The Project Management Office
In Sync with Strategy
The project management office (PMO) is easing its way into the mainstream. Yet to be truly effective,
PMOs must reflect the organizational culture and strategy—or risk being dismissed as an unnecessary
layer of bureaucracy.
Those within the profession see a clear ROI and are increasingly implementing PMOs. The State of the
PMO 2010 survey of PMO leaders and other project professionals found that 84 percent of organizations
currently have one—a jump of 36 percent from 2000.i
Companies that have made the leap are reaping benefits. Organizations with a PMO report significantly
more projects coming in on time, on budget and meeting intended goals and business intent compared to
those without a PMO, according to PMI’s 2011 Pulse of the Profession Survey.ii
The State of the PMO 2010 says PMOs help:
■■ Reduce failed projects
■■ Deliver projects under budget
■■ Improve productivity
■■ Deliver projects ahead of schedule
■■ Increase cost savings
“Not taking advantage of PMO value can be an expensive way to operate,” says Michael Cooch, director
of global portfolio and program management propositions, PricewaterhouseCoopers, London, England.
And that view is expanding beyond the project management community. “It is not just the PMO
practitioners that are talking about PMOs—it is everyone seeing that there is something there,” Mr.
Cooch explains. Unfortunately, not everyone is clear on the benefits: In The Global State of the PMO: Its
Value, Effectiveness and Role as the Hub of Training, 60 percent of respondents reported that the value of
their PMO had been questioned.iii
This disconnect can be caused by a number of factors, from structural problems to inadequate metrics
to lack of executive support. To secure the buy-in support needed to survive and thrive, PMOs must be
always be aligned with organizational strategy—no matter how often it changes. Companies must also
understand that PMOs are not a cure-all for organizational woes.
NOT ALL PMOS ARE CREATED EQUAL
While effective PMOs share some key traits, there is no such thing as a standard approach to PMO
development.
WHITE PAPER
2
The Project Management Office
There are multiple ways to classify PMOs, says Monique Aubry, PhD, professor, graduate programs in
project management, School of Business and Management, University of Québec at Montréal, Québec,
Canada. PMOs can vary based on their organizational context, structural characteristics (such as where
the PMO is located within the organization), and roles or functions.
These factors mean PMOs can differ greatly from organization to organization. What they all must have
in common, however, is a strong foundation to help them weather the precarious early stages of the
PMO’s launch.
Mr. Cooch estimates half of PMOs fail on their first attempt because they do not align with
organizational strategy. For instance, a company might set up its PMO success criteria around budget,
when the organization’s overall focus is innovation. At IT giant Google, for example, delivering costeffective
and timely projects is important, but not as important as coming up with cutting-edge thought
leadership. “The PMO has to have an environment where ideas can be created,” he says. Sometimes that
means the budget and schedule are lower priorities.
Understanding a company’s key drivers is the only way PMOs will contribute value, Mr. Cooch explains.
“You have to be flexible... You really have to understand the market
and the organizational archetypes you are working in. How does
organizational strategy tie into your strategy?”
––Michael Cooch, director of global portfolio and program management propositions,
PricewaterhouseCoopers, London, England
PMOs vary by organization, but establishing the necessary processes and culture does not require
starting from scratch each time. “I do not believe PMO leaders need to consider themselves unique in the
world of leadership or fostering a culture of success” says Mr. Cooch.
Mr. Cooch suggests all PMO leaders:
1. Err on the side of collaboration over policing to boost support and longevity.
2. Secure executive buy-in so the PMO’s value is understood by the whole organization.
3. Ensure every member of the PMO team understands his or her individual value and the value of the
PMO as a whole.
One of the top differentiators of success is how well a PMO is embedded within an organization, Dr.
Aubry says. She lists four factors that determine this level of integration:
1. Collaboration: The PMO should encourage collaboration between project professionals and
functional departments.
3
The Project Management Office
2. Recognition of expertise: Do the project professionals working with the PMO improve the level of
respect project management receives within the organization? This should also influence who works
in the PMO.
