Evolving the program management office for e-projects

Sam Lane, PMP, EDS E. solutions

Mike Oliver, PMP, EDS E. solutions

Introduction

Success—even survival—in the digital economy depends upon an organization’s ability to implement an enterprise e-business strategy (e-strategy) that extends the organization beyond the physical business realities to the virtual opportunities of the future. Paramount to success is a strategy that is responsive to customer priorities, cognizant of market, industry, and competitor performance and revolutionary in the use of emerging e-business technologies and organizational models. But strategy alone will not realize business objectives. An organization’s future rests on the successful implementation of the projects prescribed by the e-strategy. The traditional program management office continues to serve the organization well in the planning, tracking, and oversight role of these projects. But the rush to transform the old organization into one ready to exploit e-business opportunities is presenting its own set of project management challenges. Are the relationships created from the new value exchanges well managed? Are the organization’s e-business resources optimized? Is the organization ready for transformation to the e-world? Can value realization be substantiated? The program management office is uniquely positioned to address such issues as overseeing the governance of the e-strategy stakeholders, managing scarce organizational resources, preparing and managing the organization for dramatic change, and substantiating—through the use of value measures—the realization of e-value. An office construct that facilities and enables the definition of strategy, development of action plans, oversight of implementation, and verification of value delivery with a focus on e-business has become the rationale for the e-business program management office (e-PMO). The evolution of the program management office to the e-business program management office is under way today and may be the critical factor that enables an organization to accomplish their e-business vision.

The Problem of Herding Cats

Traditional organizations, not ready for the phenomenon of e-business, are struggling to define a direction. Internal e-business architectures do not exist or are not business or technologically enlightened. Business units, acting with urgency but lacking organizational strategy, have initiated projects in pursuit of their own, valid e-business agendas. Walk the hallways of these organizations and you are likely to see dozens, perhaps hundreds, of e-business initiatives under way. Independent-minded, empowered business unit leaders have selected, sequenced, and funded e-projects without an articulated e-business vision. The result is typical of action without vision: multiple projects are delivering redundant or conflicting capabilities, and scarce organizational resources are consumed through the wrong mix of projects. Taking control of this environment is like “herding cats.”

Exhibit 1 depicts a framework in which the actions necessary to bring order to the chaos may be defined. e-Governance is the governing body that establishes rule-making and rule-enforcement for the multi-enterprise e-business endeavor. e-Strategy is the evaluation of business imperatives, models, and strategies and the development of an e-strategy to realize the value opportunities. Technology, with its breakthrough capabilities and exciting promises, is actively shaping the business strategy. Value Measurement enables the traceability of e-project outcome to the strategic intent that launched the project. Organizational Alignment enables the transformation to the desired state, as transition to the e-world requires significant change to affected stakeholders both within and external to the enterprise. And, Program Management provides for the planning, tracking, and oversight of the tactical e-projects.

Exhibit 1

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Establishing the e-PMO can be accomplished with a three-phased approach: assessment of the organization, design of the e-PMO framework capabilities, and implementation of the capabilities along with the e-solutions.

There is no single, one-size-fits-all model for the organization seeking to reinvent itself in the e-business marketplace. Each must develop its own transformation strategy that includes a business model of its desired state. An organization that redefines value for its customers and designs an e-business strategy to out-perform its competition will conduct vastly different projects from one who chooses to offer its traditional goods and services for sale on the Internet. Although one of the purposes of conducting an e-PMO assessment is to evaluate the current business, technology, and project management capabilities of an organization, another is to determine how much capability the organization really needs. Each e-PMO implementation requires both an accurate diagnosis and a viable prescription; clearly, the enterprise e-business design drives the supporting processes and technologies. In other words, the organization’s infrastructure must be tailored specifically for its e-business vision. The output of an assessment phase is an identification of e-business opportunities qualified by the value they contribute to strategy actualization and their viability within the context of the organization’s current capabilities.

Design activities comprise the definition of the e-strategy (including program and project identification), the technology plan, governance process, key value performance indicators, organizational transformation strategies, and the e-PMO office structure. For the e-PMO, design involves translation of the high-level requirements into specific process models, software tools, infrastructure designs, and knowledge capabilities. Program management processes, standards, templates, and work products are created, and e-PMO roles and responsibilities, staffing plans, and training plans are developed to facilitate effective portfolio governance.

