At Telstra, the PMO Influence Starts at the Top
BY SARAH FISTER GALE
PORTRAITS BY PETER TARASIUK
From left, Rob Loader, PMP, Warwick Bray, Terence Koo and Peter Moutsatsos, PMP
As Australia's largest telecom, Telstra needs to meet the expectations of its hyperconnected customers head-on. From mobile networks to home internet access to pay television, the company has invested heavily in projects to create new ways to deliver uninterrupted service and maintain its market advantage.
But Telstra's project execution wasn't always so sharp. A capital project audit conducted by the company in 2012 revealed that nearly a third of Telstra's strategic project investments were not meeting goals. Missing the mark had the potential to deliver a significant financial blow to Telstra. So later that year, Telstra launched a central project management office (PMO) focused on strategic planning and delivery.
“The CFO came with the mindset that we needed an enterprise-wide deliberate portfolio planning process,” says Rob Loader, PMP, director of capital planning and delivery, Telstra, Melbourne, Australia.
Size: 24 full-time employees
Annual budget: US$924 million
Average project value: US$5.39 million
Since then, the PMO—with the enthusiastic backing of the C-suite—has provided structure and oversight to all of the company's major capital projects. It works with the executive team to define the company's strategic objectives. The PMO consists of an enterprise PMO, a benefits and business case management team, chief projects office team and a portfolio planning team. The full-time PMO staff of 24 oversees more than 1,800 project managers and 1,265 projects worldwide, with an annual value of more than AU$3.7 billion. With stakes that high, there's no margin for error. As such, the PMO collaborates with executives to approve all projects over a certain value to ensure Telstra's investments meet its national and global business goals.
PHOTO BY WILLIAM WEST/AFP/GETTY IMAGES
“We formulate that plan, and we determine the priorities and what areas and what programs will get funded,” Mr. Loader says.
The PMO has powerful influence. Mr. Loader is an executive leader of the capital planning group, so he has the authority to hold business unit leaders accountable for delivering the benefits defined in their project plans—and to influence the shutdown of projects that don't deliver. His team conducts all of the gating approvals and progress check-ins, and if things veer off track, it intervenes to commission a recovery or assert a “strong recommendation for change.” The PMO also closely monitors capital project spending through mandatory monthly reports that are shared with the C-suite.
Telstra's project management office (PMO) has driven a level of discipline and consistency in project execution that is generating real benefits for the company.
Number of targeted project sponsors who attended a university sponsor-training course in 2017.
Since launching its PMO, Telstra has transitioned from a never-stop-a-project culture to one in which nonviable projects are identified and shut down through a formal gating and review process.
“If projects are not performing, we're not afraid to stand up and take funds away from them and put them somewhere else,” Mr. Loader says. “We don't like doing that, but we do it where we have to.”
—Rob Loader, PMP, Telstra, Melbourne, Australia
Positioning the PMO at the top of the company helps it better align with corporate strategy, which is key to selecting the right capital projects and managing resource allocation, says Terence Koo, general manager, business operations, Telstra Media, Sydney, Australia.
“The PMO isn't a division on the side telling people what to do,” Mr. Koo says. “It's there to help project owners execute and deliver resources to the best of their ability. I think it is one of the ways that our PMO provides a strategic advantage.”
—Terence Koo, Telstra Media, Sydney, Australia
As a result, the PMO helps executives prioritize the investments that will deliver the greatest ROI—and then tracks those projects to make sure they deliver the intended results.
“Our PMO's biggest success to date has been bringing discipline to our capital spend,” says Warwick Bray, former CFO, Telstra, Melbourne. “Our capital spend is consistent with our corporate strategy and with business cases. And that's important because we have the largest corporate capital expenditure budget in Australia.”
—Warwick Bray, former CFO, Telstra, Melbourne, Australia
PHOTO COURTESY OF TELSTRA
Telstra transformed old pay phones into more than 1 million Wi-Fi hot spots across Australia.
A laser focus on capital planning also improves the quality, time and cost of Telstra's projects, Mr. Bray says. For example, the company invested up to AU$3 billion in corporate networks and in digitization, and those projects came in on time and are scheduled to deliver the anticipated benefits, he says.
“Tracking benefits is hard, so it's vital that we put in place the resources and processes to track benefits, and then we hold the project owners accountable for realizing those benefits,” Mr. Bray says.
