How to choose & implement the right PMO tool to maximize business value

The project management office (PMO) tool is considered to be the need of the hour for organizations worldwide. Organizations have different ways of implementing PMO tools on different scales; they vary from using different technologies or mixing between tools in order to have stable portfolio, program, and project performance.

The purpose of the paper is to showcase pitfalls in the process of choosing and implementing the right PMO tool for the organizations and how to use the guidelines in making the appropriate choice of PMO tool for the respective organization.

In today's market offerings, we see a lot of products that offer us choice based on the need of PMO systems. However, many organizations stumble upon the choice of making the right call for a PMO solution to bring successful implementation and usage across the partial or entire user base of the organization. The choices that are made may be influenced by the offerings of the products, which may offer:

• Scale of use based on controls offered
• Price benefit
• Ease of setup
• Technology/platform offerings

So, when the question arises on how to choose the right PMO tool, we should fall back on guidelines that have been derived on the experience. There are no rules or formulas for choosing the right PMO system, but a set of guidelines could help them make the right choice. The right choice can prove to be a “white elephant” and an expensive proposition if the call goes the wrong way.

This paper covers various guidelines that would help cover topics related to technology, platform, type of organization, and user base that would provide input to the decision-making body to narrow down the PMO tool that fits and should be implemented.

PMO tool requirement are highlighted as needs, but we need to really explore whether or not PMO incubation would be helpful in the formation of new processes within the organization or a hindrance in growth, due to the very nature of business that the company is in. PMO tools do not fit one and all, but can benefit an organization tremendously when it is the right fit.

Introduction

The PMO tool, seen as a necessity, has a lot of pitfalls that can occur during the time of choosing the right system. There are technological, organizational, operational, and resource challenges that are faced by the decision-making team. Questions like:

• Who would be right to assess current organizational setup and provide recommendation of a PMO that would best fit our organization?
• How would one derive maximum benefit? Directly and/or indirectly from the PMO tool?
• How and what planning would help me complete successful implementation and usage of a PMO tool?
  • Who will use the PMO tool?
  • Is there any impact to the PMO processes or the organizational processes?
  • Are the staff ready to receive the PMO tool?

Many more questions, apart from the ones highlighted, can be addressed to an extent that would assist/provide enough information to the decision-making body to narrow down choices to the right PMO system. Some of the statistics below would showcase the results of not going through a rigorous process in selecting a PMO tool that would not be in the favor of the organization as a result.

• 50% of PMOs close within three years (Association for Project Management)
• Since 2008, the correlated PMO implementation failure rate is over 50% (Gartner Project Manager, 2014)
• Only a third of all projects were successfully completed on time and on budget over the past year (Standish Group's CHAOS report)
• 68% of stakeholders perceive their PMOs to be bureaucratic (Gartner PPM Summit,2013)
• Only 40% of projects met schedule, budget, and quality goals (IBM Change Management Survey of 1500 execs)

PMO tool implementation usually takes time in the planning/selection phase. In this phase, the decision is to be jointly taken by the executive stakeholders and department heads/operation heads. It is in this phase, that a selection process starts by checking the validity of each PMO tool on offer to the organizational goals and setup that has been identified. Let's move ahead and see the current and future impacts of the PMO tool in a given organization.

What Is the Importance of a PMO Tool? – Current and Future

The PMO, as a division/practice, helps in standardizing the organizational processes around the entire process of the project/program and the user base across the organization/employees starting from:

• Initiation
• Planning
• Execution
• Monitoring
• Closure

With the project/program, which have predefined start and end dates, there has to be a process on who, what, how, when and where aspects of the project/program that should be covered. These are covered by the PMO tool that is implemented in the organization.