The implementation phase begins with a functioning e-PMO office structure that plans, tracks, and oversees project implementation as well as strategy and program performance. Key value performance measures are analyzed, and e-solution specialists are engaged periodically to identify new e-business opportunities and threats. Using the program office’s “sense and respond” mechanisms of reviews, audits, and inspections to conduct performance analysis, strategists are able to keep the e-strategy current by re-aligning the solution architecture.

Together the e-PMO framework and the three-phase implementation approach provide a top-to-bottom, end-to-end e-business management solution.

The Dilemma of Effective Governance

Much of the initial evolution of e-business focused on business-to-consumer (B2C) scenarios capitalizing on use of the Internet technologies for communication to address items like expectation management, advertising, dissemination of product information, and so forth. Other early B2C efforts focused on facilitating sales and order fulfillment of goods and services.

As e-business continues to evolve, emphasis is increasing on business-to-business (B2B) opportunities in the context of e-business communities (EBC), in which a number of industry-related enterprises collaborate to the benefit of all members. Expedia, Inc. is but one of several examples of an inter-enterprise EBC. Expedia is the “leading provider of branded online travel services for leisure and small business travelers” (http://www.ex-pedia.com/). Expedia has organized a global inter-enterprise e-business community of 450 airlines, 40,000 hotels, all of the major rental car companies, several major travel/vacation service providers, and 7.5 million consumers.

Obviously, Expedia’s EBC must offer a substantial value proposition for competitors such as the major airlines to agree to be community members. To ensure the livelihood of the community, Expedia, as the community provider, must effectively govern the community to the mutual benefit of all members.

Seeing the need for effective e-governance, an e-business community provider’s e-PMO is an appropriate locus from which to expedite the e-governance function. The e-PMO can facilitate management of expectations and relationships by virtue of its communication management role and its proximity to information about the conduct of the e-business portfolio that it manages. The e-PMO can channel information from community members about needs and opportunities into the perpetual e-strategy planning activity. The e-PMO can also funnel vital decision support information about the e-portfolio’s risk profile, ROI, cost/schedule performance, resource allocation and consumption, and other such indicators, to aid prioritization of new e-business initiatives spawned in response to new opportunities, threats, and/or emerging technologies.

In the conduct of an e-PMO engagement, the existing e-governance structure is examined during the assessment phase for its adequacy in contrast to the type of e-business community it serves. The recommendations from this assessment activity manifest themselves in the design of the e-PMO.

The Technology Enlightened e-Business Strategy

“Technology is no longer an afterthought in forming business strategy, but the actual cause and driver” (Kalakota, 1999, p. 4). Breakthrough technologies, combined with revolutionary changes in the business landscape and heightened customer expectations, have caused a dramatic transformation in the way people do their work. e-Business is a unique framework because it links a company electronically not only to its customers but also with its suppliers and partners. Technology allows the extended enterprise to present a single face to the customer—and to service the customer’s needs as a single company. e-Business allows companies to exploit this technology-based linkage to provide innovative, value-enhancing customer experiences. Supply Chain Management—Internet-enabled collaboration among trading partners based on inter-enterprise business processes and IT integration—is an example of a technology-enlightened competitive differentiator. But Supply Chain Management is based on Internet technology; how will the evolution of wireless technology change that? Clearly, e-business strategies must not just keep pace with changes in technology; they must learn to exploit breakthrough technologies before their competitors do.

To move from a business model based on alliances and storefronts to one comprised of end-to-end electronic connectivity requires a large number of extensive, nearly simultaneous projects—not just to create the inter-enterprise business and technology infrastructure, but to develop suites of entirely new products and services presented in new ways. The e-PMO reviews the organization’s information technology approach and identifies changes that must be made in order to support the new e-business model. Additionally, e-business is more than the creation of an Internet-based, interactive front end; it also requires integration of the business back end applications and systems that support the front end. The technology challenge is to design and implement new, integrated applications and IT infrastructure that supports cross-functional processes. That generates an enormous number of complex new projects and programs—on top of the organization’s existing project workload. And a project is no longer contained within the boundaries of the single company; e-business projects envelop the entire partnership alliance—and create new value chains.

The ability to successfully complete these projects—before the competitors do—is what differentiates the successful from the unsuccessful e-business aspirant. Today’s e-business PMO must be able to manage as a coordinated whole the vision and strategy, the re-engineered business processes, and the integration of business applications and IT infrastructure. The e-PMO must be able to plan, monitor, and control projects across corporate boundaries in the face of brutal time compression, unrelenting competitors, and entrenched organizational barriers—and provide visibility that allows senior managers to change priorities overnight in response to changes in the marketplace.

