DGiles_Project_World_TO_May_2011_presented

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PMI SOC
Project Management Office or
Strategic Program Office?
The critical role that PM plays in developing organizational
capability and culture to deliver the business strategy
David Giles
Vice Chair, PMI-SOC – PMO Branch
Director, Strategic PMO, WSIB
Principal Consultant, Alphyn Consulting Services Inc.
dgiles@alphynconsulting.ca
www.alphynconsulting.ca

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Introduction
• Project Management Offices (PMO) have been
around for years, are fairly common and have
had varied levels of success
• Strategic Program Offices (SPO) are much
more recent, rarer and much harder to put in
place. While both can be effective, SPO’s
deliver much more value.
• Why a SPO and how do you implement?
Copyright David Giles

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Background
• Over 20 years setting up and leading PMO’s and
teams of project managers
• Implemented five PMO’s and advised on many
others
• Experience across industries
• Consultant specializing in the implementation of
strategy and organizational capability through project
management

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Agenda
• Strategy
• Link to PMO’s
• Capability Maturity
• Culture
• Strategy Execution
– Concepts
– Ideal
– Alternatives

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Learning Objectives
• Understand the implications and links between
strategy, culture and capability maturity in the
implementation of improved project
management practices
• Understand how to assess the environment to
enable effective positioning of a PMO and a PM
improvement program.
• How to position the PMO as an SPO that
enables delivery of the business strategy

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Questions
• How many of you are project managers?
• How many of you:
– Are in organizations that have a PMO?
– Are in a PMO?
– Are in a business area Enterprise PMO? That
reports to a “C” level?
– Have a role running a PMO?

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Questions
• Does your organization have a clearly
defined, communicated and understood
strategy?
• Is it clear to you how your organization will
achieve it?
• Is your organization delivering the
strategy?
• Why not?

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Assumptions
• Organizations:
– Operate in environments that are changing
– Seek to become more (effective, profitable,..)
– Must therefore change
– Believe they should do so in a planned way
– Therefore need a strategy
– And a way to execute it

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Key Messages
• Creating a living meaningful strategy is hard
• Executing it is even harder. It requires:
– Commitment
– Clarity
– Cultural and organizational change
– Alignment
– Capability
– Discipline
– Effective performance management

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Key Messages
• Each organization needs a unique approach
• The “best” approach is not obvious
• This undertaking is a change project
• You have to deal with culture, capability maturity,
project management and strategy together
• The value proposition can be huge
• Getting there takes time – readiness at each
stage is key

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Strategy and PMO’s
• So what is the link to PMO’s?
• PMO’s historically have focused on supporting
individual projects or programs
• More recently many have expanded to portfolios
Portfolio Management: The centralized management
of one or more portfolios, which includes identifying,
prioritizing, authorizing, managing, and controlling
projects, programs, and other related work, to achieve
specific strategic business objectives.
• A strategic program office takes it to the next
level

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PMO
• PMO Types:
– Program Management Office
– Administrative
– Consultative
– With PM’s
– Divisional
– IT
– Enterprise

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PMO’s Role
PMO
Capability Maturity &
Culture

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CMM (Capability Maturity Model)
Level Measurement
5 - Optimized Entire organization is focused on continuous improvement.
Organization has the means (metrics) to identify weaknesses and
strengthen the process proactively.
4 - Managed Metrics are established for products and processes to identify
which variations are significant and which are “noise”. Risks of
introducing new products, processes etc. are known and carefully
managed and can be used to predict trends in process and product
quality within the Quantitative bounds of these limits.
3 - Defined Level Standard processes are based on integrated into the development
process as a coherent whole and help the team perform more
effectively. Includes training, and tailoring the project’s approach to
address the unique features of the project. Transparency to costs,
schedule, requirements and quality.
2 - Repeatable Level Policies for managing a development project and procedure to
implement those policies are established and are institutionalized.
Basic project and management controls have been installed
(requirements, costs, schedules, problems & changes)
1 - Initial Level
(Ad hoc, Immature)
-Does not provide stable environment for developing new
products.
- Performance depends on the “heroics” of individuals or teams
and varies with their innate skills, knowledge and motivations.
(CMM , Kenneth Crow DRM Associates C2000)

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CMM to PM alignment
CMM Level
• Level 1 – Initial
• Level 2 – Repeatable
• Level 3 – Defined
• Level 4 – Managed
• Level 5 – Optimized
PMO Characteristics
• Hiring PMs. No or weak
PMO.
• Basic solid PMO with
some core processes
• Full methodology applied
consistently
• Measured, project
integration
• Value focus, org wide
continuous improvement

