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The Power of PMO Leadership
October 2008
Copyright 2008 by Point B Solutions Group, LLP. All rights reserved.
October 2008PMO Leadership Slide 2
PMO Leadership
• Current Business Issues
• PMO Challenges
• Project Portfolio Management (PPM)
• PMO, PPM, and Project Leadership
• Conclusions
October 2008PMO Leadership Slide 3
Business Problem
“90% of Corporate Strategies Are Never Implemented” – Balanced Scorecard
Collaborative, 2007
Companies struggle with formulating realistic strategic goals and turning strategy into
outcomes
Strategic Planning
Execution Results
October 2008PMO Leadership Slide 4
Industry Project Success Measures
Standish Group Results
0%
10%
20%
30%
40%
50%
60%
1994 1996 1998 2000 2004 2006
Year
Per
cen
t Challenged
Success
Impaired
Standish Group
• Success: on-time, on-budget, with required features • Challenged: late, over-budget, with fewer features • Impaired: canceled or delivered but never used
October 2008PMO Leadership Slide 5
The State of PMOs
0%
10%
20%
30%
40%
50%
Per
cen
t o
f C
om
pan
ies
Level 1 - Initial Level 3 -Institutionalized
Level 5 -Optimized
PMO Maturity
PMOs have been around for several years, but few are mature
October 2008PMO Leadership Slide 6
PMO Underachievement
• PMOs could have much more of a business impact
• Most PMOs fail for these reasons:• Created for the wrong reason• Lack of vision• Lack of executive sponsorship• Poor execution - inconsistent methods, skills, governance• Too tactically oriented• Poor alignment with the business• Lack of leadership
Most PMOs end up as order-takers
October 2008PMO Leadership Slide 7
Positioning For Success
Value to Customer
Can
Uni
quel
y S
uppl
yUnique supplier of something nobody wants
CommodityProvide something that nobody wants and can’t even do it uniquely
Strategic Goal
Guy Kawasaki
October 2008PMO Leadership Slide 8
Converting Business Goals into Action
Project Portfolio Management connects strategy to execution
Why? • Because it encourages a discipline of strategic investing
• It provides transparency
• It addresses a commonly neglected issue – ‘is the strategic plan feasible?’
• It helps the organization focus on value delivery and execution
ResultsStrategic Planning
ExecutionProject
Portfolio Management
October 2008PMO Leadership Slide 9
What is Project Portfolio Management?• PPM - applying the tools and discipline of financial
management to project management
• Portfolios are investments capable of generating value
• Portfolio considerations• Investment strategy
• ROI
• Growth
• Profitability
• Balance
• Diversification
• Risk
• Alignment to goals, mission
October 2008PMO Leadership Slide 10
PMO Focus for Strategic Value
PMO Terrain
Lifecycle
Templates
Standards
Training
Change Control
Status reports
Projects
ProgramsInitiatives
Strategy
PPM
October 2008PMO Leadership Slide 11
Project Portfolio Management Goals
• Align projects to strategy
• Facilitate the transformation of strategy into results
• Eliminate marginal and poor project investments
• Provide a way to evaluate, prioritize, and sequence
projects
• Optimize resource utilization
October 2008PMO Leadership Slide 12
Breaking PPM Down
Construct Portfolio
ExecuteEvaluateAssess Results
Prioritize
Match Investments to Opportunities, Align with Business
Program/Project Management
Financial Retrospectives, Project Post Mortems
Account For All Projects
Review Investment / Resource Allocations
The Process of PPM
October 2008PMO Leadership Slide 13
Constructing a Portfolio
Business Info Financial
ProjectLine of
Bus. Business Initiative TypeFinancial
Contribution Motive Funded
Segment Gross Margin
Segment Growth
Investment (budget)
Investment as Percent of
TotalP14 Internal Fulfillment Throughput Maintenance Operational Discretionary Y 63% 15% 11,233,456$ 27%P18 LOB-A Customer Support Maintenance Operational Discretionary N 71% 5% 8,607,643$ 21%P4 LOB-A Fulfillment Throughput Enhancement Operational Discretionary Y 71% 5% 7,000,000$ 17%P3 Internal Customer Support Enhancement Revenue Discretionary Y 71% 5% 3,569,540$ 9%P7 LOB-B Grow US Sales New Operational Strategic Y 43% 7% 2,000,000$ 5%P16 LOB-D Grow US Sales Enhancement Revenue Discretionary Y 60% 13% 965,432$ 2%P19 LOB-C SOX Maintenance Operational Compliance Y 63% 15% 890,755$ 2%
Project Name Metadata Cost
October 2008PMO Leadership Slide 14
The Portfolio is Your Strategy
$0.00
$200,000.00
$400,000.00
$600,000.00
$800,000.00
$1,000,000.00
$1,200,000.00
$1,400,000.00
$1,600,000.00
LOB 1 LOB 2 LOB 3 LOB 4 Internal
Investment By Line of Business
Proposed
Funded
$-$200,000.00 $400,000.00 $600,000.00 $800,000.00
$1,000,000.00 $1,200,000.00 $1,400,000.00 $1,600,000.00 $1,800,000.00
Investment By Initiative
Proposed
Funded
$0.00
$500,000.00
$1,000,000.00
$1,500,000.00
$2,000,000.00
$2,500,000.00
$3,000,000.00
$3,500,000.00
Revenue Operations
Investment By Contribution
Proposed
Funded
October 2008PMO Leadership Slide 15
Using PPM To Increase Strategic Results
Strategic Planning
Execution ResultsFeasible?
