned priorities, as appropriate. These and a business administrator. exceptions are made visible and explained. The SPMO’s operational budget is C$1.1 million “Projects must be owned by the business leader most (US$950,000), or 3.7 percent of the annual project impacted by them, and the project portfolio must be budget. It supports three major programs covering managed by the most senior decision makers,” says 31 corporate, business and IT projects. The projects Adamo. “A difficult aspect has been agreeing on represent C$13.3 million (US$11.5 million) in expense decision criteria and weighting for project prioritization. and C$7.4 million (US$6.4 million) in annual capital WSIB has selected four criteria: alignment with the investment. strategic plan, financial viability, business continuity and risk mitigation.” The SPMO sources all program and project managers for corporate WSIB project work. Project managers McLean is working with PMs to adjust their level of manage projects costing up to C$5 million (US$4.3 rigor and discipline to fit project and program size million) and lasting one or two years. Program while still following the methodology rules and managers manage very large-scale programs that last guidelines. She is considering a number of long-term, three years. They coordinate the work of three to five innovative ideas for the SPMO, such as developing project managers and typically have seven to 10 years a PM mentoring program, developing a set of PM of project management experience. conferences and even exchanging PMs with other organizations to learn from the experiences of others. Project and program managers have solid-line reporting to their project’s business owner and dotted-line Based on interviews with, and material from, Valerie reporting to the SPMO. Subject-matter experts, such Adamo, CIO and vice president business technology as project architects and organizational effectiveness services, and Katherine McLean, director, strategic consultants, also report on a solid line to the project program management office and business advisory owner and on a dotted line to their home base. services, Workplace Safety and Insurance Board, October 2005. Taking Your PMO to the Next Stage 51
  • 54. 4 “We have moved the Position the portfolio management office outside IS PMO from reporting for greater independence to me in IS, to reporting to the The case-study CIOs evolving to the portfolio management stage have finance director moved their PMO outside IS to ensure its independence and to avoid [CFO]. This gives any perception of bias. Operating independently of IS and reporting to the PMO a needed the CFO, COO or other senior executive give a PMO the clout to raise level of autonomy, portfolio management issues to the highest levels and make decisions where it can be seen based on the best interests of the entire enterprise. Maintaining that as successful apart independence and objectivity is critical for long-term success. from IS.” To prepare for this stage, some CIOs have separated the tactical and — Garry Whatley strategic functions so that each can be more focused and have the CIO appropriate resources. Corporate Express Australia Ltd. Royal Caribbean Cruises Ltd., a global cruise and vacation company, has split its PMO’s strategic and tactical functions into two units. The CIO made program administration responsible for project and program management (PPM) tools, methodology, auditing project plans, and the knowledge base of best practices, standards and lesson learned. Program administration, which has a staff of six full-time equivalents including its manager, reports to the director of IT finance, who reports to the CIO. The tactical functions—essentially, project execution—are handled by the project management office, which reports to the CIO. The PMO supervises the 40 project managers, oversees capital and large expense projects on a day-to-day basis, collects and presents monthly executive status reports and ensures use of best practices. The advantages of this split are that program administration can take a longer-term, enterprisewide view of the project portfolio, unencumbered by the daily demands of managing 200 capital projects and 800 small projects. The PMO, on the other hand, can focus on project execution, tracking the time and skills of 500 IT full-time equivalents and improving the skills of its 40 project managers. 52 Gartner EXP Premier
