PMO 2.0: Expanding the Value and Reach of the PMO
The world of project management has changed, limiting the effectiveness of traditional project management techniques in today’s fast-moving, knowledge-based, technology-oriented service organizations. The PMO must go beyond project or even portfolio management to include financial and organizational capacity management.
I’d like to introduce the concept of the Management Integration Center as a means of establishing a center of excellence to develop the expertise and capabilities to run technology services like a business.
Rescuing Project Management
The application of traditional project management techniques in today’s knowledge worker organizations has yielded little success. Billions of dollars are lost each year due to poor planning, and less than 30 percent of all projects are successfully completed. To reverse this unsettling trend, PMOs must reach beyond project and portfolio management to balance demand for resource and financial capacities across the enterprise.
Significant operational efficiency increases of 20 percent or more can be expected when organizations implement a center of excellence to focus on business functions and better align work with money and resources across the organization.
Introducing the Management Integration Center
Typically, organizational processes are operationally structured into three distinct levels: strategy, management and development. The strategy level includes executive processes such as business planning, governance and other high-level decision-making functions.
The management level provides the various linking functions between strategy and development to convert concept into products and services.
The development level is where specialized technology processes are defined and employed. This can include computer technology, R&D, manufacturing or construction processes.
Functions traditionally provided by a PMO reside as a part of the management level. For example, the PMO does not make strategic investment decisions, nor does it dictate the engineering approach. Rather, a good PMO facilitates the investment decision-making process and ensures the engineering approach applied to a project will result in the expected deliverables within defined constraints.
The term Management Integration Center (MIC) has been used to differentiate its expanded role and functions in the organization from those of a typical PMO. The MIC encompasses a wide variety of management and control functions to include support for all organizational work and resources, as well as consolidating other business management processes.
A MIC is needed for:
- Collaboration between various groups within the organization
- Defining a common roadmap to foster consistency of process, terminology, roles and responsibilities
- Gathering, analyzing and disseminating business information
- Administering enabling technology and applications
- Developing and deploying staff with appropriate business skills.
A well-established, full-service MIC provides vital services to executives, internal departments, and customers alike by integrating business functions and information within a dedicated organization.
Since the MIC improves processes applied throughout the organization, it amplifies efficiency gains through increased performance of the entire enterprise.
The MIC as an Internal Services and Consultancy Provider
One of the overt drivers for developing an MIC is to first establish a mechanism for consolidating or creating the infrastructure and core competencies around business management. This may take the form of actually providing the service itself, such as an integrated business management application, or a dedicated planner/scheduler staff deployed to assist technical managers.
In some cases, it may manifest itself through educating the organization to raise general business awareness and process maturity. Regardless, the MIC must be positioned as a service provider rather than a domineering power center.
Of the many roles the MIC plays, one of the most important is as a liaison for the relationship between the product and service consumers and the provider organization.
Facilitating Business Process Superhighways
Processes form the framework for the flow of information, decisions work, assignments, and practically everything that is done in context of executing business today. The effectiveness and efficiency of these process ‘highways’ dictate the amount of traffic they can handle, while governance establishes the ‘rules of the road.’
By virtue of being the facilitator of the governance model and owner of the business processes, the MIC is a significant player in defining operational controls and organizational efficiency.
As the owner and administrator of the supporting technology, the MIC also develops control functions related to the automation of processes, such as defining the appropriate lifecycle and workflow models.
Every Ship Needs a Navigator
If we apply the analogy that any given business is much like a ship on a voyage, perhaps the most beneficial role of the MIC is to help it along its journey by knowing where it is at any given time by ‘reading the maps.’ While the destination is always defined by senior executives, a large component of success for the journey is ensuring the course is defined, communicated and followed.
This involves developing the analytical skills and intimate knowledge of information within supporting business systems to transform it into usable, business intelligence. Such a service is invaluable for identifying and leveraging information about past, current and future conditions.
Significant savings can be realized from this function alone. For example, if five percent of a $20 million budget is identified as being allocated to low-priority work, an organization can then spend an additional $1 million on important projects.
Business Performance Management
Information collection and analysis is a key service provided by the MIC as the bridge between tracking and controlling functions. The MIC is uniquely positioned to have the proper combination of organizational perspective, skills, access and capability to render data into useful information across departmental lines.
Business information is then further distilled into that which requires action vs. continued monitoring. Performance tracking is commonly applied to individual work items and resources, such as scheduled performance to baseline, earned value, cost versus budget or resource utilization.
However, particularly for the MIC, other important tracking functions include monitoring performance at a macro level, such as portfolio performance, average effort per particular type or class of work or process performance.
A key capability for the MIC is to have an integrated business application environment so that data can roll up and accumulate from the lowest level of planning detail to the upper levels of the organization and its portfolios.
Project, work and resource managers each have responsibilities for analyzing the information within their respective areas. And departments may also perform analysis from their perspective. But they all tend to concentrate their analysis efforts vertically. Only the MIC is uniquely positioned and equipped to perform further analysis across departmental boundaries to gain a comprehensive view of overall performance.
The Role of the MIC in Analytics and Reporting
The MIC should help define and produce the top 15-30 Key Performance Indicators (KPIs) that are used to manage at the executive level as part of routine governance and strategy meetings. KPIs refer to the set of core metrics that are an organization’s primary measures of health and performance. If you find you need more, consider rotating KPI reviews from one major grouping to another at each meeting, rather than trying to cover them all at one time.
The MIC should facilitate executive reviews by providing the KPI package to members ahead of time, flagging those in need of discussion, and keep track of actions decided upon or those that need to be reassessed at the next meeting.
As a communication tool, appropriate KPIs should get exposure beyond the governance board. Every employee should have the opportunity to see and understand organizational performance, so they can internalize their personal stake in those they influence, share in the success of performance gains, and better understand when and why improvements or changes are made.
Consolidating Business Expertise
Technology-based organizations inherently understand the value of developing depth of expertise and specialization when it comes to development-level functions. However, these same organizations have been slow to recognize and justify that the same specialization needs are present when it comes to the business management functions. A sign of organizational maturity is the recognition that business functions, such as those discussed, are as critical to being seen as a valued service provider, as much as the technology products and services themselves.
The MIC represents corporate recognition of these business capabilities as a mission critical function, and it becomes the focal point for building and applying essential business skills. In addition to improving business functions themselves, the total cost of execution actually goes down.
Assigning the Right Resource to the Right Job
Often, for lack of other options, expectations for accomplishing business functions are placed upon managers and department heads. Such functions are likely not their area of training and expertise, nor their top concern or priority. If processes, tools and techniques are formally established for these functions, they are often a product of department silos, making it difficult to consolidate results. If a common business application is available to accomplish the function, they probably aren’t using it often enough to become proficient in its use.
The net result is that if these functions are being routinely accomplished at all, they are being done by expensive resources that are better applied in other ways. And they are probably not being done as consistently or efficiently as they could be.
By comparison, the MIC can facilitate administration of these business processes using a trained and dedicated staff at considerably lower cost. This staff still works closely with managers to execute decision-making, provide reports and help them manage their work and resources better, without the administrative burden.
Terry Doerscher has over 24 years of practical process development, project management, PMO, business strategy, and work and resource management experience in the construction, nuclear, and IT fields. Mr. Doerscher is currently the Chief Solution Architect for Planview, responsible for developing Planview PRISMS™ Adaptive IT Management Best Practices, and coordinating its integration with Planview Enterprise software functionality. Prior to that, he was a business consultant and Director of Professional Services for Planview, managing the implementation of Planview for over 25 customers and supporting dozens more.