PMOs Must Evolve to be Relevant

 

Recently, the Harvard Business Review conducted a surveyof nearly 1,500 IT projects, inspecting the preliminary budgets, actual costs, and the final results of each initiative. After reviewing these projects, the authors found an astonishing average cost overrun of 27 percent (with each project running about $167 million). Perhaps more shocking, one in six projects went over budget by an astounding 200 percent, and ran past their initial schedules by an average of 70 percent. If these projects are not viewed as delivering tangible benefits to the business, they can cost an IT executive their job, and the company can suffer a significant loss of reputation or revenue.

Ambitious IT projects require PPM tools and processes that provide visibility and enable collaboration in real-time to avoid or eliminate massive cost overruns and schedule delays like those in the survey. To remain relevant, PMOs must prove their worth through integrated planning, consistent metrics for performance, flexible and adaptable methodology frameworks, and accountability for results.

Recently during our global user conference, Adapt 2011, Daptiv met with more than 150 attendees from 8 countries. The theme of the conference was “Realizing Business Value through PPM” and a major focus for attendees was how PMOs adapt to the “New Normal” of business uncertainty in their companies and the broader economy. A few key lessons from successful PMOs emerged that are worth sharing:

1.) Where the PMO reports to is important for how it is perceived in the organization. According to recent Forrester research, PMOs that report to the CEO or CFO are much more likely to be perceived as delivering significant value. If your PMO reports to the VP of IS/IT then keeping a strategic focus is key to being perceived as delivering business value.

2.) Communities of practice are important to gain influence in an organization. Listening to individuals in your organization, frequent meetings, sharing knowledge and mentorship, and proving support (not mandates) will lead to a PMO being viewed as a valuable and influential partner in the organization.

3.) There is a growing trend for successful PMOs in IT to expand to an EPMO, covering business investments as well as IT strategy and planning. A Daptiv customer who has successfully made this transition and presented at the conference was Mercy, a health care system with over 25 hospitals and 200 clinic locations, which incubated their PMO in the IT organization before creating a very successful Enterprise Project Office in 2007.

Yes, IT delays happen, even with the best of intentions. More often than not, they can be avoided through careful planning, communication and collaboration. IT governance and PPM tools have come a long way over the past several years and increasingly the PMO is playing a more strategic role within the organization beyond IT. 

Let us know whether you agree with these takeaways and what other trends you are seeing in your business as we move into 2012.