3. The mission is well understood: Do those outside the PMO know its purpose?
4. Support from upper management: Is there an executive champion who will not only communicate
the mission, but will work to gain engagement from stakeholders?
“Increasing the intensity of one or more of these variables should increase the level of embedding and,
consequently, the PMO performance,” says Dr. Aubry. “The organization needs to put emphasis on these
elements that are often put aside, rather than taking care only of technical facets of the PMO’s functions
and characteristics.”
PMO IN ACTION
The Organization: State Auto, Columbus, Ohio, USA
The Sector: Insurance
The ROI: By focusing on outcomes rather than processes, State Auto’s reorganized
PMO nearly tripled the number of projects that deliver on organizational
strategy.
The PMO at State Auto was operating in a vacuum. Small, random projects would pop up, with no
consistent mechanism system to ensure projects were meeting strategic objectives, staying on budget
and sticking to their original goals.
Realizing it had to make major changes, the company put the PMO in charge of delivery, methodology,
governance, project portfolio management and change management for enterprise-wide projects.
State Auto’s overall strategy is now revisited each year, and once a month, the PMO team analyzes how it
is driving that vision through projects.
Organizational units looking to launch projects are now required to build a business case that details
how they align with corporate strategy. Also, teams are now required to complete project scorecards to
demonstrate this alignment.
“Strategy without execution is hallucination... You can develop
strategy, but if you cannot execute it, you can just throw it away.”
–– Greg Ramah, State Auto’s project portfolio management director
Getting to that point has been a multi-year process for State Auto. Mr. Ramah overhauled the PMO team
in 2009, replacing a team staffed primarily by those with an insurance background.
4
The Project Management Office
“I brought in people who understand what makes projects work, what makes
project fail... If PMOs are not staffed well, they won’t understand this.”
–– Greg Ramah, State Auto’s project portfolio management director
The PMO team spent time with executives and stakeholders, including project managers and subject
matter experts, to discuss the value of the PMO, its goals and its methodologies.
Mr. Ramah and his team began by working with business units enthusiastic about the PMO’s changes,
including IT and claims. “We brought them in early and really talked to them about what they wanted to
accomplish and how it meshed with what we wanted to accomplish,” Mr. Ramah says. Those unites were
then transformed into promoters for the PMO throughout the organization. “Once they see success, they
want to be involved.”
Not all of State Auto’s business units have been keen on its PMO’s new approach. Now that they can no
longer just launch a project, says Mr. Ramah, some view it as a constraint. But the PMO team continues
to work with reluctant units to bridge that gap, helping them realize the added strategic value of teaming
with the PMO.
The PMO’s efforts are having an impact. Now 90 percent of State Auto’s projects are tracked within the
PMO, Mr. Ramah reports, and a majority will be directly aligned to business strategies by the end of 2012.
SEEING VALUE
Perhaps the biggest obstacle facing PMOs is not delivering results, but communicating them upward.
Only 15 percent of project managers who report to vice presidents of IT believed their firm recognizes the
PMO as delivering significant value, according to The State of the PMO in 2011.iv That number increases
slightly, to 22 percent, when respondents report to a CIO. And nearly 70 percent of respondents to
the Global State of the PMO Study who said that their PMO’s value was questioned said that it was
senior management who was skeptical. Those questions often are due to a lack of project management
understanding in the upper ranks.
“Why do some organizations see the value of PMOs? This is directly
related to the project management maturity of its leaders, not just the
size of the organization.
–– Eric Morfin, PMP, senior director of the oncology business unit at Pfizer, La Jolla, California, USA
“I have worked with large companies with very immature leadership and smaller organizations with very
mature leaders,” Mr. Morfin says. “If the executive is not mature or familiar with PMOs, at least that
person needs to be smart enough to hire the best PMO leader and let him or her establish the processes
and culture to make a difference.”