  • 55. Case Study: Royal Caribbean Cruises Ltd.—Separating strategic and tactical PMO functions Royal Caribbean Cruises Ltd. (RCCL), headquartered in Small projects, such as fixes, support and small Miami, Florida, is a global cruise and vacation company enhancements, are governed by the “checkbook” that operates Royal Caribbean International and approach. At the beginning of each year, the portfolio Celebrity cruises. RCCL has 29 ships in service and managers budget these expenses in terms of gross three under construction. The company’s 36,000 hours. During the year, they work with business employees also offer unique land-tour vacations in sponsors to stay within budget by monitoring the Alaska, Canada and Europe through its cruise-tour burn rate. division. RCCL’s project and portfolio management system, Two factors shaped RCCL’s approach to project and which is based on Computer Associates’ Clarity, helps program management. First, management was the company comply with Sarbanes-Oxley standards frustrated with the lack of alignment between IT by providing documentation and consistency. Clarity projects and the business. Second, as IT projects stores all project plans and efforts, providing a became more strategic and expensive, IT had to complete audit trail of all labor costs. It tracks and become more efficient, productive and reliable. documents due-diligence paths, enabling senior management and auditors to review standards project To address these issues, RCCL created two PMO by project. It also provides project plan templates and units. Program administration, the strategic unit, guidance to PMs, ensuring consistency across all manages the portfolio. The PMO, the tactical unit, project plans. handles project execution. They work side by side. Richard Shapiro, manager of program administration, Five portfolio managers (PFMs) in the IT department act sees three areas that need continued improvement as relationship managers and business analysts. They over the next few years. The first is management of the work with the lines of business to identify and define resource pool. An ongoing topic of discussion is: “How large projects by developing concepts and scoping best do we maintain the skill-set inventory of our 500 IT new project opportunities, preparing preliminary project staff and contractors and allocate these personnel cost estimates and developing project business cases. optimally to projects?” Governance is tailored to project size The second challenge is increasing granularity in resource tracking, from the project level down to the RCCL divides its projects into three types. Each is task level. Finer granularity would make staff governed in a different way. commitments and availability more visible, enabling improved resource allocation. Projects over US$100,000 and capital expenditures are governed by the business opportunity council (BOC), The third challenge is interfacing Clarity with the which comprises the COO, CFO, CIO and other senior Remedy Change and Problem Management system. vice president-level executives. It meets monthly to Then data could be interchanged and total-cost-of- review requests and review the status of large projects ownership information better captured and reported. underway. Based on interviews with, and material from, Richard New expense projects reviewed by the BOC are then Shapiro, manager, program administration, Royal governed by the expense project initiation committee Caribbean Cruises Ltd., October 2005. (EPIC), which comprises senior IT management. It meets quarterly to review new projects. Taking Your PMO to the Next Stage 53
  • 56. 4 “We are changing our Extend the portfolio management office’s influence PMO focus from on-time, The CIO can lobby to extend the portfolio management office’s influence on-budget projects to by getting it involved in strategy formulation, on the front end of a improving business project’s life cycle, and remaining involved through benefits realization, benefits realization.” on the back end of a project’s life cycle (see figure below). This helps the — David McBeth PMO keep projects aligned with business strategy, as well as contribute Manager, PMO Corporate Express to shaping it. Australia Ltd. Focusing on benefits realization contributes to business growth. While many case-study interviewees expressed the need for better benefits realization at the project and program stages, they get most serious about it at the portfolio management stage. A best practice is to integrate benefits realization into all PMO processes, reviews and reporting (see the December 2005 Gartner EXP CIO Signature report, Show Me the Money). AAA of Northern California, Nevada and Utah provides automotive and travel insurance and other financial services to motorists in the western U.S. Its enterprise portfolio management office (EPMO) reports outside IS to the CFO. It has end-to-end responsibility for all business and IT programs, from strategy formulation to benefits realization. AAA's EPMO has a staff of 30, including program managers but not project managers. It supports a portfolio of 15 major programs covering more than 80 business and IT projects, with an annual investment of US$150 million to US$200 million. The EPMO operating budget is US$5 million. Extend the portfolio management office’s influence beyond the project life cycle Strategy Strategy Initiation Feasibility Execution Delivery Implemen- Benefits formulation translation tation/closure realization Project life cycle Portfolio management office 54 Gartner EXP Premier
