PMO State of the PMO Function

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<p>ce en er nf co le Te</p> <p>PMO Executive CouncilResearch Teleconference 18 June 2008, 12 p.m.1 p.m. EDT</p> <p>State of the PMO Function</p> <p>Featuring: Current PMO Trends Priorities for 20082009</p> <p>Copies and CopyrightAs always, members are welcome to an unlimited number of copies of the materials contained within this handout. Furthermore, members may copy any graphic herein for their own internal purpose. The Corporate Executive Board requests only that members retain the copyright mark on all pages produced. Please call the Publications Department at +1-571-303-4444 for any help we may provide. The pages herein are the property of the Corporate Executive Board. Beyond the membership, no copyrighted materials of the Corporate Executive Board may be reproduced without prior approval.</p> <p>Legal CaveatThe PMO Executive Council has worked to ensure the accuracy of the information it provides to its members. This report relies upon data obtained from many sources, however, and the PMO Executive Council cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the PMO Executive Council is not engaged in rendering legal, accounting, or other professional services. Its reports should not be construed as professional advice on any particular set of facts or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither the Corporate Executive Board nor its programs are responsible for any claims or losses that may arise from a) any errors or omissions in their reports, whether caused by the PMO Executive Council or its sources, or b) reliance upon any recommendation made by the PMO Executive Council.</p> <p>Road Map for Todays DiscussionPMO Functional Trends</p> <p>The Ascendance of the EPMO</p> <p>Pressure to Boost Resource Productivity</p> <p>Heightened Interest in Benets Realization Tracking</p> <p>PMOEC1A8YAXV</p> <p> 2008 Corporate Executive Board. All Rights Reserved.</p> <p>3</p> <p>Emergent PMO TrendsPMO leaders are demonstrating a strong interest in growing their value perimeter, pushing to move beyond delivery of functionality to delivery of benets, and become a center of excellence for resource managementPMO Competencies of Highest Importance and Least Effectiveness PMO Executive Council Maturity Diagnostic</p> <p>while the Enterprise PMO model continues to grow in popularityPMO Executive Council EPMO Cohort As a Percentage of PMO Executive Council Membership</p> <p>Average Maturity GapHigh</p> <p>Project Management Tools and Methodology</p> <p>2006 Project Manager Incentives</p> <p>20%</p> <p>Importance</p> <p>Project Manager Coaching and Development Project Selection PMO Performance Reporting Stakeholder Partnership Bene ts Assessment and Tracking Organizational Structure Project Manager Hiring Vendor and Methodology Training Outsourcing Management End-User Adoption Readiness Assessment PMO Mandate Denition Project Stafng Portfolio Resource Monitoring 2007</p> <p>30%</p> <p>Project Performance Reporting Project Manager Performance Assessment</p> <p>Portfolio Data Collection and Reporting</p> <p>2008(E)</p> <p>40%</p> <p>Portfolio (Re)Prioritization High</p> <p>Low Low</p> <p>Maturity Gap (ImportanceEffectiveness)</p> <p>Source: PMO Executive Council research.PMOEC1A8YAXV</p> <p> 2008 Corporate Executive Board. All Rights Reserved.</p> <p>4</p> <p>State of the PMO Function</p> <p>Top of the Priority List for Second Half of YearChallenges to PMO Success</p> <p>1 Enterprise coordination for large-scale programs Challenge</p> <p>2 Anticipating and mitigating project resource bottlenecks</p> <p>3 Improving clarity on returns on project investments</p> <p>Current Trend</p> <p>The Ascendance of the EPMO</p> <p>Pressure to Boost Resource Productivity</p> <p>Heightened Interest in Benets Realization Tracking</p> <p>Source: PMO Executive Council research.PMOEC1A8YAXV</p> <p> 2008 Corporate Executive Board. All Rights Reserved.