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April 8, 2011

Are You Ready To Transform Your


PMO?
by Margo Visitacion
for Application Development & Delivery Professionals

Making Leaders Successful Every Day

For Application Development & Delivery Professionals

April 8, 2011

Are You Ready To Transform Your PMO?

Tackling Todays Challenges To Prepare For Tomorrow


by Margo Visitacion
with Mike Gilpin and Adam Knoll

Execut i ve S u mmary
As the economy continues to recover, firms are looking at how to prepare for growth while maintaining
a lean approach. Because of this, project management offices (PMOs) are continually evolving
responsibility and focus to prepare for expanding demand and stay relevant. Todays PMOs are moving
away from traditional organizations that emphasize a rigid academic approach and toward moreflexible approaches that adapt to changing delivery models. Todays office takes a more strategic, more
bare bones approach. With executive support, the new PMO strips away inessentials and takes a less
hierarchical approach to projects, embracing communities of practice (CoPs) to develop pragmatic
methods that are consistent, measurable, and effective.

ta bl e of Co n te nts
2 Its Time To Get Your Act Together
Executives See PMO Maturity As A Business
Differentiator
4 Adaptability Is The Hallmark Of Todays PMOs
One Size Does Not Fit All
The Ivory Tower Is Dead
7 The Road Ahead: Opening The Door To Total
Transparency
PMOs Must Keep One Eye On The Portfolio
While Getting The Job Done
Are You Ready To Transform Your PMO?

N OT E S & RE S O U RC E S
Forrester interviewed PMO leaders from 12
companies.

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Whats Ahead For PPM?
March 15, 2011
Involve Your PMO To Find The Right Match For
Innovation Opportunities
November 11, 2010
Making The Case For The Next-Generation PMO
October 16, 2009

recommendations

11 Be Aggressive, But Be Pragmatic

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Are You Ready To Transform Your PMO?


For Application Development & Delivery Professionals

Its time to Get Your Act Together


PMOs aspire to become next-generation PMOs but continue to struggle to make the transition
from bureaucratic entities drowning in document overkill to strategic visionaries driving portfolio
change while removing barriers to delivery. Todays PMO must transform to become a change
agent for business technology, taking advantage of new opportunities by stripping away inessentials
and creating a framework of practices that promote total transparency. Administrative PMOs are
outdated. Todays PMO must provide teams with the support they need to grow and develop the
practices that maximize their creativity and efficiency.
Executives See PMO Maturity As A Business Differentiator
Forrester interviewed 12 PMO leaders about the reasons behind their success. The interviews
clearly revealed that they were able to excel when their senior management saw consistent project
management practices supported by a strong PMO as a key business process. Our CIO sees the
value of strong project management, says the PMO director of a North American healthcare
company. We have an intense need for good execution. Firms recognize the need to set up
standards and make them an organic part of the organization because (see Figure 1):

Less-mature PMOs fight battles on many fronts. From project prioritization to value

realization, low-maturity PMOs juggle many responsibilities. At this level, PMOs tend to
be within a single organization (usually IT); therefore, education is critical, but so is action.
The main challenge is establishing a support network among project stakeholders to create
consistency in project-related practices in order to gain credibility with skeptical business
partners used to political maneuvering over value-driven planning.
IT understands the need, but managers are resistant to change. Our business partners arent
really our customers yet[; its] a maturity issue. Our CIO is relatively new and wants to drive
accountability. Our goal is to have a common understanding of project management and a
common knowledge in how to [plan and deliver]. Our project managers are hungry for this,
but management is still a bit resistant. (PMO director, global energy company)

Moderately mature PMOs have created the baseline; now they need to spread the word. Project
organizations that have achieved moderate maturity have fought hard to establish consistent
practices, and on a tactical level, they have created repeatable execution practices for larger, morevisible projects. Momentum for these PMOs is critical, and in order to sustain it, they must move
from a singular focus to a cross-organizational one. Execution priorities include gaining more
reliability in reporting and extending prioritization for high- and lower-visibility projects to
achieve greater portfolio visibility, which helps transform the practices into an organic part of the
process and makes value realization measuring portfolio performance more consistent.

April 8, 2011

2011, Forrester Research, Inc. Reproduction Prohibited

Are You Ready To Transform Your PMO?


