The Transformation office and PMO: how to achieve breakthrough value?

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The Transformation office and PMO: how to achieve breakthrough value?

More and more companies set up a project management office (PMO) in order to lead major transformation programs and to avoid program failure. Unfortunately, traditional PMOs have become quite ineffective at managing transformation initiatives to achieve results. Further, the added value of PMOs is not always perceived and they tend to be considered as an administrative layer that gathers project information and generates reports for the top management. Transformation offices seem to be the solution. They are action-oriented, have the credibility to make decisions regarding priorities, schedule and investments and are focus on value creation opportunities. But if they want to work on an efficient and pragmatic way, to create a framework that ensures value delivery and to move fast and to reinvent themselves when necessary, they need to work side by side with corporate PMOs. These two entities reinforce each other. What are the key factor successes of this collaboration? Why? How do they achieve breakthrough value?

 

What is a PMO?

A project management office is defined by the PMI as “a management structure that standardizes the project-related governance processes and facilitates the sharing of resources, methodologies, tools, and techniques”. PMI adds that the primary function of a PMO is to “support project managers in a variety of ways which may include, but are not limited to

  • Managing shared resources across all projects administered by the PMO;

  • Identifying and developing project management methodology, best practices, and standards;

  • Coaching, mentoring, training, and oversight;

  • Monitoring compliance with project management standards, policies, procedures, and templates by means of project audits;

  • Developing and managing project policies, procedures, templates, and other shared documentation

  • Coordinating communication across projects”.

A PMO gives you visibility on the program performance. It helps you to reduce the resource capability planning issue by centralizing the selection and prioritization of projects. Inconsistencies in the way projects are managed make it extremely difficult to report on status and progress, PMOs will tackle this problem by standardizing the way your project managers plan projects, request resource and report on status and progress. Project management tools provided by the PMO will help managers to structure their projects, scope, budget and costs and get more control over the entire project lifecycle. These tools also ensure that all projects have clear ownership.

 Why are traditional PMOs not sufficient?

Traditional PMOs are, too often, led by analysts in charge of tracking myriad transformation initiatives. A PMO that was dedicated to a specific program will simply transfer its methodologies, tools and processes to another new program and tends to sit on its laurels when coming from a successful program without adapting its way of working to the specificities of the new program. All too often, PMOs arise from IT departments and tend to apply an IT-oriented methodology, even for business projects. IT projects are specific projects of an organization; they have their own terminologies, approach and milestones. The advantage of having one single PMO into a company is to get one clear global overview of the whole transformation program in order to follow performance and make strategic decisions. Processes must be established to select the ideas that will be transformed into initiatives, to assess the contribution of each initiative to the high-level strategies, to spot those who have made good progress and highlight the (potential) delays or other issues. However, IT projects are not business projects and vice versa. An IT PMO that becomes a corporate PMO cannot just apply the tools and processes, previously used for IT projects, to business projects. Methodologies, processes and templates must be redesigned to suit both to IT and business projects.

PMOs which generally originate in the IT department have a disadvantage when they want to become transversal PMOs. Indeed, even if they become a transversal entity across the organization, they have not the correct authority, credibility and position within the company to make decisions that will get impact and be followed by the whole organization.

Far from their primary goals, traditional PMOs focus too often on administration and compliance and are poorly suited to the pursuit of the value creation opportunities presented by a transformation initiative. After establishing methodologies, training supports, processes and project management standards, the trap is to be focus on tracking, monitoring and reporting information gathered from project managers. Traditional PMOs tend to be reactive and process focused.

During these last years, business has changed. Accelerating product cycles and competitive threats now demand continuous planning and the PMOs must adapt their way of working. Change is constant and managing it is more important than ever. PMOs are often too focused on execution and procedures, instead of the value of the program portfolio (and not only results of individual projects).

How to make PMOs more efficient?

A PMO defines and maintain standards, through a combination of people, processes and tools, for project management within an organization. It plays many roles and the depth of each role varies greatly for each organization depending on its size, projects scope… However, don’t expect a traditional PMO to manage the transformation.

