The Power of PMO Leadership
October 2008
Copyright 2008 by Point B Solutions Group, LLP. All rights reserved.
PMO Leadership
• Current Business Issues
• PMO Challenges
• Project Portfolio Management (PPM)
• PMO, PPM, and Project Leadership
• Conclusions
PMO Leadership
October 2008
Slide 2
Business Problem
Companies struggle with formulating realistic
strategic goals and turning strategy into
outcomes
Strategic
Planning
Execution
Results
“90% of Corporate Strategies Are Never
Implemented” – Balanced Scorecard
Collaborative, 2007
PMO Leadership
October 2008
Slide 3
Industry Project Success Measures
Standish Group Results
60%
Percent
50%
40%
Challenged
30%
Success
20%
Impaired
10%
0%
1994
1996
1998
2000
2004
2006
Year
• Success:
on-time, on-budget, with required features
• Challenged: late, over-budget, with fewer features
• Impaired: canceled or delivered but never used
Standish Group
PMO Leadership
October 2008
Slide 4
The State of PMOs
PMO Maturity
Percent of
Companies
50%
40%
30%
20%
10%
0%
Level 1 - Initial
Level 3 Institutionalized
Level 5 Optimized
PMOs have been around for several years, but few are mature
PMO Leadership
October 2008
Slide 5
PMO Underachievement
• PMOs could have much more of a business impact
• Most PMOs fail for these reasons:
• Created for the wrong reason
• Lack of vision
• Lack of executive sponsorship
• Poor execution - inconsistent methods, skills, governance
• Too tactically oriented
• Poor alignment with the business
• Lack of leadership
Most PMOs end up as order-takers
PMO Leadership
October 2008
Slide 6
Can Uniquely Supply
Positioning For Success
Unique supplier
of something
nobody wants
Strategic
Goal
Provide something
that nobody wants
and can’t even do it
uniquely
Commodity
Value to Customer
Guy Kawasaki
PMO Leadership
October 2008
Slide 7
Converting Business Goals into Action
Strategic
Planning
Project
Portfolio
Management
Execution
Results
Project Portfolio Management connects strategy to execution
Why?
• Because it encourages a discipline of strategic investing
• It provides transparency
• It addresses a commonly neglected issue – ‘is the strategic plan feasible?’
• It helps the organization focus on value delivery and execution
PMO Leadership
October 2008
Slide 8
What is Project Portfolio Management?
• PPM - applying the tools and discipline of financial
management to project management
• Portfolios are investments capable of generating value
• Portfolio considerations
•
Investment strategy
•
ROI
•
Growth
•
Profitability
•
Balance
•
Diversification
•
Risk
•
Alignment to goals, mission
PMO Leadership
October 2008
Slide 9
PMO Focus for Strategic Value
Strategy
PPM
Initiatives
Programs
Change Control
Projects
Standards
Lifecycle
Training
Status reports
Templates
PMO Leadership
October 2008
Slide 10
Project Portfolio Management Goals
• Align projects to strategy
• Facilitate the transformation of strategy into results
• Eliminate marginal and poor project investments
• Provide a way to evaluate, prioritize, and sequence
projects
• Optimize resource utilization
PMO Leadership
October 2008
Slide 11
Breaking PPM Down
The Process of PPM
Construct
Portfolio
Account For
All Projects
Evaluate
Review
Investment /
Resource
Allocations
Prioritize
Match Investments Program/Project
to Opportunities,
Management
Align with Business
PMO Leadership
Assess
Results
Execute
Financial
Retrospectives,
Project Post
Mortems
October 2008
Slide 12
Constructing a Portfolio
Business Info
Project
P14
P18
P4
P3
P7
P16
P19
Line of
Bus.