For Application Development & Delivery Professionals

Weve learned that you cant shoot from the hip anymore. For us, project management has
come to the forefront of business. [The PMO] has trained VPs how to be project sponsors.
Were showing them that project management expertise doesnt slow things down. Were
showing them that you can get more done by working on fewer projects with greater
deliberation[;] youll get more done than [by] continually changing direction. (PMO leader,
North American healthcare company)

Very mature PMOs drive standards to encourage efficiency, not bureaucracy. The most-

mature PMOs focus on how companies need to execute as a whole. Multiple PMOs are the
norm to drive consistency throughout the organization. Federated or latticed approaches enable
the enterprise project management office (EPMO) to focus on optimization practices while
still maintaining an advisory relationship with the business units it supports. Strategy drives
investment in innovation as well as techniques for managing maintenance and operations
activities. PMO involvement in these mature organizations emphasizes optimizing project
management practices and extending them to cover nontraditional project tracking to provide
realistic views of resource capacity as well as continued portfolio alignment. These mature
organizations establish fully supported governance, metrics, and portfolio standards.
We are seeing an increase in productivity because the PMO is making huge strides to
remove redundancies and duplicative activities and locate them in a single place. Now that
we are driving consistency and see a standard process for reporting, [its] improving project
productivity. (Managing director, global program management office, global financial
services company)

2011, Forrester Research, Inc. Reproduction Prohibited

April 8, 2011

Are You Ready To Transform Your PMO?


For Application Development & Delivery Professionals

Figure 1 Executives Recognize That Mature PMOs Are Critical To Sustained Success

Mature PMO
Integrated portfolio/
program/project
Moderately maturity PMO management
More work is projectized.
Prioritizes high-visibility
The methodology is flexible, with
projects
an emphasis on frameworks.
Some alignment with
Standard measures for
portfolio
performance and value
Improving project
are in place.
performance
Lower-maturity PMO
Resource planning begins. A resource management
standard is in place.
Prioritization challenges Higher-visibility projects

A
communities of practice
Projects are not always
are measured for
standard is in place.
aligned with strategy.
performance.
A suite of tools is in place.
Inconsistent project
Teams are incented to
performance
optimize performance.
Unable to measure
project value postimplementation
Source: Forrester Research, Inc.

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Adaptability Is The Hallmark Of Todays PMOs


Organizations today quickly realize that the cycles of business rarely slow down to allow them to
retrofit practices; if youre not adaptable, youre dead. The days of doggedly bureaucratic PMOs are
starting to fade: If PMOs cannot adapt to accelerated or Agile practices, they become the problem,
and the organization dismantles them.
One Size Does Not Fit All
Successful PMOs quickly learn that no single prescription for a PMO exists. Project needs,
corporate structure, and culture force PMO directors to adapt their approach to support their
organizations specific project and portfolio management needs (see Figure 2). However, there are
some basic types of PMO you can use as a starting point as you work to decide which model will
best fit your organizations needs:

Tactical PMOs target the basics. Projects are the most-visible work initiatives, and they

often carry the most risk and benefit. Tactical PMOs focus on getting the job done for the
processes supporting project delivery by integrating the project management methodology with

April 8, 2011

2011, Forrester Research, Inc. Reproduction Prohibited

Are You Ready To Transform Your PMO?


For Application Development & Delivery Professionals

project-specific activities such as development and deployment. Tactical PMOs primary goal
is consistency and as these PMOs maturity level tends to be lower, establishing pragmatic
project governance is crucial to achieving that objective. Tool use is another tactical focus
for these PMOs; while project portfolio management (PPM) tools may be evident, most
organizations rely on Excel or SharePoint to communicate project information.
The tactical PMO is organizationally static: It has clearly defined role responsibilities and
manages the traditional activities of best practices development, project reporting, and
administration. Tactical PMOs typically support a single area, such as IT. Hands-on commandand-control project management is becoming more prevalent, with about half of PMOs having
project managers as direct reports.1

Strategic PMOs look at the big picture. Strategic PMOs dont abandon tactical PMOs

responsibilities; however, except for corporate or cross-organizational projects, they take a


less-hands-on approach regarding actual project delivery. Because strategic PMOs tend to be
more mature and have wider organizational support, their organizations usually already have
basic best practices in place. Portfolio management alignment and selecting the right projects
at the right time become a greater focus in these more-mature PMOs. Tools are in active, if
not consistent, use. Organizationally, project managers are more likely embedded within the
business or technology groups they serve. Communities of practice become more commonplace
and collaborate with PMO training to foster project management as a profession and to refine
best practices.

Transformational PMOs take it to the next level. Transformational PMOs fully integrate into

the companys project planning and delivery. The EPMO transforms from an enterprise project
management office into an enterprise program management office because its emphasis shifts
from separate, distinct project planning to holistic, integrated initiative planning and execution.2
Organizations with transformational PMOs integrate methodologies, metrics, and tool usage,
recognizing that business and IT must work together to deliver effectively. CoPs are imperative
at this level, because while the PMO places great emphasis on standardization, the community
must recognize and refine individual practices to enable extended support from stakeholders
and to continuously drive project management as a professional role and as a stakeholder in
business success.