Project and program management (PPM) and the PMO go hand in glove, with PPM offering a number of primary functions to the organization, including:

• Senior Management Functions :
  • Portfolio analytics and selection
  • Portfolio tracking (performance monitoring)
  • Portfolio governance and oversight
  • Portfolio planning, including resource allocation
  • Portfolio selection and prioritization
  • Portfolio process management
• In the current scenario, PMO tools provide, but are not limited to:
  • Governance
  • Project/program management
  • Finance management
  • Risk and issue management
  • Time and task management
  • Resource management
  • Demand management
  • Schedule management
  • Reporting and business intelligence (BI) insights

Apart from the features/functionalities, they provide:

• Resource calibration/recalibration to align to organizational and industry standards that are imbibed by the PMO division of the organization
• Current resource strengths to continuously gain expertise in process-oriented activities
• New set of resources who join the organization to align/recalibrate themselves seamlessly to organization practice and standard(s)

In future view, it is clearly envisioned that PMO tools would deliver the following possibilities:

• Complexity would become the norm
• Project management would be used everywhere and by everyone
• Close partnerships with social networks to help people be adept at change
• More individuals in the PMO would be VERSATALIST, rather than GENERALIST
• More individuals would be results-oriented, rather than just process-oriented

Why Do You Need a PMO Software and How Can We Select the Right PMO Tool?

The question may seem obvious. However, many companies jump right to the buying stage; they prefer to use what is common in the marketplace, rather than using the right software for their organizations. In today's volatile software marketplace, we need to conduct GAP analysis for the current and future capabilities required in the PMO tool in order to maximize the business benefits of the selected PMO tool.

We recommend the below points to assist with your selection. The PMO tool must:

• Support the integration with the enterprise: One of the main requirements of the PMO tool is to have a holistic view over the cost, schedules, and resources from the enterprise perspective. If this is a priority to your PMO, make sure that it is there before the selection process.
• Provide information for different levels of stakeholders: Make sure that the PMO tool is simple enough to be used by different levels of stakeholders, as per the latest PMI Pulse of the Profession^® In Depth Report, “it is unsurprising that the communication gaps are affecting sponsors’ ability to effectively perform their role, the essential role of communication revealed US$75 million of every US$1 billion spent on projects is wasted due to ineffective communication” (PMI, 2014). This point should be considered heavily in the selection of the right PMO tool.
• Support dynamic changing environments and priorities: The PMO tool should be flexible enough to adapt to changing environments and to have external stakeholders independent of external influencing factors.
• Map and support your processes: Before selecting the PMO tool, good analysis for the processes should take place in order to be more efficient with the PMO tool. Understanding how the software can support the processes is a must in order to have more efficient and automated processes.
• Analyze your teams: Nowadays, virtual teams are accepted in projects. Collaboration between different teams in different locations is essential and technology makes it feasible to build project teams from across the organization. This can add another layer of complexity to the PMO tool.
• Build your knowledge base: One of the main features of the PMO tool is to have a central repository of information (sometimes customization should take place). The main focus here is to reduce the time spent in planning from project to project.
• Simplify and reduce the administrative burdens: One of the main focuses of the PMO tool is to simplify the reporting processes during projects. This can let the project managers focus on their main tasks during the projects. Simplicity is one of the main concerns in designing and adopting the PMO tool.
• Support the organizational standards and consistency across the projects: The PMO tool should support consistency and standardization among all projects with their use of common knowledge information.
• Manage the project portfolio and provide high-level dashboards: One of the main features of the PMO tool is to have a holistic view to manage the selection, managing, reporting, and optimization of all projects through a consolidated dashboard that can provide senior management with enough customized information about the portfolio in order to facilitate their strategic decisions.

So, what are the best practices in order to select the right PMO tool? Many software products claim to have what they call “the PMO in a box,” while in fact, we all need the best choice for our particular organizations. Generally, we recommend following these simple steps before making a selection:

How to Design the PMO Tool

1. Assess the Stakeholders Groups

PMO leaders can help realize the PMO's core value by balancing the competing demands of their disparate stakeholders. However, PMO leaders often get lost in low-level activity and mountains of reporting. When they don't satisfy any stakeholders, the value created by their role will be very small.