</p> <p>5</p> <p>Road Map for Todays DiscussionPMO Functional Trends</p> <p>The Ascendance of the EPMO</p> <p>Pressure to Boost Resource Productivity</p> <p>Heightened Interest in Benets Realization Tracking</p> <p>PMOEC1A8YAXV</p> <p> 2008 Corporate Executive Board. All Rights Reserved.</p> <p>6</p> <p>The Ascendance of the EPMO</p> <p>State of the EPMOEPMOs maintain authority over large budgetsEPMO Budget Managed, 20062007 Percentage of Companies2006 2007</p> <p>Eighty-two percent of EPMOs manage budgets greater than $1 million, up 5% from 2006.</p> <p>32% 32%</p> <p>36% 36%</p> <p>14% 5%Under $500,000n = 22.</p> <p>14% 9% 9%</p> <p>14%</p> <p>$500,000$1 Million</p> <p>$1 Million $5 Million</p> <p>$5 Million $10 Million</p> <p>More Than $10 Million</p> <p>and report beyond the IT functionEPMO Reporting Relationships Percentage 31% 23% 15% 15% 8% 8% Sixty-nine percent of EPMOs report outside of IT.</p> <p>n = 26.PMOEC1A8YAXV</p> <p>CIO/CTO/ Governance</p> <p>COO or Operations</p> <p>CFO or Finance</p> <p>Functional Heads</p> <p>CEO or Head of Subsidiary</p> <p>Strategy</p> <p> 2008 Corporate Executive Board. All Rights Reserved.</p> <p>7</p> <p>The Enterprise PMOEPMO Architecture Infrastructure Applications and Operations Support Shared Resource Pools Non-IT IT Business Unit PMO Functional PMO</p> <p>IT</p> <p>Governance Activities and AccountabilitiesPortfolio Planning Creating the Portfolio Management Framework Aligning with Business Partners Setting Allocation Levels Across Portfolio Asset Classes Screening Business Ideas for Strategic Fit Developing Business Cases Dening Project Requirements Prioritizing the Portfolio Process and Methodology Governance Developing Resource Management Processes and Standards Tracking and Reporting Key Metrics to Business Partners Reviewing Cross-Functional Projects at Stage-Gates Selecting a Resource Management Tool Enforcing Resource Management Processes and Standards Managing Multiple Vendors Capacity Planning Monitoring Key Delivery and Quality Metrics Reconciling Skills Prociency with Role Requirements (Re)allocating Resources to Projects Estimating Demand</p> <p>Owned: The PMO has complete decisionmaking authority for this activityPMOEC1A8YAXV</p> <p>Consulted: The PMO inuences decisions with analysis and recommendations</p> <p> 2008 Corporate Executive Board. All Rights Reserved.</p> <p>8</p> <p>Source: PMO Executive Council research.</p> <p>Reporting Maturity Curve</p> <p>Download the EPMO Metrics and Reporting Toolkit at www.pmo.executiveboard.com</p> <p>Maturing Toward Business ValueEvolution in EPMO Metrics PMO Executive Council Analysis 3Business Outcomes</p> <p>Assessing Portfolio Returns Sample Metrics: Portfolio ROI Dollars of generated revenue Dollar efciencies gained Cost avoided from automation efforts FTE Savings</p> <p>2Focus of EPMO Activities</p> <p>1 Standardizing Process Sample Metrics: Percentage of PMs using standard methodology Percentage of PMs attending methodology training classes Percentage of BUs using standard PM job descriptionsProcess Inputs Low</p> <p>Delivering Projects Successfully Sample Metrics: Percentage of sponsors satised with delivered projects Percentage of projects delivered on-time Percentage of projects delivered on-budget Rework as a percentage of total project work</p> <p>High</p> <p>Relative Cost of Measurement</p> <p>With Sincere AppreciationCISCO SYSTEMS, INC.</p> <p>Source: PMO Executive Council research.PMOEC1A8YAXV</p> <p> 2008 Corporate Executive Board. All Rights Reserved.</p> <p>9</p> <p>Road Map for Todays DiscussionPMO Functional Trends</p> <p>The Ascendance of the EPMO</p> <p>Pressure to Boost Resource Productivity</p> <p>Heightened Interest in Benets Realization Tracking</p> <p>PMOEC1A8YAXV</p> <p> 2008 Corporate Executive Board. All Rights Reserved.