Accelerating organizational project management maturity at Siemens
Kevin McDevitt, MSP
PMO Director, Siemens Energy & Automation,
Automation and Motion Division, Springhouse, PA
Siemens has embraced organizational process maturity models as tools for improving organizational performance for more than a decade and a half. Included among these models are Capability Maturity Model Integration (CMMI®) and Organizational Project Management Maturity Model (OPM3®) as well as several proprietary internal models such as the Siemens Maturity in Project Management (MPM). Even after several years of conducting hundreds of valuable assessments, movement toward higher levels of organizational project management maturity was not meeting corporate expectations. A breakthrough approach was needed to accelerate improvements, manage organizational change, and deliver business benefits. This paper discusses the approach taken, progress made, and lessons learned in effectively transforming the cultural aspects of Siemens USA businesses towards greater OPM maturity and achievement of business excellence targets using formal program management. From a practical perspective, a case study of Siemens Energy and Automation, Automation and Motion Division (SEA AMD) is discussed to share experiences and lessons learned.
Project management is a core competency of all Siemens companies. More than 60% of the overall Siemens turnover is based on project business and cover a wide spectrum of products, solutions, and service deliveries. In 2000, the executive board of Siemens AG launched a corporate initiative to systematically and continuously improve its organizational project management maturity. This became known as the [email protected] Initiative.
Each company's approach to project management must be applicable to the entire project life cycle from project acquisition, engineering, and development through customer delivery, installation, and commissioning projects. The same requirements hold true for any maturity model used to evaluate and analyze the capabilities of Siemens project management organizations.
In 2007, Siemens Corporate in the United States teamed with Siemens Corporate Research (SCR), the project management consulting organization within Siemens USA, to develop a revitalized approach to accelerate Siemens USA businesses to the upper levels of OPM maturity in accordance with corporate objectives. The outcome was the creation of the Successfully Defined Program (SDP), named after the Capability Maturity Model Integration (CMMI®) label for maturity level 3 (Defined). SDP embarked on a paradigm shift toward formal program management for Siemens USA businesses regarding their approach to organizational project management maturity improvement. The focus on business benefits, organizational change, and an iterative maturity analysis and coaching approach are proving effective in establishing a critical support infrastructure, standardizing best practices, business value alignment, and enabling the organization to establish and sustain an improved level of organizational project management maturity.
Where We Were …
Prior to SDP, organizational project management improvements in the U.S. Siemens businesses were largely comprised of improvement projects centered on implementing the recommendations of the [email protected] Handbook and achieving PMI Project Management Professional (PMP)® certification for their project managers with an implied alignment to the achievement of business benefits. The Maturity in Project Management (MPM) assessment was the primary means of educating the businesses and engaging them in project management best practices. Even though the assessment results were accurate, prioritized, and thorough, this often resulted in an overwhelming amount of information for many organizations. Secondly, the improvement project approach, which was fine from an execution perspective, did not carry through to the full realization of business benefits and institutionalizing changes in the organizations. In many cases, improvement workshops and assessment were often conducted at a level too low in the organization, where they lacked the organizational strength to support Level 3 maturity on their own. Follow-on MPM assessments to measure improvements also were not occurring at the desired rate. This called for a more innovative approach for developing OPM maturity capabilities, and embedding change and tying these to business targets (the benefits).
Approach and Methodology
Based on SCR analysis of project management maturity research, organizations must have in place certain common essential elements to achieve and sustain greater levels of OPM maturity. These key factors as well as the alignment of the Siemens MPM model with Organizational Project Management Maturity Model (OPM3®) (Project Management Institute [PMI], 2008b)and Capability Maturity Model Integration (CMMI®) have been discussed in detail and presented at previous PMI Congresses by Lebsanft, Strausser, and Sopko (2007); Sopko and Strausser (2008); and Sopko and Husemeier (2009). Specifically, the identified key elements are:
- Effective executive sponsorship
- Establishment of an effective and relevant organizational PMO function
- Development of program management capabilities to achieve business benefits and embed organizational change
- Establishment of a process management infrastructure
To accomplish this, SDP utilized a staged engagement program with pre-kickoff informative discussions, formal program establishment, conducting a gap analysis based on the MPM assessment model, and conducting program workshops to formally identify and define the maturity improvement programs and define benefits. In support of the gap analysis, SCR developed the Guide to Project Management Maturity, which, when used in concert with the gap analysis, established a sustaining knowledge base within the organization for maturity development. This guide was based on the Siemens MPM model supported by OPM3®, CMMI®, and Six Sigma.
