Business change management using program management

Abstract

The use of program management, and its focus on benefit management, results in organizational initiatives being more effective, efficient, and successful. It enables organizational programs to succeed, as opposed to running the initiatives as projects, which can lead to missed benefits, wasted resources, and failed efforts.

Two key international standards for program management, The Standard for Program Management—Second Edition (Project Management Institute [PMI], 2008) and Managing Successful Programmes, (Office of Government Commerce [OGC], 2007) are being used within Siemens to implement organizational program management and to support organizational project management maturity improvement efforts. This paper will introduce the standards, compare them, and describe how they are being implemented and used within Siemens.

Introduction

The Project Management Institute ([PMI], 2008) defined a program as “a group of related projects managed in a coordinated way to obtain benefits and control not available from managing them individually” (p. 5). In addition, PMI defined program management as the “centralized coordinated management of a program to achieve the program's benefits and objectives. It involves aligning multiple projects to achieve the program goals and allows for optimized or integrated cost, schedule, and effort” (p. 6).

The United Kingdom's Office of Government and Commerce ([OGC], 2007) defined a program as a temporary, flexible organization created to coordinate, direct, and oversee the implementation of a set of related projects and activities in order to deliver outcomes and benefits related to the organization's strategic objectives (p. 4).

The key concept is that programs deliver benefits that are tied to the organization's strategic objectives. This idea, along with the concept that programs may be charted to deliver a mandated benefit or group of benefits, with no clear path or method to achieve the benefits, has been very useful to implementing program management at Siemens and other companies.

The use of program management and its focus on benefit management results in organizational initiatives being more effective and efficient. It enables organizational programs to succeed, as opposed to running the initiatives as projects, which can lead to missed benefits, wasted resources, and failed efforts. Two key international standards for program management, The Standard for Program Management—Second Edition (PMI, 2008) and Managing Successful Programmes (OGC, 2007), are being used within Siemens to implement organizational program management and to support initiatives like organizational project management maturity improvement efforts. This paper will introduce the standards, compare them, and describe how they are being used within Siemens.

Is program management a fundamental new method, tooling, or fad? Is it a breakthrough? Is it revolutionary? Unfortunately, no—it is the application of fundamental principles in an organized fashion—where the normal reaction by individuals in training classes and implementations is “why don't we already do this” and “this is so simple—it is common sense.” It is neither common nor complex. However, it is difficult to do well consistently. The research data shows that most organizations are not organizationally mature in program management.

Examples of Programs

A key discussion point in most early interactions with organizations is the clarification question of “What is a program?” The definitions from OGC and PMI are good, but generic. The best explanation that is used by Siemens is if you can set up the scope, cost, schedule, work breakdown structure (WBS) baselines from the start—even if they are complex—it is likely a project. If the first reaction to the mandate is “I'm not sure how to do that” or “I have an idea how to start, but not how to finish,” then it may be a program. Programs are not just large or complex projects, although large and/or complex projects can benefit from program management methodologies. One of the comparisons utilized within Siemens is shown in Exhibit 1. Programs can be internal initiatives (e.g., improvement programs, business change initiatives, or product development programs) or externally focused (e.g., customer programs).

Comparison of Projects and Programs (Core I.S. Ltd, 2009)

Exhibit 1. Comparison of Projects and Programs (Core I.S. Ltd, 2009)

Some examples of programs are SAP implementations; SG&A reductions; reorganizations; implementing a project management office; organizationally adopting Six Sigma; improving project management maturity, new product development, some customer solutions, etc. The best use of a program management approach is when a mandate tied to the organization's strategy is clear, but the path is not well defined.

For example, organizational project management improvement initiatives are business change programs. They are characterized by creating and standardizing processes, delivering new capabilities, transforming of the business, and embedding change in many functional groups with the goal of achieving program benefits. Although Siemens has done this improvement process many times with many business units, each unit's specific path is unclear at the start of their program, and the use of program management is a key success factor for these efforts.

The Standards

In early 2007, Siemens US selected the OGC's Managing Successful Programmes (MSP) as the basis for training, certification, and implementation. MSP was selected for the following reasons:

  • MSP provided a best practice methodology that addressed the relationships between business as usual, business change, benefits management, and program governance.
  • Business change managers are formally defined and are responsible for defining capability requirements, transition planning, embedding change, and achieving the program benefits.
  • Maturity—MSP was launched by the OGC in 1999. The standard is in its third revision (OGC, 2007).
  • A training and certification network that enabled practitioners and program participants was implemented through accredited training organizations.
  • The other worldwide standards at that point in time were not adequate.

In 2008, the Project Management Institute issued The Standard for Program Management—Second Edition. The second edition is a significant improvement over the first edition that was published in 2006. Detailed changes are noted in Appendix A to the standard, but in general, this is a new document, not merely a revision. The standard is now 324 pages versus 109 pages. Themes were deleted, knowledge areas added, and other major modifications were performed.

