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Gartner EXP Premier Reports

Growing IT’s Contribution: The 2006 CIO AgendaJanuary 2006

Building Business Smarts in ISNovember 2005

Overcoming Change Obstacles in the Public SectorOctober 2005

Applying Enterprise Architecture September 2005

The CIO’s Personal Contribution Scorecard July 2005

Changing Business ProcessesMay 2005

Perception Is Reality: Communication Strategies for Public Sector CIOsMarch 2005

Playing to Your Advantage: Proven Practices of Midsize-Enterprise CIOsMarch 2005

Delivering IT’s Contribution: The 2005 CIO AgendaJanuary 2005

Making Time: The Office of the CIONovember 2004

The New Shape of ISSeptember 2004

Improving the CEO’s View of the CIOJuly 2004

Upgrading the IS ScorecardMay 2004

Preparing for the Upswing: The 2004 CIO AgendaMarch 2004

Building Brilliant Business CasesJanuary 2004

CIO Credibility: Proven Practices From the Public SectorNovember 2003

Geosourcing IS: Is It Right for You?November 2003

Taking Yo

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Contents Executive summary 4

PMOs evolve through three stages as they mature to meet ever-increasing business needs. CIOs must ensure that their PMOs master the basics of their current stage before evolving them to the next stage.

Section 1 PMOs must evolve as business needs change 8 As business needs evolve from risk reduction to resource management to business growth, CIOs evolve their PMOs through the project, program and portfolio management stages.

Section 2 Reduce business risk with a project management office 18 A project management office can reduce the risk of project schedule slippage, cost overruns and scope creep by focusing on a standard project management process, basic tools and project manager development.

Section 3 Optimize resource use with a program management office 32

A program management office can improve resource management across business and IT projects and programs by combining related business and IS projects into programs, as well as by implementing governance, communications programs and collaboration tools.

Section 4 Contribute to business growth through a portfolio management office 46

A portfolio management office can contribute to business growth by optimizing the mix of project and program investments and focusing on benefits realization and knowledge management.

Appendix A Organizing the PMO 62Appendix B Representative PMO tools and frameworks 66 Further reading 67

march2006

Taking Your PMO to the Next Stage

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67Taking Your PMO to the Next Stage

Gartner EXP reports

Aron, D., Tucker, C. and Hunter, R., Show Me

the Money: Advanced Practices in Benefits

Realization, Gartner EXP CIO Signature Report,December 2005

Tucker, C. and Rowsell-Jones, A., Getting

Priorities Straight, Gartner EXP Premier Report,September 2002

Tucker, C. and Woolfe, R., Building Brilliant

Business Cases, Gartner EXP Premier Report,January 2004

Core research

Light, M. and Stang, D., “Magic Quadrant for IT Project and Portfolio Management—2005,”G00129208, June 22, 2005

Light, M., Rosser, B. and Hayward, S.,“Realizing the Benefits of Project and PortfolioManagement,” G00125673, January 4, 2005

Light, M., Hotle, M., Stang, D. and Heine, J.,“Project Management Office: The IT ControlTower,” G00132836, November 22, 2005

Books and other publications

Crawford, J. K., The Strategic Project Office: A

Guide to Improving Organizational Performance,

New York, NY: Marcel Dekker, Inc., 2002

Eglund, R., Graham, R. and Dinsmore, P.,Creating the Project Office: A Manager’s

Guide to Leading Organizational Change,

San Francisco, CA: Jossey-Bass, 2003

Jeffery, M. and Leliveld, I., “Best Practices in ITPortfolio Management,” MIT Sloan Management

Review, Spring 2004

Maizlish, B. and Handler, R., IT Portfolio

Management Step-by-Step: Unlocking the

Business Value of Technology, Hoboken, NJ: John Wiley & Sons, Inc., 2005

Pennypacker, J. S., PM Solutions’ Project

Portfolio Management Maturity Model,

Havertown, PA: Center for Business Practices, 2005

Project Management Institute, A Guide to the

Project Management Body of Knowledge,

Newton Square, PA: PMI Publications, 2004

Rad, P. F. and Levin, G., The Advanced Project

Management Office, Boca Raton, FL: St. LuciePress, 2002

Web sites

Project Management Institute, www.pmi.org

The Online Community for IT Project Managers,www.gantthead.com

Further reading


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Foreword

PMOs are evolving. Shifting from the tactical to

the strategic, PMOs are performing a widening

range of work. They’re supporting business

programs outside IS, such as product launches

and post-merger integration. And they’re helping

ensure that the enterprise invests in the best set

of projects and programs—and achieves the most

benefits. Their stakeholder set is broadening as well

to include business partners and external resources.


PMOs evolve through three stages to perform a wider range of work. Each stage builds on the prior stage. Moving from one to the nextdepends both on the PMO’s maturity and theneeds of the business. CIOs play a leading rolein this evolution.

Chuck Tucker and Hilda Agopian led theresearch on Taking Your PMO to the Next

Stage. This report answers the question, How

can CIOs make their PMOs more effective?

Fifteen CIOs, PMO heads and IS executivesfrom 10 enterprises with established PMOswere interviewed as part of this research. Their best practices and lessons learned aresummarized in the report.

Many individuals from around the worldcontributed to this work, including:

• Contributors to the case studies: San Retna,AAA of Northern California, Nevada and Utah;Garry Whatley and David McBeth, CorporateExpress Australia Ltd.; Mike McLaughlin and

Ken LeBlanc, EMC Corporation; MerissaSmith, Hallmark UK; Jan Cronje and AndréMichau, Metropolitan Holdings Ltd.; AviDuvdevani and Ron Rigores, New York CityHousing Authority; Richard Shapiro, RoyalCaribbean Cruises Ltd.; Patrick Anglard,Thales Group; Ana Paula Keil, TIM Brazil; and Valerie Adamo and Katherine McLean,Workplace Safety and Insurance Board(Ontario, Canada).