An effective PMO should be part of an independent transformation office (also called “Transformation Management Office” or “TO”), an independent unit that is neither linked to IT department, neither to business branches of the company, and that will lead the transformation of the whole company. The transformation office must be the beating heart of the transformation of the whole organization, propelling it forward at the right pace guaranteeing flawless execution and instilling a new culture of delivery through a combination of strategic perspective and disciplined implementation (supported by the PMO). Pace and rhythm are important in planning and execution.

The TO must have the correct authority and position within the organization in order to have the credibility to make necessary decisions and to directly help top managers in their strategic decision-making processes. It needs a mandate from the CEO to challenge upward as well as downward. The transformation team can include junior profiles but it must include experienced transformation specialists. This organizational unit must be flexible, proactive, able to move fast and to reinvent itself if necessary.

In this article, a distinction is made between the roles of these two entities (transformation office and PMO) that should be intrinsically linked but please note that these roles are sometimes played by different people within the same team that could be called “Strategic PMO” or “Transformation PMO”.

The transformation office sets the rules of the game: schedule and tone of the transformation. A simple, consistent way of defining and tracking value, decided by the TO with the PMO, known by everybody, gives it clear credibility when it comes to assess those who have made good progress and highlight the (potential) delays or other issues. The transformation office, through the PMO, ensures everyone has access to the methodology, principles and is trained to understand it. The PMO will have to onboard all stakeholders from where there are and form them to this new culture, this pace of change and its methodologies.

The governance model brought by the TO directs investment in and execution of the projects to deliver their optimized value. In order to approve and transform ideas into projects, a structured stage-gate process must be set, from ideas identification to final realization of the selected initiatives, including initiation and execution phases. The transformation team must also create an approach that makes it straightforward for employees to generate ideas and turn them into projects. Thereafter, it will conduct the relevant analysis needed to confirm that each transformation investment is aligned and contributes to the transformation objectives.

The transformation office does not view process, administration and compliance as its primary focus, this operational role will be played by the PMO in order to support the transformation. The TO operates from a streamlined operating model in which initiatives are invested in, executed and the value is realized in a pragmatic, efficient and cost effective way. It should be able to move fast, be action-oriented and rapidly provide an efficient turnkey investment and execution environment.

PMO and TO: how to get the best of this collaboration?

The central task of the TO is to orchestrate the complex change needed to achieve breakthrough value and strategic results to the company. Value creation opportunities management through transformation initiatives should be the main focus of the TO. The PMO will be there to support this transformation by creating processes, tools and methodologies that fit to the TO mission. The PMO will be more focused on tracking, monitoring and reporting key indicators. It is not empowered to influence program direction, unlike the TO, nor is it involved in managing and measuring expected benefits and strategic outcomes the organization seeks for the program. TO and PMO roles should be mutually reinforcing, PMOs focus on cost, schedule and scope whereas TOs coordinate the efforts of multiple projects and ensure the alignments of the projects results with the strategic objectives of the organization.

Transformation office and its PMO help to give visibility on processes and clear rules and goals. With clear rules, there can be no debate about which valuation is right or what ideas should go into a business case. A TO provides an investment decision-making framework to align project investment to the company objectives and to quantify the way in which each idea could deliver value and to assess the contribution of each initiative to the high-level strategies. All ideas and initiatives that will be launched must be listed in the roadmap.

 Roadmap definition

A key role of the TO is to work with key stakeholders to define the objectives of the program in alignment with those of the organization, to develop its main strategies in accordance with the company’s strategic vision and its roadmap. The TO ensures that the program supports and contributes to the achievement of objectives defined by the organization. Further, initiatives of the program roadmap (projects, change requests…) should aim at supporting achievement of these goals.

