from traditional PMO to strategic PMO
Fennia Mutual Insurance Company
Business Development Manager
Fennia Mutual Insurance Company
Fennia is a small, Finnish mutual insurance company where all development projects are in the same portfolio.
Their project management office (PMO) was founded in 2008 and it has had traditional PMO tasks: portfolio management (including investment budget, resource, and benefits management and operational and strategic analysis), project management methodology (both programme and project level), project management tools (portfolio, programme, and project management), and project management training and mentoring. Even though all projects are business development projects, most of them have IT components.
A new strategy period started at Fennia in the beginning of 2016. At the same time, insurance companies are facing a big challenge because of digitalisation and regulation (e.g., Solvency II). As a small company, Fennia is slightly behind the major competitors in digital services and, therefore we need to make very clever and innovative strategic choices to ensure our market position and growth.
Fennia's executives realised that a PMO could have a role in strategy planning to ensure strategic development programmes/projects can be implemented. Strategy work is done in three customer segments, with a member of the PMO facilitating each process.
The PMO has a significant role in executing strategy and the PMO plans strategy programmes and projects together with business owners and IT-architects.
A Development Steering Group was founded to support strategy work and the PMO has a key role in the steering group.
In addition to new responsibilities, the PMO continues with all of its traditional tasks.
This new, business-oriented development approach sets new requirements for the PMO's skills and competences.
Keywords: PMO, strategic PMO, development method, regulation, digitalisation, customer centric, company strategy
INTRODUCTION - BACKGROUND
The Fennia Group consists of Fennia, Fennia Life, and Fennia Asset Management, Ltd. Together, the companies offer their clients competitive, high-quality non-life and life insurance and asset management services. Fennia and our insurance activities date back to the 19th century, giving us a solid professional foundation.
The Fennia Group provides various risk management and insurance services for enterprises, their personnel, entrepreneurs, and private households, as well as flexible, client-financing solutions.
Fennia is managed in accordance with the principle of mutuality: the supreme decision-making power rests—through the general meetings—with the clients. The members of the governing bodies include a large number of entrepreneurs and representatives of business enterprises, who thus participate in all key decisions. Fennia Life is fully owned by Fennia and Fennia Asset Management, Ltd. is owned by Fennia Life.
Fennia is the fourth largest insurance company in Finland with approximately 10% of the market share. Fennia employs around 1,000 people.
Fennia was quite advanced when its PMO was established in 2008. Luckily, the PMO was placed into the Business Development Department, unlike in traditional Finnish companies where it's typically placed under the IT Department. In first phase, the PMO had the most traditional primary task: manage the project portfolio. From the beginning, the Microsoft Enterprise Project Management (MS EPM) tool was used to manage projects, resources, and financial investments.
At times (2008–2010), the PMO was not very well known in the organisation; vice-versa, it was seen as a weird function and sounded too much like a bureaucratic office.
A special feature of Fennia is that there are only a few professional project managers and they work in a line organisation, instead of working in a PMO. When a business line finds a new development need and a project manager is not available, they will name a substance expert to be a project manager for the duration of the project. We call them “Expert Project Managers” to differentiate them from the professional project managers. The Expert Project Managers, especially, didn't see value in using EPM, feeling that EPM was just extra work for an already busy workday.
The new strategy period began in 2011 and there were a lot of projects of different sizes. A new way to manage this wide variety of projects was required and a programme methodology was implemented. Three programmes were founded and a lot of training was given to enable utilization of the new programme management method. A portfolio management group was founded and the PMO started reporting there. In August 2011, the PMO manager retired and a new PMO director was hired.
In the fall of 2011, the PMO services were described and put into a Service Catalogue so it was easier to market the PMO's services to the organisation and also to share responsibilities in the maintenance and development services among the PMO staff, which had grown to four people. Services were divided into three groups:
1. Portfolio management (operational and strategic analysis, investment budget management, resource management, annual planning, and benefits management)
2. Project support (support implementing programme and project methodologies, support using tools, maintaining the virtual project manager network, communication throughout the organisation, etc.)
