Successes and challenges in maturing the PMO

Abstract

Organisational change activities, such as implementing a Project Management Office (PMO) seldom run smoothly. A major challenge for such an initiative is realising the promised benefits.

NCR Financial Solutions Group, the world's number one Automated Teller Machine (ATM) provider, has successfully implemented a PMO and grown it to become a key function within its development organisation.

The PMO in NCR Dundee Scotland has a remit to drive Project and Program Management Excellence through continuous improvement of people, practices, systems and organisational accountability.

This paper commences with why and how NCR implemented a PMO. It then goes on to describe how the PMO has been further developed and matured within NCR's development organisation. The successes and challenges of growing and maturing the PMO into a key function are also detailed.

The PMO, like any support function, needs to meet the needs of its customers if it is to survive and develop. Customer Management activities will be highlighted as a key factor for success of the PMO. Another important success factor is the need to have a balanced skill-set across the members of the PMO during its development.

Both the tangible and intangible benefits of the maturing PMO are detailed as well as the challenges for the future.

This paper gives the opportunity to gain an insight into the successes and challenges faced by the PMO to achieve Project Management Maturity and tangible improvements in business performance. It provides excellent learning for other organisations embarking on, or in the midst of, developing and maturing a PMO.

Introduction

NCR, founded in 1884, manufactured the world's first cash register. It is now a multi-national organisation involved in providing solutions that are designed specifically to enable NCR's customers to build, expand and enhance their relationships with their customers by facilitating transactions and transforming data from transactions into useful business information.

Today, NCR has 28,500 employees worldwide and revenue of $6 billion. NCR is made up of 5 different business units. The NCR plant in Dundee Scotland is part of NCR's Financial Solutions Group business unit. It employs 1500 people and is NCR's headquarters for the design and development of Financial Self Service Products - the most recognisable product being the Automated Teller Machine (ATM).

Within the Dundee location there are 500 people involved in Research & Development of which approximately 35 are Project Managers. At any one time there are typically about 60 active product development projects. Projects involve the development of software, electronics, hardware or a combination of all three, and can typically be anything from 2 months to 2 years in duration.

Although the NCR Financial Solutions Group business unit is the world's number one ATM provider, competition in the market place is strong and there is an ever growing need to improve business performance.

The need for change

There are a number of factors and activities required for any organisational change activity to succeed. One of the primary factors is for change to be recognised as being needed.

The need for change was understood within the development organisation. Some initiatives were already underway to address the situation. It was realised at a senior level that the coordination, focus and impact of these activities needed to be improved if the business were to fully reap the benefits.

The first step to address this was to conduct an effectiveness study within the development organisation. One of the outputs of this effectiveness study was the need for an enhanced project development capability. The success rate of development projects was seen as a major issue impacting business performance.

The creation of a Project Management Office (PMO) was seen as one possible solution to address this issue.

The creation of a PMO would ensure that the appropriate focus was given to enhancing project development capability, the objective being to grow a Project Management culture that delivers to commitments. The PMO would drive this culture change.

Creating the PMO

When creating the PMO, the first challenge was to establish what type of PMO would be suited to the organisational environment and meet the objectives set by senior management.

To assist with this, further assessment of the development organisation was performed. In particular, a Project Assessment Program was created where all currently active projects were assessed, and structured interviews were held with a cross section of project stakeholders.

External resources were used to perform the project assessments. The advantage of this was that the assessment was not seen as being driven by the PMO. Thus any negative feedback regarding a project was not associated with the PMO, who would subsequently have to work with the project team to address the issues.

The goals of the Project Assessment Program were to clean up the development project portfolio on a per project basis and to highlight systemic issues upon which to rebuild Project Management capability.

The output of the assessment activities was a report for each project which detailed specific issue areas and recommendations to progress the project. The report clarified each project's disposition. This was classified as either allowed to continue as is, continue but with recommendations implemented, or put into a recovery mode if in severe difficulties. Projects in recovery had PMO resources allocated to assist them through the recovery.

The project issues identified during the Project Assessment Program were then analysed to identify systemic issues. There was found to be a strong correlation between issues found and project slippage. Further analysis of the systemic issues was done to identify the drivers of the issues. Key drivers are typically the root causes which, by tackling first, will yield the maximum positive impact. Finding the key drivers and addressing these first was key to implementing an effective solution.

The information obtained from the Engineering Effectiveness Study and the Project Assessment Program was used to decide which areas the PMO would focus their activities. Three areas of focus were initially identified: Project Management Practices, Project Managers Competencies, and the Project Management Systems being used.

Creating a PMO strategy

The development of a PMO strategy was relatively straightforward given the information available on project issues, issue drivers, and the three areas of focus to be addressed by the PMO.