PMI's The Standard for Program Management—Second Edition is linear in approach, with very generic good practice recommendations. It assumes that the entire scope of the program is known early on, which is not true in all programs, or it plans for an R&D type phase that will answer the outstanding questions. The standard is very non-prescriptive in nature, allowing the implementing organization to create the best implementation method. This type of standard is helpful, but requires significant organizational expertise to help the implementation process. The PMI Standard does have more detailed guidance in certain functional areas than MSP does (e.g., procurement management).

MSP has a more proscriptive implementation of program management, with key roles and responsibilities defined. The PMI Standard is less proscriptive in nature, but as a result, requires more infrastructure development and the creation of specific organizational methodologies, processes, etc. While MSP has a more specific method of delivering programs than the PMI Standard, it is still very flexible in nature, allowing organizations to tailor the basic methodology, while keeping the important principles in place. The MSP Standard is useful for all types of programs and it has more direct emphasis on benefit management than the PMI Standard, which is a key success factor for organizations delivering programs.

Three specifics that illustrate some of the differences are as follows:

  1. In the PMI Standard, procurement is addressed in Chapter 12, Program Procurement Management. This 23-page section addresses good practices in procurement for a program. MSP has two paragraphs in section 16.10, plus one paragraph in section 4.8.
  2. MSP has an entire governance theme devoted to benefits realization and management (all of Chapter 7), and additional references to this theme appear in all of the transformational flows and most of the other themes. The PMI Standard has a subsection in the Governance Knowledge Area devoted to it. Section 15.6 (Manage Program Benefits) consists of four and one-half pages, and there is discussion in other areas, notably an additional two pages in Chapter 2, Program Life Cycle and Benefits Management.
  3. PMI stated that benefits are to be managed. MSP has created an entire structure, including specific roles and responsibilities, around this concept.

There are some important similarities between the two standards. Both advocate strongly the implementation and use of program management offices, preferably at the organizational level. They both focus on benefit management, which is critical to success. There is also an emphasis on program and project level governance.

It should be noted that utilizing MSP for linear programs, even with a well-defined scope, does work as well as the PMI Standard. Essentially, MSP is applicable for all types of programs and is especially useful for the less well-defined mandates. Following the MSP Standard will align an organization or a program with the PMI Standard, as the integral components are similar. As previously stated, the PMI Standard is more of a generic document; the MSP provides one instance of implementation of the standard.

Based on an internal evaluation and use of both standards, the MSP Standard was selected for implementation by Siemens in the United States, since it was seen as being easier for individuals to understand, and for organizations to implement. The new PMI Standard is a good resource for helping to write certain individual processes thanks to the detail and information provided in the various knowledge areas, especially where the MSP Standard does not have sufficient coverage. Siemens is using both program management standards, in conjunction with PMI's Organizational Project Management Maturity Model (OPM3®)—Second Edition. It is recommended that other organizations evaluate the standards for utilization in their businesses and select whatever combination will optimally support their businesses.

Program Management Methodology

Flow of MSP (Core I.S. Ltd, 2009)

Exhibit 2. Flow of MSP (Core I.S. Ltd, 2009)

Focus on Benefits

A common failure mode of projects is the lack of focus on benefits—the reason for spending the money. This is even more critical in programs, where some of the components and projects may have no inherent benefit; they are supporting components that enable or help to deliver a benefit from the overall program. The overall flow in MSP is shown in Exhibit 2. The organization has some vision that ties to the strategic plan, the vision is tied to benefit(s) from a specific program, the program delivers the capabilities required to deliver the benefit through projects, the capabilities are used by the organization, the benefits are realized and embedded in the organization, and thus delivering the vision of the program and supporting the organization's strategy.

Organizations have many diverse efforts, initiatives, projects, and programs in place at any one time. Typically, not all of them have clearly defined benefits or ties to organizational strategy. Many times Siemens program management implementation teams identify many projects and initiatives that have no clear sponsor, owner, or organizational benefits tied to a strategy. In one example, there were approximately 60 efforts in place, 20 were terminated after this review, 20 were put into an future evaluation category, and the remaining 20 were put into the program management methodology to run in a more standardized manner to deliver explicit benefits. Optimization of scarce resources by focusing them on benefit delivery and the organizational strategy is the outcome of these efforts.