• Other members of the Gartner EXP researchteam: Dave Aron, Mark McDonald, TinaNunno, Andrew Rowsell-Jones and Gartneradjunct researcher, Barbara McNurlin.

• Other Gartner colleagues: Nicky Basset,Francois Bonnel, Lyne Bouchard, Ione deAlmeida Coco, Tim Goetz, Robert Handler,Amanda Hatten, Matt Hotle, David Lentz, Matt Light, Anna Maria Nenna, VenessaPenov, Bridgette Randolph, Jonathan Rosenand Ruth Steinberg.


Executive summary

A PMO is a center of expertise that provides

the organizational focus on improving the

management of projects, programs and portfolios.

PMOs evolve through three stages as they mature

to meet ever-increasing business needs. CIOs

play an important role in ensuring that their PMOs

master the basics of their current stage, employ

best practices and demonstrate results, before

evolving them to the next stage.


PMOs must evolve as businessneeds change

From the case studies it is clear that PMOs arenot static. They evolve over time through thethree stages—even though the term “PMO” isused to refer to all three. Through this evolutionthe scope of work changes from tactical tostrategic, and the scope of initiatives changesfrom IT-intensive projects to combinedbusiness-IT programs and finally toenterprisewide initiatives (see figure below).

Disciplines established in previous stages don’t disappear. They provide the foundation to succeed in the current stage.

PMOs at all three stages perform the basics ofmaintaining the project management process,

supplying tools and centrally tracking status.

The project management stage is where projectmanager training, coaching and mentoring havethe most focus.

High-level governance programs andcommunications programs are most frequentlyimplemented at the program managementstage to coordinate business and IT projects.

The portfolio management stage is wherebenefits realization management and knowledgemanagement most frequently take place.

CIOs play an important role in matching thePMO stage to business needs, and planning the evolution. Getting too far out in front of thebusiness or lagging too far behind have similardisadvantages.

PMO scope of work and scope of initiatives change across the three stages

Strategic

Portfolio management• Portfolio scope definition• Overall investment, benefit, risk optimization• Active portfolio performance monitoring• Business environment change adaptation

Program management• Comprehensive program planning• Change and risk management• Coordination of project delivery• Measurement of results• Business-IS collaboration

IT Business-IT Enterprise

Tactical

Project management• Initiation• Budget• Schedule• Resources

Source: Adapted from New York City Housing Authority (NYCHA).

• Deliverables• Scope• Risks• Metrics

Scope of work

Scope of initiatives


Reduce business risk with aproject management office

Defining and implementing an end-to-endproject management process is the first step in establishing a project management office.This requires implementing a flexible projectmanagement process and basic tools forproject planning and reporting.

CIOs should also devote resources todeveloping competent project managersthrough formal training, coaching andmentoring. Not all projects require the samelevel of experience. Use a mix of internal andexternal hires, contractors and external serviceproviders to provide project manager staffingflexibility.

Once you have best practice basics in place,demonstrated improvement in project deliveryand gained credibility, consider broadening thePMO’s scope beyond IT-intensive projects andevolving to the program management stage.

Optimize resource use with aprogram management office

The next stage in the PMO’s evolution is tobecome a program management office.Program management offices coordinate relatedbusiness and IT projects. Programs usuallyimpact multiple stakeholders, last longer andinvolve external resources, so they are morecomplex to manage. Cross-project visibility andfocusing on the interdependencies betweenrelated projects allow program managementoffices to ensure that the right business and ISresources are used at the right time.

To move to the program management stage, anenterprise must first institutionalize its project

management functions. A PMO cannot managecomplex functions if it still spends most of itstime on the basics.

At this level CIOs must focus on establishing an effective governance structure andcommunicating early and often with theprograms’ extended stakeholder groups.

In addition to being the communications hub, aprogram office facilitates collaboration betweenbusiness and IS project teams that are workingin the same program.

CIOs with mature program management officeswho can demonstrate improved programdelivery and resource utilization should startthinking about moving the PMO out of IS andevolving to the portfolio management stage.

Contribute to business growththrough a portfolio managementoffice

Portfolio management offices contribute tobusiness growth by optimizing the enterprise’sportfolio of projects and programs. Theyallocate scarce resources toward enterpriseobjectives, while factoring in risk, desiredreturns and interrelationships between theseinvestments.

The portfolio management office typicallyoperates independently of IS, reporting to theCFO, COO or other senior executive. This givesit the clout to raise portfolio management issuesto the highest levels and make decisions basedon the best interests of the entire enterprise.

CIOs can help extend the portfolio managementoffice’s influence by getting it involved instrategy formulation and benefits realization.


They can upgrade governance to deal withportfolio-level issues.

PMO staff now require new competencies, suchas strategic planning and investment analysis,and more powerful tools to measure, manageand report benefits realization, portfolioalignment and health, and PMO performance,as well as capture lessons learned and promotepositive change.

The figure below summarizes best practices for improving PMO effectiveness. The three-stage framework and the self-assessment at the end of each section can help CIOs manageexpectations, fill in gaps and plan when andhow to take their PMO to the next stage.

See Appendix A to see how case-study CIOs organize their PMO resources. Refer to Appendix B for representative examples of PMO tools and frameworks.