Development of the strategy was done by detailing activities for the three areas of focus and directly linking them to the issues and key drivers to ensure plans were thorough and complete.

When developing the PMO strategy a risk assessment was performed to identify risks to the PMO's activities. As with any organisational change initiative, there would be people assisting the initiative and those against it. Identifying and addressing risks prior to implementation of the strategy would help increase the probability of success.

As part of the risk assessment, an assessment of the cultural environment within the development organisation was performed. Like most change management activity, implementing a PMO must take account of the cultural environment if it is to have any chance of success. This exercise produced a list of cultural traits which were prevalent prior to PMO implementation. A corresponding target culture was then produced. Although this target culture does not have definitive measures, it is seen as a useful goal to move towards.

The ‘as was to target culture’ list was often used to communicate the rationale behind the PMO's strategy, and was seen as a good high level view of the direction in which the development organisation was driving.

A competency assessment of the Project Managers was performed. This was done to identify development opportunities for individual Project Managers as well as identifying specific areas for the PMO to address. Training programs were created from the results of the competency assessment.

Within the organisation another major improvement initiative in progress was a program to implement the Capability Maturity Model Integration (CMMI) (CMU/SEI 2002-TR-004). CMMI focuses primarily on processes, with Project Management being a core component. The PMO and the CMMI program successfully complement each other in many ways towards improving Project Management Maturity. The PMO is a major influence in driving the implementation of CMMI, and the outputs of the CMMI program strengthen the position of the PMO as drivers of change.

Implementing the Strategy

Creating a PMO, performing assessment activities and creating an appropriate strategy to meet the objectives set by senior management was a six month task.

There were many challenges faced in implementing the PMO strategy. The major ones were as follows.

As previously mentioned above, for any organisational change initiative, there would be people assisting the initiative and those against it. Analysis was performed to identify the support or otherwise of the various stakeholders with regards to the PMO's activities. The main action performed to address this issue was to hold one to one meetings with the doubters to communicate the details of the PMO strategy, capture their views and discuss concerns.

The PMO, like any service department within an organisation, needs to meet the needs of its customers if it is to survive and develop. A major challenge is to create and execute effective customer management activities. This was done by firstly identifying customers and capturing the different needs of these customers. A communications plan was then created which detailed what, when and how information was supplied to the different customers to ensure that their needs were met.

The desire for any new department to show an early positive impact is very strong. Identifying opportunities where the PMO could get easy and quick wins to show a positive impact was done by assessing planned activities using an Impact / Effort matrix. Several areas which were identified as being low effort and high impact were implemented early. One example was the quick implementation of a structured lessons learned forum where Project Managers present their projects successes, challenges and recommendations. Actions are captured in these sessions and progressed by the PMO. A growing repository of ‘top tips’ is another beneficial output of these sessions.

In addition to showing an early positive impact a major challenge was to establish appropriate measures to show the impact of its overall strategy. Overly complex measurement systems are challenging. Too many or too complex measures can be counter-productive. The key action to address this was to utilise measures that focused on the key business objectives. Using measures that directly relate to the bottom line helps keep senior management interested and engaged. This is important given that it takes time for benefits to become visible across the organisation.

Developing and maturing the PMO

Implementing and establishing a PMO is difficult. Developing and maturing a PMO can be even more of a challenge. Some of the challenges faced by the PMO in developing and maturing its activities are now detailed.

The implementation of the PMO's strategy has influenced and changed many of the ways the development organisation operates and the way that it performs Project Management. These changes include improved application of methods and practices to managing projects, and a parallel improvement in Project Managers' competencies. As Project Management Maturity increased, needs changed. A challenge for the PMO was to ensure that its plans and activities took account of these changes. This was done by regularly assessing the development environment and current activities against the changing needs of its customers in order to identify and address any gaps. The task of the PMO was to further develop and mature the services delivered. For example, Project Planning Support Services originally developed for Project Managers have been expanded and modified for the Product Management function.

Improvements to several areas of Project Management within the development organisation gave the PMO the opportunity to expand its remit and develop its activities into new areas from what was detailed in its original strategic plans. For example, success at a Project and Program Management systems level was the catalyst for expanding the PMO's role into Project Portfolio Management.

The opportunity to address new areas came not only from successes in improving the original targeted areas of focus, but also the fact that if the impact of the PMO's activities were to be fully realised, then other areas would need to be addressed. For example, functions and activities that were dependencies to and from the development Project Managers were opportunities for the PMO to address. An important aspect for the PMO in expanding its remit was to apply the same rigour as was used when originally creating and implementing the PMO. New areas of focus had to be identified that were appropriate to any expanded remit. The PMO's activities were continually assessed to identify opportunities for stopping, expanding, or refocusing some activities.