Program Management Organizational Structure

A key element of program management adopted by Siemens from the MSP Standard is the organizational structure. Prior to its adoption, Siemens had the program manager in place, without the standardized support structure provided by MSP (Exhibit 3). The addition of the role of senior responsible owner (SRO) (or program sponsor) provides a key link to the senior management of the organization. The SRO is accountable for delivering the benefits to the organization and must provide support to the program manager and business change manager (BCM). The BCM concept is also a key addition to the team. It is normal practice to hold the project or program manager responsible for delivery of the capability to the organization, and then the capability was supposed to be utilized by the organization as envisioned. This ad hoc method does not always result in using the capabilities effectively by the organizations. The BCM role is now responsible for taking the capability from the program manager and implementing it into their business and deriving the benefit(s) from its actual utilization. The BCMs should come from the functional groups being impacted by the program. For example, when a Siemens business unit improves its project management maturity, the changes not only affect the project management group but also affect many other groups: sales and marketing, procurement, quality, financial reporting, configuration management, proposal teams, engineering, etc. BCMs or change agents from each impacted stakeholder group are critical to the successful implementation of these types of organizational changes. The MSP provides many examples of ways to implement this role or function in various organizational configurations.

Organizational Structure for Programs, © Crown Copyright 2007, Page 30, Managing Successful Programmes

Exhibit 3, Organizational Structure for Programs, ©
Crown Copyright 2007, Page 30, Managing Successful Programmes.

Discipline and Methodology of Program Management

Organizations need maturity in the execution of their work and program management is no exception. While individuals can be very successful in implementing business changes and running programs, organizations need mature methodologies in place to ensure consistent, reliable, and scalable delivery of programs and the benefits that they deliver to the organization.

MSP provides a detailed methodology including quality gates, recommended documents, phases, etc., that drive successful program implementation. It is more proscriptive than PMI's Standard, but it is still flexible in application. MSP defines the roles and responsibilities of all who need to form part of the leadership of a program. .

The MSP framework is based on three core concepts:

  1. MSP principles. These are derived from positive and negative lessons learned from program experiences. They are the common factors that underpin the success of any transformational change
  2. MSP governance themes. These define an organization's approach to program management. They allow an organization to put in place the right leadership and delivery team, organization structures, and controls. These are similar to PMI's Knowledge Areas.
  3. MSP transformational flow. This provides a route through the life cycle of a program from its conception through to the delivery of the new capability, outcomes, and benefits. These are similar to PMI's phases.

There are numerous artifacts generated by going through a standardized MSP program including the program mandate, program brief, program preparation plan, vision statement, blueprint, business case, benefits profiles, stakeholder map, program plan, and quality management plan, etc. These are used to help define and manage the program. These can be customized for each organization and can be tailored for specific programs.

Tranches

Another useful concept from the MSP Standard is tranches. These are a group of projects structured around distinct step changes in capability and benefit delivery. The concept facilitates those programs whose total plan cannot be determined at the beginning. The concept is to plan and obtain approval for the first tranche, during which the view for the next tranche will become more clear. Tranches can also be organized around things like fiscal years, locations, etc. A program may have only one tranche or it could have dozens.

Referring back to Exhibit 2, a tranche can be envisioned in simple terms to be one cycle around the circle, where the organization has some vision that ties to the strategic plan, the vision is tied to benefit(s) from a specific tranche of a program, the program delivers the capabilities required to deliver the benefit through projects, the capabilities are used by the organization, and the benefits are realized and embedded in the organization. If the full vision is not yet realized, another cycle around the circle is performed in a new tranche. This process is repeated until the vision is realized and all the benefits from the program are embedded in the organization.

Program Management Training and Certification

Siemens is actively training and certifying its employees in the United States on program management, using the MSP methodology. At this time, Siemens has just over 100certified employees and continues to hold MSP training/certification classes throughout the year. MSP is now a standard offering of the Siemens Learning Campus, in cooperation with an external vendor—Core I.S. Ltd. Siemens long-term commitment to this plan has led to making the investment of having two employees certified as MSP instructors.

In October 2007, PMI released its program management certification program called the Program Management Professional (PgMP®) credential. OGC's MSP Standard has had multi-level certification in place since 1999. There are currently three qualifications available for MSP: Foundation, Practitioner, and Advanced Practitioner.

The MSP certifications are forward looking—enabling personnel to participate in or lead a program. The PgMP®credential is historical facing—it certifies that someone has led programs successfully in the past and understands a certain body of knowledge. Siemens is recommending that its personnel look to the MSP certifications as a good front-end process with the PMI certification as a capstone.

How Siemens is Implementing Program Management and the Path Forward

One of the ongoing missions within Siemens is to improve organizational project management maturity to support the project business. Overall, Siemens is progressing to higher levels of sustained maturity. Due to the importance of project management maturity to Siemens, the United States region of Siemens decided to accelerate the improvement effort. Based on a review of assessment results and evaluation of global consulting experiences, the following key success factors were determined to be fundamental characteristics for implementing and sustaining organizational project management maturity:

  • Executive support,
  • Organizational project management office (PMO),
  • Process management infrastructure, and
  • Program management best practices.