• Key Challenges
  • The PMO often fails to understand its responsibilities to the project purse, as a unit of investment activity. If the project fails to perform, the PMO has failed to add value to the organization as a whole.
  • The PMO often initiates projects with inadequate staff, poor stakeholder involvement, and unclear business value, simply because somebody wants it now.
  • Many PMOs focus on purely reporting project performance and upwardly delegate the work of deciding what needs to be done, thereby, failing to adequately support upper management with analysis and recommendations.
  • Projects require competent project leaders. Failure to develop these skills appropriately puts project performance at risk.
  • Failure to support multiple stakeholders is one of the key reasons that organizations fail to move beyond Level 2 in PPM maturity.
• Recommendations
  • Ensure that projects are set up for success during the initiation stage. If all the required elements are not in place, then don't start the project.
  • Treat project managers as professionals who know their job. If they don't, then either train them or move them to some other part of the organization.
  • Support senior management by providing recommendations and analysis. The decision is theirs, but the PMO is responsible for providing all the ramifications of any potential decision.
  • Ensure the enterprise understands that projects and programs are the mechanism by which strategy is realized and change occurs in an organization. The PMO can often offer expertise and value to the enterprise as a whole.

Exhibit 1: Stakeholder groups.

Managing a project is immeasurably easier if the right tools are available. It is imperative that the decision-making body keeps in consideration, additional tools/features are to be provided by the PMO tool that is under consideration. In addition to scheduling, task assignment, and document repository features, our experience suggests that the tools most requested by project teams are:

• Status capture — Until project managers are held responsible for project budgets, they do not need time reporting in the same way that it is needed by the PMO, the portfolio function, or the resource management function. Project managers don't need to know how much time has been spent as much as they need to know how much more time is needed to complete a task.
• Risk and issue tracking — This is best done in a tool to support extended visibility.
• Collaboration workspace — The collaboration workspace is another direct contribution to facilitating a project. It provides higher visibility of a variety of different aspects of a project and can be designed to show all stakeholders (including the project team) just the information they are interested in.
• Cost capture — When project managers are responsible for budgets, the tool needs to provide a mechanism for cost capture.
• Scheduling that is capable of supporting dependency linkages — Although Microsoft Excel is the most common tool used by most project managers, task lists alone just can't do the job if project managers are expected to deliver on time.

2. Assess Corporate Culture – Type of PMO

At this level, an assessment for the corporate culture and the type of the PMO available in the organization needs to be done. We need the PMO to have three different aspects. They are:

• Process
• People
• Tools

Regardless of different categories of PMOs, we can summarize three types of PMOs:

• Project Control Office: In this type, we do not need high-end tools. In this type, the need is to track project costs and schedules with simple management of the resources.
• Business Unit Project Office: This type is all about managing multiple projects with dependencies within the same business unit such as IT departments. The level of complexity is higher since the resource assignment becomes crucial.
• Strategic PMO: The complexity is higher since the engagement of senior management takes place, setting up the enterprise standards.

Exhibit 2: PMO types and tools.

3. Assess the Organization's User Base – End User Base: Current and Future

This should be tailored to your organization's maturity level. Like everything else, there's an order in which it generally makes sense to address the needs of project managers. Using the construct of the maturity model, PMO leaders should consider:

• Level 1 — Reward action and support honest failures. Build an environment in which project managers can tell the truth, take risks, and get things done. A PMO should stand behind in support and stand in front to protect the project manager from fluff and political flak.
• Level 2 — Encourage the development of soft skills, such as people skills. Encourage system thinking so project managers can think through the impacts that their actions may have on other areas. We strongly recommend building a project management culture that stresses personal mastery.
• Level 3 — Implement some form of a performance-based competency program to help ensure appropriate recognition of a project manager's contributions and capabilities. Status is still a primary driver for human motivation.

4. Assess the Categories of PMO Tools

Exhibit 3: Technology comparison.