Maturity and cultural attitudes play a role in determining a PMOs location and style. Though most
organizations have various flavors of PMOs, mature, forward-thinking companies are consistently
adopting a transformational view of project and program management.

2011, Forrester Research, Inc. Reproduction Prohibited

April 8, 2011

Are You Ready To Transform Your PMO?


For Application Development & Delivery Professionals

Figure 2 PMO Models Range From Tactical To Transformational


Target:
Focus

Tactical PMO
Project

Strategic PMO
Portfolio

Transformational PMO
Strategic planning
Value-driven delivery

Methodology

Project only

Portfolio
Project framework
Some life-cycle
management

Enterprise portfolios
Adaptable project management
Life-cycle management

Emphasizes

Tools
Governance
Reporting
Some hands-on project
management

Tools
Governance
Reporting
Hands-on program or
corporate project
management

Some tools
Governance
Reporting
Project management
professionalism
Compliance
Risk

Management
style

Command and control

Command and control


portfolio
Collaborative project
management

Collaboration and communities


of practice
Portfolio oversight and reporting

Size

Static

Static

Adaptable

Organizational
structure

Reports to director of
IT/LOB

Reports to VP or C-level
executives

Reports to C-level executives

Source: Forrester Research, Inc.

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The Ivory Tower Is Dead


Todays PMO lives, although perhaps not in a familiar form. Todays PMO isnt as concerned with
traditional labels or structures, as long as the job gets done. Bureaucracy has no place in todays
PMO; business executives realize that while standardized practices bring accountability and
consistency, they cannot allow this to slow down progress or the ability to react to critical business
changes. Adaptability is crucial, and todays PMOs:

Transform PMO structures to fit company culture and delivery style. Organizational

structures play a large role in determining project delivery styles. Highly centralized or
federated organizations benefit from a strong centralized EPMO, while decentralized companies
may take a decentralized or latticed approach to their PMOs.3 Labels are not important;
sustained practices are an organic part of the companys delivery methods. Successful
organizations analyze what works and make it standard.
Eight months ago we disbanded our central PMO and placed [it] within the individual
brands. We blended project management in with the business. My job is to build knowhow worldwide how to run projects the right way. Weve built communities of practice,
training, and mentoring. Everything is voluntary, and everyone is excited by that. (Global
PMO director, food industry)

April 8, 2011

2011, Forrester Research, Inc. Reproduction Prohibited

Are You Ready To Transform Your PMO?


For Application Development & Delivery Professionals

Integrate best practices from the ground up. Todays PMOs are not relying only on training

as a way to drive project management best practices into their organizations; mentoring and
communities of practice (CoPs) are increasingly finding their way into companies as a way to
foster greater visibility and executive support for PMOs. Participation ranges from voluntary to
a required part of management development. PMOs using CoPs as a training mechanism find
that the approach brings additional benefits, including visible executive support.
We bring our PMO managers together for two hours every month as part of the forum
and governing body its part of the job description, and they are chartered as part of the
council. We have a multiyear agenda that focuses on governance, capabilities reporting,
and tools. We have project managers on task[s that] force [them] to build [continuous
improvement]. We measure it closely and make it part of their career path. (Global director
program management office, financial services industry)

Bring the business in to build a global project approach. Companies committed to a

holistic approach to portfolio and project management continue to tear down the walls
between technology and business execution. To these organizations, business direction, key
applications, and technology initiatives are of equal importance to overall success. They take
a transformational approach to project management working to understand the specific
requirements of different projects while holding them to equal standards and requirements
for accomplishment. Whether a projects goal is constructing a branch office or delivering
customer-facing web applications, it must use proven methods to achieve success.
Were focused on getting faster and more effective. We have a global EPMO that provides
standards to every PMO, but were a hybrid model. We have program managers that focus
on cross-functional programs that affect the company, but then we leverage CoPs to drive
out the standards. We are not going to manage every project, but were giving everyone
the processes and tools they need to be successful. (Global EPMO director, international
beverage company)

The road ahead: Opening the door to total transparency


Regardless of its maturity level, structure, or methods, every PMO strives to maximize transparency for
the organization it supports. Executives require confidence in the data they see in order to make
strategic decisions. Managers need visibility into progress and capacity in order to drive effective
practices within their ranks, and financial officers need insight into costs to guide their work in budget
control and compliance. PMOs find themselves tasked with the responsibility of gathering that data and
distributing information. As a result, PMOs are taking on more portfolio management responsibilities, a
move that highlights that effective planning and delivery cycles require sustained support.