Siemens began implementing program management in the United States under the Successfully Defined Program, which is sponsored by Siemens Corporate in the United States and started in 2007. This program supported project management maturity under the PM@Siemens initiative and addressed all four success areas noted previously. This program, executed by Siemens Corporate Research (SCR), concluded in 2008. Continuing efforts are targeted at the business unit level and are not presently sponsored at the corporate level. SCR is continuing to develop Siemens program management capability and improve the maturity level within specific business units.

Training and Certification

As noted previously, Siemens is actively training and certifying employees in the MSP methodology. This extends the knowledge of standardized program management into the organization, creating awareness. It also opens opportunities for the various business units to run programs more successfully and engage in sponsored improvement programs. Individuals have the capability to improve their own results. One of the participants stated, “I now know why my project is failing—it's a program—and I know how to fix it.” There is also an effort to incorporate program management into our leadership development and training program.

Program Management Infrastructure Development and Individual Program Support

SCR provides support to individual business units to develop and implement a program management methodology. The development of policies, procedures, tools, methodologies, organizational structure, etc., is ongoing with selected business units.

SCR also provides services to our business units to successfully plan and execute individual programs. One of the tools is called Program Acceleration through Coaching and Teamwork (PACT), which helps plan and kickoff a program.

PACT (Siemens AG, 2009)

Exhibit 4. PACT (Siemens AG, 2009)

SCR is in the process of finalizing program management maturity assessments for Siemens businesses. We have an internal model created and will be evaluating the use of PMI's OPM3 ProductSuite® tool for suitability. Siemens is also working on several organizational level internal projects to develop infrastructure (tools, templates, procedures, processes, etc.) to facilitate the use of program management by our business units.

Results

Siemens has been actively using MSP in the United States since 2007. While it is not universally utilized, the use of MSP has accelerated and it continues to grow.

Sopko and McDevitt (2009) described one of Siemens’ pilot organizations of program management in detail. The use of program management was a key enabler that led to results/benefits that included: (1) higher customer satisfaction; (2) improved financial performance comprised of managed profitable growth and reduced Non Conformance Costs (NCCs) and, (3) business scalability—the implementation of standardized, tailorable project management processes. The program has added additional tranches and is continuing as it is still delivering benefits to the organization.

Other Siemens’ organizations are utilizing formal program management methodology—based on MSP—to target and deliver strategically aligned benefits including increased orders/sales, improving organizational maturity, lower non-conformance costs, implementation of new standards, certification to ISO standards, and improved customer satisfaction. The use of program management and the MSP methodology has resulted in an efficient way to identify the benefits and the blueprint. In addition, business change managers have used it to implement the new capabilities successfully.

Recommendations and Conclusions

The use of a standardized program management methodology is critical to successful internal and external programs. Maturity in project, program, and portfolio management is a significant contributor to the success of project and service based businesses. A standardized program management methodology is currently being utilized successfully in parts of Siemens, and its adoption is continuing and expanding. The benefits achieved so far have been impressive, spawning a number of internal case studies that are under development.

It is recommended that organizations adopt a combination of PMI's The Standard for Program Management—Second Edition and OGC's Managing Successful Programmes standard for all programs including internal business change initiatives, customer facing programs, R&D programs, quality initiatives, etc. It is critical to implement programs and it enables portfolio management.

Siemens is working to tie program management maturity into the entire portfolio of organizational initiatives and methodologies including portfolio management, project management, project management offices, Six Sigma, Lean Six Sigma, capability maturity model integration (CMMI), and other key initiatives.

It should be clearly stated that this paper is only an introduction to program management and the standards. The foundation level course for OGC's MSP Standard is three days, and Siemens uses a combination foundation/practitioner course that is four and one-half days of training and testing to introduce our employees to the method. The other critical component is utilizing subject matter experts for support—in both training and implementation of program management. The pilot activities have proven that the right expertise and support results in more efficient and effective implementation and use of program management.

References

Core IS Ltd. (2009). UK, MSP Training Materials. Retrieved from www.coreis.co.uk.

Office of Government Commerce. (2007). Managing successful programmes (3rd ed.). Norwich, UK: Office of Government Commercs.

Project Management Institute. (2008). Organizational project management maturity model (OPM3®) (2nd ed.). Newtown Square, PA: Project Management Institute.

Project Management Institute. (2008). The standard for program management (2nd ed.). Newtown Square, PA: Project Management Institute.

Sopko, J., & McDevitt, K. (2009). Accelerating organizational project management maturity at Siemens. 2009 Paper presented at the PMI Global Congress 2009—North America, Orlando, FL

Siemens AG (2009), Siemens PACT Training Materials Document for internal use only.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

© 2010, Glenn Strausser, Siemens
Published as a part of 2010 PMI Global Congress Proceedings – Milan Italy

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