PMO Status - 2011

Making Leaders Successful Every Day

August 3, 2011

The State Of The PMO In 2011by Margo Visitacionfor Application Development & Delivery Professionals

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For Application Development & Delivery Professionals

ExEcuTIVE SuMMAryForrester Research and the Project Management Institute (PMI) recently hosted a survey regarding the state of the project management office (PMO) in 2011. The survey garnered 693 respondents, and the results show that today’s PMOs are tasked with significant challenges but also possess great opportunities to become a strategic part of a business’ delivery process. PMOs that the business sees as a strategic partner flourish, and those that struggle to demonstrate value must change the conversation — or the business will bypass them.

TAblE OF cOnTEnTSToday’s PMO: Striving For Strategy

Setting The Scene

Size Drives control

PMO Challenges: Value And Strategy

Where The PMO reports Determines Its Perceived Value

Delivering On Strategy Gets lost In the Shuffle

Challenges Bring Great Opportunities

Focus Is Shifting To Outcomes

communities Are Starting To Take Hold

rEcOMMEnDATIOnS

Raise Visibility, And Focus On What’s Important

Supplemental Material

nOTES & rESOurcESForrester worked in partnership with the Project Management Institute (PMI) to survey 693 project management professionals to gather information used in this report.

Related Research Documents“Why Apps, Infrastructure, And PMO roles Fail” June 2, 2011

“Are you ready To Transform your PMO?” April 8, 2011

“Making The case For The next-Generation PMO” October 16, 2009

August 3, 2011

The State Of The PMO In 2011challenges breed Opportunitiesby Margo Visitacionwith Mike Gilpin and Adam Knoll

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http://www.forrester.com/go?docid=59119&src=60102pdf



© 2011, Forrester research, Inc. reproduction ProhibitedAugust 3, 2011

The State Of The PMO In 2011 For Application Development & Delivery Professionals

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TODAy’S PMO: STRIVInG FOR STRATeGy

The PMO in today’s business environment is an organization in transition. Location, reporting structure, and emphasis vary widely. Today’s PMO leaders are striving to evolve their organizations into strategic partners, and when the environment is supportive, the PMO can become a critical element in achieving business objectives and delivering significant value. When the PMO is in a less strategic position, the story can be quite different.

Setting The Scene

From April 2011 to May 2011, Forrester conducted a web survey hosted by the Project Management Institute; PMI released the survey to the PMI Program Management Office Community of Practice (formerly the Project Management Office Special Interest Group [PMOSIG]), and 693 PMO leaders responded. The leaders answered questions about their organizations, methods, and challenges. While the majority of the members of the group are from North America, about one-third of the survey respondents are from Europe, Latin America, and Asia Pacific (see Figure 1-1). Larger organizations were the most-frequent respondents. Subsequent responses showed that similar environments and challenges were equally spread across the regions.

Size Drives Control

Unsurprisingly, the type of PMO correlates with the size of its firm. While there are many PMO configurations, two models predominate, and in our survey, organization size was the deciding factor determining what model of PMO organizations tended to have (see Figure 1-2). PMOs generally fell into two categories: centralized or decentralized. Looking at the numbers:

· Smaller companies avoid overkill by having a centralized PMO. Surveyed companies with fewer than 100 employees overwhelmingly chose centralized PMOs to manage their project functions (74%). As company size goes up, the percentage of centralized PMOs drops to less than 50%, though the centralized model still far outranks federated and decentralized models.

· In companies small and large, there is room for centralization of the PMO. On the surface, it would seem that strong central controls don’t make sense for larger companies with diverse business units. Among companies with 1,000 to 5,000 employees, the number of firms with a decentralized PMO almost doubles compared with firms that have 500 to 999 employees; however, for even larger firms, this rate of increase slows. Looking at firms with more than 20,000 employees, a little more than half of those surveyed responded that they have a decentralized PMO, but centralized PMOs rank second with 33%.

· Federated or matrixed PMOs lag behind — perhaps because they straddle the fence. Federated or matrixed PMOs — which have a centralized enterprise project management office (ePMO) with individual line-of-business (LOB)/IT PMOs — lag behind their counterparts, with the smallest percentage of respondents claiming the federated model; these were the firms with the most distributed reporting structure, which lends itself to unclear executive support. Centralized ePMOs fare slightly better — the strong centralized unit provides the visible support of a centralized PMO but allows for closer relationships at the line-of-business (LOB) level.

© 2011, Forrester research, Inc. reproduction Prohibited August 3, 2011


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Figure 1 The Survey Is Global And Includes Many large Organizations

Source: Forrester Research, Inc.60102

More than 20,000employees

33%

Fewer than 100employees

12%

Don’t know2%

North America61%Europe

13%

Latin America8%

Asia Pacific10%

Other, please specify8%

“In which region do you reside?”“Approximately how many employees work

for your company worldwide?”