From experience in MPM assessments, SCR found that even though a full MPM assessment was deemed accurate and complete, the lack of supporting infrastructure mentioned above within the assessed organization often restricted effective action regarding the recommendations. Further, even with prioritization and guidance from assessors, progress was delayed in many cases due to enterprise environmental factors.
Assessment data analysis also showed that lower maturity organizations typically have common gaps in their capabilities. Armed with this knowledge, a faster, more focused, iterative coaching approach was developed that was more cost- and time-effective than a full MPM assessment for accelerating Siemens businesses. Detailed MPM assessments would be conducted at a later time when the foundation processes and supporting infrastructure were established; this also increases the probability that the organization will comprehend the recommendations, understand their value, and take action.
Focus on business benefits and embedding change are inherent and dominant characteristics of program management. To develop program management skills and best practices, SDP adopted the UK Office of Government Commerce (OGC) standard, Managing Successful Programmes (MSP). MSP, when compared to the PMI program management standard, closely aligns in most process areas. Further, MSP also incorporates some of the organizational enablers of OPM3.
To validate our approach and to update our best practice knowledge and professional network, SCR also actively participated in global standards development and professional best practice sharing conferences. Among these included participation on the core teams for PMI's OPM3—Second edition (PMI, 2008b) and The Standard for Program Management—Second edition (PMI, 2008c). SDP also enabled a joint PMI/SEI pilot assessment utilizing OPM3, CMMI®, as well as the Siemens MPM model to better understand the benefits of multi-model maturity assessments.
Engaging the [email protected] USA Community
Working directly with the [email protected] coordinators from the Siemens USA companies, the SDP Team proposed and mentored the implementation of an organizational PMO structure and process management infrastructure at the proper organizational levels. More importantly, executives were generally more supportive and engaged than in the past due to a program focus on business benefits (e.g., business targets, nonconformance costs) rather than on improving process capabilities and maturity alone. MPM assessments were now viewed by the organizations as tools in identifying gaps in capabilities needed to achieve the business benefits and the “new state” rather than as compliance audits to verify capabilities mandated by headquarters. As a result, SDP enabled meaningful engagements with nearly 20 organizations in 15 months, at a more senior level in the operating companies than in the past.
Of the four key factors mentioned, the most influential was the introduction of formal program management. The inherent characteristics of formal program management using Managing Successful Programmes (MSP) (Office of Government Commerce, 2007) for benefits realization and organizational change management is now actively in place in several organizations. SDP methodology linkage to CMMI®, Lean, and Six Sigma communities has also encouraged the Siemens Business Excellence leadership. These communities are similarly engaged in organizational improvement initiatives involving organizational change and the delivery of business benefits, as well as internal projects. Also of note was that the process management component of SCR, historically a separate function from project management consultancy, was seamlessly integrated into SDP in order to extract benefits from their core competencies in CMMI®, Quality, and People Competency Management—all of which are supporting models for MPM, CMMI® and OPM3.
Another attribute of program management, particularly MSP, is the benefit profile. Often when a benefit is achieved, especially in the complex environment of OPM, attribution of the benefit to the program or a project within the program is often masked. The benefits profile requires the definition, observation, attribution, and measurement of the benefit. This sets the traceability in place that places credit where it is due and assists in program effectiveness analysis.
