It’s a lesson Sam Gorham has learned well. An IT professional with experience establishing PMOs in various industries, Gorham says a PMO can improve the clarity and flexibility of the company’s project portfolio. “Managing a single ERP project or several smaller projects can be done fairly easily. However, when the number and complexity of projects increase, it becomes more difficult to manage the portfolio without structure. A PMO allows the organization to have one central focal point and becomes the control mechanism needed to ensure proper project management,” says Gorham. The PMO is a governance and standards control function that provides insight and oversight into each project, which can be either a SAP project or other internal projects, as illustrated in Figure 1.   The goal of a successful PMO is to eliminate much of the confusion and uncertainty that can bog down projects large or small. The PMO ensures all-around visibility and transparency into projects and company priorities through regular updates and frequent meetings with key stakeholders.

The Evolution of the SAP Project Portfolio

Companies in many industries have thrived for decades with little evolution of business processes or flexibility to compete in a digital age. As they evolve into a new era of enterprise technology, lowering the cost of ownership by replacing legacy systems, increasing business systems opportunities, standardizing business processes, and otherwise improving their ability to react to changing times become key drivers of success. But investment in multiple IT projects can overwhelm the teams tasked with completing them. Schedule delays and increased costs are common, as project managers and other team members sometimes find themselves caught in the middle between executives, stakeholders, functional team leads, and other project managers working on competing initiatives. Designing and implementing a PMO is a natural step toward coordinating these projects and ensuring effective governance of them. Most organizations start with only a few projects and then expand to additional projects. The result is a need to deliver all projects using a standard approach and adhering to project management fundamentals such as time, budget, and approved scope. “When you have multiple internal units you’re trying to keep happy, you have to have more formality or methodology to what you’re doing. It’s the nature of the beast,” says Gorham.

Selling a PMO Internally

Because executives are a key audience for the PMO, securing their buy-in at the outset is critical to the success of the project. This executive support, however, is also essential throughout the entire project lifecycle. Otherwise, the success of the ERP implementations will be difficult and could result in unmet expectations. “Executives may not understand how a PMO should function, but they do care if the projects are implemented according to some sort of plan,” says Gorham. “While the executives will rarely get into the plan details, they want a comfort feeling that there is a logical sequence and process in place to ensure success.” Securing executive buy-in, then, is largely a matter of addressing the impact of project risks on the specific units affected by each project. When first introducing the PMO concept and the value to executives, it helps if the message is discussed in a very simple, easy to understand way. The initial discussions should focus on the value of increased structure and formality to the business. Executives should hear the realities of project-type work and see a demonstration of how confusion can have a negative impact on the business without effective controls. Speaking to the executives in business terms they understand will go a long way to addressing the most common executive complaints about projects. A list of common executive complaints is shown in Figure 2.   The job of securing executive buy-in doesn’t end with the launch of the PMO, however. Gorham says constant communication is necessary to avoid the perception of the PMO as a project bottleneck, or additional red tape, rather than a facilitator of getting work done in a consistent and expedited manner. “The PMO must consistently show that it is adding value to the business. That can be done in many ways. It is not just implementing change control. It is making sure that the PMO has the company’s best interests at heart, which is why some projects are prioritized above other projects,” he says.

Creating and Enhancing a PMO Roadmap

When planning a PMO, it is critical to follow a detailed roadmap or approach to implementing and enhancing the services provided by a PMO. Gorham suggests following a basic five-step process for designing your approach: Step 1 — Assess the company’s needs. Early in the planning phase, it is critical to gain an understanding of the company’s project management needs. This assessment should account for the needs of the project managers, executives, and other key stakeholders within the organization. A thorough assessment will help secure buy-in at all levels and hone the requirements of the PMO. “The goal is to be a one-stop shop for project management, where you coach the project managers and provide them with tools and templates needed to ensure that all projects are properly managed and have the discipline and rigor needed for a successful implementation,” says Gorham. The result of Step 1 should be a comparison between the “As Is” and “To Be” statuses of each aspect under the PMO’s purview.

Step 2 — Plan the move from “As Is” to “To Be.”

Once the assessment is complete, the project leader should map out the steps necessary to get from here to there (a plan that gets the PMO from a state of “As Is” to “To Be”). A detailed and thorough assessment of the work necessary for each requirement helps you set realistic expectations regarding functionality and dates for the delivery of the “To Be” state. “Let’s say there are 10 things the business wants the PMO to have in the ‘To Be’ state. You need to prioritize those 10 based on the needs,” says Gorham. “Start ‘bucketizing’ them into releases, which could be monthly, quarterly, or whatever timeframe suits your stakeholders. Then, based on the current workload of those impacted by the change, you can validate that what you place in the buckets is realistic and can or cannot be completed in that timeframe. If it cannot be done, take a look at the items in the various buckets and re-plan the ‘To Be’ items that are in question.”

