pmo 2.

o: the changing face of todays pmo

terry doerscher
chief soLution architect for pLanVieW, inc.

Background The world of project management has changed. Have you adapted? Management techniques historically grounded in construction and manufacturing have quickly become obsolete in todays fast moving, technologyoriented service organizations. For many PMOs, the message is clear: evolve or die. PMO 2.0: The Changing Face of Todays PMO is part of a continuing series on the evolution of the PMO, exploring concepts first introduced in the PlanView white paper, Put Your PMO in Overdrive: Align Work, Resources and Business Objectives Across the Enterprise. In PMO 2.0, author Terry Doerscher will explain the changes needed for PMOs to not only adapt, but also thrive in todays environment. This paper will define the characteristics and challenges of a new type of organization (the Technology Service Organization), and deliver best practices for successful project management within these dynamic new businesses. Finally, PMO 2.0 will present a logical case for expanding the responsibility of the PMO to include a host of related performance management services as well as work and workforce management. contents 1. the failure of project management in technology............................................................2 2. introducing the technology service organization (tso)....................................................2 3. project management in the tso...................................................................................4 4. Best practices for success: Learning to Love the tso environment....................................5 5. Work management versus project management..............................................................5 6. more techniques to turn chaos into order..................................................................7 7. evolve your pmo with planView enterprise....................................................................7

Terry Doerscher has over 24 years of practical process development, project management, PMO, business strategy, and work and resource management experience in 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 Director of Professional Services for PlanView, managing the implementation of PlanView for over 25 customers and supporting dozens more.

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the FaIlure oF project management In technology

In the United States, we spend more than $250 billion each year on IT application development of approximately 175,000 projectsA great many of these projects will fail. Software development projects are in chaos, and we can no longer imitate the three monkeys -- hear no failures, see no failures, speak no failures. - the standish group

The quote above accompanied The Standish Groups 1994 Chaos Report with research stating that a staggering 31% of application development projects will be canceled before they ever get completed, and 53% will cost 189% of their original estimates. The cost of these failures and overruns are just the tip of the proverbial iceberg. The lost opportunity costs are not measurable, but could easily be in the trillions of dollars. Profitability. Value. Success. Achievement. These are the bottom line goals for all business organizations, accompanied by words like innovation, change and, vision. Inside the company, however, there is another equally distinct set of terms at play. Too often, where planning meets execution, it is more common to hear terms like, restart, change in priorities, cost overrun, schedule overrun, and content deficiency. Over a decade later, there is still a huge disparity between the success rate of projects executed in more traditional environments compared to those in the technology sector. Surveys have shown staggering levels of failure in technology project deployment: 51% of respondents to the 2001 Robbins-Gioia Survey felt their ERP implementation were, in general, unsuccessful. A 2001 Conference Board survey showed 40% of projects failing to achieve their business case within one year of going live with implementation costs reaching, on average, 25% above original projections. These two figures are not alone. Statistics consistently show that project success rates in technology services have continued to face significant challenges over the past decade. What we are dealing with is nothing short of a project management crisis. Where did things go wrong? Why is it that commonly accepted standards and methodologies that have worked so well for so long in other scenarios seem to fall flat when applied to technology initiatives? More importantly, what can organizations and PMOs do to reverse this unsettling trend? IntroducIng the technology servIce organIzatIon (tso) To understand the current project management crisis inside most technology companies, we must first analyze the evolution of these organizations as well as their fundamental characteristics.

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For over 20 years, the business environment has been in the midst of its most radical transformation since the industrial age. The technology revolution that began in the 1980s set the stage for todays instantaneous information access and truly global economy. The new paradigm is constant change, a compressed time-tomarket, and on-demand expectations. This change led to rapid growth in a unique sector dedicated to providing the technology services that enable this transformation. While they could be stand-alone entities, most often these tech services groups are departments or business units embedded in virtually every large corporation. Typified by IT, they also include organizations such as engineering services, telecom, new product development, and R&D, to name a few. Instead of construction and manufacturing, it is now these knowledge-based organizations that largely drive innovation and economic growth in global economies. I refer to these groups collectively as Technology Service Organizations (TSOs). TSOs have the following common characteristics: They generally serve multiple internal and/or external customers with virtually unlimited needs, resulting in an opportunity-rich environment They have transformational as well as operational responsibilities They deal with a high volume of inbound work of different types, from strategic projects to ad hoc support requests Their primary mechanism of producing deliverables is through the talents of a limited number of highly skilled, specialized knowledge workers Often times project work cannot be fully planned in advance, due to the iterative nature of the work or use of new technology This staff generally multi-tasks across a range of different assignments and responsibilities They operate in a matrix environment, with various groups interdependent upon one another to achieve most deliverable results They operate within a highly dynamic business environment, where strategies and priorities are constantly being adjusted in response to the ever-increasing pace of business, new opportunities, and rapidly evolving technology Given these circumstances, is it any wonder that executing projects on time, under budget, and as promised is such a significant challenge? Lets compare and contrast this to the typical classic project environment that gave birth to most accepted project management standards: Total organizational focus on a single large project, or a small number of related projects under a program umbrella Most of the workforce is a variable commodity of temporary labor - managed, hired, and released in groups as project needs dictate, but 100% dedicated to the work in question while employed

