Every year top PMO professionals attend the Gartner PPM and IT Governance Summit – coming away with valuable key learnings from peers and analysts. This year Innotas was named a “Leader” by Gartner in the Cloud-Based IT Project and Portfolio Management Services Magic Quadrant for the fifth consecutive year (download a complimentary copy here) and I was fortunate enough to experience high quality conversations on the show floor and attend forward-thinking presentations by the Gartner analysts. Here are some key takeaways that are applicable to every PMO:
#1 PMOs Must Be Adaptive
The role and function of the PMO varies depending on an organization’s needs. Whether you are an enterprise PMO (ePMO) focused on compliance and governance across the entire organization or a full service PMO that is focused on completion of innovation projects to enable the line of business (LoB), your goal remains the same – deliver results to propel the business forward. The challenge is that the business environment is constantly changing as competitive, market, and internal forces create moving targets for the PMO – not to mention the adoption of agile and lean methodologies that are driving constant adjustments in the execution of projects.
In one of senior researcher Mbula Schoen’s sessions, she shared survey results on how the business views their PMO. The results are subpar.
- 19% say their PMO adds some value but is bureaucratic
- 31% say their PMO provides useful administrative support
- 48% say their PMO is an integral part of getting things done
On the surface, one might be content that nearly half of business stakeholders believe their PMO is integral to the business, but on the other side I would argue that only half is completely unacceptable and furthermore, only 19% say the PMO adds value is even worse. Neither would be a passing grade in elementary school, so why should project management professionals accept it in the real-world? We shouldn’t.
PMOs need to increase their business mindset by thinking, communicating, and managing to value or business outcomes – especially when change occurs. If you are not looking at each project or initiative and able to answer the question “what is the real value or benefit of this work?” then you have an opportunity to improve. Your ability to answer this question (under all circumstances) is directly related to the perception of your PMO. The key to becoming more integral in your organization is directly related to your ability to tie your efforts to delivered value, not just delivered projects. This means understanding what the stakeholders need, introducing agility into your processes to account for change, and constantly striving towards alignment with the business. Schoen sums up this concept well, “A failure to evolve and adjust to such changes can result in a PMO being misaligned with an organization’s goals, and therefore being seen as failing to deliver value.”
#2 Value Can Be Defined in Many Ways
In addition to the emphasis throughout the Summit on delivering value, another key point is that there is no single way to define value. In fact, an organization may use multiple key performance indicators (KPIs) and metrics to measure value. So where do you start? PMOs can start to define their value by evaluating two specific parameters – business outcomes and measurable metrics. Coincidentally, your business stakeholders are likely running their business based on these parameters, so you should look to align to the specific metrics when managing your portfolio of projects.
Let’s focus on business outcomes. Having an understanding of what business outcomes your stakeholders are trying to achieve is where it starts, these can include, but are not be limited to:
- Faster time to market (TTM)
- Improved product quality
- Entry into new markets or geographies
- Improved customer retention
- Fewer product returns
Better understanding of what the stakeholders are trying to accomplish will result in decision-making during project planning and delivery that improves business alignment – naturally leading to increased value, or at a minimum, perceived value. For example, if a project is late or slightly over budget, but the decisions you made throughout project execution ultimately yielded a better business outcome (such as improved product quality over the initially stated goal), the PMO can communicate the incremental value to justify the tardiness or over expenditure. Alternatively, if your PMO is solely focused on on-time and on-budget, then the perception could be that you are not efficient, slowing down the business, or simply not effective because your desired outcomes are misaligned with the business. Misaligned desired outcomes lead to an inability to demonstrate value contribution.
The next step is understanding the metrics that are used to measure achievement of the desired business outcomes. Tying back to our original list above, relevant metrics could be:
- Reduced product development cycles
- Reduced support tickets or customer complaints
- New revenue from specific verticals or countries
- Increased renewal rates or reduced customer churn
- Reduced return rates
There are two specific steps that a PMO must take to ensure alignment with business outcomes and relevant metrics – prioritize projects in the planning phase and challenge team members to make better decisions during execution. The most common way to achieve alignment in the prioritization phase is to implement scoring based on these business outcomes. In fact, in a recent survey, 51% of organizations reported using scoring as their method to align with the business. Maintaining alignment through the execution process can be a bit more challenging. Begin by communicating with your team the metrics that the business is measuring. If transparency is provided through awareness of the metrics, then you increase the likelihood they will execute tasks and make trade-offs that will help achieve desired outcomes. Secondly, PMOs and project managers must have periodic checkpoints to ensure the project stays on track with desired business outcome and metrics by consistently putting them top of mind for all team members.
#3 Portfolio Management – Implement Process or Tool First?
One of the most discussed topics at the Summit was portfolio management implementation. The most common question was “Do we implement a portfolio management process or a project portfolio management (PPM) tool first?” The most accurate answer is that there is no magic bullet and best practice is for organizations to do both, simultaneously.
The reason is to create unity between processes and tools to allow for scalability as your PMO matures. Processes only stay intact when they are properly measured and communicated through a tool and tools are only effective when you have processes that need to be measured and tracked. We learned about the importance of introducing agility into the PMO to increase absorption of environmental changes – portfolio management is no different. As your PMO changes over time, you will have to account for changes in processes and will require a tool that continues effective measurement and tracking of your updated processes.
There are several factors that go into choosing processes and tools, but a good place to start is with these three critical pillars:
From a process perspective this entails understanding business strategies and organizing your project portfolio into categories that help you accurate classify work and resources. From a tools perspective, you need a solution that helps you build a top-down portfolio hierarchy that has a many-to-many relationship – allowing you to classify work into several business strategies if applicable. Your solution must be scalable to add additional portfolios and provide reporting and dashboards to demonstrate alignment with your business stakeholders.
We have discussed how important value is. From a portfolio management context, value is about prioritizing projects and resources to ensure they are deployed on the best work possible – work that will generate the most benefit for the organization. Here your organization must establish a process that assigns value to all project work from request through delivery. Value can be defined in many ways and your portfolio management tool should allow for configurability and flexibility to capture the factors that determine value. These can include strategic fit, risk, revenue, or investment to name a few. Your tool must support both low and high maturity value attribution methods, such as low, medium, high or a weighted scoring model. As your organization evolves, your value attribution process will mature and your tool must be able to scale with it.
The third pillar, planning, ties alignment and value together to set a direction for the company’s project portfolio roadmap. Here you cannot simply develop an ideal portfolio roadmap, you must do so within the largest constraint of the organization – resources. In the recent Project and Portfolio Management Landscape Report, over 70% of organizations reported they do not have enough resources to meet incoming project demand. Therefore, it is important to ensure planning processes are not just about what to get done, it is about when to get it done and with who. Here your processes will be used maximize the value of your portfolio (ensuring alignment with the business), assign available resources to projects based on role or skillset, and develop timelines that are setup for successful delivery to the business stakeholders. Your tool must enable you to have continuous planning cycles, leverage predictive or automated technologies, and facilitate healthy debate with your stakeholders through intuitive and graphical visuals – ultimately driving agility into the organization to ensure maximum value and alignment throughout the entire project lifecycle.
All in all, every year there is always something every project management professional can take away from the Gartner PPM and IT Governance Summit. This year, it was worth the flight delays and the tropical storms as it inspired me to challenge myself and my organization to be better.