Step 3 — Secure buy-in on the approach.

Once again, it is critical to view each step from the perspective of stakeholders and team members — especially the project managers and the functional team leads. Gorham says their eventual buy-in is critical since they are typically the ones that will perform additional work and provide inputs and information to the PMO, in addition to their current duties. “The people you’re selling this to are typically not the ones who are going to be doing the work,” he says. “You want to get the managers and stakeholders on board because it’s much easier to sell it to the resources when you can go in there and say the managers are already on board with this.”

Step 4 — Train everyone affected by changes.

The implementation of a PMO will likely lead to increased or altered tasks for many team members, such as the project managers and functional team leads. Typically these changes are relatively small, but securing cooperation from team members can still be challenging because they have to attend to other tasks and projects. Rather than sending an email detailing the changes (such as a new service or offering), Gorham suggests arranging brief training sessions — ideally in person — to review the changes and discuss how the change affects him or her. For workers in remote locations, a short conference call using Web conferencing software such as WebEx can suffice.

Step 5 — Implement and monitor the results.

Monitoring the value of a PMO is especially important, since many on the business side will inevitably view it as additional work rather than a critical component of the company’s IT initiatives. Some on the business side may be inclined to believe that the PMO is going to add red tape or overhead, so constant reinforcement of the PMO’s value to the business is key. “The PMO needs to produce results the business can use to help make decisions and ensure that the overall business strategy is met,” says Gorham.

Creating a Change Control Board and a Governance Board

One of the primary goals of a PMO is governance. The PMO is responsible for deciding what needs to be governed based on the needs of the organization, says Gorham. One approach to governance is the creation of two oversight boards — a Change Control Board and a Governance Board. The Change Control Board, which should meet weekly, comprises personnel from the IT and business departments, including project teams and support staff, business process owners, and selected super users. When the business generates change requests, the Change Control Board approves, rejects, or defers the change based on factors such as cost and necessity. Gorham says the Change Control Board can typically handle around 90% of requests. The Governance Board, on the other hand, is comprised of more senior stakeholders and ensures that the each request meets the company’s overall business strategy. For this reason, the Governance Board has ultimate authority over the PMO’s project priorities.

Using a Project Prioritization Matrix

Because the basic aim of the PMO is to prioritize and manage projects and initiatives within the division, the PMO should use a Business Case template that includes a simple project prioritization matrix to help determine the ranking order of each project. An example of a matrix is shown in Figure 3. A typical prioritization matrix includes, among other things, information on the number of resources required for the project, who is funding the project, anticipated returns on the investment, business impacts, tangible and intangible benefits. The information is then used to calculate a suggested ranking. “Based on whether you choose high, medium or low, each factor has a different value. For example, a project risk of ‘High’ could be three points while a project risk of ‘Moderate’ could be two points. These values can then be tabulated and the project is given a score that helps the PMO suggest a rank,” says Gorham.

Managing the PMO

Once the PMO is established, project and portfolio managers must continually enforce the standards and requirements set by the PMO. This is easy if the PMO initiative received complete buy-in at all levels, but that is unlikely, says Gorham. Instead, the PMO and its representatives must maintain a disciplined routine of selling value back to the company. This is accomplished, Gorham says, by adhering to a strict routine of meeting with executives and demonstrating the successes of the PMO. To maintain credibility, the PMO must also demonstrate a fundamental understanding of the business. “You have to implement what the business needs — no more and no less. And you have to make sure the timing is right. You need to be aware of the other activities that the stakeholders and end users are doing so that you implement projects at the right time. This will help make the implementation more successful because the new service implementation is not competing with other higher priority items,” says Gorham. Finally, there is the issue of project cutbacks and the place of the PMO in rough economic times. Regardless of the overall climate within an industry, the infrastructure of the PMO is just as valuable in lean times as in times of plenty, says Gorham. The PMO should be flexible enough to adapt processes, methodology, and controls based on the changes in the industry. “The PMO does more than just watch projects. The PMO provides team members with the methodologies, tools, and templates to do their jobs,” he says. “If the PMO has the infrastructure in place, it doesn’t matter if you have five projects or 500.”