</p> <p>10</p> <p>View from the Corner Ofce</p> <p>No ExcusesBusiness tolerance for delivery lapses is at an all-time lowCurrent Business Customer Expectations Percentage of Respondents</p> <p>just as the traditional options for accelerating delivery are no longer availableContract Employees Percentage Change in Headcount</p> <p>Very Low Tolerance for Projects Not Delivered on Time and Budget</p> <p>89%</p> <p>14.13%</p> <p>20072008 Increasing Pressure to Accelerate Speed to Market</p> <p>67%</p> <p>20062007</p> <p>(7.45%)n = 33. Source: PMO Executive Council research. n = 145. Source: CIO Executive Board research.</p> <p>Just Get It All DoneInput prices are at historic highs, competition is brutal, and our margins are under tremendous pressure. To survive, we all have to nd ways to deliver more with fewer resources. So I dont want to hear about our limited capacity for new projectsI dont care how you do it, I need it done. Business Unit GM Services Company</p> <p>Get It Done for LessI dont care what you do, just do it for 20% less! CFO Pharma Company</p> <p>PMOEC1A8YAXV</p> <p> 2008 Corporate Executive Board. All Rights Reserved.</p> <p>11</p> <p>Pitfalls to Avoid</p> <p>Three Myths About Increasing Resource ProductivityThe Myth 1 The Process Hound 1. 2. 3. . . . 7. The Reality Drivers of PM Effectiveness Ownership and Commitment Learning Agility Risk Management The Lesson</p> <p>More Methodology Does Not Mean More Productivity</p> <p>More Process Adoption is Better If people followed our methodology more consistently 2</p> <p>Process Adherence</p> <p>n = 65.</p> <p>The Technologist1010101010101010</p> <p>What Tools Cant Do Secure executive support Identify effective resource management processes Tools are Necessary not Sufcient</p> <p>Tools are the Solution! Once we nish our PPM implementation, well be able to! 3</p> <p>Ensure data quality</p> <p>The Empire Builder</p> <p>Projects That Cut Across Business Units Percent of Projects in PortfolioSingle Business Unit 26% 74% Two or More Business UnitsSource: PMO Executive Council research.</p> <p>More Visibility not More Control</p> <p>Control Over Resources is Key If only I could get more control over resourcesn = 60.PMOEC1A8YAXV</p> <p> 2008 Corporate Executive Board. All Rights Reserved.</p> <p>12</p> <p>The Size of The Prize</p> <p>Implementation Guide in Appendix.</p> <p>Reducing Resource Bottlenecks: A $20 Million Cost Savings OpportunityImpact of Resource Bottlenecks on Portfolio Cost* IV Rework and Unplanned Attrition $2.5M $0.2M $2.3M $3.1M Key Drivers of Ineffective Resource Management VI Inability to Quickly $17.3M67% Relieve Bottlenecks ($6.5 Million) 33%</p> <p>II</p> <p>III Lost Productivity on Completed Projects $3.1M Unplanned Stafng to Resolve Bottlenecks $8.1M</p> <p>Cost (Millions of Dollars)</p> <p>1</p> <p>$4.1M Lost Productivity on Ongoing Projects $6.1M</p> <p>$4.0M</p> <p>$2.7M $1.3M $2.1M $100MPortfolio Budget (A) Lost Time to Respond (B) Resource Ramp-up (C) Resource OverUtilization /Burnout (D) Unplanned Staff Augmentation (E) Unplanned Outsourcing (F) Understaffed Maintenance</p> <p>V Inability to AnticipateResource Bottlenecks ($13.3 Million)</p> <p>$100MPortfolio Cost (G) Rework (H) Unplanned Attrition</p> <p>* Costs are based on $100 million portfolio and two bottlenecks per project per month .PMOEC1A8YAXV</p> <p>Source: PMO Executive Council research.</p> <p> 2008 Corporate Executive Board. All Rights Reserved.</p> <p>13</p> <p>PMO Executive Council2008 Meeting Series</p> <p>Redening Resource GovernanceBoosting Resource Productivity to Deliver High-Quality ProjectsExecutive Retreats for PMO PrincipalsDesigned to allow peer-level interaction among PMO leaders, the executive retreat meetings are reserved for the seniormost PMO executive at member institutions.</p> <p>Leadership Briengs for PMO StaffDesigned for key PMO staff, leadership briengs expose high-performing staff and emerging PMO leaders to select executive retreat practices in a one-day session.