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Culture
• Definition: The beliefs, traditions, expectations
and values shared by an organization’s
members and transmitted from one employee to
the next. The culture sets norms (rules of
conduct) that influence the behaviours and
attitudes of its members.
• Heavily influenced by management style: Top
down, collaborative, etc..
• Culture is not necessarily what is published but
instead what directs actions – the unwritten rules

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Culture and Unwritten Rules
• Powerful
• Must be addressed
• Requires Organizational Change
• Examples:
– “Reporting a project as Red is bad”
– “Turf must be respected, even at the expense of cost,
time and quality”
– “Strategic projects come first” alongside of “You will
only be rewarded for improved results even if you
have no funding (no strategic projects)”

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Strategy
• Strategy development is hard
– How many have a clear vision of where their
organizations need to go?
– How many of you are at organizations where
you can see that the strategy development
and maintenance process is effective?
– What makes it challenging?

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Executing the Strategy
• Strategy execution is much harder
• Why is it so hard to bridge the gap?

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Strategy Execution Challenge
• Booz & Co. survey on strategy(1)
– Lack of coherence
– Deciding on priorities and linking decisions to them is a big hurdle
– Most executives – 52% – say they don’t feel their company’s strategy
will lead to success.
– Two out of three executives confess that their companies’ capabilities
don’t fully support their strategy.
– 64% of executives say their biggest frustration is having too many
conflicting priorities.
– The vast majority of executives– 81% – say growth initiatives at their
companies lead to waste, at least some of the time.
– Most companies – 54% – say their company’s capabilities do not
reinforce each other.
– The majority of executives – 56% – say that ensuring that day-to-day
decisions are in line with strategy is a significant challenge; the same
percentage reports significant problems with allocating resources in a
way that supports the strategy.
(1) http://www.booz.com/global/home/what_we_think/cds_home/the_concept/our_leading_research_on_strategy

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Barriers to Strategy Execution
Wharton-Gartner & Wharton Executive Education
surveys (1)
1. Inability to manage change effectively or to overcome
internal resistance to change
2. Trying to execute a strategy that conflicts with the
existing power structure
3. Poor or inadequate information sharing between
individuals or business units responsible for strategy
execution
4. Unclear communication of responsibility and/or
accountability for execution decisions or actions
5. Poor or vague strategy
(1) http://www.ftpress.com/articles/article.aspx?p=360437&seqNum=3

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Barriers (2)
6. Lack of feelings of "ownership" of a strategy or
execution plans among key employees
7. Not having guidelines or a model to guide strategy-
execution efforts
8. Lack of understanding of the role of organizational
structure and design in the execution process
9. Inability to generate "buy-in" or agreement on critical
execution steps or actions
10. Lack of incentives or inappropriate incentives to
support execution objectives
11. Insufficient financial resources to execute the strategy
12. Lack of upper-management support of strategy
execution

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Assess (1)
• Start with the strategy
• What does it’s execution mean for the
organization in terms of:
– Products and services
– Markets
– Business model
– M&A
– Etc.

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Assess (2)
Undertake an assessment of the current
• Culture
• Key management and style
• The strategy itself
• PM maturity
• Organizational capabilities
• Alignment
• SWOT

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Assess (3)
• Look at the potential barriers. Assess and
prioritize them for your organization
• Identify areas of competitive advantage
and organizational strength

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Models
• McKinsey & Co 7 S’s
• Mintzberg
• Porter
• Miles and Snow
• Kaplan and Norton’s Balanced Scorecard

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Models
S.Certo and J. Peter proposed a five-stage model of the
strategy implementation process:
1. Determining how much the organization will have to
change in order to implement the strategy under
consideration;
2. Analyzing the formal and informal structures of the
organization;
3. Analyzing the "culture" of the organization;
4. Selecting an appropriate approach to implementing the
strategy;
5. Implementing the strategy and evaluating the results.

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What is required to implement
effectively
1. Build an organization capable of executing the
strategy
2. Establish a strategy-supportive budget
3. Install internal administrative support systems
4. Devise rewards and incentives that are tightly
linked to objectives and strategy
5. Shape the corporate culture to fit the strategy
6. Exercise strategic leadership
Ryszard Barnat, LLM., DBA, Ph.D. (Strat. Mgmt) A General Framework For Strategy Implementation

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The “Ideal” PM Approach
• A typical PM/Process change approach
works. Look at:
– “As is” versus “to be”
– Objectives
– Major deliverables
– Required supporting organizational changes

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The “Ideal” PM Approach
• Look at the strategy and what has to be done to
deliver the functionally
– Segment in a way that makes sense for the strategy
and your company
– Determine what this means in terms of projects and
programs to address the functionality
– Build a high level program roadmap
• Look at the implications (the gap) in each area
(culture, key management and style, PM
maturity, organizational capabilities, alignment)
– What does this mean in terms of projects and
programs to address the organization, culture, etc.