5,000 to 19,999employees

18%

1,000 to 4,999employees

18%

500 to 999employees

6%

100 to 499employees

11%

Company size and region1-1

Base: PMO professionals

More than 20,000 employees 33% 30% 10% 57% 2%

5,000 to 19,999 employees 35% 26% 6% 42% 5%

1,000 to 4,999 employees 48% 13%2%

30% 13%

500 to 999 employees 59% 11%5%

18% 7%

100 to 499 employees 68% 9%1%

17% 9%

Fewer than 100 employees 74% 7% 19% 7%

“What type of PMO does your organization contain?”(Multiple responses accepted; “don’t know” responses excluded)

Centralized PMOfunction

Centralized ePMO with line-of-business (LOB)/IT PMOs

Federated ePMOleading LOB/IT PMOs

DecentralizedPMOs

Other

Source: Forrester/PMI April 2011 Global Project Management Office Online Survey

Type of PMO across different company sizes1-2

N = 229

N = 125

N = 42

N = 76

N = 83

N = 125

Base: 693 PMO professionals



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PMO ChAllenGeS: VAlue AnD STRATeGy

Ensuring delivery of the right projects and programs is no longer a tactical exercise, but not everyone gets it. Today’s organizations straddle the fence in realizing how important project management (PM) and PMOs are in helping them achieve their objectives (see Figure 2-1).

Where The PMO Reports Determines Its Perceived Value

PMOs are often in a precarious position; because they are not always directly involved in delivering projects (unless the project manager reports to the PMO), there are few direct measures that demonstrate the benefits that a PMO delivers to an organization. If the firm’s leaders do not see the PMO as a significant player, they view it more as a cost center and less as a driver for change and right-sized practices. Reporting relationships also play a role because:

· PMOs reporting into VPs of IT have the toughest time proving their value. When a PMO finds itself buried deep within the organization, it has fewer opportunities to effect strategic change. PMOs that are overly focused on administrative and tactical activities aren’t supporting faster delivery and executing the right projects at the right time, and it shows. Only 15% of PMOs respondents from PMOs reporting into VPs of IT believe that their firm sees the PMO as delivering significant value, and a third believe their firm sees the PMO as only delivering some value (see Figure 2-2).

· PMOs reporting to the CIO fare better. PMOs reporting higher into their organization have a slightly improved situation, but not by much. Twenty-two percent of survey respondents with PMOs that report to the CIO think their organization perceives the PMO as delivering significant value, and about two-thirds think that their organization perceives the PMO as bringing some or moderate value. Reporting to the CIO enables a PMO to gain improved insight into business technology strategies, yet this reporting structure still tends to hamper the PMO with too many tactical concerns.1

· When the PMO reports into the business, business leaders see the value of a strong PMO. PMOs reporting into the vice president of business, the CFO, or the CEO are the PMOs whose firms see them as bringing the most the value to the organization. These PMOs focus more on managing the portfolio, devising practices to deliver key programs and projects, and measuring results to ensure that they align with strategic plans.2



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Figure 2 Perception Of PMO Value Varies


PMO in LOB/IT (N = 191)Independent organization (N = 34)Corporate level (N = 191)

Other19%

27%24%

VP LOB34%

29%20%

VP IT8%

6%2%

CIO18%

15%12%

CFO3%3%

6%

CEO19%

21%36%

Base: PMO professionals(percentages may not total 100 because of rounding)


“To whom does your PMO report, and where is your PMO located?”2-1



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Figure 2 Perception Of PMO Value Varies (cont.)

Delivering On Strategy Gets lost In The Shuffle

What PMOs emphasize may be a key reason for a poor showing in perceived value (see Figure 3). When they find themselves buried in the organization chart or are in lower-maturity organizations, PMOs:

· Are tempted to split concentration between governance and execution. Seventy-five percent of surveyed PMOs that are located in the IT/information services (IS) group are tasked with hands-on project management. If a PMO is not sufficiently staffed, this focus can distract it from growing efforts such as project governance and methodology development that can benefit the whole organization. Emphasis on tactical activities deters PMOs from growing project management prowess or becoming a conduit that brings critical information to executives to help them make necessary decisions. In a recent interview, Jennifer McCaffrey of PMI stated:

“The PMI 2010 Pulse of the Profession Survey supports the benefits of a more strategically focused PMO as well. Focusing on higher-level responsibilities such as program and portfolio management and monitoring project success metrics results in better organizational performance via more projects coming in on time and on budget and meeting original business intent.”