Internal
LOB-A
LOB-A
Internal
LOB-B
LOB-D
LOB-C
Business Initiative
Fulfillment Throughput
Customer Support
Fulfillment Throughput
Customer Support
Grow US Sales
Grow US Sales
SOX
Project Name
Type
Maintenance
Maintenance
Enhancement
Enhancement
New
Enhancement
Maintenance
Financial
Segment
Financial
Gross
Segment
Contribution
Motive
Funded Margin
Growth
Operational
Discretionary
Y
63%
15%
Operational
Discretionary
N
71%
5%
Operational
Discretionary
Y
71%
5%
Revenue
Discretionary
Y
71%
5%
Operational
Strategic
Y
43%
7%
Revenue
Discretionary
Y
60%
13%
Operational
Compliance
Y
63%
15%
Metadata
PMO Leadership
Investment
(budget)
$ 11,233,456
$
8,607,643
$
7,000,000
$
3,569,540
$
2,000,000
$
965,432
$
890,755
Investment
as Percent of
Total
27%
21%
17%
9%
5%
2%
2%
Cost
October 2008
Slide 13
The Portfolio is Your Strategy
Investment By Line of Business
Investment By Contribution
$1,600,000.00
$1,400,000.00
$1,200,000.00
$1,000,000.00
$800,000.00
Proposed
$3,500,000.00
$600,000.00
Funded
$3,000,000.00
$400,000.00
$2,500,000.00
$200,000.00
$2,000,000.00
Proposed
$1,500,000.00
Funded
$0.00
LOB 1
LOB 2
LOB 3
LOB 4
Internal
$1,000,000.00
$500,000.00
Investment By Initiative
$0.00
$1,800,000.00
$1,600,000.00
$1,400,000.00
$1,200,000.00
$1,000,000.00
$800,000.00
$600,000.00
$400,000.00
$200,000.00
$-
Revenue
Operations
Proposed
Funded
PMO Leadership
October 2008
Slide 14
Using PPM To Increase Strategic Results
Strategic
Planning
Execution
Results
Two Key Pitfalls PPM Can address:
• Inadequate Resource Management
• Inadequate Risk Management
PMO Leadership
October 2008
Slide 15
PPM Ensures Feasibility – Capacity Planning
Are there enough of the right resources?
Total Staffing
1,800.00
Hrs
1,600.00
1,400.00
1,200.00
1,000.00
800.00
600.00
400.00
Adj. Supply
Total Demand
Proposed
Mar
Feb
Jan '08
Dec
Nov
Oct
Sep
Aug
Jul
200.00
0.00
Funded
UI
300.00
250.00
Hrs
200.00
150.00
100.00
50.00
0.00
Jul
Aug
Sep
Oct
Nov
UI Adj. Supply
Dec
UI Total Demand
Jan '08
UI Funded
PMO Leadership
Feb
Mar
UI Proposed
October 2008
Slide 16
PPM Ensures Feasibility – Risk Management
Political Exposure
Risk Profile
Impact on Core
Business
Ability to Deliver
Key Factors Contributing to Risk
PMO Leadership
October 2008
Slide 17
Risk DNA – Contributing Factors
Organizational
Acumen and
Experience
Requirements
Risk Profile
Ability to Deliver
Schedule Flexibility
Resource Capacity
• Do we control the plan?
• Do we know what we are doing?
Quality Control
• Do we have the commitment to deliver?
PMO Leadership
October 2008
Slide 18
Visualizing Risk Using PPM
Portfolio Mix
(bubble size = investment)
10
9
P10
8
P8
P5
P6
Reward -->
7
P3
6
P1
5
P24
4
P7
P2
3
P3
2
P12
P9
P4
1
0
0
1
2
3
4
5
Risk -->
6
7
8
9
10
Is there the right balance?
PMO Leadership
October 2008
Slide 19
PPM Benefits
• Project investments discussed strategically
• Feasibility and risk assessed and mitigated before investing
• Transparency to stakeholders
• Resources deployed on only the highest-value projects
• Detailed trade-offs understood when new ideas are
suggested
PMO Leadership
October 2008
Slide 20
PPM Summary
• Project Portfolio Management involves applying the
tools and discipline of financial management to
project management
• PPM requires competencies in strategic planning,
financial and project management
• Overall objective of PPM: Manage projects, people,
processes, and information assets for maximum
business benefit
• PPM requires leadership to be successful
PMO Leadership
October 2008
Slide 21
Project Leadership
Project Leadership is expertise that combines the science
of project management with the art of leadership essential
to solving tough problems and getting business results.