Summary of PMO case-study best practices

Reduce business risk with a project management office

1. Establish a flexible, end-to-endproject management process that balances rigor with overhead

2. Support the process withsimple-to-use tools to plan,manage, track and report allproject activities

3. Make the tools available overyour intranet along with examples and instructional support

4. Provide formal training, coaching and mentoring to both IS and the business to develop competent project managers

5. Be flexible in sourcing andproviding project management resources

6. Provide project managementassistance, e.g., consulting, problem solving, audits and expertise

Optimize resource use with a program management office

1. Expand PMO oversight to include business and IT projects, and projects sourced externally

2. Institutionalize project manage-ment discipline into the culture to free up resources to focus on program management

3. Use program-level visibility toidentify and alleviate resource contention issues

4. Educate the business, IS and external stakeholders about their shared responsibilities for ensuring program success

5. Expand governance body membership to represent the expanded stakeholder set ofprograms

6. Establish communications programs to keep all stakehold-ers informed and committed to program success

7. Provide collaboration tools to facilitate the work of the business, IS and external project teams

Contribute to business growth through a portfolio managementoffice

1. Position the PMO organizationally outside IS to give it indepen-dence and senior management sponsorship

2. Enlarge the breadth of PMO influence to extend from strategy formulation through benefits realization

3. Design governance to focus senior management on strategic issues

4. Integrate benefits realization into the entire life cycle starting with planning, and report on it regularly

5. Implement portfolio management tools that provide high-level visibility and analysis that inform decision makers

6. Broaden PMO staff competen-cies to include strategic planning and investment analysis

7. Implement knowledge manage-ment tools to capture, categorize and distribute best practices and lessons learned

PMOs must evolve as businessneeds change


As business needs change—from riskreduction to resource management, toaccelerating business growth—CIOs must help their PMOs evolve through theassociated project, program and portfoliomanagement stages in a planned fashion.

1



1PMOs change their scope as they evolve

A PMO is a center of expertise that provides the organizational focus on improving the management of projects, programs and portfolios.

This report is based on analysis of 10 case studies from enterprises with established PMOs, and review of the PMO literature. The analysisuncovered a three-stage pattern of PMO maturity, shaped by the PMO’sown capabilities and by the changing needs of the business.

But there is no standard terminology. All 10 case-study PMOs usedifferent names for the office (see figure below). They also have differentreporting relationships and organizational structures, which may or maynot include project and program managers (see Appendix A).

This report is structured around the three stages. All PMOs must start at the initial stage, project management, before they can evolve to theprogram management and then the portfolio management stages. Thescope of work changes from tactical to strategic, while the scope ofinitiatives broadens from IT-intensive projects to enterprisewide businessand IT initiatives (see figure opposite).

A project management office is usually created to solve a specificproblem: generally, the IS organization’s inability to deliver IT projects on time, on budget and in scope. It focuses on implementing the basicproject management process, introducing simple tools and developingcompetent project managers. Project managers may “live” in the PMO,or in different IT units, such as application development, or in thebusiness. Seven of the 10 case-study enterprises have their project and program managers reporting into their PMO.

The 10 case studies use varying names for their PMOs

PMO name

Enterprise Portfolio Management Office (EPMO)

Program Management Office (PMO)

IT Project Management Office (IT PMO)

Program Management Office (PMO)

Project Support Office (PSO)

Virtual IT Project Management Office (VPMO)

Program Administration (PA) and PMO

Program Office (PO)

IT Program Management Office (IT PMO)

Strategic Project Management Office (SPMO)

Case-study organization

AAA of Northern California, Nevada and Utah

Corporate Express Australia Ltd.

EMC Corporation

Hallmark UK

Metropolitan Holdings Ltd.

New York City Housing Authority (NYCHA)

Royal Caribbean Cruises Ltd.

Thales Group

TIM Brazil

Workplace Safety and Insurance Board (WSIB)


PMO scope of work and scope of initiatives change across the three stages

Strategic

Portfolio management• Portfolio scope definition• Overall investment, benefit, risk optimization • Active portfolio performance monitoring• Business environment change adaptation

Program management• Comprehensive program planning• Change and risk management• Coordination of project delivery• Measurement of results• Business-IS collaboration


Tactical




Scope of work


It can easily take two to three years for a projectmanagement office to build a track record ofdelivery performance. The disciplinesestablished at the project management stageunderpin the two subsequent stages. Once thePMO has earned credibility with the business, it usually receives requests to help managebusiness projects. At this point it needs toevolve to the next stage.

A program management office managesprograms as well as projects. A program is agroup of related business and IT projects thatsupport a common goal. The PMO focus shiftsto the more complex management of programs,which are larger, take longer, require morebusiness-IS collaboration and involve a morediverse set of stakeholders. Program-levelvisibility and governance give a programmanagement office a way to better coordinate

business and IS resources.

Evolving to a portfolio management office starts when greater visibility into program costs(provided by the program management office)prompts senior executives to question whetherthe enterprise is making the right investmentsand getting the best returns. The portfoliomanagement office provides the information,analysis and oversight to answer thesequestions enterprisewide. Governance focusessenior management on strategic issues. ThePMO is supported by portfolio managementand knowledge management tools.

For clarity and simplicity, this report assumes a single PMO in an enterprise. In reality, largeenterprises may have many, both in thebusiness and IS, and at different stages.


1As they evolve, PMOs add new functions

PMO characteristics change significantly at each stage. The disciplinesestablished in previous stages don’t disappear; they provide thefoundation, credibility and competencies to succeed in the current stage. Each stage builds on the accomplishments of the previousstage(s) (see top figure opposite).

Four case-study PMOs are at the project management stage; four are at the program management stage; and two are at the portfoliomanagement stage. But some are also planning their evolution, or are in transition, to the next stage. The bottom figure opposite lists thefunctions performed by all the case-study PMOs at the same stage, and shows which functions they retain from previous stages.

But the commonalities and differentiators are clear:

• All the case-study PMOs at all three stages perform the basics ofmaintaining the project management process, supplying tools andcentrally tracking status.