Base: PMO professionals

Other 26% 20% 22% 4%

1%

13% 14%

CEO 38% 20% 20% 6% 9% 7%

CFO 36% 14% 36% 5% 9%

CIO 22% 28% 32% 6% 8% 4%

VP LOB 23% 32% 27% 4% 10% 3%

VP IS/IT 15% 25% 33% 7% 12% 8%

The PMO deliverssignificant value

The PMO deliversmoderate value

The PMO deliverssome value

The PMO deliverslittle value

The PMO delivers no value We don’t measure the PMO Don’t know

1%

“How is your PMO perceived in delivering value to overall business growth?”2-2

PMO

’s r

epo

rtin

g r

elat

ion

ship N = 123

N = 144

N = 181

N = 75

N = 148

N = 22



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· Are unable to sell project management and the PMO’s value at the strategic level. PMOs primarily show their value through repeated successful execution. Unfortunately, fewer than half of our surveyed PMOs located in the IT/IS group are focused on training, practitioner competency development, or project management maturity. When PMOs focus purely on execution, they cannot take the time to drive best practices that enhance the value that PMOs bring.

· Miss opportunities because the portfolio and resources are not a priority. Only 60% of PMO respondents whose PMO is located in the IT/IS group included portfolio management as a focus. In PMOs that are far away from the selection process, a portfolio management focus can help PMOs ensure prioritization of the right projects. Less than 40% of these PMO respondents list resource forecasting or resource allocation as a focus, a lack that can also cause problems; when the PMO has little insight into the portfolio and resource planning, it can’t consistently manage shifts in priorities that affect resource allocation.

Figure 3 PMO Focus Is Scattered


“What is the focus of your PMO?”(PMO located in the IT/IS group)


Base: 217 PMO professionals who have their PMO located in the IT/IS group(multiple responses accepted)

Other 7%

Maintenance management 9%

Service management 13%

Resource allocation 31%

Resource forecasting 38%

Training 39%

Practitioner competency development 40%

Project management maturity 43%

Project management informationresource for organization 56%

Program management 58%

Portfolio management 60%

Reporting 68%

Methodology development 72%

Project governance 75%

Project management 75%



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ChAllenGeS BRInG GReAT OPPORTunITIeS

While PMOs face some significant challenges, there is also much reason to feel positive. Despite their tactical focus, PMOs are starting to shift focus from traditional measures to more-strategic ones that will ultimately support developing next-generation PMO practices.3

Focus Is Shifting To Outcomes

Historically, project managers relied on the triple constraints of schedule, cost, and scope to manage project progress and outcomes. While this approach may help keep a project on track, it’s not focused enough on delivery. Value measurement isn’t yet pervasive — in fact 24% of our respondents whose PMOs are located in the IT/IS group don’t measure it at all — but more PMOs are starting to take a broader view in order to (see Figure 4):

· Determine business success. Even PMOs that have a tactical focus are turning their concerns toward ensuring that the projects executed align with business objectives. Fifty-one percent of PMOs located in the IT/IS group measure alignment to business objectives as a key metric for determining PMO success, and 29% measure portfolio alignment. Using metrics like these is an important step toward making project management and the PMO a critical part of the planning and delivery process.

· Measure customer satisfaction. Today, meeting baselines is important, but it’s not quite as important as knowing the customer is happy with the outcome and using the application. Forty-nine percent of surveyed PMOs located in the IT/IS group use this measure as a key metric to help them determine success — and we expect more PMOs to begin doing this as business technology further integrates into organizations, driving business growth.

· Remember the basics. Moving to more-strategic measures is a positive step that shows that the PMO and project delivery teams are committed to doing the right projects to bring value to the organization. However, the basics are a major part of what drives sustained support for project management and the PMO; 47% of respondents with PMOs located in the IT/IS group noted that their PMO continues to use schedule and budget performance as a metric for showing critical success.



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Figure 4 Organizations Measure PMO Effectiveness using A Variety Of criteria

Communities Are Starting To Take hold

In the survey, 60% of respondents from PMOs located in the IT/IS group cited the business’ understanding of project management as one of their top challenges (see Figure 5). One way to combat this is through education. Building a better understanding of project management is paramount to creating a supportive, transformative environment. Forty-two percent of our respondents whose PMOs are located in the IT/IS group are starting to do this via communities of practice (see Figure 6). By creating a community of practice, PMOs can:

· Increase perception of value. Especially in IT organizations, PMO communities of practice (CoPs) can share best practices and experiences to build practices that work — avoiding practices that look like best practices but in fact are overhead.

· Drive education to business stakeholders who don’t understand their role in projects. Very often, it is up to the project manager to chase stakeholders for information and support. These practitioners can use a CoP share communication strategies that help create better understanding of stakeholder responsibilities without creating unnecessary pain.