5
The Project Management Office
Executives must first establish the value of project management in delivering strategic results. With that
foundation, they can then spread the word about why the organization needs a PMO. They should secure
funding, get buy-in from different departments, and create a value proposition. “That will happen with
the executive support,” Raed Skaf, PMP, executive manager of PMO a
The Project Management OfficeIn Sync with StrategyThe project management office (PMO) is easing its way into the mainstream. Yet to be truly effective,PMOs must reflect the organizational culture and strategy—or risk being dismissed as an unnecessarylayer of bureaucracy.Those within the profession see a clear ROI and are increasingly implementing PMOs. The State of thePMO 2010 survey of PMO leaders and other project professionals found that 84 percent of organizationscurrently have one—a jump of 36 percent from 2000.iCompanies that have made the leap are reaping benefits. Organizations with a PMO report significantlymore projects coming in on time, on budget and meeting intended goals and business intent compared tothose without a PMO, according to PMI’s 2011 Pulse of the Profession Survey.iiThe State of the PMO 2010 says PMOs help:■■ Reduce failed projects■■ Deliver projects under budget■■ Improve productivity■■ Deliver projects ahead of schedule■■ Increase cost savings“Not taking advantage of PMO value can be an expensive way to operate,” says Michael Cooch, directorof global portfolio and program management propositions, PricewaterhouseCoopers, London, England.And that view is expanding beyond the project management community. “It is not just the PMOpractitioners that are talking about PMOs—it is everyone seeing that there is something there,” Mr.Cooch explains. Unfortunately, not everyone is clear on the benefits: In The Global State of the PMO: ItsValue, Effectiveness and Role as the Hub of Training, 60 percent of respondents reported that the value oftheir PMO had been questioned.iiiThis disconnect can be caused by a number of factors, from structural problems to inadequate metricsto lack of executive support. To secure the buy-in support needed to survive and thrive, PMOs must bealways be aligned with organizational strategy—no matter how often it changes. Companies must alsounderstand that PMOs are not a cure-all for organizational woes.NOT ALL PMOS ARE CREATED EQUALWhile effective PMOs share some key traits, there is no such thing as a standard approach to PMOdevelopment.WHITE PAPER2The Project Management OfficeThere are multiple ways to classify PMOs, says Monique Aubry, PhD, professor, graduate programs inproject management, School of Business and Management, University of Québec at Montréal, Québec,Canada. PMOs can vary based on their organizational context, structural characteristics (such as wherethe PMO is located within the organization), and roles or functions.These factors mean PMOs can differ greatly from organization to organization. What they all must havein common, however, is a strong foundation to help them weather the precarious early stages of thePMO’s launch.Mr. Cooch estimates half of PMOs fail on their first attempt because they do not align withorganizational strategy. For instance, a company might set up its PMO success criteria around budget,when the organization’s overall focus is innovation. At IT giant Google, for example, delivering costeffectiveand timely projects is important, but not as important as coming up with cutting-edge thoughtleadership. “The PMO has to have an environment where ideas can be created,” he says. Sometimes thatmeans the budget and schedule are lower priorities.Understanding a company’s key drivers is the only way PMOs will contribute value, Mr. Cooch explains.“You have to be flexible... You really have to understand the marketand the organizational archetypes you are working in. How doesorganizational strategy tie into your strategy?”––Michael Cooch, director of global portfolio and program management propositions,PricewaterhouseCoopers, London, EnglandPMOs vary by organization, but establishing the necessary processes and culture does not requirestarting from scratch each time. “I do not believe PMO leaders need to consider themselves unique in theworld of leadership or fostering a culture of success” says Mr. Cooch.Mr. Cooch suggests all PMO leaders:1. Err on the side of collaboration over policing to boost support and longevity.2. Secure executive buy-in so the PMO’s value is understood by the whole organization.3. Ensure every member of the PMO team understands his or her individual value and the value of thePMO as a whole.One of the top differentiators of success is how well a PMO is embedded within an organization, Dr.Aubry says. She lists four factors that determine this level of integration:1. Collaboration: The PMO should encourage collaboration between project professionals andfunctional departments.3The Project Management Office2. Recognition of expertise: Do the project professionals working with the PMO improve the level ofrespect project management receives within the organization? This should also influence who worksin the PMO.3. The mission is well understood: Do those outside the PMO know its purpose?4. Support from upper management: Is there an executive champion who will not only communicatethe mission, but will work to gain engagement from stakeholders?