The Role of the PMO
Once the improvement program is identified, the role of the PMO becomes clearer as the center of excellence for maturity as well as the command center for OPM improvement. This concept of connecting the PMO to program benefits delivery is instrumental in its acceptance by senior management as a relevant organization. The degree of relevance is directly tied to the program phases, and its achievements and value proposition must be renewed at each program phase boundary. Typically, this is an 18- to 24-month cycle. When planned and managed in this manner, the intended result is to keep the PMO relevant to business success. As described by Hobbs (2007), we feel this is also a factor in improving PMO longevity. The PMO also becomes valuable to the project teams by focusing on project execution streamlining and process improvement, which includes centralization of process and performance monitoring, control, and recommendations for improvements.
Maturity Models and Assessments
The need for maturity models and assessments is directly related to the definition of the program, the intended benefits, and the desired future state of the organization with regard to processes, organization, technology, and information systems. Once the future state is defined (also termed a “Blueprint”), the logical question is, “Where are we today and what capability gaps do we need to fill?” This is the natural role of maturity assessments such as OPM3 or CMMI®. Due to the engineering solutions nature of Siemens projects, the Siemens MPM model retains characteristics of both models. Exhibit 1 shows the MPM maturity levels and the approximate alignment with the OPM3 maturity stages (Standardized, Measured, Controlled, and Continuously Improved). The current OPM3 Self-Assessment Model (PMI, 2008b) is viewed as a useful tool for PMOs engaged in an OPM improvement program.
Early Adoption in Siemens Industry
As the SDP early adopter, Siemens Energy and Automation, Automation and Motion Division (SEA AMD) became involved in SDP in November, 2007. Prior to that, the organization had an internal initiative to harmonize their small project processes among the constituent business units which were in search of revitalization and business focus. SEA AMD is an interesting organization from the project management perspective. The division consists of mostly a small but diverse set of project organizations. United by a common solution type (industrial automation solutions), the uniqueness of the market environments that each business serves presented a challenge regarding achieving a standardized process environment. At the onset of this program, SEA AMD had several challenging concerns:
▪ Different levels of [email protected] / project management implementation
▪ Different type of businesses (motion control, process automation, industrial software, automotive production automation)
▪ Project quality varied in implementation
▪ Shortfalls in reporting to SEA headquarters and [email protected] USA
▪ No division-level coordination group (e.g., Project Management Office)
▪ No common tools or infrastructure
▪ No common resource usage view into the future
▪ Limited skilled resource pool in certain areas
Program management, as a defined process methodology, was new to SEA AMD. Since they already had an improvement initiative underway, the [email protected] program was viewed as adding formal best practice methodology to the existing initiative. Part of SDP's offerings was formal training in program management theory and practices (MSP). [email protected] program leadership, both at the division and business-unit levels, fully participated in this training in January 2008. The outcome was a unanimous decision to adopt and incorporate MSP practices into their methodology.
[email protected] Program
With the decision to follow a formal program management approach, the seven principles of MSP were adopted. Managing to these principles, as it turned out, played a key role in sustaining the program through a major reorganization of SEA AMD's parent organization, Siemens Industry, by keeping [email protected] relevant to Siemens Industry's strategic objectives. The MSP principles are:
- Remaining aligned with corporate strategy
- Leading change
- Envisioning and communicating a better future
- Focusing on the benefits and threats to them
- Adding value
- Designing and delivering a coherent capability
- Learning from experience
The next step was to formally identify and define the program, the first two stages of the MSP transformational flow. As part of this, a program charter was created and a program leadership board was formed. The executive sponsor was the SEA AMD Vice President of Finance. This was appropriate since one key strategic objective was to reduce nonconformance costs (NCCs) and to improve financial as well as operational performance. The senior responsible owner, the MSP term for the program director, was the SEA AMD business excellence director with the SEA AMD PMO director as the program manager. Since a key part of any business excellence program relies on effective organizational change and effective transition, future PMO leaders from the constituent SEA AMD businesses were selected for the roles of business change managers (BCM) for [email protected] The BCM roles work in concert with the program manager to ensure realization of business benefits. This facilitated efficiencies in business buy-in, transition of capabilities to the business units, and enabled a solid network of PMOs.