3. Education (training to owners, steering groups, project managers and project members, mentoring new project managers, and orientating consult project managers)
After a couple of years, the PMO services were settled into Fennia and the PMO was better known throughout the organisation. Yet, project managers were disappointed with the tool and we evaluated different options during years. In 2014, we decided to make a switch from EPM to Thinking Portfolio, which is a Finnish tool. It is easy to use and, finally, project managers have a tool that helps them in their management work and even our Expert Project Managers love the new tool.
During the strategy period of 2011–2015, most investments had to be used to develop internal processes and very complicated insurance legacy systems. Fennia has traditionally approached programmes and projects by mainly focusing on solving internal problems. Projects were mostly made using the traditional waterfall method and they were slow and expensive because of their size and complexity. In any case, the work processes and systems took huge leaps throughout this strategy period and it put pressure on the Fennia staff to study the new methods and give up old methods.
DRIVERS/CHANGES IN ENVIRONMENT
All our competitors passed us in digitalised services while we developed our internal processes and systems. At the same time, big changes have happened in the surrounding world and in the customer behaviour, such as: digitalisation and automation services, changes in customer loyalty, clients expecting mobile first, an increased use of social media, insurance fragmentation (e.g., buying a car with insurance), etc.
The competitive environment in Finland has also changed due to insurance company merges and increased close cooperation with the banks.
At the same time, new regulations and other mandatory requirements hit the finance sector at both the European Union (EU) and the national level. The Solvency II EU directive is the most important one and it came into effect on January 1, 2016. These regulations require a lot of work and investments, but seldom bring any direct customer value. Typically, regulations are also more demanding for small companies like Fennia, as we need to make nearly similar investments as our competitors, who can be up to ten times larger.
Fennia had completed most of its internal large projects at the end of 2014, so basic technical capabilities were available. Since the Fennia system development was organized into silos, the challenge was in how to fully utilize these capabilities. Fennia realised that a new, faster, customer-centric, and business-driven development method was needed.
The Fennia strategy period ended in 2015 and digitalisation, competitive environment, regulations, and slowness of the internal development set demanding requirements for the new strategy period and for working methods.
CHANGES IN WORKING METHODS
The PMO got a role in innovating a new development method and, luckily, the PMO got a new business development-oriented member who was in a key role in developing a new, business-oriented method that is thinly based on SAFE (Scaled Agile Framework). In Fennia, the new method is called “Hyrrä” (Finnish word meaning a kind of windmill with four wings, representing four releases per year).
Hyrrä objectives can be classified into two groups: business objectives and operational objectives. Fennia has traditionally developed systems, not business capabilities. Hyrrä's key idea is to identify a business need first, then conceptualise and prioritise it, and after that, analyse the impact on different IT systems. Prioritised business functionalities are then implemented using a release-based development model. From an operational point-of-view, there is a lot of room for improvement and synergy possibilities in development, testing, and deployment practices.
The Hyrrä steering group was founded and its responsibility was to identify and prioritise business needs (e.g., manage Fennia-level backlog).
In the rise of a new strategy period, three matrix customer-segment groups were established to meet the challenges of digitalisation, changes in customer behaviour, and regulation. The objective of this approach is to ensure an agile and customer-oriented development, as well as the communication and cooperation between silos.
Even though Fennia has corporate-level strategic objectives, each customer segment has its own focus areas and targets. The executive board wanted to make sure that segment groups work consistently and the end results are comparable. Therefore, the PMO was asked as a neutral partner to facilitate the process and bring new working methods and templates to strategy work. Luckily, the PMO has three senior members who were willing and eager to take part in the strategy work.