“Increasing the intensity of one or more of these variables should increase the level of embedding and,consequently, the PMO performance,” says Dr. Aubry. “The organization needs to put emphasis on theseelements that are often put aside, rather than taking care only of technical facets of the PMO’s functionsand characteristics.”PMO IN ACTIONThe Organization: State Auto, Columbus, Ohio, USAThe Sector: InsuranceThe ROI: By focusing on outcomes rather than processes, State Auto’s reorganizedPMO nearly tripled the number of projects that deliver on organizationalstrategy.The PMO at State Auto was operating in a vacuum. Small, random projects would pop up, with noconsistent mechanism system to ensure projects were meeting strategic objectives, staying on budgetand sticking to their original goals.Realizing it had to make major changes, the company put the PMO in charge of delivery, methodology,governance, project portfolio management and change management for enterprise-wide projects.State Auto’s overall strategy is now revisited each year, and once a month, the PMO team analyzes how itis driving that vision through projects.Organizational units looking to launch projects are now required to build a business case that detailshow they align with corporate strategy. Also, teams are now required to complete project scorecards todemonstrate this alignment.“Strategy without execution is hallucination... You can developstrategy, but if you cannot execute it, you can just throw it away.”–– Greg Ramah, State Auto’s project portfolio management directorGetting to that point has been a multi-year process for State Auto. Mr. Ramah overhauled the PMO teamin 2009, replacing a team staffed primarily by those with an insurance background.4The Project Management Office“I brought in people who understand what makes projects work, what makesproject fail... If PMOs are not staffed well, they won’t understand this.”–– Greg Ramah, State Auto’s project portfolio management directorThe PMO team spent time with executives and stakeholders, including project managers and subjectmatter experts, to discuss the value of the PMO, its goals and its methodologies.
Mr. Ramah and his team began by working with business units enthusiastic about the PMO’s changes,
including IT and claims. “We brought them in early and really talked to them about what they wanted to
accomplish and how it meshed with what we wanted to accomplish,” Mr. Ramah says. Those unites were
then transformed into promoters for the PMO throughout the organization. “Once they see success, they
want to be involved.”
Not all of State Auto’s business units have been keen on its PMO’s new approach. Now that they can no
longer just launch a project, says Mr. Ramah, some view it as a constraint. But the PMO team continues
to work with reluctant units to bridge that gap, helping them realize the added strategic value of teaming
with the PMO.
The PMO’s efforts are having an impact. Now 90 percent of State Auto’s projects are tracked within the
PMO, Mr. Ramah reports, and a majority will be directly aligned to business strategies by the end of 2012.
SEEING VALUE
Perhaps the biggest obstacle facing PMOs is not delivering results, but communicating them upward.
Only 15 percent of project managers who report to vice presidents of IT believed their firm recognizes the
PMO as delivering significant value, according to The State of the PMO in 2011.iv That number increases
slightly, to 22 percent, when respondents report to a CIO. And nearly 70 percent of respondents to
the Global State of the PMO Study who said that their PMO’s value was questioned said that it was
senior management who was skeptical. Those questions often are due to a lack of project management
understanding in the upper ranks.
“Why do some organizations see the value of PMOs? This is directly
related to the project management maturity of its leaders, not just the
size of the organization.
–– Eric Morfin, PMP, senior director of the oncology business unit at Pfizer, La Jolla, California, USA
“I have worked with large companies with very immature leadership and smaller organizations with very
mature leaders,” Mr. Morfin says. “If the executive is not mature or familiar with PMOs, at least that
person needs to be smart enough to hire the best PMO leader and let him or her establish the processes
and culture to make a difference.”
5
The Project Management Office
Executives must first establish the value of project management in delivering strategic results. With that
foundation, they can then spread the word about why the organization needs a PMO. They should secure
funding, get buy-in from different departments, and create a value proposition. “That will happen with
the executive support,” Raed Skaf, PMP, executive manager of PMO a
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