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Deliverables are derived from tangible materials to provide physical results, such as a building, bridge, road, ship, or new product Often times, the initial project planning horizon is through to completion, or at least many months in advance, frequently drawing upon a solid history of experience as an estimating foundation These scenarios are almost unheard of in a TSO environment. In fact, unlike their parents many of whom were factory or skilled trade workers todays younger knowledge workers have likely never had a full day at their job when they came in knowing exactly the single thing they were to do, were left undisturbed to do it, and recognized it as definitively complete at the end of the day. This has seriously impacted on the role and operational effectiveness of the traditional PMO. project management In the tso In a world now dominated by TSOs, project managers and PMOs face a very different set of challenges compared to their classical project counterparts. In this multi-work type, multi-tasking work environment, independent planning techniques applied at the project level as the sole management approach crumble under stress. The key concerns of project management within a TSO include: Managing a portfolio of endless demand vs. fixed organizational capacity Balancing project management vs. work management, and the resulting competitive pressures placed on assigned staff Executing deliverables when requirements, sponsorship, and risks take on ethereal, ghost-like qualities Coordinating differing priorities between contributing groups to achieve a common result To succeed in this new project management environment, project managers and PMOs must update their management approach to embrace the TSOs unique challenges. They cannot afford to operate in a totally reactive manner, nor can rely on classical management techniques alone to be successful.

Respondents to a recent Computerworld survey identified project management as the No. 1 management challenge for 2006. -computerWorLd magazine

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Best practIces For success: learnIng to love the tso envIronment There are three key characteristics that define successful project management in a TSO. Organizations looking to drive process improvement should focus on the following areas: 1. Flexibility: To address the business dynamics of a TSO, flexibility must be an integral part of the internal culture of the PMO. Martial arts teach us that it is often better to leverage the opposing forces momentum than bluntly resist it. Similarly, the realities of todays fast-moving business environment must be embraced rather than opposed; no amount of denial will overcome the internal and external influences that forces change on a TSO. 2. Take a Resource-Centric Approach: This is the key to moving from chaos to success. Avoid reactive juggling of staff, the creation of inefficient starts and stops, and overloading critical skills. Instead, factor in total workload, instead of just the needs of a few major projects. The end result is greater control over assigned work and higher morale for workers who are able to maintain greater focus, be more efficient, and meet realistic expectations. 3. Operate Within The Limits of Your Planning Horizon: Given the incredible uncertainties placed upon the TSO, planning and management techniques must be accomplished in iterations of increasing granularity as dictated by the availability of reliable supporting information. As these plans are utilized in the decision-making process, everyone must also recognize such plans for what they really represent best-estimate, point-in-time projections subject to continuous refinement based on time, emerging impacts, and incremental discovery. Work management versus project management All of the changes weve described have had a significant impact on the role the PMO plays. Formal project management now represents only a small portion of the overall workload. According to industry analysts, formally managed projects make up only 12-20% of the total TSO workload. These projects must compete for the same pool of resources that are assigned collateral duties for the other 80% of the mission. As a result, PMOs must elevate their management perspective to include total workload as well as comprehensive resource management. Mastering this need for an elevated view requires recognition in the different types of work the organization faces. By virtue of their size, cost, complexity, duration, and other attributes, each type of work has unique requirements for both appropriate process controls and assigned responsibilities. There are five general work types found in the TSO environment: 1. Strategic projects: Those projects that are rigorously managed to formal project management standards, have strategic significance, and thus are overseen at the highest levels of the organization. 2. Major projects: Other formally managed projects of significance that have oversight at senior levels of the organization. 3. Other planned work: The collective of relatively small, quick-hit planned work that results in unique deliverables but does not warrant the same level of formal controls as Projects. These are typically deliverables that take anywhere from days to weeks to achieve, and are rarely visible as individual efforts above the manager level.