Substantiating the Claims of Value Realization

An e-PMO can offer additional value to the conduct of an e-business program by tracking and analyzing the value performance metrics defined in the business case that justified the e-project. Projects launched from e-strategies often fail to support the strategic vision, but this may not be discovered until well past the implementation date. Program management office mechanisms such as audits, inspections, and reviews, provide a continuous “sense and response” monitoring of e-strategy performance. The performance metrics gathered during project execution can provide feedback on goals such as entry to market and return on investment. Performance metrics such as increase in market share or reduction in cost lag project completion by months. Since the life of the program management office extends beyond the project, it is ideally positioned to gather and analyze post project implementation metrics. The capabilities of the organization to gather and analyze measurement data are determined during the assessment phase activities. Often, organizations do not have data to the granularity and purity necessary for decision-making. The business decision support systems are often immature and the information may be ambiguous or misleading. e-PMO design and implementation activities around value management are definition of key indicators and definition and implementation of interventions that remedy these flaws. The discipline of value management provides senior executives with the feedback component to their e-strategy by tracing business intent to project outcome.

The Significance of Organizational Change Management

The September 1999 issue of Wired magazine featured an article entitled, “Venture Verite: UPS – Can an old-style bureaucratic giant give birth to a hot Net start-up?” The article outlined UPS’ venture in creating an e-business community called eLogistics.net to provide a variety of global logistics services and information ranging from shipping to inventory management. The article also explored the culture of UPS in response to the question raised by the article’s title. This observation was made about the project in the section entitled, Results and Expectations: “April came and went with no sign of eLogistics.net. [Ken] Lyon [UPS Logistics Group/IS Director] was stingy with explanations, offering only the obvious: ‘Organizationally, we weren’t able to do it.’”

The story of UPS is not unique. Change is required of affected stakeholders for an organization to realize the value of their investment in e-business. However, unlike past paradigm shifts, the domain of e-business is characterized by significant volatility with respect to emerging technologies, new opportunities, developing threats, new business paradigms, and clientele’s high expectations of speed, convenience, performance, quality of the experience, and value. Failure to facilitate change in stakeholders’ behaviors, quickly and effectively, will compromise the realization of e-value.

The e-PMO can address the significance of organizational change by:

• Providing organizational change management planning expertise to program and project managers

• Ensuring, as part of the overall e-business program, that all business initiatives and the programs and projects they spawn have incorporated appropriate activities in the design of their plans to address the organizational change needs of those initiatives.

• Orchestrating some aspects of change program, particularly in the e-PMO’s communication management role.

• Monitoring and providing visibility into stakeholders’ behavioral changes and its impact on the realization of e-value.

In the conduct of an e-PMO engagement, the organizational change environment is examined during the assessment phase through exploration of items like:

• Change history—In the conduct of the e-business program, what is the nature of stakeholders’ past change experiences with the organization? How might this affect future needs for change?

• Change capacity—What other changes are the stakeholders presently experiencing? What is the nature of those changes with respect to the degree and speed of change? What’s their current capacity for additional change?

• Effective use of organizational change management strategies—Is the organization cognizant of the strategies for facilitating organizational change? How have they used these strategies? On what e-business initiatives have these strategies been used? Have they been used effectively?

The findings derived from the assessment phase result in recommendations to bolster the organizational change management effectiveness of in-progress business initiatives and to incorporate the orchestration of effective change management practices in the design of the e-PMO.

Program Control Considerations

The e-PMO, in addition to the other elements presented in the preceding sections of this document, must also fulfill the traditional expectations of a program management office and exercise effective control of the e-business portfolio. During the assessment phase of an e-PMO engagement, the following aspects of the organization’s project and program management environment are evaluated:

Culture—Does the organization exhibit beliefs and behaviors supportive of effective project/program management?

Capability—Of what aspects of project/program management is the organization capable? What intellectual capital, skills, and enabling tools do they possess?

Maturity—What policies and standards does the organization possess? Do their processes, tools, and training support these policies and standards? How do they address quality assurance/conformance in the application of their project/program management methods?

The information gathered through these assessments provides visibility to those environmental factors that may constrain the design of the e-PMO’s program control functions. The assessment activity also seeks to characterize some of the typical program management office constraints like:

• Cost

• Time/urgency

• Stakeholder expectations

• Needs/requirements of the program for which the e-PMO is being designed

• Reuse requirements of the organization’s existing program/project management infrastructure.

