The document discusses the evolution of project management offices (PMOs) through three stages: project management, program management, and portfolio management, driven by changing business needs. CIOs play a crucial role in guiding PMOs through these stages, ensuring they master essential practices and adapt to organizational challenges. Ultimately, effective PMOs contribute to reducing risk, optimizing resource use, and facilitating business growth.

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
®

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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
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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
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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)
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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
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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.”
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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.
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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.
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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.
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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).
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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
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