As part of defining the program, a description of the future state regarding desired processes, organization, technology, and information systems was defined (the blueprint). Together with the blueprint, benefits profiles were created to describe the benefits to be achieved, how they will be observed and measured, and to what part of the program they will be attributed. Attribution is important since, in a complex environment such as [email protected], it is necessary to understand and agree to the cause and effect that the introduction of new capabilities have on the organization. The focus on benefits realization significantly improved program communications with executives since objectives and strategic alignment.
Benefits defined for the [email protected] program are:
▪ Higher customer satisfaction will be realized through improvement in the sales process and project delivery (execution)
▪ Improved financial performance—managed profitable growth / reduced NCCs
▪ Business scalability—standardized, tailorable project management processes
Program Phases or “Tranches”
Programs often have a clear vision, but not a clear path all the way to the objective. Therefore, the results of one phase may redirect or set the foundation for the projects and activities in the later phases. In MSP vernacular, these phases are termed “tranches.” Three tranches were defined for [email protected]:
- Project acquisition processes and training
- Project business infrastructure and tools
- Project management and engineering processes standardization (MPM Level 3)
MPM Level 3 maturity was set as a target early on to establish standardized and defined processes. This was given as a target by Siemens Corporate. In that case, the [email protected] program was as much a mandate as it was a business improvement program. By going through the benefit definition process, SEA AMD was able to elicit the benefits associated with achieving Level 3 maturity. This mapping of benefits served the program very well in that it was able to survive both the major realignment of the business and a significant economic downturn. From the program manager's perspective, this enabled justification of the program funding and the program's continuation. The reason was clear as the benefits that the program was chartered to deliver were still strategically relevant to the key stakeholders. The program team had to adjust the blueprint when new businesses were added to the program scope. They needed to adjust the timeline when resources were not available. They needed to adjust the budget with the economic downturn. Still, the [email protected] program continued.
Baselining Maturity and Early Results
Early in the program, SCR performed an MPM capability gap analysis for each business unit to identify and prioritize the areas that needed the most work. This helped focus the efforts early in the program. Further, it clarified the organizational enablers needed for the second tranche of the program. About halfway through the program, we conducted a second, more in-depth desk assessment to verify delivery of process and tool capability. A few gaps were identified, but the timeliness of the desk assessment was critical in making final adjustments to the program plan. At the time of this writing, SEA AMD feels confident that the objectives of the program will be met. To date, improvements in project selection, regulatory compliance, business scalability, and a significant reduction in nonconformance costs are being realized. Early positive trends for this data seem to support a successful transition of the program capabilities to the business.
In summary, SDP appears to have led Siemens USA on a course for change and maturity improvement that is significantly different than in the recent past. Some organizations quickly engaged in the SDP model, specifically SEA AMD, with very positive results. The program management approach, whether following the PMI standards or UK OGC MSP appear to have promised as a significant contribution linking OPM to business benefits realization effectively engaging senior management and the “business as usual” side of the business operations. Reestablishment of the PMO at the proper levels, as a program leader, as a center of excellence for organizational maturity, and process improvement organization helps redefine its relevance to the business. It also promotes PMO relevance and longevity as a benefits delivery mechanism. To further enable Siemens and to foster the MPM improvement programs, sustaining program management training and conducting research in the areas that support the way forward are important. For the most part, the four key elements mentioned earlier are in some stage of formation in most of the organizations. Improvement initiatives are now more often discussed in the context of program management with ties to delivering business benefits than simply as improvement projects that end in capability delivery. The positive performance results and value experienced by SEA AMD promise to confirm our expectations.
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© 2009, Joseph Sopko & Kevin McDevitt
Published as a part of 2009 PMI Global Congress Proceedings – Orlando, Florida