• The project management stage is where project manager training,coaching and mentoring most frequently take place.

• The program management stage is where high-level governance,collaboration and communications programs are most frequentlyimplemented.

• The portfolio management stage is where benefits realizationmanagement and knowledge management most frequently occur.

13Taking Your PMO to the Next Stage 13

The characteristics of each PMO stage differ

Project management

Reduce risk

Project mgmt. process, project manager development

Individual IT projects

CIO or application development

Project manager

Primarily IT project managers and project owners

Time tracking, project management, risk mgmt., deliverable templates

Process implementation

Project and project manager performance

Benefit

Focus

Scope

Typically reports to

Role

Engagement

Tools

Skills

Metrics

Program management

Optimize resource use

Program coordination, governance, communications

Multiproject programs

Usually CIO, but sometimes to the business

Program coordinator, program overseer

Business leaders, external partners, ESPs

Program management, resource management, collaboration

Change management

Program performance and resource utilization

Portfolio management

Contribute to growth

Investment optimization, benefits realization

Proposals/projects/assets

Outside IS, e.g., CFO, COO

Investment advisor, portfolio overseer

Senior management decision makers

Portfolio management, knowledge management

Benefits realization

Portfolio and PMO performance

PMOs add functions as they evolve, while retaining most functions from previous stages

Project management

Program management


PMO functions Case-study frequency

Knowledge management

Benefits realization management

Project portfolio management

Communications programs

Governance body support

Management and delivery of programs

Project manager mentoring and coaching

Project manager training coordination

Standards, methods and best practices

Centralized tracking/reporting for all projects

Tool selection/implementation/support

Process development/implementation/support


1Corporate Express Australia Ltd.’s PMO provides a wide range of services

Corporate Express (CE) Australia Ltd. is one of Australia and NewZealand’s leading suppliers of business supplies and services. CE’s PMO is in transition from the program management stage to the portfolio management stage. The PMO manager and 15 project manager contractors currently oversee 54 active projects with costs of AU$300,000 (US$221,000) to AU$5 million (US$3.7 million). Thefigure below shows the wide range of functions the PMO provides.

CE’s PMO services range from tactical to strategic:

1. Operational Services handles the methodology, tools and actualrunning of projects.

2. Competency Services provides education and training services forboth the business and IS and acts as the center of excellence andrepository for project management knowledge.

3. Strategic Services handles portfolio management, strategic alignmentof projects and operational and management reporting.

Corporate Express Australia Ltd.’s PMO services range from tactical to strategic

PMO

Tactical Strategic

Operational Services

• Provides PMO methodologies, templates, tools and governance

• Project managers directly “run” projects

Source: Adapted from Corporate Express Australia Ltd.

Competency Services

• Provides project management expert assistance

• Offers project management training to project managers and the business

• Acts as central repository of project management knowledge

Strategic Services

• Reports at a strategic, executive level

• Manages strategic priorities and milestones for projects

• Prioritizes and aligns projects to the business strategy and objectives


Case Study:

Corporate Express Australia Ltd.—Moving from program management to portfolio management

Corporate Express (CE) Australia Ltd., headquartered inSydney, is one of Australia and New Zealand’s leadingsuppliers of business essentials, such as office andcomputer supplies, business furniture and printmanagement services. Its 2,100 staff in 42 locationsgenerate revenues of AU$1 billion (US$750 million).

CE’s IS organization faced similar issues as other ISorganizations: how to better deliver infrastructure anddevelopment projects, how to more effectively useexisting operational resources and how to maximizebusiness benefits in an environment of too manyprojects. To meet business expectations, IS neededgreater control over its projects, which meant institutinggovernance.

CE’s business culture was not project-oriented. In fact,the business executives feared that a PMO would addbureaucratic overhead and reduce their entrepreneurialsuccess. But CE’s need to comply with Sarbanes-Oxley and the PMO’s success in delivering projectschanged management’s mind; they saw the PMO’svalue and became its advocates.

Moving toward portfolio management

The CIO formed a PMO steering committee,comprising himself, the CEO, COO, CFO, chief logistics officer and the general managers of majorregions and strategic supply. The committee’s charteris to prioritize and align all proposed projects againstthe organization’s strategic plans to ensure maximumbenefits realization from investments, enforce theproject management process and identify and eliminateroadblocks to project success.

To consolidate projects and provide the basis ofportfolio management, the PMO is implementingMicrosoft Project Server and the Enterprise ProjectManagement (EPM) tool suite. “It is critical that allprojects align with the business strategies to ensurecontrol and the delivery of business benefits,” saysDavid McBeth, manager, PMO. “This will help usidentify potential resource contention and give us anenterprise-level view of the project portfolio and theorganizational resource commitments. The PMO

steering committee will be able to select projects thatsupport the business strategy and stop or reorientthose that don’t.”

CE is expanding its PMO education to businesspeople, to help them be better project sponsors, team members and system testers. The PMOmethodology is also expanding to include a detailedchange management strategy and its associatedcommunications plans and computer-based training.

PMO management is evaluating using the enterprisecontent management systems as the central repositoryfor all project documentation. And the PMO isimplementing a scorecard that initially measures theoverall performance of the PMO and all projects, theprogress of each individual project, the performance ofeach project manager and the effectiveness of riskmanagement.

The long-term aim is to measure each competencyarea in the Project Management Institute ProjectManagement Book of Knowledge (PMBOK). Benefitsrealization will also become a new and central focus of the PMO.