There are different types of roadmaps (according to timeline, granularity, scope…). Some roadmaps are defined for a limited time period, others are continuously updated. For instance, at the end of each year, the transformation office can help key stakeholders, and their teams, to gather all ideas that could become initiatives which will be integrated in the next year roadmap. This exhaustive list will then be sorted by types of ideas, priorities, budget, responsible, involved team, etc. PMO can help to gather ideas and sort them but it should be the responsibility of the TO to present the list to executives and to help them to select ideas that could become projects during the following year. The TO must also identify accurately stakeholders, understand their needs and challenge their expectations. During this very first stage, programs sponsors must be actively engaged in the elaboration of the roadmap. During the elaboration of the roadmap, always try to take into account the unexpected. If it is an annual roadmap, it is quite impossible to have all the ideas for one year. There will be additional ideas that will come up during the next 12 months. A budget for these unexpected projects must also be approved.

 It is important to keep in mind that each idea should match a high-level strategy defined by the company (or a legal obligation). When the roadmap and its high-level budget and schedule have been reviewed and accepted by the executives, the ideas included in the roadmap will follow the process and be presented during the stage gating boards to finally be transformed into initiatives. This project, with its approved budget and planning, will then be launched.

Roadmap execution

The TO manages the global transformation schedule to execute the portfolio of initiatives which deliver the right projects in the most efficient way to achieve the transformation strategies and achieve the best outcome for the business, taking into account dependencies, legal obligations, priorities set by the executive committee, budget and capacities.

PMOs implement and consolidate best practices and processes, within the organization, as decided with the transformation office leader. They standardize project and change management processes across all departments. They provide consistent project management guidance, methods, systems, tools and metrics. They maintain consistency and synergies between project managers working for projects that run in different services of the company through use of standard tools, processes and practices. The project culture and mindset must be common by communicating and training employees about the different methodologies, tools and best practices. The PMO also helps develop common milestones, metrics and (quantitative and qualitative) KPIs so that everyone is on the same wave length. In this way, the management of projects is harmonized and efficient all over the organization and the transformation office can provide reports and help managers to get visibility into project performance for better decision-making.

Every initiative (programs, projects, change requests…) should have the same value measure (through qualitative and quantitative KPIs) in order to compare them. The TO assists in the scoring of projects using predefined criteria, in the strategic selection of potential projects and their planning according to the business goals of the organization. To and PMO both use KPIs. PMO uses this measure to prepare reporting about progress, to detect (potential) delays or issues, through alert models and to have a project management processes enforcement follow-up. TO will use KPIs to measure benefits and outcome of initiatives, to set priorities and adapt them following unexpected events and to help managers to make strategic decisions.

A PMO also ensures that lessons learned from projects are well documented. Indeed, its role does not end at the go live of a project but at its closure. Successes of projects must be celebrated and the PMO could provide guidance to formalize the end of a project. This will consist in the collection of  feedback from the team and lessons learned that could be useful for other projects. These lessons could be used, for instance, by the TO to make predictive management and give value to executives when they need to decide about the roadmap.

A transformation office drives results through standardized, recurrent, action-oriented meetings. Attendees include programs managers, key stakeholders of the relevant departments, and transformation office representatives. Meeting agendas are tightly defined (content is based on information gathered and processed by the PMO) and action items must be rigorously tracked. Members of the transformation office and PMO work side by side.

An effective transformation office will reinforce the transformation culture at all times: during weekly TO meetings, at executive-committee meetings, in reports and updates, during problem-solving discussions, and in communications to the rest of the organization. Everyone should see its messages, and initiative owners need to follow the Transformation office’s lead. By the way, program and project managers could be members of the transformation office team.

An important role of the transformation office is to ensure that all participants have a “single source of truth,” a transparent view of what flows through the pipeline and a central record of the progress and of each initiative. Provide leadership with the information they need helps them to make effective, timely decisions.

As the single source of truth, the transformation office has the credibility to spot potential conflicts or overlaps among work streams and can help to sort out many interrelated strategic and operational issues, to ease communication between teams that work on the same issue in parallel, to foster cooperation and to avoid waste of time. Providing one single overview of all initiatives also contributes to remove bottlenecks, to raise the issues with stakeholders and to negotiate trade-offs among competing ideas, thanks to process established by the transformation team. If there are technical issues, the transformation team which has a traversal view helps to ensure that technical decisions are made with a holistic view. Further, on the technical side, a standard technical approach implemented across the program improves efficiency and compatibility.