“How do you measure PMO effectiveness?”(PMO located in the IT/IS group)


Other 2%

Assessment tools/benchmarks 17%

Successful resource allocation 21%

We do not measure value to the business 24%

Financial alignment 26%

Portfolio alignment 29%

Schedule and budget performance 47%

Customer/stakeholder satisfaction 49%

Achieving business objectives throughdelivered projects 51%



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· Improve and refine tool usage. Thirty-two percent of respondents with PMOs located in the IT/IS group cited adequate tooling as a challenge. Using communities of practice as problem-solving groups helps PMOs focus on ways to improve tool usage to drive better communication and data reporting. Ms. McCaffrey of PMI noted:

“Communities of practice are vital and rich resources, and project managers are taking advantage of them. According to PMI’s 2010 Pulse of the Profession Study, 73% currently belong to an online project management community. Additionally, you can take advantage of specialized knowledge by belonging to various communities. PMI alone has 36 newly formed communities of practice that cover a broad spectrum of practice areas and industries.”

Figure 5 challenges Often represent Great Opportunities


Other 8%

Don’t know 4%

Poor leadership skills of executive sponsor 17%

Clear lack of executive sponsorship 21%

Limited bandwidth of executive sponsor 21%

Ability to collaborate 22%

Lack of ownership by project sponsors 29%

Adequate tooling 32%

Organizational alignment 43%

Organizational maturity 58%

Business’ understanding of project management 60%

“What are the greatest process challenges faced by your PMO?”(PMO located in the IT/IS group)





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Figure 6 communities Of Practice Are Taking root

r E c O M M E n D A T I O n S

RAISe VISIBIlITy, AnD FOCuS On WhAT’S IMPORTAnT

no doubt, PMO leaders don’t have an easy job justifying and sustaining their existence. Value and consistency are necessary to build credibility and define a path to establishing stronger relationships with senior executives. To achieve success with your PMO:

· If your firm buries the PMO deep in the organization, strive for consistent performance. PMOs reporting to VP-level management must determine what types of behavior and performance will bring value to the organization they support. reach agreement about what is possible within the PMO’s span of control, and then work with key stakeholders to build a framework of practices that can deliver measurable results.

· Staff for your span of control. PMOs cannot manage projects, portfolios, and methodology without adequate staffing. If the PMO is small and there is no room for additional headcount, limit the PMO’s responsibilities and be very clear about what it is accountable to deliver.

· Want to raise PMO visibility? Change the conversation. If the PMO’s goal is to be strategic and work with senior executives, then it cannot and should not focus on tactical practices. Shift emphasis to providing the tools and necessary support to allow people to do their job, and then get out of the way. change the conversation from triple constraints to value, benefits, and flexibility.


Other, please specify 3%

Don’t know 20%

The PMO supports an independent community ofpractice 5%

The PMO participates in a community of practice 18%

The PMO sponsors communities of practice 19%

The PMO does not support a community of practice 35%


“What role do project management communities of practice play in your organization?”(PMO located in the IT/IS group)

Base: 217 PMO professionals who have their PMO located in the IT/IS group



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· use your talent to build out your frameworks. If PMO goals shift to become more outcome-based, then use your talent — the resources who have worked in the trenches — to refine practices into a pragmatic collection of tools and processes that have been road-tested. Education and communication, via communities of practice, must be bidirectional, not pushed.

SuPPleMenTAl MATeRIAl

Methodology

Forrester conducted its Forrester/PMI April 2011 Global Project Management Office Online Survey as a web survey hosted by the Project Management Institute; PMI released the survey to the PMI Program Management Office Community of Practice, and 693 PMO leaders responded. The leaders answered questions about their organizations, methods, and challenges. The survey was fielded from April 2011 to May 2011. Respondent incentives included a summary of the survey results.

Exact sample sizes are provided in this report on a question-by-question basis. Panels are not guaranteed to be representative of the population. Unless otherwise noted, statistical data is intended to be used for descriptive and not inferential purposes.

enDnOTeS1 PMOs still have a relatively high failure rate, and that is often due to unclear organizational understanding

of the role of project management as well as reactive prioritization processes and poor tools execution. See the June 2, 2011, “Why Apps, Infrastructure, And PMO Roles Fail” report.

2 Transformational PMOs report higher in the organization and often have a champion within C-level management. See the April 8, 2011, “Are You Ready To Transform Your PMO?” report.

3 The next-generation PMO supports both the strategic and tactical requirements of project, program, and portfolio management. See the October 16, 2009, “Making The Case For The Next-Generation PMO” report.




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PMO Status - 2011

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