During the winter of 2015–2016, the PMO has helped segments in the following tasks:
- current state analysis and pain points
- methodology to describe development items
- low-hanging fruit to get something ready soon (by mid-summer 2016)
- methodology to describe customer paths to ensure customer-oriented development
- tracking progress of tasks
- being a right hand for executives in segments
We three facilitators work closely together with the Development Director. We plan next steps together, make the templates, and manage the time schedule, and so forth.
Fennia's management system also needed some updates and the new Development Steering Group (DSG) was founded to support strategy work. The ex-portfolio management group and the Hyrrä steering group were compounded into one and new members were taken into the group to make sure that knowledge will grow and that we'll begin to think of Fennia's best interests, not the best interest of one line of business. Examples of the DSG's responsibilities include:
- make all investment and G1-decisions
- define the implementation method for each development item (programme, project, Hyrrä-release)
- schedule development items
- manage dependencies
- monitor portfolio
The PMO has big role in the DSG. We are responsible for preparing and running meetings. We have developed processes, methods, and tools to support work. We are trying to use different facilitation methods to activate group members and to shift the mindset to a more client-centric and agile direction. The objective is continual improvement of our processes and methods.
Fennia has had insufficient information management practices mainly because of silos, but also because of the renewal of development models and the Solvency II regulation set new requirements to this area. The PMO has taken information architecture responsibility and is coordinating information management at the Fennia level. The objective is to speed up development and ensure all systems and channels are using accurate information.
WHERE ARE WE NOW?
The PMO still has all the traditional PMO tasks in 2016, but also has many new responsibilities:
- facilitating strategy work and segments
- facilitating development at the Fennia level
- owning and running the Hyrrä-model and Hyrrä-releases
- promoting agile and lean development and customer centricity in Fennia
- coordinating information architecture
After all this, the competences in the PMO members has also increased. We still need basic understanding and knowledge about project, programme, and portfolio management, but a lot of other skills are also able to be managed through our expanded responsibilities.
We have learned a lot during the last year and here are few findings:
- a system-oriented approach helps
- create clear, simple processes and templates which are easy to deploy
- make sure everybody concentrates—monitor computer and smart phone use
- try to visualize a lot
- try to find new, efficient working methods or start using old ones which are forgotten (like wall painting technique)
- create a culture where everybody prepares carefully—it's not efficient to read materials together; it's better to use common time in discussion and Q&A
- take advantage of modern tools (e.g., conversation forums instead of emails, OneNote memos instead of different memo files, etc.)
- take photos and videos from meetings and workshops (all pictures and images don't need to be drawn clean)
- activate group members and maintain activity—don't do everything by the PMO
- use time boxes, but be aware that sometimes there's a place/need for free conversation without a time limit in order to keep an intensive rhythm working
We have jumped from a traditional role into a more strategic role. We have discussed that a Portfolio/Project Management Office (PMO) doesn't quite describe our work anymore and that maybe we should be a Development Management Office or an Office of Strategic Management & Execution instead!
ABOUT THE AUTHORS
With almost 30 years of experience in project/programme/portfolio/PMO management, Anne Isolator has proven herself in both vendor and line organisations. She has been working in various roles developing project culture, and now, she's in charge of the PMO at the Finnish Insurance Company, Fennia.
Anne Isotalo holds the IPMA A (Certified Projects Director), IPMA B (Certified Senior Project Manager), and IPMA C (Certified Project Manager) certificates.
Joni Nurminen is a project management and business development professional with 15 years of experience in management roles, both in project and line organisations. Mr. Nurminen's core competencies are project management practices and methodologies, business intelligence, and working in between business and IT. Currently, he is working for a Finnish insurance company developing processes, tools, and operating models to help the company to achieve its strategic objectives. Mr. Nurminen is a Project Management Professional (PMP)® certification holder.
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|Anne Isotalo |
© 2016, Anne Isotalo and Joni Nurminen
Originally published as part of the 2016 PMI® Global Congress Proceedings – Barcelona, Spain