How PMOs Save Money


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  • How PMOs Save Money

    1. 1. How PMOs Save Money And you thought they were just a cost center?
    2. 2. David Blumhorst <ul><li>Founder of the EffectiveIT™ Group </li></ul><ul><ul><li>Specializing in IT Governance and PMO Management </li></ul></ul><ul><ul><li>Over 100 PMO clients served! </li></ul></ul><ul><ul><li>Fortune 1000 clients </li></ul></ul><ul><li>PeopleSoft Sr. Director, IT-PMO </li></ul><ul><ul><li>Managed 50+ Million Project Portfolio </li></ul></ul><ul><ul><li>Managed PPM, Resource Mgmt, Project Methodologies, Value Mgmt </li></ul></ul><ul><li>Clarent Corporation CIO </li></ul><ul><ul><li>Deployed IT services for global VoIP firm </li></ul></ul><ul><li>Former CFO and CIO for multiple companies </li></ul>
    3. 3. Life without a PMO Project Intake Analysis Execution Results Prioritization
    4. 4. Step 1: Eliminate Waste with Portfolio Management <ul><li>Creating a consolidated list of projects reveals </li></ul><ul><ul><li>Duplicate projects </li></ul></ul><ul><ul><li>Rogue projects </li></ul></ul><ul><li>Which can be eliminated to save $$$ </li></ul><ul><li>Client example: How many projects do we have? </li></ul><ul><ul><li>Initial estimate: 35 </li></ul></ul><ul><ul><li>Actual count: 70 </li></ul></ul><ul><ul><li>Duplicates: 5 (not listed twice – actual duplicate teams working toward the same goal!) </li></ul></ul><ul><ul><li>Multiple “rogue” projects </li></ul></ul>$$ +
    5. 5. Step 2: Avoid “Paralysis by Analysis” <ul><li>Without a PMO, project intake is single-threaded </li></ul><ul><li>Each project requires analysis before approval </li></ul><ul><li>Example: How many projects requests are being analyzed? </li></ul><ul><ul><li>Requests per quarter: 120 </li></ul></ul><ul><ul><li>Average time to estimate: 16 hours </li></ul></ul><ul><ul><li>Total effort required: 1920 hours – 240 days! </li></ul></ul><ul><li>Result: Paralysis by Analysis! </li></ul>+
    6. 6. Step 2: Avoid “Paralysis by Analysis” <ul><li>With a PMO, project intake is a portfolio process </li></ul><ul><li>Scorecards save time! </li></ul><ul><li>Example: How many projects requests are being analyzed? </li></ul><ul><ul><li>Requests per quarter: 120 </li></ul></ul><ul><ul><li>Average time to estimate: 16 hours </li></ul></ul><ul><ul><li>Average time to score: 30 minutes </li></ul></ul><ul><ul><li>Total effort saved: 1860 hours – 232 days! </li></ul></ul><ul><li>Result: 90% savings! </li></ul>$$ Scorecard
    7. 7. Step 3: Fund projects in stages <ul><li>Typical project funding is all or nothing </li></ul><ul><li>Problems with total funding: What if the estimate is way off? </li></ul><ul><li>Solution: staged funding </li></ul><ul><ul><li>Funds approved at the end of each phase for the next phase </li></ul></ul><ul><ul><li>Forces re-evaluation after each stage </li></ul></ul><ul><li>Projects that are no longer business worthy can be killed – saving $$ </li></ul>Deploy Close Develop Plan Initiate Initial Funding Plan Funding Execution Funding
    8. 8. Step 3: Fund projects in stages <ul><li>Questions to ask at each stage: </li></ul><ul><li>Will the project still hit the business target? </li></ul><ul><li>Are the costs in-line with the business target? </li></ul><ul><li>Is the project still worth doing? </li></ul><ul><li>Is the project proceeding according to plan? </li></ul><ul><li>Example: Custom configurator </li></ul><ul><ul><li>Target: Create a web-based system configuration tool </li></ul></ul><ul><ul><li>Initial solution (1998): Perl-based web design </li></ul></ul><ul><ul><li>Results </li></ul></ul><ul><ul><ul><li>Killed the project and started over </li></ul></ul></ul><ul><ul><ul><li>New project delivered better functionality for less time and money </li></ul></ul></ul><ul><ul><ul><li>Perl programmer not happy  </li></ul></ul></ul>
    9. 9. Step 4: Monitor Portfolio Performance <ul><li>Monitoring performance of projects in the portfolio </li></ul><ul><ul><li>Reports highlighting the performance of projects should be reviewed regularly by a cross-functional steering committee </li></ul></ul><ul><ul><li>Metrics to include vary by industry and company </li></ul></ul><ul><li>Key benefits of monitoring </li></ul><ul><ul><li>Laggards are quickly identified, and can be fixed or culled </li></ul></ul><ul><ul><li>The mix of projects within can be tuned </li></ul></ul><ul><ul><li>If the portfolio is too large, it’s easier to re-prioritize </li></ul></ul><ul><ul><li>Using a cross-functional committee to make decisions provides cover! </li></ul></ul><ul><li>Result: Low-hanging fruit gets priority, and bad apples get discarded! </li></ul>$$
    10. 10. Caution: Don’t throw good money after bad <ul><li>Reality: Projects gain momentum </li></ul><ul><li>Sometimes, things go wrong </li></ul><ul><li>But no one wants to kill the project! </li></ul><ul><li>Reality check: Don’t throw good money after bad </li></ul>$$
    11. 11. Step 5: Increase productivity with Capacity Planning <ul><li>Most organizations make these classic resource management mistakes </li></ul><ul><ul><li>Resource planning is first done during project planning </li></ul></ul><ul><ul><li>Resources are planned serially (one project at a time) </li></ul></ul><ul><ul><li>Organization capacity to execute projects is looked at anecdotally (ask the managers!) </li></ul></ul><ul><li>Result: Resources can’t be found or are overwhelmed! </li></ul>Incoming Demand Org Capacity Churn
    12. 12. Step 5: Match supply to demand Intake Capacity Planning (overall supply/demand) Planning Role Scheduling (role-based supply/demand) Launch Resource Assignment (named resource availability) Execute Utilization (hours worked by resource and role) Funding Match the project and resource lifecycles to improve productivity!
    13. 13. The Strategic PMO: A Well-Oiled Machine Resource Management Deploy Close Develop Plan Initiate Project Delivery - Resource Assignment - Resource Utilization PPM Qtr Planning Portfolio Mgmt and PMM Review <ul><li>Cap Planning </li></ul><ul><li>Qtr Planning </li></ul><ul><li>Resource Scheduling </li></ul><ul><li>Utilization </li></ul><ul><li>Project Intake funnels requests . Reduced analysis time saves $$ </li></ul><ul><li>Planning cycles select the best projects. Not starting low-priority projects saves $$. </li></ul><ul><li>Resource supply is aligned with project demand. Greater productivity = $$ </li></ul><ul><li>Portfolio monitoring identifies laggards . Culling bad projects saves $$ </li></ul>
    14. 14. Questions? <ul><li>David Blumhorst </li></ul><ul><li>CEO EffectiveIT Group </li></ul><ul><li>[email_address] </li></ul><ul><li>http:// /PMO </li></ul>Visit our blog: Lessons from 100 PMOs (and counting)