Lessons learned

The following factors have contributed to the successof CE’s PMO:

• Getting the basics implemented quickly and matchingproject management methodology and approach toCE’s maturity level

• Improving the delivery on a few very visible projects,to demonstrate value, earn credibility and developkey business advocates to help sell the conceptenterprisewide

• Investing in tools ahead of the need, to deal withexpected challenges, such as managing resourcesacross multiple projects

Based on interviews with, and material from, GarryWhatley, CIO, and David McBeth, manager, PMO,Corporate Express Australia Ltd., December 2005.


1“Understand the role the business wants the PMO to play. Don’tdeliver a battleshipsolution you can’tsupport and that thebusiness doesn’t need.”

— Mike McLaughlinDirector IT PMO and cross-functional servicesEMC Corporation

Plan to evolve your PMO to meet changingbusiness needs

Because of the long lead time required to set up a project management office and to demonstrate results, planning should start as soon as the need is recognized. This is the job of the CIO because the initial work ofPMOs is typically with IT-intensive projects. From there, though, the PMO can evolve.

New York City Housing Authority (NYCHA) is the largest housingauthority in the U.S., serving 417,000 tenants. It has a three-year plan to provide more PMO functions as both the business and IS mature (see box opposite).

CIOs play an important role in matching the PMO stage to businessneeds. Getting too far out in front of the business or lagging too farbehind have similar disadvantages, as shown in the bottom figureopposite.

The PMO and the business need to evolve and mature together. CIOs must ensure that their PMOs are responsive to business needs:

1. Begin with a project management office to improve project deliveryand develop competent project managers—to reduce business risk.

2. Move to a program management office to coordinate business and IS project teams—to better manage resources.

3. Evolve to a portfolio management office to optimize the enterprise’sproject portfolio and its realization of benefits—to contribute tobusiness growth.

The next three sections of the report discuss best practices for each PMO stage.


Don’t let your PMO get too far ahead of, or behind, the business needs

PMO stage

Primary PMO benefit

PMO is seen as overkill

PMO has capabilities the business does not value

PMO is seen as ineffective

PMO does not have the capabilities to meet business needs

PMO has the right capabilities to meet business needs

Project management

Program management


Reduce risk

Enable resource

management


NYCHA’s plan to enhance its IT PMO and governance model

Q1 2006: Portfolio prioritization and management

Q3 2006: IT procurement standards and processes

Q2 2007: Knowledge management capability

Q4 2007: Capability Maturity Model (CMM) assessment

Q3 2008: IT governance model, version 2

Q3 2009: Enterprise content management system

Reduce business risk with a projectmanagement office


CIOs in enterprises with weak projectmanagement capabilities need to focus on the basics. By implementing a standardproject management process, providingbasic tools and developing competentproject managers, a project managementoffice can reduce the risk of projectschedule slippages, cost overruns and scope creep.

2



2Project management offices develop the process,tools and managers

CIOs can improve project delivery to reduce business risk by getting the basics right and building a strong foundation for subsequent PMOstages. The basics include a repeatable project management process,simple tools for project planning and reporting, and competent projectmanagers—usually developed initially for IT-intensive projects (see topfigure opposite).

The PMOs in all four case studies at the project management stagefocus on the same six basic functions:

1. Process development, implementation and support

2. Tool development, implementation and support

3. Centralized tracking and reporting for all projects

4. Standards, methods and best practices

5. Project manager training and coordination

6. Project manager mentoring and coaching

All concentrate on improving the delivery of individual IT projects anddeveloping the competencies of the project managers (see bottom figure opposite).


Project management focuses on the delivery of individual IT-intensive projects

Strategic


Program management


Tactical



Scope of work


Benefit

Focus

Scope


Role

Engagement

Tools

Skills

Metrics

Project management

Reduce risk

Project management process, project manager development

Individual IT projects

CIO or application development

Project manager

Primarily IT project managers and project owners

Time tracking, project management, risk management, deliverable templates

Process implementation

Project and project manager performance

Project management offices develop the process, tools and managers that deliver projects

Project manager mentoring and coaching

Project manager training and coordination

Standards, methods and best practices


Tool development/implementation/support


Project management office functions Project management office case-study frequency

Most common project management office functions

Project management office


2EMC Corporation’s IT PMO is driven by the business’s need forcost and resource control and SOX compliance

EMC Corporation is a leader in information storage and managementproducts and services. Its IT project management office (IT PMO)focuses on process compliance, reporting and training.

It aims to improve compliance by implementing project managementstandards, increasing the use of project management tools andimproving the accuracy of project information for the business, seniormanagement and the CIO.

“We’re driven by the business’s need for better cost and resourcecontrol, as well as SOX compliance,” says Mike McLaughlin, director, IT PMO and cross-functional services. He has a staff of three projectmanagers and two business analysts who support and trackapproximately 300 projects and 1,000 enhancements.

“We’d like our IT PMOtoolset to function like an MRP for IT.”

— Mike McLaughlinDirectorIT PMO and cross-functional services EMC Corporation


Case Study:

EMC Corporation—Focusing on process compliance, reporting and training

Based in Hopkinton, Massachusetts, U.S.A., EMCCorporation is the world leader in products, servicesand solutions for information storage and itsmanagement. EMC had 2004 revenues of US$8.2billion and employs nearly 23,000 people worldwide.

EMC’s IT PMO has a staff of three project managers(PMs) and two business analysts (BAs). It is part of theIT group that handles central operations and IT portfolioand process management. PMOs in other parts ofEMC are responsible for very large projects andcorporate initiatives such as Six Sigma.

The IT PMO handles work typical at the projectmanagement stage. It is responsible for supporting andenforcing technical process standards, tracking projectand portfolio metrics and providing core training forPMs and BAs.

One PM is managing the initial definition and designphase for a project and portfolio management (PPM)system. The new system will augment five systems the IT PMO currently uses: Documentum’s eRoom,which is used for project tracking and collaboration; aninternally developed time-tracking system; Excel, whichis used for project and portfolio management; and twosystems used to track smaller maintenance andenhancement projects.