</p> <p>910 September, Chicago, Ill. 2122 October, Palo Alto, Calif. Executive Retreat for EPMO Principals 31 July, New York, N.Y.</p> <p>7 October, Chicago, Ill. 4 December, Washington, D.C.</p> <p>Registration InformationTo register for a meeting, visit our Web site at www.pmo.executiveboard.com and click on the Meetings and Teleconferences tab. Feel free to contact the PMO Executive Council with additional questions either by e-mail at PMOExecutiveCouncil@executiveboard.com or by phone at +1-866-913-8101. As with all PMO Executive Council meetings, there is no charge for attendance.</p> <p>R.S.V.P.: PMO Executive Council E-Mail: PMOExecutiveCouncil@executiveboard.comPMOEC1A8YAXV</p> <p> 2008 Corporate Executive Board. All Rights Reserved.</p> <p>14</p> <p>Road Map for Todays DiscussionPMO Functional Trends</p> <p>The Ascendance of the EPMO</p> <p>Pressure to Boost Resource Productivity</p> <p>Heightened Interest in Benets Realization Tracking</p> <p>PMOEC1A8YAXV</p> <p> 2008 Corporate Executive Board. All Rights Reserved.</p> <p>15</p> <p>Migrating to Benets Tracking PartnershipPMOs seek to facilitate business case realization trackingWhat Is Your PMOs Role in Tracking Business Case Realization? 2008 Council SurveyCurrent Role Desired Role</p> <p>to drive a multitude of expected benetsWhat Is the Main Benet That Your Organization Expects from Improving Business Case Realization Tracking? 2008 Council Survey</p> <p>73%</p> <p>29% 26% 23%</p> <p>47%</p> <p>19%</p> <p>29% 19% 3%No Involvement</p> <p>20% 5%Collaborate with Finance Staff (or Another Function) to Help Facilitate the Tracking Lead the Tracking Ability to Drive Business Accountability for Bene ts Realization Ability to Focus Senior Executive Attention on Harvesting the Full Bene ts of Project Investments Better Quality of Information for Project Selection Decisions Visibility into the Overall Returns of the Whole Portfolio</p> <p>3%</p> <p>3%Merely Provide Data</p> <p>Improved Estimation Accuracy via Historicals and Retrospectives</p> <p>Source: PMO Executive Council research.PMOEC1A8YAXV</p> <p> 2008 Corporate Executive Board. All Rights Reserved.</p> <p>16</p> <p>Assessing Portfolio Returns</p> <p>Download Intels Finite Enterprise Wide Value Metrics Case at www.pmo.executiveboard.com</p> <p>Portfolio-Level Business Value MapIntels Value Dial Map 1 Project benets are expressed in business terms. 2 Standard metrics Standard metrics denitions ensure denitions ensure project comparability. project comparability 3Inventory Management Systems Planning Systems</p> <p>Project TypeSupplier-Facing Supplier-FacingMaterials/Procurement Systems Technical/Product Document Exchange Applications</p> <p>Employee Facing Employee FacingEmployee Web Tools</p> <p>Conveyance of Product Information</p> <p>A/P, Payroll, Stock Programs</p> <p>Delivery Systems</p> <p>Uptime/Reliability/ Design</p> <p>Map provides a a Map provides holistic view of the holistic view of the entire portfolio. entire portfolio</p> <p>Order Management and Customer Support</p> <p>Mergers and Acquisitions x x x x x</p> <p>Customer Customer Facing Facing</p> <p>Infrastructure InfrastructureRemote, Down the Wire</p> <p>BenetsCash CycleWorking Capital Reductions Expense Reductions</p> <p>Metric1. Days of Inventory 2. Days of Receivables 3. Headcount Reduction</p> <p>Description$M/Day Balance Sheet Impact [$M per Year] $M/Day Balance Sheet Impact [$M per Year] Number of HC Reduced or Avoided x Avg Burden Rate</p> <p>x</p> <p>x</p> <p>x x</p> <p>Financial</p> <p>Total Value Toward Dial* 0% 2%</p> <p>x x x x x</p> <p>x x x x x</p> <p>x x x x x x</p> <p>x x x x</p> <p>x x x x</p> <p>x x x x</p> <p>x x x x x x x</p> <p>x x</p> <p>4% 9% 6%</p> <p>4. Headcount Productivity 50% x (Number of HC Reduced or Avoided) x Avg 5. Headcount Turnover 6. System End of Life 7. Materials Discounts $ per Turnover Avoided Incremental Dollar Cost of Displaced System per Each Actual Incident Discounts from 1) Contractual Early Pay; 2) Reverse Action Lowe...</p>