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4. Support work: The continuum of services and support provided to customers. Managed as a collective, often under formal customer agreements such as Service Level Agreements. 5. Ongoing work: The continuum of internal work necessary to maintain the viability of the TSO itself and its infrastructure. Generally managed by operations leads and managers.

2006, PlanView. All rights reserved.

FIgure 1: the five general work types found in the technology services organization environment.

Combined with administrative overhead, these five work types add up to the total TSO resource burden. Recognition of this cumulative demand is the first step in empowering the PMO to proactively manage projects in relation to other resource commitments. By managing this overall work structure, at least in terms of shifting capacity requirements, PMOs can avoid failures in assessing true staff availability one of the biggest contributors to project failure in a TSO environment. However, work management is not the PMOs only consideration. Managing the TSO requires an integrated approach to process management. With thousands if not tens of thousands of activities going on inside a TSO at any given time, both resource and work managers must carefully orchestrate assignments and progress and consider interdependencies to make valid decisions in a collaborative manner.

20% of all projects are over 3 months late.

- forrester research

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more technIques to turn chaos Into order In this paper we have discussed evolution in the types of organizations fueling our current economic prosperity. As the managers entrusted with the success or failure of the business innovation, we must remember that the project manager and PMO are a critical component that enables companies to succeed. If they are indeed to overcome the current marginal rate of project success, project managers must confront their responsibility armed with more effective management approaches. In our continuing series on the changing face of the PMO, PlanView will outline a management processes that enables: Dynamic management of project portfolios Adopting a resource-centric approach Best practices for iterative planning and resource assignment Organizational capacity management Integrated priorities The result is a PMO that not only thrives in the TSO environment, but gains greater control over its own destiny and ability to serve the organizations long-term vision. evolve your pmo WIth planvIeW enterprIse To succeed in todays fast-moving, technologyoriented work environment, an organization needs a foundation of proven process. PlanView recommends a structured approach to process maturity through the application of best practices. PlanView PRISMS delivers adaptive management best practices that have been developed with experience gained over the past 17 years at hundreds of organizations across the globe. These best practices are designed to help define, measure, analyze, improve, and control performance while incorporating the latest industry standards with PlanViews unique insights.

Changes
Ideas Requests External Inuences

FIgure 2:

planView enterprise balances goals, risks, money, and resources to enable organizations to make better decisions around strategies, projects, and service delivery.

PlanView offers an extensive library of best practices for incorporating project management techniques into an integrated approach to performance management. These best practices are integrated into PlanView Enterprise and driven by automated lifecycles to drive continuous process improvement throughout your organization.

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PlanView Enterprise is a combination of enterprise software and proven best practices that enables organizations to achieve greater levels of control over their ever-changing environments by dynamically managing money and resources. Using a unique portfolio management discipline, PlanView Enterprise delivers unprecedented, realtime visibility into the trade-offs involved in key business decisions. PlanView PRISMS Best Practices provide the foundation your PMO needs to thrive within a TSO. next: The Next White Paper in this series will be: Beyond Project Management: Elevate Your PMO to Manage Financials, Demand, and Organizational Capacity. COMMENTS?: Email author Terry Doerscher at pmo@planview.com.

Every company has information, but having control of your information delivers a competitive advantage. - pmo director, ceridian

Since 1989, PlanView has been a market leader and trusted partner in software for comprehensive IT management. Our flagship product line brings the most comprehensive IT management solution to the market, combining adaptive IT management best practices, best of breed resource management, and portfolio management software. PlanView enables business leaders to integrate the decisionmaking process to improve alignment of IT resources with business strategies. We serve an active and growing global customer community of over 400 organizations in financial, insurance, healthcare, government, and other industries. PlanView is privately held and has been profitable for over a decade. For more information visit www.planview.com. 2006 PlanView, Inc. All rights reserved. PlanView is a registered trademark of PlanView, Inc. All other trademarks are acknowledged. PlanView reserves the right to vary specifications and availability of these products and services without notice

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