The system will answer questions such as: “What willthe next project gate require?” and “What is the realstatus of a project based on milestones, spend andestimates-to-complete?”

The other two PMs are currently working onimplementing IT Infrastructure Library (ITIL) processes.

Timely and accurate reporting builds trust

To improve the IT PMO’s processes, Mike McLaughlin,the office’s director, is working on gaining the trust ofbusiness management by giving them timely and

accurate project status information. Then they will becomfortable canceling projects that are not meetingcriteria. “Being able to establish get-well plans early onand track progress can make all the difference inensuring timely and cost-effective delivery of solutionsto our customers,” says McLaughlin.

The BAs handle project reporting and support cross-functional IT projects. They report project status andperformance to the CIO for shared services, applicationdevelopment and client services. Information trackedincludes the number of projects and the number ofbusiness cases reviewed, approved and rejected.Service-level statistics include applications uptime andservice desk statistics, such as time-to-answer andtime-to-resolve. Annually, the IT PMO reports on totalspend and resource allocation.

Project manager training is key

EMC developed its project manager training with a local college. The training covers such topics asbusiness case development, business case financialand risk analysis and management, estimatingtechniques, requirements gathering, projectmanagement methodology and client engagement.Some BAs are involved in training PMs and BAs inother EMC IS departments.

“People will operate under the radar if they don’t seethe IT PMO’s value,” says McLaughlin. “So we offertraining. Our approach is to influence and direct, ratherthan dictate. I also expect to use more industry-standard approaches and tools, such as supportingProject Management Institute training and certification.”

Based on interviews with, and material from, MikeMcLaughlin, director, IT PMO and cross-functionalservices, and Ken LeBlanc, senior director, IT businessoperations and IT portfolio management, EMCCorporation, November 2005.


2Implement a flexible project management processand basic tools

Defining and implementing an end-to-end project management processis the first step for a project management office. Being flexible andhaving “just enough process” is a best practice. To ensure consistencymany enterprises use a standard methodology, like the one from theProject Management Institute (PMI). But they develop a “lite” version toachieve a balance between process rigor and overhead.

Corporate Express (CE) Australia Ltd. provides a good case in point.When David McBeth was hired as the manager to set up the PMO in IS,he focused initially on improving IT project delivery. During the first year,he developed a streamlined project management methodology, with atoolset and controls to support it. “Because CE is a fast-growing,entrepreneurial enterprise, we wanted ‘just enough’ methodology toimprove project delivery, but not so much to slow it down,” says McBeth.

The “lite” version is based on the PMI’s Project Management Book of Knowledge (PMBOK) and rapid application development (RAD)techniques. The supporting tools for standard project proposals, projectplans and project status dashboards are based on Microsoft Office.Microsoft Project is used for project scheduling and reporting.

New York City Housing Authority (NYCHA) facilitates processcompliance with tools

The New York City Housing Authority’s IT PMO took a different approachto gain flexibility. Its methodology is risk-driven. Low-risk projects haveless stringent deliverables and reporting requirements than higher-riskprojects. The office provides Web-based tools to encourage processcompliance.

NYCHA’s IT PMO has taken its tools to the next level. The toolset notonly provides templates, examples and procedures, but also enforcesprocess compliance and delivers just-in-time training for projectmanagers over the intranet. See the key features of NYCHA’s toolset in the figure opposite.

The IT PMO is virtual, in that none of the project managers report to it. Its program manager, aided by consultants, supports 12 enterpriseprojects, 12 infrastructure projects and proposed business projects.

“Because the toolset enforces the methodologyand standards, Idon’t have to be the bad cop. I have more time tocoach and advise to increase projectmanagement skills.”

— Ron RigoresProgram managerVirtual IT projectmanagement officeNew York CityHousing Authority


Key features of NYCHA’s IT PMO toolset

“Smart” templates and electronic project management forms• All project management forms and templates, such as project charter and change control forms, are available online

for one-time data entry.

Simple and route-specific workflow automation• All project management processes are available online as “clickable” processes that provide online help for the

phase and required forms.

• Each form has built-in business rules that reinforce the process, including executive review and approval, e-mail notifications and reporting.

Integrated reporting• An executive dashboard includes project reporting using specific criteria, such as schedule and budget health.

• Common reporting processes are automated and simplified by pre-loading data from project schedules or issues/risks lists into a weekly or monthly status report form.



2“To develop projectmanagement skills, weuse and support theProject ManagementInstitute methodology,membership,professionaldevelopment andcertification for ourproject managers.”

— Katherine McLeanDirector, strategicprogram managementoffice and businessadvisory servicesWorkplace Safety andInsurance Board

Develop competent project managers throughformal training, coaching and mentoring

CIOs should plan on devoting resources to developing competentproject managers to ensure long-term success. Case-study enterprisesuse many kinds of training. The Project Management Institute (PMI) is an often-used source. Many of the case-study enterprises use PMI forprofessional development and certification.

Project management education and training are critical to CorporateExpress Australia Ltd.’s success. The focus is on two areas. One is howto use the methodology and tools, develop clear business requirementsand track benefits realization; both project managers and the businessreceive this training, but the project managers receive more detailedtraining. The second area is understanding what a PMO is and how itachieves buy-in; the business receives this training.

One of the most difficult changes that Mike McLaughlin, director ofEMC’s IT PMO and cross-functional services, has experienced whilecoaching and mentoring project managers is helping them overcome thefear of marking their projects yellow (at risk) or red (in trouble). Yet doingso escalates the problem, gets management’s attention, resolves issuesand can gain additional support. By identifying problems and getting helpearly, project managers can get their projects back to green status whilethey still have time and budget to recover.