  • 57. Case Study: AAA of Northern California, Nevada and Utah—Supporting strategic investments and managing how projects are executed The second largest of the more than 70 auto clubs in Retna explains: Delivery excellence is the number of North America, AAA of Northern California, Nevada and projects completed on budget, in scope, on schedule Utah serves 4 million members from its San Francisco, and with the required quality; benefits realization is the California, headquarters. Its 6,000+ employees percentage of planned benefits actually achieved; and generate over US$2 billion in revenues from a wide customer satisfaction comprises quarterly online array of automotive, travel, insurance and financial assessments by 250 project managers and project services. staff on how well the EPMO supported their work. AAA’s project management office (PMO) was formed in Progress on these metrics has been impressive, he 1999 to improve IS’s execution. In late 2002, San says. “The initial rating for delivery excellence was 33 Retna was recruited from a major consulting firm as percent; its current rating is up to 88 percent. The initial chief portfolio officer (CPO). He reports to the CFO, at rating for customer satisfaction was 65 percent and is the same level as the CIO. now over 80 percent. Benefits realization goes against the trend. Its initial rating was 88 percent and it’s now Retna reorganized, moving the newly named enterprise 82 percent because of the increased complexity and portfolio management office (EPMO) outside the IS risk of recent projects, coupled with more aggressive organization. His charter was end-to-end responsibility planned benefits.” for all business and IT programs enterprisewide, covering six areas: strategy formulation, strategy Each percentage point increase in the combined score translation, portfolio management, program of delivery excellence and benefits realization translates management, project management and benefits to some US$2 million of benefit to AAA’s bottom line. realization. “Balancing executing well, delivering benefits and customer satisfaction is how we measure success,” Retna inherited a staff of 28, but their skills did not fit says Retna. the EPMO’s expanded mission. He replaced them with more senior candidates with extensive consulting EPMO tool use increases as it matures experience, mostly from outside AAA. His current staff of 30 has developed and nurtured a portfolio of over The EPMO started with the basic Microsoft Office tools, 200 project and program stakeholders. and now Microsoft Office Project Server has become the standard for project management. Time-reporting From a strategic perspective, the EPMO works with tools feed into PeopleSoft, and ProSight Portfolios has groups in AAA to define activities, projects and been added for top-down portfolio management. programs to reach AAA’s strategic objectives. At the execution level, the EPMO manages how the company The EPMO is considering using the earned value executes the projects and programs in the portfolio. functionality of Project Server in the future. Retna is also looking at improving the precision of the revenue benefits realization metrics, which are now based on EPMO benefits have been impressive correlation. By developing an integrated driver model, The EPMO uses a comprehensive set of metrics to the EPMO will be able to show greater causality measure success. Two core measures—delivery between program delivery and revenue increases. excellence and benefits realization—account for 70 percent of the EPMO’s overall performance rating. Based on interviews with, and material from, San Customer satisfaction is the third main component. Retna, chief portfolio officer, AAA of Northern California, Nevada and Utah, October 2005. Taking Your PMO to the Next Stage 55
  • 58. 4 “To add portfolio Portfolio management is the focus of AAA’s EPMO management value, you Introducing portfolio management was key to AAA answering four senior have to start top-down management questions: at the enterprise level and have a seat at the 1. Are we investing in the right programs and projects? priority-setting table. 2. Do we have the operational capacity to execute? Otherwise, you’re fighting a losing battle, and you 3. Can we absorb the impact of executing multiple projects? are only doing demand management.” 