As the PMO increased its areas of focus there was a danger that resources would be spread too thinly for activities to be implemented adequately to ensure a positive impact was made. Increasing the areas that the PMO addressed often led to new customers to manage. However, there is a danger that existing customers can be easily disappointed if they see a reduced service level. This issue was tackled by simple capacity management.

To assist with performing capacity management, activities are separated into four categories:

• -     Closed, for activities that were completed and ceased to exist.
• -     Maintenance, for activities that were generally complete but require effort to be allocated to ensure that they remain applicable.
• -     In-Progress, for activities that are active and require additional work.
• -     New Opportunity, for activities or areas that are identified as having potential to address.

Current activities and potential new opportunities are regularly assessed against a number of criteria, such as business impact and customer need, to ensure that PMO resources are allocated appropriately. Managing PMO capacity is a constant challenge which comes down to balancing current and future activities in addition to short-term and long-term activities. To cope with emergency situations, which the PMO get called into regularly, there is the need to ‘create’ extra capacity. This is done by agreeing priorities with the PMO's customers regarding delaying the start of new activities or re-planning active work. Having activities and resources mapped to the four categories assists in this decision making. The key point here is keeping close to customers and giving them visibility of activities. This makes it easier for the PMO to change focus and develop into new areas.

One of the biggest challenges to developing and maturing the PMO is expanding the size of the PMO and developing the overall team's skill-set in line with the maturing organisational environment. A major factor for the PMO's success is undoubtedly the quality of individuals within the team, however of equal importance is the diversity and balance of skills across the team. When increasing the size of the PMO a great deal of effort was taken during recruitment to ensure that new members' skill-sets complemented and expanded the team as a whole. People who had a similar skill-set to that already in the PMO were not recruited. Having a diverse set of skills within the PMO assists in developing the individuals within the team through cross learning. This has been key to developing and maturing the overall skill-set of the PMO.

Successes

The results to date are positive both in terms of achieving improvements in the specific business metrics utilised by the PMO and achieving additional intangible benefits to the organisation.

Two of the key business metrics used by the PMO to track the impact of their activities are improvements to development project schedule variance and reductions in development project cycle time. Both these metrics have improved since the implementation of the PMO's strategy. Some other tangible results have been achieving CMMI level 2 by end 2002 and level 3 by mid 2004.

Intangible benefits realised have been an on-going culture change whereby behaviour is moving towards the target culture in many ways. Several PMO initiatives assist in driving this cultural change such as: the implementation of a formal internal Project Management certification program, regular training sessions for the Project Management community, and a dedicated Project Management website.

Key success factors

There have been many reasons for the success of the PMO so far. Some of the more significant ones are as follows:

• -     keeping close to customers, identifying their needs and doing what they value most from the PMO
• -     identifying different types of customers and implementing appropriate customer management activities
• -     balancing current and new activities by applying simple capacity management to ensure the PMO appropriately develops into new areas
• -     when recruiting new members into the PMO ensuring that their skill-set is diverse from current team members and that they complement the overall team
• -     performance measurements are closely tied to business objectives, in particular improved schedule variance and reduction in cycle time being the key metrics to demonstrate a positive impact of the PMO strategy

Challenges for the future

To realise the potential benefits of implementing a PMO takes time, effort and commitment. Some of the major challenges to developing and maturing the PMO identified as needing addressed are as follows:

• -     Ensuring that the PMO's strategy and activities change and develop as the organisation's capabilities and Project Managers' competencies mature. The difficulty is implementing change at a pace that will improve the organisation without drowning it.
• -     The PMO's activities are seen by most within the organisation as making a positive impact to achieving Project Management Maturity. However, as Project Managers competencies, Project Management practices, and the Project Management systems all improve, the challenge will be in keeping the momentum of the improvement initiatives going.
• -     Similar to this is the challenge of continuing to show improvements to the business performance measures. Improving the metrics will no doubt become more difficult as the high impact opportunities reduce in number and the effort to realise them increases.

Conclusion

Implementing and establishing a PMO is difficult. Developing and maturing a PMO can be even more of a challenge. Like most organisational change activities there are seldom any definitive answers. However to do it successfully, we have found two things to be key:

• -     When expanding and developing the PMO, it is beneficial to recruit people with diverse skill-sets from those currently available within the team and ensure that the overall team skill-set is balanced and aligned to current activities and future opportunities.
• -     When maturing the PMO, it is vital to perform detailed customer management activities. A major aspect being continual assessment of both customers' needs and the maturing Project Management environment to ensure that activities can be aligned appropriately.