Case Study:

New York City Housing Authority (NYCHA)—Benefiting from its virtual IT PMO and governance

NYCHA is the largest housing authority in the U.S., with 13,300 employees overseeing 36,700 residentialbuildings and 181,000 apartments, as well as 86,000leased housing units. NYCHA serves 417,000 tenants.

NYCHA recently developed an enterprisewide ITgovernance model (see page 38) and virtual IT projectmanagement office (VPMO). Together they alignNYCHA’s business and IT strategy and address fourmajor IT shortfalls:

• High project failure and slippage rates

• High rates of projects over budget

• Senior management inability to mitigate delays,failures and financial losses in a timely fashion

• Lack of transparency/visibility of project plans andstatus reports

The PMO is virtual in that the project managers reportelsewhere. “The PMO integrates process flows,templates, online tools and collaborative techniques to standardize IT project selection and managementthroughout the organization,” said Ron Rigores, PMOprogram manager. He reports to Avi Duvdevani, CIOand deputy general manager for IT.

The PMO toolset makes the virtual PMO possible.Rigores leverages the toolset, which uses mainly theMicrosoft Enterprise Project Management (EPM) suite,delivering it via a Web-based project managementapplication integrated with Microsoft Project Server.

Via its IT governance framework and toolset, the PMOtransfers project management skills to NYCHA staff,including the business units and IT strategic partners.Projects are managed by NYCHA staff, not the PMO.The PMO assists and mentors these dispersed projectmanagers in using the toolset, often on a just-in-timebasis.

PMO benefits are evident

The PMO procedures and toolset have fosteredorganizational collaboration, document managementand control over standard reporting. The PMO has alsoimproved governance of IT projects by making theprojects, the issues and risks surrounding them and

their strategic importance all visible. Projects are moreconsistent, and the project management process iscontinually improving.

NYCHA has realized significant benefits from its virtualPMO. First, it has avoided spending US$1.2 millionhiring additional project managers. Second, it hasincreased business unit satisfaction and collaborationwith IT. Third, it has streamlined the business-IT five-year strategic planning process. Fourth, it has improvedthe quality, timeliness and cost-effectiveness of itsstrategic IT programs. And fifth, it has increased ITcapital spending because the business is confident thework will be well managed.

Five factors have contributed to success

CIO Duvdevani attributes PMO and governancesuccess to five factors:

1. Negotiating and developing an IT governance modelthat supports the use of a consistent and repeatableproject management methodology

2. Aligning business and IT strategic initiatives byfostering a strategic partnership with seniormanagement

3. Allowing the governance framework to guide thebusiness through the project management life cycle,developing a project management tool to enforcecompliance and letting the business determine thetechnology portfolio

4. Meeting frequently to review the IT project portfolio

5. Investing in project management training andmentoring

“Together with the business, we can identify newrevenue-generation and cost-saving opportunities.Creating a partnership between IT and the businessowners leads to a more effective use of technology and more successful projects,” says Duvdevani.

Based on interviews with, and material from, AviDuvdevani, CIO and deputy general manager for IT,and Ron Rigores, virtual IT project management officeprogram manager, New York City Housing Authority,November 2005.


2“We have seen a direct impact onproject success rates as a result ofimplementing thePMO. Early warningand intervention introubled projectshave really begun to pay off.”

— Ken LeBlancSenior directorIT businessoperations and ITportfolio managementEMC Corporation

Provide flexible project management staffing

Demand for experienced project managers varies. Not all projectsrequire the same level of experience. A PMO best practice is to beflexible by providing project manager resources from internal sources,hiring externally and using contractors and external service providers.

Corporate Express Australia Ltd.’s PMO selects qualified contractors asproject managers to get the right expertise and experience for eachproject, as well as to flex staffing levels based on demand. Initially,finding the hands-on, jack-of-all-trades type of project manager for itsmid-size business was challenging. The PMO learned to avoid selectingproject managers from very large companies because their approachwas “overkill.”

TIM Brazil has outsourced part of its PMO

TIM Brazil provides mobile phone service to 20 million subscribers. Ana Paula Keil, senior manager of its IT program management office,has outsourced part of the office to a large IT consulting firm. Of her 25 staff, 13 full-time equivalents are consultants. By using externalresources she has increased her staffing flexibility, added specializedproject management expertise and taken advantage of some of theconsultants’ tools. Her staff supports approximately 300 projects. Theproject managers reside in other IT departments, such as applicationsolution delivery.

Best practice PMOs do more than just provide project managers andtools. They provide other types of resources, such as consulting,problem solving, audits and specialized expertise to ensure projectsuccess.


Case Study:

TIM Brazil—Upgrading its IT program management office

TIM Brazil, headquartered in Rio de Janeiro, is asubsidiary of Telecom Italia S.p.A. It provides mobilephone services to 20 million subscribers in Brazil. Its 7,500 employees generate revenues of over US$1 billion.

TIM Brazil created its first PMO to manage the rollout ofits GSM network. Now it has seven PMOs. A strategicPMO reports directly to the president. The six majorlines of business, including IT, each have their ownPMO.

The IT PMO’s mission is to ensure that the IT portfolioaligns with company strategy, all the way throughproject follow-up. Its budget is 2 percent of the total ITcapital expenditure, which includes PM tools andresources to follow up on projects. The IT PMO isresponsible for: portfolio management, to ensurealignment between IT projects and company strategies;project follow-up, to ensure on-time, on-cost, qualityproject delivery; selection and support of PMO tools;methodology, skills and coaching of project managers;and metrics and reports.

The IT PMO is upgrading its capabilities and tools

Ana Paula Keil became senior manager of the IT PMOin mid-2003, reporting to the head of business IT. Herstaff of 25 includes external consultants but excludesproject managers who reside in the other ITdepartments, such as application solution delivery. Shealso draws on external resources to gain staffingflexibility, project management expertise and tools.