4. Are we realizing the expected benefits from our investments? — San Retna AAA’s EPMO provides a wide range of portfolio management services Chief portfolio officer so that the company can create, execute, balance, manage and realize AAA of Northern benefits from its portfolio of internal investments. By bringing together California, Nevada and Utah people and processes from disciplines throughout the enterprise, the EPMO is the focal point for delivering portfolio success. Enterprise planning drives the five major processes of AAA’s enterprise portfolio management model (see top figure opposite). AAA’s EPMO provides a common language, approach and toolset for all levels of the enterprise, as shown in the bottom figure opposite. The EPMO provides four major services: 1. Core disciplines are common management processes that are deployed at the project, program and portfolio levels to ensure effective execution. 2. Program management is a guide to increase the likelihood of achieving expected business results through the program life cycle, and the detailed financial management processes to accurately account for program costs. 3. Portfolio management describes the processes and tools required to obtain funding and sets expectations on performance reporting at all levels of the portfolio. 4. Enterprise transformation considers the entire portfolio and assesses whether organizations have the capacity to support initiatives, and focuses on defining and monitoring the benefits of all programs. These services map well to the project, program and portfolio management stages framework of this report. 56 Gartner EXP Premier
  • 59. AAA’s portfolio management model is driven by enterprise planning Enterprise governance (program management team, EPMO) Strategic Create portfolio Balance portfolio direction • Initial prioritization • Forecasting/analysis Enterprise Operational • Collation • Fund appropriation operating performance • Compilation • Continuous ratio • Reconciliation prioritization Manage portfolio • Capacity mgmt. • Issue mgmt. • Variance mgmt. Enterprise • Risk mgmt. planning • Financial mgmt. Execute portfolio • Trends and analysts Resources • Funding release • Control Realize benefits Operational • Audit capacity • Definition • Data compilation • Calculation Asset Operational • Business case • Post-implementation management direction validation reviews Depreciation Project/program management Source: Adapted from AAA of Northern California, Nevada and Utah. AAA’s EPMO provides the enterprise with a common language, approach and tools Enterprise transformation Operational Enterprise EPMO capacity Change Benefits assessment realization Portfolio management team Portfolio management Funding Performance Capacity process reporting assessment Program managers Program management Program Financial Program Program life cycle management capacity reporting Project managers Comm- Core disciplines unications Risk Issue Change Quality management management management management assurance Source: Adapted from AAA of Northern California, Nevada and Utah. Taking Your PMO to the Next Stage 57
  • 60. 4 “Probably any of the Design governance to focus senior management’s tools in the leader’s decision making on strategic issues quadrant of the Gartner While choosing which projects and programs to approve and which to IT project and portfolio stop must remain the responsibility of senior management, the PMO management Magic can facilitate the process. It can provide objective information and Quadrant will work. But analysis, ensure that the right people have input, and provide the 80 percent of the work, decision makers with a consistent process and rational decision criteria and the critical success based on strategic concerns for making and monitoring decisions. PMO factors, involve working staff competencies must now include strategic planning and investment on the process and analysis. methodology and getting staff adherence.” “Portfolio management governance is very important at AAA because — Richard Shapiro it’s the framework that supports our strategic investments,” says San Manager Retna, chief portfolio officer. Governance bodies operate at the business Program administration strategy, portfolio and program/project levels, to ensure alignment from Royal Caribbean Cruises Ltd. top to bottom (see top figure opposite). Implement tools to facilitate informed portfolio decision making and organizational learning As portfolio size increases and different stakeholders require different portfolio views, more powerful tools are needed. Many vendors provide tools for project and portfolio management (see bottom figure opposite). And best-in-class portfolio management offices provide senior management with a realistic overview of an enterprise’s project portfolio, complete with standard reporting across business units and functional areas. When important problems or opportunities appear, the PMO analyzes the information and makes recommendations. Portfolio management offices track benefits realization, portfolio alignment and health, and PMO performance. They teach managers how to measure, manage and report benefits, not just costs. They also implement knowledge management tools to capture lessons learned and promote positive change. And they share lessons learned, best practices and research, and foster a culture that uses this experience to make project decisions and take actions. 58 Gartner EXP Premier