A key role of the PMO is to manage and allocate resources accurately across projects. The transformation office manages priorities based on timelines, budgets, resource loads and what-if analysis information and the PMO accordingly provide the right resources, in accordance with resource managers, at the right time and train and coach employees to project management, especially project managers.

Key success factors

A transformation office team includes the PMO, a transformation team leader (who has a deep knowledge about transformation), experienced transformation team members and, sometimes, project and program managers. Besides these employees, the TO must have access to resources from a variety of experiences and knowledge, in order to provide the necessary domain knowledge when it is required. It should be able to call on those resources when and how they are needed throughout the project lifecycle. For instance, an IT architect must be required to assess whether an idea should be launched or whether a suggested solution is realistic. The TO team is scalable. Firstly, It can be  a small one and members may be added as the program evolves. This team can be scaled to match the size, geographic dispersion, impacts and the complexity of the transformation.

Among barriers to succeed transformation program, resistance to change, inadequate sponsorship and unrealistic expectations are the main ones. TO and PMO must together tackle these traps. They both have an active role in understanding the stakeholders and their needs and in developing and implementing effective communication and training plans to onboard them on the program, to make and keep them actively engaged in and informed about the transformation. PMO usually gives training and inform about project management methodologies, tools and processes. It will also be responsible for the communication, within the transformation program, about project management, follow-up meetings and processes. TO must challenge projects about, among others, its sponsorship, planning, budget and benefits expectations. It must also communicate about the transformation program to the whole organization, about the main objectives, strategies that will be followed. Communication about changes is also crucial in order to involve everybody, to keep them actively engaged, to ease changes and to reduce resistance.

Regarding stakeholders, encouraging people to define and document business needs or requirements of one project will make the management of the scope and the communication about this project easier. The PMO could provide templates to collect business requirements. It will be the responsibility of the TO to challenge these needs and get the opinions of the right people before deciding to launch a project.

The long-term effectiveness of any program depends on stakeholder support and adoption. Without this buy-in, a program may achieve short-term results under the drive of its sponsors and leaders, but the long-term success is weak as leaders move on to the next program, the team members, who must integrate the program in their daily job, tend to abandon the requested effort. A program cannot be effective in the long-term if its support comes only from the key leaders. The PMO can focus to get the support of the stakeholders at key milestones (business requirements establishment, creation of the project, kick-off meeting and Go Live, for instance) but the TO must maintain a long-term relationship with sponsors, from the outset of a program. The TO will identify the key stakeholders, understand and challenge their needs and the results they want to get. It will develop the change management plan, with the concerned stakeholders, and then communicate about how changes will impact the organization and transform existing processes and ways of working. Stakeholders who are informed and who feel involved in the program, will be more engaged, support the program and its implementation and embrace what the program initiates. Through regular meetings, the TO will imply stakeholders in a long-term relationship.

People often play a critical role in program’s effectiveness. Poor training and lack of skills must be detected. This detection must be done upstream and the TO and PMO must be able to provide a tailor-made solution. Training plans must be available as soon as the project management framework has been established. The PMO will be responsible to update it and give different training according to the profiles of the employees. A web platform could be set up, maintained and run by the transformation team. Training and communication supports, tools, process models and reporting from both the TO and the PMO could be added on this platform. This could also be the place to inform about next meetings, meeting minutes and action plans. However, this platform must be user-friendly, useful and updated. Such a website could really bring value to people who work within the transformation program if it is well structured and if it avoids unnecessary meetings and emails.

