Leadership

A tale of two PMOs

The actual benefits and most effective way to setup your PMO are difficult to identify. Patrick Gray looks at two different PMOs--one an administrative service, the other involving portfolio management.

If you've spent any amount of time in IT management circles, you've likely heard of a Program/Project Management Office or perhaps been asked to set one up for your organization. Like many ideas in IT management, the actual benefits and most effective way to set up your PMO are difficult to identify and, in the worst case, quickly descend into a sales pitch for tools and services that do little to build an effective PMO. Rather than focus on the minutiae of establishing a PMO, let's examine two different PMOs, one of which is unfortunately far rarer than the other.

The "Italian Job" PMO

I spent about four months living in Italy, and perhaps some of the best advice I received during our first visit to look for an apartment was to expect that few services would work correctly, which would make our stay far less stressful rather than lamenting every little thing that went wrong or every minor administrative hurdle thrown in the way of daily life. The Italians had a zeal for administrative formality that was impressive, with the lowest level bureaucrat sporting a color-coordinated uniform, to the police whose impeccable uniforms, shined boots, and myriad badges, patches, and epaulets made other police forces look downright slovenly.

Many PMOs are analogous to this system, with form trumping function. In the best case, this PMO serves as an administrative clearinghouse, managing the various people and projects occurring within the organization and ensuring they don't step on each other's toes. In the worst case, these groups place their "traffic control" duties to the side and focus on formalities. While these efforts are certainly well-intentioned, this PMO gradually accumulates reams of standards, policies, and out-of-control knowledge repositories that become overwhelming to anyone actually trying to get real work done. A struggling project manager likely hears from this group only when issuing new pronouncements about which forms must be completed or threatening an "audit" to make sure documentation is complete rather than providing assistance or insight into how to right a struggling project.

For the CIO, this PMO tracks projects and presumably provides standard reporting about their status, but does little to deliver insight into how the projects relate to the company's overall business. While there is nothing wrong with an organization that provides this consolidated view, it has little impact on the organization other than an administrative function.

The Investment Management PMO

For the rare organization that takes its PMO beyond its administrative role, the most effective function is managing the company's portfolio of projects like an investment portfolio. Traditional project management is tightly focused on tracking objectives and costs, but misses the mark on tying those objectives back to a business result with an expected return, risk level, and time frame to achieve that return.

Much as one might sit with their financial adviser and discuss their goals, the CIO can sit with this type of PMO and discuss where he or she sees the business going in the coming months and years. Someone nearing retirement might focus on bonds and low-risk investments, just as a CIO in a stagnant industry or facing a severe economic downturn might focus on short-term, low-right projects. Like the financial adviser, this PMO can quickly point to which projects are more strategic and likely more risky and which are "bread-and-butter" maintenance and infrastructure projects.

When considering new projects, the Investment Management PMO can look at where they fit among the existing portfolio and suggest changes before the organization takes on too many high-risk projects or encourage bolder efforts when the competitive landscape demands it. Effectively, this PMO becomes the key means for the CIO to deliver business results and convey the value that IT brings to the larger organization beyond just keeping the infrastructure up and running.

The latter PMO is obviously the preferred option for most organizations, but the price of admission is perfecting the former. No one would want a disorganized investment manager who could not instantly identify which stocks and bonds you were holding, just as no PMO can move into portfolio management without being able to track and manage projects from an administrative perspective.

Building an investment management PMO requires careful care and nurturing from the CIO and a variety of talents beyond raw technical skill or project management techniques. A project portfolio requires what is effectively P&L responsibility, since projects frequently are a big slice of the IT budget and the only area where true business returns can be demonstrated, short of selling IT services as a product to external customers. If your PMO cannot brief you on the key business objectives of each project and the likelihood of delivering those business results, you are simply not getting the maximum value from your PMO.

About

Patrick Gray works for a global Fortune 500 consulting and IT services company and is the author of Breakthrough IT: Supercharging Organizational Value through Technology as well as the companion e-book The Breakthrough CIO's Companion. He has spent ...

4 comments
jcabanis-brewin
jcabanis-brewin

Exactly right: the PMO has to walk before it can run. PMO leaders who subscribe to the investment model described here might want to nominate their PMO for the PMO of the Year, sponsored by PMI's PMO Community of Practice with PM Solutions. The award honors PMOs for being tuned in to the larger issues of business success, as Patrick describes here, while having the basics of PM discipline firmly in place.

Ay Caramba
Ay Caramba

I've been involved in both models described in this article, and some that were somewhere in between. I recently came to the same conclusion that the Investment Management approach is the way to go. I even started using some of the same terminology in communicating that focus to my team. It probably helps that I work at a trading firm and that the analogy is particularly relevant to us here. That said, it's one thing to think of your project portfolio as an investment portfolio, but another to actually implement it. I'm slowly starting to steer us in that direction, but it is going to be an extended process before we get to the point where I can actually talk about the impact of substituting one project for another on the overall value of the portfolio.

PurpleSkys
PurpleSkys

I'm going to mark you as spam every time you post your consulting business with a post...

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