  • 61. AAA’s governance operates at three levels to ensure alignment Strategy and financial guidance Executive Executive decision Business strategy leader team making and involvement Strategic Prioritization initiative and investment roundtable decisions Portfolio management Portfolio Oversight and management accountability for team enterprise portfolio Program and Steering teams Consistent, project repeatable program management and project delivery Program teams Program and project management process Source: Adapted from AAA of Northern California, Nevada and Utah. Implement tools to support decision making at the portfolio level Challengers Leaders EPM=Enterprise Project Mercury Management Oracle Projects IBM RPM SAP xRPM Compuware RPM=Rational Portfolio Primavera Niku Manager Microsoft Project EPM Ability to PlanView execute UMT=United Lawson Software Management Technologies Planisware Artemis Interna- Business tional Sciforma Engine Tenrox ProSight Augeo Software Pacific eProject UMT Edge Genius Inside PowerSteering Software Automation Centre Instantis Atlantic Global ITM Software As of June 2005 Niche players Visionaries Completeness of vision Taking Your PMO to the Next Stage 59
  • 62. 4 Royal Caribbean Cruise’s PMO provides a knowledge management system Royal Caribbean Cruise’s program administration developed an IT life- cycle (ITLC) knowledge base that contains all IS standards, practices, policies and procedures. The ITLC is available to all IS team members via the company’s intranet. Items are cataloged by life-cycle phase or activity, for easier search and retrieval. Process guidance is also integrated with “Tool How-Tos,” where appropriate, to mentor IS staff. In addition to the specific life-cycle guidance, the knowledge base includes cross-enterprise disciplines that span life-cycle and functional areas, such as project management (see box opposite). The 500-member IS department contributes content to the ITLC knowledge base. Assess your portfolio management office against best practices If you are considering evolving to the portfolio management stage, or are already operating at that level, compare yourself with the best practices identified by completing the self-assessment opposite. CIOs considering the move to portfolio management should use the assessment as a checklist to plan what needs to be accomplished. CIOs already at the portfolio management stage should use the assessment to determine how effectiveness can be improved, even if it means relinquishing control of the PMO. Mature PMOs at the portfolio stage refine the techniques and metrics they use. AAA is evaluating earned value analysis to better measure project status, and an integrated driver model to better tie revenue increases to program delivery. According to AAA chief portfolio officer Retna, “Portfolio management is a long, arduous journey. You won’t see immediate results, so you need to manage expectations carefully and ensure that you have sustained commitment from senior management.” The three-stage framework and self-assessments can help you manage expectations, fill in gaps and plan when and how to take your PMO to the next stage. 60 Gartner EXP Premier
  • 63. ITLC knowledge base topics • Project management • ITLC templates • Financial management • Metrics • Enterprise standards • Peer reviews • Configuration management • Resources How effective is your portfolio management office? Done poorly/ Done somewhat Done Done well/ not at all poorly somewhat well completely 0 1 2 3 1. We have positioned the PMO outside IS to give it independence and senior management sponsorship 2. We have extended the PMO’s influence to reach from strategy formulation through benefits realization 3. We have designed governance to focus senior management on strategic issues 4. We have integrated benefits realization into our processes, starting with planning, and we report on it regularly 5. We have implemented tools that provide high-level portfolio visibility and analysis to decision makers 6. We have broadened PMO staff competencies to include strategic planning and investment analysis 7. We have implemented tools to capture, categorize and distribute our best practices and lessons learned Scoring: 17 – 21 You’re in good shape; see what needs fine-tuning Total score 10 – 16 Determine what else stakeholders need and fill in the gaps 0 – 9 Focus on the basics; educate the business and get buy-in for portfolio management Taking Your PMO to the Next Stage 61
