Project management office (PMO) professionals hold significant knowledge that can help ensure alignment for businesses focused on achieving their vision. In order for businesses of today to reach full operational effectiveness, C-suites will need to unlock the potential of their PMO resources.
Historically, many PMOs were set up to manage and meet program- and project-specific deliverables and requirements, and did not necessarily have a strong direct link with high-level business objectives. Today, effectiveness is increasingly measured by how clearly the PMO can map a direct line back to the success of overall business performance.
For the most part, a PMO should play a pivotal role in ensuring business objectives are successfully met; the days of just managing program and project specific outcomes are gone. When a PMO lacks alignment with the business' strategy, these issues will arise:
Ambiguous PMO direction. The Economist Intelligence Unit (EIU) reports that 90 percent of senior executives believe activities that support strategic goals are vital to keeping up with changing economic conditions. However, approximately 61 percent of those surveyed are unclear on how to accomplish these activities. Moreover, the EIU reports, in the last four years only 56 percent of those businesses have been successful in meeting their strategic goals. The problem in part seems to be tied to businesses using PMO resources to focus primarily on project success and not enough on strategy and in so doing contributing to these findings.
Underutilized PMO resources. A Project Management Institute (PMI) research report shows that in 54 percent of businesses, PMOs are set up in a business unit level formation and are not clearly focused on companywide performance as a whole. The report also indicates that only 33 percent of businesses have captured the full benefit of their PMO.
Low company performance at a high cost. The PMI report goes on to say that only 42 percent of businesses find their projects align with their strategy. Yet, the cost of PMOs is on the rise. A PMO is a valuable resource; the real issue is whether its activities are supporting the high-level plans and vision of the business. Implementing only siloed departmental projects is simply ineffective and a poor use of human and financial resources. C-suites will need to focus more on maximizing these assets.
Decline in project success rates. In another recent report by PMI, researchers found that while PMO growth is on the rise, the success rates for projects have actually declined. According to the report, the key reason is lack of alignment with business strategy.
Power Behind Strategic Alignment
PMOs that ensure alignment with strategic objectives are almost twice as likely to become high-performing teams capable of implementing successful strategies and creating significant value. Higher-performing PMOs are also four times more likely than lower performers to execute a planned strategy, three times more likely to be successful, and more likely to enable companies to perform financially, according to PMI research.
Ultimately, companies may need to consider transitioning from a traditional business unit PMO model to an enterprise project management office (EPMO) that focuses all efforts on executing projects in alignment with overall business strategy.
According to PMI's research, statistically EPMOs are capable of improving portfolio reporting services by 20 percent, strategic alignment services by 23 percent, confirmation of strategic priorities by almost 10 percent and project alignment with strategic objectives by 10 percent.
Transitioning to an EPMO
According to Gartner, by 2017 senior executives in most of the largest companies in America will rely on EPMOs to implement companywide strategies and remain innovative. Today's PMOs need to prepare for the transition to an EPMO model to keep pace with increasing competition.
To ensure strategic objectives are met throughout project lifecycles, businesses and PMOs will need to take the following steps:
Planning and initiation. Businesses need to consider setting up an EPMO for the purpose of ensuring all business units are undertaking initiatives that tie to overall strategic goals. Moreover, EPMO participation is critical in companywide planning sessions in order to transform the traditional PMOs into high-performing teams that deliver significant value. This will also help to establish a shared vision.
Monitoring activities, resources and performance. Throughout project implementations, it will become critical for EPMO leaders and senior executives to work closely together to maintain alignment between projects and overall business goals. In working together, part of the dialogue should include establishing key performance indicators to communicate and measure what matters to the company.
Close-out. Going forward, it will be equally important at the end of each project for PMOs and senior executives to quantify the success rates of projects in relation to companywide objectives and determine what changes may be required for future projects to keep the business moving in the right direction. Gaining an understanding of the lessons learned is part of the formula for success.
Senior executives will also need to view their EPMO as a strategic partner that reports directly to the executive team, and not solely as a project-based business unit. When the PMO is allowed full access to the executive team and vice versa, this can help ensure alignment is achieved at all levels of the business.
As it becomes more difficult for businesses to compete, shareholders will continue to expect more from all areas of business, and this means that EPMOs will need to become fully immersed in the direction of the business. Going forward, they will also need to modify contributions to become exceptionally efficient and effective, and can expect increasing accountability. C-suites will have to prepare EPMOs for the transformation into high-performance teams ready to keep up with changing economic conditions, and work closely with them to develop activities that support strategy and raise the success rate of companywide projects.
Moira Alexander is a co-founder and director, information systems and technology advisory, at Conture Business Advisors. She is also a project manager and contributor for Price of Business Talk Radio 1110 KTEK (home of Bloomberg Radio), Houston, Texas. She has 18-plus years in business (IS&T) and finance for small to large businesses in the U.S. and Canada.
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