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Develop the roadmap
• This will tell you what has to change, and the
projects that will get you there
• You can create a strategic roadmap of initiatives,
dependencies, etc
• Now look at the investment that has to be made
to achieve it ($, people resources, skills
development, organizational change, etc.)

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Assess Practical Feasibility
• Capacity for change
• Competencies
• Organizational structure
• Capability maturity
• Executive commitment and support
• Affordability
• Re-assess the strategy in the context of these
factors and modify it or implement the roadmap

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Balanced Scorecard
http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx

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Alternatives
• What if the “ideal” cannot be achieved in
your organization right now?
• What can you do to move things forward
to becoming a more strategic PMO
• Focus on a value add model (not admin)
1. Build Organizational Capability Maturity
2. Create an effective Strategic Project
Prioritization Process

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The Capability Maturity Model
Improving project results
1. Initial: Chaotic. Success depends on heroics of the project team.
2. Repeatable: Basic project management processes are
established. Can repeat successes on single projects.
Have not yet achieved best practices.
3. Standardized: Documented and done
consistently. Groups of projects done well
4. Managed and measured:
Successful portfolio.
5. Optimized

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Organizational Capability Maturity
• What is your current level of project
management Capability Maturity?
• What is the credibility of the PMO?
• In particular, what is your maturity in the area
of cross organizational portfolio decision
making?
• What areas should you focus on if you want to
improve strategic execution

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The State of the PMO 2010
Research Report
• The PMO’s contributions are valued by executives
– 64% say they have executive sponsors who appreciate their strategic value
– 83% of respondents indicate the value added by the PMO goes largely
unquestioned, and among mature PMOs that figure rises to 94
– PMOs are highly regarded because they deliver value and continuously improve
processes. Over a third of responding PMOs (34%) rate themselves at a maturity
level of 3 or above, with 9% rating themselves at Levels 4 or 5; 61% say the
PMO leadership displays business acumen in addition to project management
expertise
• In our experience, not everyone measures business value. But of
those in this research that do:
– 31% report a decrease in failed projects
– 30% report projects delivered under budget
– 21% report improvements in productivity
– 19% report projects delivered ahead of schedule
– 7% report cost savings
an average of US$567,000 per project.
www.pmsolutions.com

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PMI Study on the
Value of Project Management
• Tangible benefits were realized in 47% of the
organizations studied:
– Cost savings (17%)
– Increased revenues (27%)
– Decreased write offs (15%)
– Customer retention (22%)
– Increased customer (17%)
– Improved market share (7%)

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PMI study continued
Almost all organizations received intangible benefits:
– Attainment of strategic objectives (63%)
– More effective use of human resources (63%)
– Improved overall management (61%)
– Improved corporate culture (56%)
– Improved reputation (53%)
– Improved regulatory compliance (24%)
– Improved competitiveness (22%)
– Greater social good (15%)
– New product/service streams (8%)
– Improved staff retention (8%)
– Improved quality of life (3%)

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Gartner Prediction
By 2014, less than 20% of today's PMOs will
become an enterprise function centered on
business change or strategy execution.
Those that evolve to this level will get there by:
- Becoming directly accountable for program or portfolio
level results
- Making the process fit the work, making the approach
fit the culture
- Focusing on internal PMO process improvement, not
just on fixing “them”
Audrey Apfel, Gartner: Be Prepared for the future of Program and Portfolio Management

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Creating an Effective Project
Prioritization process
Focus on strategic projects – a case study at a
major retailer
– Initial state
– Approach
• Reviewed strategy
• ID strategic alignment factors
• Framework and weighting for these factors
• Questionnaire/scoring worksheet
• Pre-reviewed with select executives
• Approved by CEO and implemented for annual planning
– Result

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Summary
• There are links between culture and capability maturity and the
implementation of strategy
• You can assess the environment to enable effective positioning of a
PMO and a PM improvement program for strategic delivery
• The ideal approach involves creating an enterprise strategic
roadmap
– Commitment
– Clarity
– Cultural and organizational change
– Alignment
– Capability
– Discipline
– Effective performance management
• Alternatives: focus on value, capability maturity and strategic
frameworks

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Questions?
dgiles@alphynconsulting.ca

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