PMO Systems are made available by many vendors in various forms, sizes, and scale. Noteworthy, would be the ability to categorize the current solutions into a simple graph as illustrated below:

Exhibit 4: Technology comparison 2.

The graph not only depicts the type of systems offered, but the generic cost economics associated with it. This graph does not represent any product's low/high price, but rather, depicts the technology offering that is categorized in a generic manner. All the products that are offered would typically fall in this graph with more or less correlation to cost as projected. OEM products have higher costs, but also offer a higher feature set that will be required by the organization, whereas the open source application may be lower on the cost economics, but the support is limited and is still lower in comparison to OEM products. A simple table is also provided in the next graph showcasing that.

Most of the organizations would fit into the SAAS or ON-PREMISE offering of product. There are quite a lot of factors that are involved when comparing SAAS to ON-PREMISE. Some of them are summarized as below:

Exhibit 5: SAAS & On- Premise comparison.

Quite a few considerations should be made while choosing the right product with the right platform:

• Setup cost
• Consulting cost
• Training cost
• Implementation cost
• Annual maintenance
• Support cost
• Other costs related to infra/upgrade/new resource addition

As the saying goes, one size does not fit all. We cannot conclude that certain a product/technology is right for everyone. A perfect fit depends on a lot of parameters that must be considered in the selection process.

5. Assess Current and Future In-House Technology Layout

PMO systems come in various sizes, options, and flavors. Deep dive analysis should be performed to know the current and future state of the technology offered in the company. Accordingly, the product life cycle of the PMO tool should be determined.

Exhibit 6: In-House technology assessment.

Manage PMO Tool Handover and Transition

Maximizing the benefits does not stop on the selection and implementation phase, but continues to the handover and transition phase. To maximize the business value behind the rollout phase, we recommend the following:

• Proceed slowly and incrementally. Do not start the deployment of the new system for the first day. Start with the basics and do not involve everyone from the initial deployment, but rather, in phases.
• Start with a pilot phase. The idea behind that is not only to fix the bugs, but to also gain more supporters and success for the new PMO tool.
• Fix the processes and teach the people the new process flow and the new business rules. Sometimes you need to introduce the new processes and the new tool concurrently.
• Train, train, train and mentor, mentor, mentor. Try to diversify your techniques and avenues to have different types of training and mentoring in order to make sure that your people are very solid and ready to receive the new PMO tool.
• Plan the handover with all the concerned parties including your shared services and your enterprise environmental factors.
• Get the needed support from senior management. Let them understand their role in the system processes and their role to support the PMO tool deployment.

Exhibit 7: Roadmap to utilize the PMO tool.

Conclusion

• Maximizing the business value of the PMO tool starts from the selection process and it should be considered in the design and handover stages.
• Plan your PMO tool product life cycle to know more about your exact requirements throughout a number of years.
• Maximizing the value does not cover the PMO tool's technical design, but goes beyond that to people and processes.
• Tailor the tool to the organization's maturity level.
• Plan your roadmap to utilize the PMO tool and clearly communicate it with all the stakeholders with a clear timeframe.

References

Association for Project Management.

Crawford., J.K. (2011). The strategic project office (2^nd ed.). Boca Raton, FL: CRC Press.

Hill, G. M. (2013). The complete project management office handbook (3^rd ed.). Boca Raton, FL: Auerbach Publications.

Gartner. (2014, October 15). Prioritize the demands of key stakeholders to achieve greater PMO value and PPM maturity. Retrieved from http://www.gartner.com/technology/reprints.do?id=1-1VSJ606&ct=140624&st=sb

Project Management Institute. (2013). A guide to project management body of knowledge (PMBOK^® guide) – Fifth Edition. Newtown Square, PA: Author.

Project Management Institute. (2014). Pulse of the profession^® In depth report: Executive sponsor engagement – Top driver of project & program success. Newtown Square, PA: Author.

Standish Group. CHAOS Report