It is critical to the success of a transformation program that its objectives fit within the company’s overall strategy. Goals of the program must be clearly defined, aligned with the organization’s objectives and realistic within its constraints (budget, schedule, scope). Without this alignment, programs frequently fail, either because the objectives are not achievable or because achieving their objectives has no impact or, even worse, a negative impact on the whole organization. Legal regulations could have a negative impact (more work to be done) and a positive one (contribution to the willingness of the company to be compliant). The assessment of the results must be done with pragmatism, carefully and as a whole. Indeed, one project can have both positive and negative impacts. The TO, with program sponsors and key stakeholders will outline the objectives of the organization and identify which objectives the program aim to support. During the selection of the ideas that will integrate the roadmap, and during the process that will transform ideas into initiatives, it must be clear that these ideas and projects contribute to one or more objectives of the organization.

Once the strategy and vision of the program have been defined, communicating about the program with key stakeholders and everyone impacted by the transformation is a priority. Communication is crucial to reduce resistance to change, make the program execution efficient and pragmatic.

The TO focuses on the outcome, and not only the output of projects. A few outcomes can be measured. The first one is to assess whether a project has met its initial objectives. In this case, we refer to the objectives related to the overall need or purpose of the project within the transformation program in order to fit with the organization’s overall strategy and vision. Another outcome to check is the adoption or acceptance of the project by the stakeholders. This will have an impact on the long-term results of the project. Indeed, short-term outcomes are often lost after the initial project launch, when old habits or attitudes develop again. Stakeholders must not only support but embrace a project, its implementation and consequences, to make a project truly effective. Others outcome measures could include financial impacts on an organization, for instance, although it would not be fair to take into account only financial impacts as they cannot always be quantified and key projects of a company could have no financial results.

A PMO must endorse its oversight role. A PMO will gather information (mainly about cost, schedule and scope) from project managers to get a global overview of the program portfolio and make reporting that will be used, among others, by the TO to communicate about the program performance and to help executive to make informed decisions. However, a PMO should do more than collecting information, consolidate them and transform them into plans and reporting. It has an advisory role to play by providing risk management guidance and quality suggestions, for instance. It established guidelines, templates and standard processes that make it easier for people to work together to achieve effective individual initiatives.

Thanks to all the (historical) data collected, the PMO could make an analysis to help the TO with predictive management. For instance, information from closed projects can help to assess the budget of a new similar project or to evaluate the outcome of another one. This information could be useful for leaders when they have to make decisions about the roadmap.

The success of a transformation depends on the regular pace set by the transformation office, on clear communication and an action-oriented tone. Transformation offices are critical to the organization accomplishing its goals but cannot be efficient without a PMO that will support the transformation, create methodologies, process and tools, train people and deliver the right information, at the right time to the TO and other stakeholders. The reports produced by the PMO will give visibility for operational purpose (such as resources allocations) and strategic ones. Thanks to these reports, the TO and the executives of the company get clear views on project performance for better decision-making. A traditional PMO needs a transformation leader that can orchestrate the complex change needed to achieve breakthrough value to the company, propel the transformation forward at the right pace guaranteeing execution in an efficient and pragmatic way and instill a new culture of delivery.

A highly effective transformation team, including the PMO, is one that continues to evolve, it is crucial in this very fast-changing world. It must expand its capabilities to meet the changing needs of the business. In other words, it must focus on supporting the organization strategy, business and IT projects created in accordance with this global strategy, managing development and execution and driving organizational change.

Author

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Marie Misson has 6 years of experience including 2,5 years at Initio. She obtained a degree in Business engineering at Solvay Business School & Post-Master in intellectual property law at K.U. Leuven. As senior consultant Marie developed expertise in Banking and PMO.

Sources

  • “PMOver, Transforming the PMO into a Result Management Office” Deloitte (2009)

  • “The role of the transformation office”, McKinsey (November 2016)

  • “How a PMO may cause your transformation initiative to fail”, Forbes (September 2016)

  • “Do you need a transformation management office?”, CIO (August 2014)

  • “5 Major roles a Project Management Office plays within a company”, Orchestra PPM (December 2016)

  • “The PMO, your key to strategy execution and results delivery”, PMI (May 2014)