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Presented by Harlan Bridges
BOT International
Business Driven PMO Setup and Management
Business Driven PMO Setup
Perspectives on the Traditional PMO ◦ Case Study Example
◦ Survey
Introduction to the Business Driven PMO ◦ Purpose of the PMO
◦ Project Management Triangle
◦ Managing Projects
◦ Managing Portfolios
◦ Managing Maturity
Summary and Q&A
Slide 2
Business Driven PMO Setup Slide 3
CEO proposed a PMO
People
Tools
Process Training
PMO
PMO Manager #1
• VP of Sales “Unhappy”
• VP of PS “Unhappy”
• VP of Business Dev “Unhappy”
• Manager of Prod Dev “Unhappy”
• CFO “Unhappy”
• CIO and CEO “Concerned”
6 Month Checkpoint PMO Manager #2
• Top 3 Problems
• Vision
• Mission
• Goals / Objectives
• Value to the Business
Business Driven PMO Setup
Nemawashi – Leadership Team Ending Position
Slide 4
I. Top three problems to be solved by the PMO I. Poor forecasting and management of project-based revenue
II. Not enough capacity to perform more projects
III. Lack of visibility of all the projects of the company
II. Vision I. To be an enabling and facilitating organization that is focused on, and accountable for, the
project-based success of the company
III. Mission I. To develop and execute annual plans and strategies that solve the major project-related
problems faced by the company
IV. Goals and objectives I. The top three goals and objectives (how much by when) of the PMO
I. Goal 1: Improve project revenue management
I. Objectives: Reduce forecasting margin of error to 5 percent by year end
II. Goal 2: Increase project capacity
I. Objectives: 100% increase by year end
III. Goal 3: Provide holistic view of all projects
I. Objectives: Effective project reporting in place within 90 days
V. Value to the business ($50m / Significant)
Business Driven PMO Setup
2012 PMO survey findings – BOT International Research ◦ 80 IT PMOs, questions to determine focus and perceived value
1. Does your PMO have measurable business objectives in place?
2. What is the top area of focus of the PMO?
3. What is the PMO self assessment of PMO performance?
4. What is the CIO grade of PMO performance?
5. How important is it to “sell” the PMO?
Slide 5
Survey Question Response
Measurable Objectives (y/n) ?
Top area of focus (open-ended) ?
PMO self assessment (A-F) ?
CIO grade (A-F) ?
Sell the PMO? (Very Unimportant to Very Important
?
What would your answers be..?
Business Driven PMO Setup
PMO survey results
Survey Question Response
Measurable Objectives Yes
Top area of focus Agility
PMO self assessment (A-F) C+
CIO grade (A-F) A-
Sell the PMO? Very
Unimportant
Survey Question Response
Measurable Objectives No
Top area of focus Methodology
PMO self assessment (A-F) A-
CIO grade (A-F) D+
Sell the PMO? Very
Important
Business Driven PMOs
28 out of 80 Theory Driven PMOs
52 out of 80
Slide 6
What can be inferred..?
Business Driven PMO Setup
Before we go further… ◦ It is easy to be “Inwardly Focused”
It’s not anyone’s fault, it is an institutional problem..!
Blame can be placed..!
◦ Ensure your PMO is “Business Driven”
Constituents determine mandate and value
No need to “sell” the PMO, ever…
“Selling the PMO” a tell-tale sign of poor business acumen
PMO plans and executes strategy
Means to the ends are important
But without the ends to be achieved first established, there can be no sensible discussion of the means
Slide 7
Application Knowledge
Foundational Concepts ◦ Purpose of the PMO
◦ Project Management Triangle
◦ Managing Projects
◦ Managing Portfolios
◦ Managing Maturity
Slide 8
Let’s start with the
ABC’s of the Business
Driven PMO
What is the purpose of a PMO..? ◦ 90% of project management professionals and PMO
managers incorrectly answer this question
The purpose of a PMO is not… ◦ To develop standards for the management of projects…
◦ To support, report, train, coach, and mentor…
◦ To do the right projects and to do them right…
The purpose of a PMO is… ◦ To best address the project-related issues and
opportunities of the constituent leadership team for whom the PMO was created and exists to serve and for which business as usual (sans-PMO) is not a viable option…
Most folks answers “what is the purpose of a PMO”
by describing what a PMO does.
Slide 9
Business Driven PMO Setup
The Project Management Triangle ◦ Intended to reveal biases for the project
Slide 10
The Project
Management Triangle
Project Management Leadership
Business Acumen “If we only speak the
language of project
management as in scope,
time, and cost; then
project management as a
profession will fail today’s
businesses..!”
-- Mark Langley, CEO PMI
Business Driven PMO Setup
PMO Business Acumen ◦ Project Management
Exercise - Which project manager did a better job?
Slide 11
What is buffering?
PM #1 wanted to make scope,
time, and cost measures. This
gives the appearance of good
project management.
PM #2 wanted to deliver the
project as soon as possible due to
stakeholder bias as the product of
the project will produce $25,000
per day once delivered. This is
good project management.
Note: PM #1 squandered
$1,000,000 in the name of good
project management..! Shame..!