  • 64. Appendix A: Organizing the PMO EMC Corporation’s IS and PMO organization CIO Customer Enterprise Office of info. Applications Human operations/ programs security & risk development resources Field mktg. mgmt. SPO/ESG/ IT PPMG/ Client services Global Finance G&A Operations technology IT PMO & IT communi- Mergers & Security & risk Global Client services cross-functional cations & acquisitions PPMG technology PPMG services mktg. PPMG 3 project managers 2 business analysts Source: Adapted from EMC Corporation. NYCHA’s IT organization and virtual PMO CEO/General manager CIO/deputy general Business manager information decision Office of technology makers the CIO Business Enterprise Program Director units architect manager information virtual IT PMO management 1 manager, and Quality Information consultants assurance security office Director business Director Senior director enterprise system application IT infrastructure transformation development Source: Adapted from New York City Housing Authority (NYCHA). 62 Gartner EXP Premier
  • 65. TIM Brazil’s IT PMO structure CTO Business IT Senior manager PMO Methodology: Manager Portfolio management: Manager • Implementation • Portfolio management • Alignment • Methodology • Coaching • PMO tools • Project prioritization • Metrics & reports • Metrics & scorecard • Project follow-up • Special projects • Interface with • Requirements management tool president’s PMO • PMO management tool Special projects: Coordinator Coordinator • Project management tool • 4 projects PMO tools special projects • Time tracker • 8 task forces 1 analyst 2 analysts 3 outsourced resources • SharePoint development center 3 analysts • Collaboration portal tools Consultant Weekly follow-up: Outsourced PMO • 300 projects (13 FTEs) • 750 open requirements • 4 special projects, 8 task forces • 500 risks/issues Source: Adapted from TIM Brazil. Metropolitan Holdings’ project support office Group CEO Group Corporate Retail technology & MetHealth group International strategy (GTS) Market Shared Shared Shared Group Group intelligence infrastructure solutions facilities technology procurement planning Business Solutions Project Solutions Problem Relationship process design & support office management & management management analysis development maintenance 6 project managers 4 project administrators Source: Adapted from Metropolitan Holdings Ltd. Taking Your PMO to the Next Stage 63
  • 66. Hallmark UK’s PMO is part of its new business improvement organization PLC exec board Director business improvement Quality Business Program Management improvement management System (QMS) office (PMO) 4 program managers Source: Adapted from Hallmark UK. Workplace Safety and Insurance Board’s strategic PMO organization President Chief prevention Chief Chief Chief & corporate operating corporate financial strategy officer officer services officer officer Prevention Service delivery Human resources Finance Program Corporate strategy Legal services Investments development Health & safety Specialized Regulatory services Actuarial services associations claims services & appeals Communications, Business services Internal audit policy & research Strategic project Business technology Health services management office services 8 project/program managers 2 project specialists 1 chartered accountant 1 business administrator Source: Adapted from Workplace Safety and Insurance Board. 64 Gartner EXP Premier
  • 67. AAA’s enterprise portfolio management office organization CEO CFO Chief portfolio officer EPMO Portfolio Special Portfolio strategic projects operational services services Business Strategic Portfolio Portfolio Portfolio consultant initiative management manager manager roundtable team Program Program Business Program manager manager consultant manager Program Program Business manager manager consultant Program Business manager consultant Governance body Source: Adapted from AAA of Northern California, Nevada and Utah. Royal Caribbean Cruise’s PMO organization CIO Director IT finance Manager Manager project program management administration office 2 business 2 technical 1 financial 2 analysts 40 project analysts support analyst FTE managers Source: Adapted from Royal Caribbean Cruises Ltd. Taking Your PMO to the Next Stage 65
  • 68. Appendix B: Representative PMO tools and frameworks Representative PMO tools and frameworks Project portfolio management Project management Risk management • Artemis (Artemis 7, Viewpoint) • Microsoft Project • C/S Solutions: Risk+ for MS • Compuware (Changepoint) • Niku (Clarity) Project • IBM (Rational Portfolio Manager) • PlanView • Palisade: @RISK • Lawson (Services Automation) • Primavera • Pertmaster: Risk Expert • Mercury (ITG) • X-Pert • Primavera: Monte Carlo • Microsoft Project (w/Business Engine, • Risk Services and Technology: Pacific Edge, ProSight) Risk Trak • Niku (Clarity) • RMC Project Management • Oracle (Enterprise Project Management) • SmartOrg: Portfolio Navigator • PlanView and Decision Advisor • Primavera (Prim. IT Proj. Offc.; Prim. IT Ops. • Welcom: WelcomRisk Mgmt.) • SAP (xRPM) • Sciforma (PS Next) • United Management Technologies (UMT) Requirements management Quality management Time reporting • Borland – CalibreRM • Compuware • Best Software • IBM Rational – RequisitePro • Empirix • Journyx • Serena – Requirements Traceability • IBM Rational • Kronos Management • Keynote Systems • Replicon • Telelogic – DOORS • Mercury • Tenrox • UGS – Teamcenter • Segue Software • Telelogic Project management methodology Maturity models Training and certification • IBM Rational • Gartner • Association for Project • PlanView • PM Solutions Management • PM Solutions • Project Management Institute • Boston University • PMI Project Management Book of (PMI) • CompTIA Knowledge (PMBOK) • Software Engineering Institute • ESI International • Primavera (SEI) • George Washington University • PRINCE2 (Projects in Controlled • International Institute for Environments) Learning • PM Solutions Content and document management Collaboration • Project Management Institute • EMC/Documentum • Cisco/Latitude (PMI) • FileNet • EMC/Documentum/eRoom • Project Solutions Group • Hummingbird • Genesys • Stanford University • IBM/Lotus Notes • IBM • Interwoven • Intralinks • Open Text • Microsoft/Placeware • Stellent • SiteScape • Vignette • Vignette/Intraspect • Xerox • Webex 66 Gartner EXP Premier
  • 69. Further reading Gartner EXP reports Eglund, R., Graham, R. and Dinsmore, P., Creating the Project Office: A Manager’s Aron, D., Tucker, C. and Hunter, R., Show Me Guide to Leading Organizational Change, the Money: Advanced Practices in Benefits San Francisco, CA: Jossey-Bass, 2003 Realization, Gartner EXP CIO Signature Report, December 2005 Jeffery, M. and Leliveld, I., “Best Practices in IT Portfolio Management,” MIT Sloan Management Tucker, C. and Rowsell-Jones, A., Getting Review, Spring 2004 Priorities Straight, Gartner EXP Premier Report, September 2002 Maizlish, B. and Handler, R., IT Portfolio Management Step-by-Step: Unlocking the Tucker, C. and Woolfe, R., Building Brilliant Business Value of Technology, Hoboken, NJ: Business Cases, Gartner EXP Premier Report, John Wiley & Sons, Inc., 2005 January 2004 Pennypacker, J. S., PM Solutions’ Project Portfolio Management Maturity Model, Core research Havertown, PA: Center for Business Practices, 2005 Light, M. and Stang, D., “Magic Quadrant for IT Project and Portfolio Management—2005,” Project Management Institute, A Guide to the G00129208, June 22, 2005 Project Management Body of Knowledge, Newton Square, PA: PMI Publications, 2004 Light, M., Rosser, B. and Hayward, S., “Realizing the Benefits of Project and Portfolio Rad, P. F. and Levin, G., The Advanced Project Management,” G00125673, January 4, 2005 Management Office, Boca Raton, FL: St. Lucie Press, 2002 Light, M., Hotle, M., Stang, D. and Heine, J., “Project Management Office: The IT Control Tower,” G00132836, November 22, 2005 Web sites Project Management Institute, www.pmi.org Books and other publications The Online Community for IT Project Managers, Crawford, J. K., The Strategic Project Office: A www.gantthead.com Guide to Improving Organizational Performance, New York, NY: Marcel Dekker, Inc., 2002 Taking Your PMO to the Next Stage 67
  • 70. Gartner Headquarters Gartner EXP Premier Reports Corporate Headquarters Growing IT’s Contribution: The 2006 CIO Agenda 56 Top Gallant Road January 2006 Stamford, CT 06902-7700 U.S.A. Building Business Smarts in IS +1 203 964 0096 November 2005 Overcoming Change Obstacles in the Public Sector Europe Headquarters October 2005 Tamesis The Glanty Applying Enterprise Architecture Egham September 2005 Surrey, TW20 9AW The CIO’s Personal Contribution Scorecard UNITED KINGDOM July 2005 +44 1784 431611 Changing Business Processes May 2005 Asia/Pacific Headquarters Gartner Australasia Pty. Ltd. Perception Is Reality: Communication Strategies Level 9, 141 Walker Street for Public Sector CIOs North Sydney March 2005 New South Wales 2060 Playing to Your Advantage: Proven Practices AUSTRALIA of Midsize-Enterprise CIOs +61 2 9459 4600 March 2005 Japan Headquarters Delivering IT’s Contribution: The 2005 CIO Agenda Gartner Japan, Ltd. January 2005 Aobadai Hills 6F Making Time: The Office of the CIO 4-7-7 Aobadai, Meguro-Ku November 2004 Tokyo, 153-0042 JAPAN The New Shape of IS +81 3 3481 3670 September 2004 Improving the CEO’s View of the CIO Latin America Headquarters July 2004 Gartner do Brasil Av. Das Nações Unidas, 12.551 – 9º andar Upgrading the IS Scorecard World Trade Center – Broklin Novo May 2004 04578-903 – São Paulo – SP Preparing for the Upswing: The 2004 CIO Agenda BRAZIL March 2004 +55 11 3443 1509 Building Brilliant Business Cases January 2004 For more information, visit gartner.com. CIO Credibility: Proven Practices From the Public Sector November 2003 Geosourcing IS: Is It Right for You? November 2003 © 2006 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. GARTNEREXPPREMIER20060315