PMO/PPM/Project Leaders:
• See the big picture
•
•
•
•
•
•
•
Get people to agree on priorities
Are decisive
Accommodate different executive styles, processes do not
Are accountable; they address issues and mistakes
Understand how to turn vision into reality
Conquer uncertainty
Deliver results
PMO Leadership
October 2008
Slide 22
Managing & Leading
“Managers are people who do things right and leaders are people who do the right thing.”
– Bennis and Nanus, 1985
“Most U.S. corporations today are over-managed and under led.”
– Kotter, Harvard Business Review 2001





Enforcing Standards
Resolving Issues
Budgeting
Planning
Reviewing Status





PMO Leadership
Coaching
Providing Vision
Motivating
Aligning Stakeholders
Demonstrating Standards
and Providing Structure
October 2008
Slide 23
Management & Leadership Behaviors
Leadership
Project Leadership behaviors augment and complement
project management behaviors to enhance execution
Envisions
Management

Innovates
Seeks
Feedback
Anticipates
Supports
Leverages
Identifies
Project Tasks
Estimates
Accurately
Makes Sound
Decisions
Adapts
Motivates
Solicits Input
Challenges
Manages
Schedule
Fosters
Ownership
Manages
Budget
PMO Leadership
Mitigates
Issues/Risks
Promotes
Teamwork
Acts with
Integrity
Identifies
Issues/Risks
October 2008
Communicates
Slide 24
Leadership In Action – Strategic Execution
The Problem: The client needed to evolve its online platform in order to
grow and better serve customers.
The Challenge: Complex, transformational projects often fail
Project Leadership Behaviors:
• Created a shared vision and a process for achieving it
• Established high trust at the executive level
• Created an entrepreneurial atmosphere focused on execution
• Garnered crucial support from around the organization
• Forced tough decisions that kept the project focused and moving forward
The Result: A successful open, scalable new technology platform
PMO Leadership
October 2008
Slide 25
Project Leadership Testimony
“Point B brought in a way of thinking that elevated
the internal mindset and successfully got us through
this inflection point. They helped us focus our
innovation and gave us a lasting understanding of
how to handle large-scale projects in times of
extreme transition.”
- CEO
PMO Leadership
October 2008
Slide 26
Conclusions
• Business issues abound
• 90% of corporate strategies are never implemented
• Project success rates are only 35%
• Most PMOs rate themselves at 2 out of 5
• PMOs should strive to be a business partner, not an
order-taker
• PPM will help improve business results
• PMOs, PPM, and Project Execution will not be
successful without leadership
PMO Leadership
October 2008
Slide 27
Contact Information
• For a copy of these slides or other questions, contact:
• Gaylord Wahl
[email protected]
206.517.2762
PMO Leadership
October 2008
Slide 28
About Point B
Point B is the first professional services firm focused on project leadership
and execution. Founded in 1995, the firm provides a diverse and experienced
team of locally-based project leaders to companies in Seattle, Denver,
Portland, Phoenix, San Francisco, Los Angeles and Chicago. Organizations
ranging in size from startups to Fortune 100 corporations turn to Point B for its
ability to step into any segment or role of a mission-critical project and help
lead it to success. And, unlike many professional services firms, Point B
works exclusively for its clients and does not enter into alliances, reseller
agreements, or other relationships that might compromise the firm's
objectivity. Point B has attracted top project leaders from various industries by
offering a culture that promotes flexible work schedules and well-rounded
lifestyles for its more than 300 professionals. Additional information on the
firm and its offerings can be viewed online at http://www.pointb.com.
PMO Leadership
October 2008
Slide 29