Business Driven PMO Setup Slide 12
Time Management Time Value of Money
• The effect that time has on value
• First to market vs. last to market
• Contingent value
• Opportunity windows
• Penalties and fines
Money Value of Time Time Cycles
• PMBOK® Knowledge Area
• Best Practices
• Techniques
Business Driven PMO Setup
PMO Business Acumen ◦ Project Management
Exercise – Importance of Project Time Management
M&A PMO ◦ 100 projects in the portfolio
◦ Small firms to be acquired ($20m / 25% NEBT)
Potential Time Management Error = ? ◦ Acquisition price = EV = 5 times NEBT = $25m
◦ Peak price (Premium) = 150% of EV = $37.5m
◦ Trough price (Discount) = 50% of EV = $12.5m
Slide 13
How well is this (Project Time Management)
addressed in our industry standards?
Business Driven PMO Setup
PMO Business Acumen ◦ Portfolio Management
Exercise - Which project should be selected?
The PPM executive committee is selecting a project
Business is good, revenues exceeding plan, NEBT = 20%
Slide 14
Cost Total
Benefit
A $500k $2m (reduction
in cost)
B $500k $5m (additional
revenue)
Time to Benefit
Project Duration
Risk Project Description
< 6 mths Recurring annually
6 months Low This project will improve the supply chain and will result in reduced operating costs.
< 6 mths Recurring annually
6 months Low This project will enhance a current product line and will result in additional sales revenue.
How well is this addressed in our industry standards?
At a 20% NEBT, it takes $5
of revenue to equate to $1 of
expense. Hence, project A
with a revenue equivalent
benefit of $10m is the better
project of the two…
Business Driven PMO Setup
PMO Maturity
Slide 15
CEO
Information
Technology
IT PMO Operations Applications
Applications
PMO
Operational
Services Finance & Legal Manufacturing
Operations Quality Engineering
Engineering
PMO
Sales &
Marketing
Sales
North America
Business Unit
PMO
Strategic
Accounts
Functional
Team PMO
Industry
Business Units
General
Business Units
International
Marketing
Marketing PMO
Strategic PMO
CEO
Information
Technology
IT PMO Operations Applications
Applications
PMO
Operational
Services Finance & Legal Manufacturing
Operations Quality Engineering
Engineering
PMO
Sales &
Marketing
Sales
North America
Business Unit
PMO
Strategic
Accounts
Functional
Team PMO
Industry
Business Units
General
Business Units
International
Marketing
Marketing PMO
Strategic PMO
Traditional PMOs
Line of business PMOs
Project management and PMOs are not limited to IT, enterprise, and
strategic projects – nor are project/PMO manager career paths..!
Business Driven PMO Setup
PMO Maturity Landscapes
Slide 16 Scientific “Plan-Driven” Management
Ubiquitous View
(Informal)
Complex Adaptive Systems
Myopic View
(Formal)
Projects exist in all
landscapes, whether
appreciated by the
PMO or not..!
Organizational-wide Project Management
Most PMOs
are only here
Emergent interactions
Hard to define boundaries
Self-organized teams
Less formal guidelines
Codified practices
Deterministic
Task lists
Ad hoc
Invisible Landscapes Simple Landscapes
Rugged Landscapes Dancing Landscapes Some PMOs are
adopting agile
Business Driven PMO Setup
PMO Maturity Landscape – Example ◦ Software salesman was managing a large project (sale)
9 month effort, unique outcome, $2m sale, forecasted in 2Q
◦ The company was a $80m firm with a $3.1b market cap
◦ The company had a $20m forecast for 2Q
◦ Salesman had a sales (project) delay of 10 days, slipped to 3Q
The company missed its quarterly performance forecast by $2m
Stock price fell from $84 to $42 per share overnight
◦ Salesman’s project management skills, or lack thereof, cost the company $1.5b in market cap
◦ Who was fired on account of this project mishap?
Salesman, Sales VP, CFO, CEO, PMO Manager
Slide 17
For those that believe project management is a profession, there is no poorer
example of the profession than to have a project difficulty cost a company half
its value while no one within the profession had a care or role to play..!
Business Driven PMO Setup
PMO Maturity Landscapes – BAU Projects Example
Slide 18
Who uses
Salesforce.com?
Who are the intended
users of this new project
management tool?
What kinds of projects
do these users manage?
How important are these
projects to the business?
What percent of PMs
and PMOs know or care
about this?
Shame, Shame, Shame!
Business Driven PMO Setup
Summary ◦ Be driven by business needs, not just industry standards
◦ Constituents determine the mandate
Goals, objectives, value of fulfilling the mandate
◦ PMO determines the strategy
Execution metrics and KPIs (related to PMO objectives)
◦ Manage the PMO like a business unit, not a staff organization
Recast PMO mandate with constituents annually
Project-related business issues and opportunities to be addressed
Value to constituents of addressing their issues and opportunities
Slide 19
Application Knowledge
Business Driven PMO Setup Slide 20
True or False ◦ Purpose of a PMO
To establish and maintain standards for the management of projects within a business or enterprise
To fulfill the leadership team determined mandate of the PMO as represented by PMO goals and measurable objectives
◦ Purpose of Project Management
To apply all of the knowledge areas and process groups of the PMBOK via a defined and managed project life cycle model
To apply the most effective project management techniques for the given project based upon stakeholder biases and business needs
◦ Value of the PMO
The collective value of the benefits of projects delivered by the PMO over a marked and measured period of time
The leadership team assessment of value of the fulfillment of the PMO mandate
Business Driven PMO Setup Slide 21
If only I had this information when we
first set up our PMO..!
You have given me a lot to think
about..!
I can immediately apply these
business-driven PMO techniques ..!
Business Driven PMO Setup
Contact Information
Harlan Bridges, PMP
PMO Setup Practice Lead
517-488-7558
United States
BOT International – Corporate Office
Toll-free: (877) 239-3430
http://www.botinternational.com