2011, Forrester Research, Inc. Reproduction Prohibited

April 8, 2011

Are You Ready To Transform Your PMO?


For Application Development & Delivery Professionals

PMOs Must Keep One Eye On The Portfolio While Getting The Job Done
Taking a holistic approach supports stronger linkage between the project portfolio and the overall IT
portfolio.4 As PMOs continue to build out stronger delivery processes, they must ensure that while
focusing on an organizations new initiatives, they dont lose sight of how all IT work affects the
project portfolio (see Figure 3).
To do this, a PMO must:

Build a robust and consistent demand management and prioritization process. IT

organizations are quickly learning that when taking a portfolio approach to managing areas
other than projects namely, application and service portfolios they must broaden
visibility because of the impact this approach will have on shared groups of resources. PMO
disciplines lend a natural hand to organizations building out the sourcing process. The PMO
helps consolidate demand, allowing the owners of ITs various portfolios to see the resource
impacts across the board.5 Prioritization is a tougher process but is equally critical in helping the
organization drive a consistent method of selecting the right projects at the right time. Using
scorecards and other best practices, PMOs become stewards of the prioritization process.6
We needed to have a central portfolio to see the projects and to manage change caused
by new projects. Our project portfolio consists mostly of new projects and business
change; however, if its a big enough maintenance project such as an upgrade to PeopleSoft
or [salesforce.com], its a project. That way we can control the impact of demand on the
portfolio. We are constantly discussing prioritization. Everyone thinks their [project] is
most important. Weve become the de facto prioritization group because we manage how
resources are allocated. (PMO director, global energy group)

Use appropriate measures to demonstrate and guarantee continued executive support.

PMOs must continuously justify their value to garner sustained support for the structure and
the processes needed to do project planning and delivery. By selecting the appropriate goals
and publishing them, the PMO can demonstrate that the organization is reaching portfolio
objectives or that it is at risk due to poor support. PMOs should focus on issues such as change,
project cost, and value all common and important metrics.
We manage change; we help everyone become more focused on building a better
foundation for systems and projects. Its helped us establish better architecture, better
security levels, and better applications. Were still going through growing pains, but were
moving in a positive direction. We publish this in our portfolio, and weve seen quality
improvements. (Director of the EPMO, US state government)

April 8, 2011

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Are You Ready To Transform Your PMO?


For Application Development & Delivery Professionals

Figure 3 The PMO And Its Role In Portfolio Management

ePMO

LOB PMO

I T PMO
Project
portfolio

Project
portfolio

Portfolio

Maintenance

Project
portfolio

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Services

Operational
projects

Source: Forrester Research, Inc.

Are You Ready To Transform Your PMO?


External change more often spurs PMO transformation than internal change, and todays business
environment is a rich source of inspiration for foundational changes. Every PMO representative
we interviewed for this report saw systemic change opportunities driven by regulatory changes,
economic shifts, or business opportunities. To prepare the PMO to become a change agent for the
organization, PMO leaders must:

Find a champion to support necessary changes. PMOs buried in the organization face too

many barriers to drive real change they lack the authority and visibility to work beyond a
narrow frame of reference. PMOs that have been able to bring change report directly into senior
management. The most-successful PMO leaders we interviewed report to C-level executives
with a program or project management background. Others are able to work closely with a
senior executive who sees value in a holistic approach to project management that is closely
tied to the portfolio. This support gives the PMO authority to enforce changes as well as
accountability for supporting practices that drive company success.

Create a clear career path for project managers. All but one of the individuals we interviewed
worked at a company that had established or was in the process of establishing a clear career
path that formalized the project management career. Formal training and career development
with a visible growth path attracts excellence to the PMO and builds credibility with business
leaders and management.

2011, Forrester Research, Inc. Reproduction Prohibited

April 8, 2011

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Are You Ready To Transform Your PMO?


For Application Development & Delivery Professionals

Establish communities of practice now. Formal training is important, but to foster the

project management mindset, project managers and stakeholders have to have a sense of
ownership and a say in how the firm manages projects. Professional frameworks such as the
Project Management Body of Knowledge (PMBOK) and PRINCE2 provide guidance, but realworld experience and team-driven problem solving provide greater support in driving sustained
growth. When everyone has a sense of ownership, said one PMO director, people stop
looking for a way around the system.