The PMO also became responsible for improving project execution through more definitive planning, a scalable gating process that could be applied to projects of all sizes, and proactive monitoring to ensure every investment is on track to achieve delivery and value outcomes. Mr. Loader says the company follows a value-based management approach to benefits realization that uses leading operational indicators to track and measure value delivered.
“We use classic portfolio management as the enabler to look at where we are going to put our money and what are our priorities,” Mr. Loader says. “It's not just about the planning or the delivery and upscaling. It's about marrying these elements. That became the driving force for the PMO.”
BUILT TO LAST
One way the PMO forges a culture of project excellence is by emphasizing the value of talent development and training, says Peter Moutsatsos, PMP, chief project officer (CPO), Telstra, Melbourne, Australia. For instance, the PMO's long-term strategy includes providing project management certification training for all project professionals. More broadly, the PMO's capability leader built and maintains a comprehensive training program designed to elevate the overall project management skills of the entire organization. The program is based on external benchmarks for project management excellence and features 13 pathways built around technical, business and leadership skills.
“Project managers can work their way through any one of those programs by participating in a series of education, environment and exposure criteria,” Mr. Moutsatsos says.
The training starts with a two-hour intensive project management induction session, which was delivered to more than 400 project managers last year. The company also sponsors in-house study groups for project managers seeking certification. The payoff: Since 2014, the proportion of project managers who are certified has increased from less than 15 percent to 35 percent. An additional 40 project managers are participating in study groups to prepare for the exams, Mr. Moutsatsos says. His goal is to have 100 percent participation in the certification process.
The PMO also is working with the human resources team to hire more project managers who have earned the PMI Agile Certified Practitioner (PMI-ACP)® certification to oversee agile IT projects. Mr. Moutsatsos views the agile certification as another layer of expertise that his project managers can add to their skill set as the company strives to transition from a telecom company to a more well-rounded technology company.
“There's a school of thought that ‘project manager’ and ‘agile project manager’ are mutually exclusive, but I want to demystify that,” he says. “Having an agile set of tools in their toolkit is just another way that project managers can wear different hats and still achieve the desired outcome, whether the project is agile or waterfall or something else.”
The expectation for excellence extends to sponsors and key stakeholders, too. That's why the PMO has a dedicated training program that helps it understand whether a project sponsor can add value to the delivery process and how sponsor support can help the team stay on track and address obstacles as they arise. No such development opportunities existed for sponsors before the PMO. Now, 77 percent of sponsors have participated in training or coaching to improve their skills.
“We encourage all senior executives to sponsor large projects, and educating them about what that means is a big part of it,” Mr. Moutsatsos says.
He also hosts quarterly roundtable discussions for executive sponsors, in which they can evaluate their existing projects and the challenges they might be having. “We encourage them to collaborate and network with other executives in the business so they can get a sense of why sponsorship is important,” he says.
Telstra's PMO also ensures that the right project managers are working on the right projects. As CPO, Mr. Moutsatsos and his team monitor the experience of all project managers to match the most skilled project professionals with the most complex projects. For instance, the biggest projects are assigned to PMO team members. “We lead by example by putting them on the really big complex projects and overseeing those personally,” he says.
When Telstra launched a three-year, AU$40 million project to deploy Australia's largest wireless network, a PMO program manager led the initiative to transform old public pay phones into more than 1 million Wi-Fi hot spots. The project was completed in 2017—within 5 percent of schedule and budget—and 800,000 customers now use the network.
Such outcomes reflect a discipline that's grounded in the PMO's sharp focus on key performance indicators (KPIs). At the outset of each major project, the PMO works with business owners to set targets that outline how it will help the company meet goals in areas such as sales, profitability or customer engagement. By gathering these metrics, the PMO can raise a red flag early if things start to slip.
“We follow up with all business owners to provide monthly KPI data so we can get a sense of which projects are underperforming or over-performing on their KPIs,” Mr. Moutsatsos says. “If a project is underperforming, the senior leadership team will ask the accountable executive to intervene and get that project back on track.”
—Peter Moutsatsos, PMP, Telstra, Melbourne, Australia
In the end, the PMO helps project teams strike a balance between governance and delivery, says Mr. Koo. Finding the right level of tension between managing resource allocation while still providing project teams with enough freedom to accelerate project delivery is a constant struggle—but one Telstra teams are increasingly equipped to manage.
“They have to be very transparent about how they achieve that balance and what role we all play in making sure that balance is maintained,” Mr. Koo says. “Getting that right has been one of their biggest successes.” PM
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