Additionally, e-business programs may exhibit one or more of the following characteristics that will affect the design of the e-PMO’s program control functions:

A large number of short duration projects conducted by small development teams—The combination of object-oriented development tools and methods allows for smaller, concurrent discrete projects compared to traditional legacy development tools and methods. For example, one prospective client’s e-business portfolio contains over 170 e-projects. The total number of projects and the shorter durations in which they operate may necessitate:

• Tighter bandwidth of variance thresholds

• Shorter collection/analysis cycles of project performance information

• Program information management systems that support rapid analysis of portfolio performance

• Increased dynamic complexity in managing project interdependencies

• Collaborative project management tools that also allow for discrete activity by the project team

• Streamlined communication channels for escalating program level change items, issues, risks, and performance variances to quickly analyze impact significance and ensure timely resolution.

A variety of external subcontractors conducting the program’s work—In some organization contexts, most, if not all, of the e-business development work may be conducted by a number of vendors providing a variety of services (networking, hosting, database management, graphic design, application development, etc.). Not only must the traditional aspects of contracting and/or procurement be addressed, but the design of the program control functions must offer clearly defined reporting requirements and channels to ensure the e-PMO has access to appropriate information to fulfill its program control obligations. Some of the comprehensive/integrated, enterprisewide program information management systems may be inappropriate when the majority of the work is being performed by external entities.

Expectations that the e-PMO also exhibits web-enabled functionality—Over the past few years, several commercially available program information management platforms have migrated to web-based delivery. This development combined with the visual elements and rapid access of information exhibited in other web-based applications has created an expectation among many CxO’s (CEO, CIO, CFO, etc.) that the e-PMO should exhibit web-enablement of some or all of its program control functions through features like executive “dashboards,” which provide drill-down analysis of portfolio performance information.

In approaching the design of the e-PMO’s program control functions, one of the guiding principles is to “do what’s right for this organization at this time in this context” while also leaving the door open to future realities. One “box” does not fit all situations. Furthermore, the “box” built for the organization always leaves “one flap” free to accommodate future growth. As the e-PMO engagement moves through the Design and Implementation phases, the findings from the assessment phase are mapped against an e-PMO model outlining specific functional elements for the following areas:

Core Capabilities—Of the fundamental functions the e-PMO must provide to be effective, how many are characteristic of this organization? How effective are those functions that are present?

Project Integration—For this organization’s e-business program environment, what degree of integration between the e-PMO and the project level is appropriate? Of the Project Integration functional elements, which ones should be invoked for this e-PMO?

Business Integration—For this organization’s e-business program environment, what degree of integration between the e-PMO and the enterprise/business is appropriate? Of the Business Integration functional elements, which ones should be invoked for this e-PMO?

• Regardless of the proposed design for the e-PMO’s program control functions, the implementation of the e-PMO is planned and managed as a project. Since the e-PMO will most likely require changes in affected stakeholders’ behaviors, the implementation plan exhibits many of the organizational change strategies that might also be used to facilitate organizational changes for the portfolio’s e-business initiatives.

Conclusion

E-strategies are being driven by the opportunity value argument. Act while the opportunity is available! The lesson “late to market is loss of market share” has been well learned. As a result, the focus at the executive level is shifting from “do projects right” to “do projects right now.” This is a perilous attitude. While successful translation of e-strategy into e-projects is essential to accomplishing vision, the contribution of project management and organizational change management is clear. Project mismanagement and an inability to transform the organization will lead to failure. “Do the right project RIGHT AND NOW” must be the mindset of today’s executive. The e-business program management office will continue to provide the important functions of project oversight and organization change. But in the e-project management environment, these functions appear to play a more crucial role in realizing the business vision. The role of project management continues to evolve. The enterprise level, e-business program management office—the e-PMO—enables the definition and development of an organization’s e-strategy through appropriate project, organizational change, and value management capabilities. Ignoring these management disciplines delays or prevents the accomplishment of the e-business vision.

References

http://www.expedia.com/

Kalakota, Ravi. (1999). e-Business Roadmap for Success. Reading, MA: Addison-Wesley.

http://www.wired.com/wired/archive/7.09/ups.html?pg=1&topic=&topic_set=

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.

Proceedings of the Project Management Institute Annual Seminars & Symposium
September 7–16, 2000 • Houston, Texas, USA

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