Gain consensus on the metrics that matter, and apply them often. Traditional measures such

as cost and schedule will always be part of the process, but transformational PMOs also look to
quality measures such as reduced rework, resource allocation levels, and customer satisfaction
as ways to demonstrate the PMOs effectiveness. Practices such as polling key stakeholders to
find out whats important to them and coaching project managers to set metrics at the start of
each project enable the PMO to get a realistic view of portfolio and project progress as well as
how effectively the process is working.

Realize that tools are necessary, and work to find the right ones for the organization. Its

critical to drive standards and consistency, and finding a tool set that helps instead of hinders
the process enables the PMO to guide changes faster than it could without tools. PMO leaders
realize that PPM tools enable them to roll out reporting and project standards; once these
capabilities are in place, PMO leaders can allow project managers more flexibility at the
individual project planning level, as long as they use the standardized reporting, resource, and
cost management activities.

Show value quickly to make sustained changes. All of the PMO leaders we interviewed had
held their position for less than four years, and most less than two. Each leader knew that
the PMO had to demonstrate real but incremental value within the first six months to retain
executive support. To do this, the PMOs focused on specifics first such as starting in a
single organization or with particular portfolios and then broadened changes as project
management became a systemic part of the company. One PMO leader from a global energy
company noted that the PMO started with the IT department; about a year later, when it
became clear that IT was the only operating group that could demonstrate success, business
leaders started asking for PMO help to build their project management practices.

April 8, 2011

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Are You Ready To Transform Your PMO?


For Application Development & Delivery Professionals

R e c omme n dat i o n s

Be Aggressive, But Be Pragmatic


While every PMO leader wants a transformational PMO, the reality is that not every organization
is ready for one. However, PMO leaders can make substantial changes to how the PMO supports
project delivery in order to bring greater value to the broader organization. PMO leaders should:

Start with a project plan. Realize that this is a project in itself. Many of the PMO leaders we
interviewed stated that their transformation was a planned project with clear objectives
and deliverables. Without this guidance, PMOs will quickly run off track. Drink your own
champagne, and make it a successful project.

Get a champion. While you cant pick your boss, its important to realize that buried PMOs
dont work and they dont last long. Approach business executives to find out what they
expect and understand about project management in their organizations. Show them the
impact of resource management and inconsistent practices, followed by your improvement
plan. Get their feedback about what works and what doesnt, and use that in your
transformation plans.

Start communities of practice. No one wants to fail at managing projects. By providing a


sense of ownership, formal and casual project managers can learn from each other about
how to be successful. Incent project managers in their career plans to mentor junior or casual
project managers to help build bench strength for project management expertise.

Invest in a pragmatic PPM solution. Successful project and portfolio reporting relies
on accurate data, and that means that there must be a central location for all project
information. PPM tools support standardizing practices and reporting use them
for managing resources and planned work. While its important to load current project
information, think about the long run to make sure youre not continually retrofitting the tool
as you mature. Phase the implementation by focusing first on the critical aspects: projects,
resources, and portfolios.

Endnotes
1

According to The State of the PMO 2010 report issued by PM Solutions, approximately 50% of the surveyed
PMOs have project managers as a direct report. Source: The State of the PMO 2010, PM Solutions (http://
www.pmsolutions.com/collateral/research/State%20of%20the%20PMO%202010%20Research%20Report.
pdf).

You can support achieving a holistic planning approach to delivery by adopting program management
practices that provide visibility into the impact of cross-project planning on achieving business and
technology objectives. See the December 31, 2009, Leverage PMO Skills To Build Program Management
Competency report.

2011, Forrester Research, Inc. Reproduction Prohibited

April 8, 2011

11

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Are You Ready To Transform Your PMO?


For Application Development & Delivery Professionals

The advent of the latticed PMO enables organizations to share best practices without the danger of
incurring bureaucracy. See the April 9, 2010, The Next-Generation PMO: The Latticed Model Enhances
Enterprise IT Visibility report.
As organizations increasingly call IT to show its alignment to business objectives, the project portfolio plays
an important role in demonstrating how new initiatives fit into the IT portfolio. See the December 9, 2010,
Forresters Best Practices Framework For BT Portfolio Management Leadership Maturity report.

Consolidated demand and prioritization processes can help an organization optimize all its portfolios.
See the January 14, 2009, Four Steps To Optimize Your Application And Project Portfolios In Volatile
Economic Times report.

Project prioritization is difficult, but creating a consistent practice and using it across the business groups
requesting projects can simplify it. See the July 25, 2008, Whos On First A Simple Model For Project
Prioritization report.

April 8, 2011

2011, Forrester Research, Inc. Reproduction Prohibited

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