Two Key Pitfalls PPM Can address:• Inadequate Resource Management• Inadequate Risk Management
October 2008PMO Leadership Slide 16
PPM Ensures Feasibility – Capacity Planning
0.00200.00400.00600.00800.00
1,000.001,200.001,400.001,600.001,800.00
Jul
Aug
Sep
Oct
Nov
Dec
Jan
'08
Feb
Mar
Hrs
Total Staffing
Adj. Supply Total Demand Proposed Funded
Are there enough of the right resources?
0.00
50.00
100.00
150.00
200.00
250.00
300.00
Jul Aug Sep Oct Nov Dec Jan '08 Feb Mar
Hrs
UI
UI Adj. Supply UI Total Demand UI Funded UI Proposed
October 2008PMO Leadership Slide 17
PPM Ensures Feasibility – Risk Management
Key Factors Contributing to Risk
Risk ProfileImpact on Core
Business
Ability to Deliver
Political Exposure
October 2008PMO Leadership Slide 18
Risk DNA – Contributing Factors
Risk Profile Ability to Deliver
Organizational Acumen and Experience
Requirements
Resource Capacity
Schedule Flexibility
Quality Control
• Do we control the plan?
• Do we know what we are doing?
• Do we have the commitment to deliver?
October 2008PMO Leadership Slide 19
Visualizing Risk Using PPM
Is there the right balance?
October 2008PMO Leadership Slide 20
PPM Benefits
• Project investments discussed strategically
• Feasibility and risk assessed and mitigated before investing
• Transparency to stakeholders
• Resources deployed on only the highest-value projects
• Detailed trade-offs understood when new ideas are suggested
October 2008PMO Leadership Slide 21
PPM Summary
• Project Portfolio Management involves applying the tools and discipline of financial management to project management
• PPM requires competencies in strategic planning, financial and project management
• Overall objective of PPM: Manage projects, people, processes, and information assets for maximum business benefit
• PPM requires leadership to be successful
October 2008PMO Leadership Slide 22
Project Leadership
Project Leadership is expertise that combines the science of project management with the art of leadership essential
to solving tough problems and getting business results.
PMO/PPM/Project Leaders:• See the big picture• Get people to agree on priorities• Are decisive• Accommodate different executive styles, processes do not• Are accountable; they address issues and mistakes• Understand how to turn vision into reality• Conquer uncertainty• Deliver results
October 2008PMO Leadership Slide 23
Managing & Leading
Enforcing Standards Resolving Issues Budgeting Planning Reviewing Status
Coaching Providing Vision Motivating Aligning Stakeholders Demonstrating Standards
and Providing Structure
“Managers are people who do things right and leaders are people who do the right thing.”
– Bennis and Nanus, 1985
“Most U.S. corporations today are over-managed and under led.” – Kotter, Harvard Business Review 2001
October 2008PMO Leadership Slide 24
Management & Leadership BehaviorsM
anag
emen
t
L
ead
ersh
ip
Identifies Project Tasks
Estimates Accurately
Manages Schedule
Manages Budget
Identifies Issues/Risks
Communicates
Leverages Adapts Challenges
Supports
Promotes Teamwork
Acts with Integrity
Makes Sound Decisions
Solicits InputMitigates
Issues/Risks
AnticipatesSeeks
FeedbackFosters
Ownership
Innovates Motivates
Envisions
Project Leadership behaviors augment and complement project management behaviors to enhance execution
October 2008PMO Leadership Slide 25
Leadership In Action – Strategic Execution
The Problem: The client needed to evolve its online platform in order to grow and better serve customers.
The Challenge: Complex, transformational projects often fail
Project Leadership Behaviors:• Created a shared vision and a process for achieving it• Established high trust at the executive level• Created an entrepreneurial atmosphere focused on execution• Garnered crucial support from around the organization• Forced tough decisions that kept the project focused and moving forward
The Result: A successful open, scalable new technology platform
October 2008PMO Leadership Slide 26
Project Leadership Testimony
“Point B brought in a way of thinking that elevated the internal mindset and successfully got us through this inflection point. They helped us focus our innovation and gave us a lasting understanding of how to handle large-scale projects in times of extreme transition.”
- CEO
October 2008PMO Leadership Slide 27
Conclusions
• Business issues abound• 90% of corporate strategies are never implemented• Project success rates are only 35%• Most PMOs rate themselves at 2 out of 5
• PMOs should strive to be a business partner, not an order-taker
• PPM will help improve business results
• PMOs, PPM, and Project Execution will not be successful without leadership
October 2008PMO Leadership Slide 28
Contact Information
• For a copy of these slides or other questions, contact:
• Gaylord [email protected] 206.517.2762
October 2008PMO Leadership Slide 29
About Point B
Point B is the first professional services firm focused on project leadership and execution. Founded in 1995, the firm provides a diverse and experienced team of locally-based project leaders to companies in Seattle, Denver, Portland, Phoenix, San Francisco, Los Angeles and Chicago. Organizations ranging in size from startups to Fortune 100 corporations turn to Point B for its ability to step into any segment or role of a mission-critical project and help lead it to success. And, unlike many professional services firms, Point B works exclusively for its clients and does not enter into alliances, reseller agreements, or other relationships that might compromise the firm's objectivity. Point B has attracted top project leaders from various industries by offering a culture that promotes flexible work schedules and well-rounded lifestyles for its more than 300 professionals. Additional information on the firm and its offerings can be viewed online at http://www.pointb.com.