Her first priority was to develop a complete projectmanagement methodology. What she developed isbased on the Project Management Institute Book ofKnowledge (PMBOK), which transformed TIM Brazil’sview of PMOs from managing IT projects to managingbusiness projects.

During 2004, Keil rapidly upgraded the PMO’scapabilities and tools:

• Implemented a subset of the new PM methodology;divided the IT PMO team into strategic andoperational activities

• Commenced weekly follow-up on all projects in the ITportfolio

• Developed the ToDoList application to manageproject follow-up

• Worked with the presidential-level PMO to define anIT portfolio aligned with company strategies

• Managed special projects for IT organizationalchange and balanced scorecards

• Customized the Microsoft Enterprise ProjectManagement (EPM) suite to support the newmethodology

In 2005, Keil created 10 task forces to focus ITresources on important company problems. Their work is reviewed daily. At midyear she transferredresponsibility for demand management to a newlycreated relationship management function.

This PMO function consolidates and reports allinformation about IT projects, including:

• Weekly reports to the IT steering committee and to itsItalian parent

• Monthly status reports for all IT projects and taskforce work

• Semiannual and annual performance summaries

• On-demand presentations about IT projects or ITstrategic plans

In 2006, Keil expects to be more involved in developingthe IT strategic plan and reporting the status of theproject portfolio to the board. She will work with thepresidential-level PMO to extend EPM to the otherPMOs, and to include non-IT projects. “We willintegrate projects into programs and develop high-levelcompany views of all programs, not just IT, for seniormanagement,” says Keil.

Based on interviews with, and material from, Ana PaulaKeil, senior manager, IT program management office,TIM Brazil, November 2005.


2Assess your project management office againstbest practices

Focusing on IT projects is the universal starting point for projectmanagement offices. CIOs should ensure that they have the basics in place before attempting to broaden the PMO’s scope beyond ITprojects. If you’re starting from scratch, plan to recruit an experiencedPMO leader and to spend at least two years establishing a consistentprocess, gaining compliance, improving delivery and measuring results.

Use the self-assessment opposite to determine if you have bestpractices in place and to develop a plan to fill in any gaps.

CIOs with high-scoring project management offices can start buildingmanagement support for the next stage—a program managementoffice—by demonstrating project management office successes andhaving business leaders advocate for the PMO by communicating whythey value it. This will create momentum for expanding the PMO’s scopeto include business projects and integrated programs comprising relatedbusiness and IT projects.

The program management office is the topic of the next section.


Do you have the basic project management elements in place?

Done poorly/not at all

0

Done somewhat poorly

1

Done somewhat well

2

Done well/completely

3

1. We have established a flexible, end-to-end project management process that balances rigor with overhead

2. We support the process with easy-to-use tools to consistently plan, track, manage and report all projects

3. We make tools available over our intranet along with supporting materials to increase adoption and compliance

4. We provide formal training, coaching and mentoring to both IS and the business to develop competent project managers

5. We are flexible in sourcing and providing project management resources

6. We provide project management assistance, such as consulting, problem solving, audits and resources

Scoring:14 – 18 You’re in good shape; start planning for the next stage 7 – 13 Determine what else stakeholders need and fill in the gaps 0 – 6 Focus on the basics; get the process and trained project managers in place

Total score

Optimize resourceuse with a programmanagement office


CIOs can improve resource management andensure that the best resources are availablefor the most important projects by combiningbusiness and IT projects with common goalsinto programs that are managed by a programmanagement office.

3



3Program management offices focus oncoordinating related business and IT projects

CIOs increase the scope of their program management offices by integrating business projects and focusing more on theinterdependencies between related projects, to ensure that the rightbusiness and IS resources are used. Programs usually impact multiplestakeholders, last longer and include external resources, so they aremore complex to manage. CIOs should provide leadership in setting up governance bodies and communications programs because both are needed to make coordinated decisions across the organizationalboundaries that programs cross (see top figure opposite).

All four case-study PMOs at the program management stage focus onthe management and delivery of programs, governance body supportand communications programs. All also retain three of the most commonproject management functions (see bottom figure opposite):

1. Centralized tracking and reporting for all projects

2. Tool selection, implementation and support

3. Process development, implementation and support

Metropolitan Holdings Ltd., a South African financial servicesorganization, distinguishes between project and program managementnot by size or cost but by scope and breadth of change. For example,some programs may have low cost, but have a huge impact on thebusiness—affecting a few thousand people or spanning multipledisciplines. Some large programs are subdivided and managed asindividual projects but report at a program level. Ultimately, the projectboard decides “program” or “project.”

“As the project andsystem managersbecome more skilled in project management,the PMO will shift focus from ensuringdelivery to improvingproject integration and planning forinterdependencies atthe program level.”

— Ana Paula KeilSenior manager IT programmanagement officeTIM Brazil


Program management coordinates both business and IT project resources

Strategic


Program management


Tactical

Project management

• Comprehensive program planning• Change and risk management• Coordination of project delivery• Measurement of results• Business-IS collaboration

Scope of work


Benefit

Focus

Scope


Role

Engagement

Tools

Skills

Metrics

Program management

Optimize resource use

Program coordination, governance, communications

Multiproject programs

Usually CIO, but sometimes to the business

Program coordinator, program overseer

Business leaders, external partners, ESPs

Program management, resource management, collaboration

Change management

Program performance and resource utilization

Program management offices support program delivery with governance and communications







Program management office functions Program management office case-study frequency

Most common program management office functions

Most common project management office functions retained by a program management office

Program management office


3Program management requires an institutionalizedproject management culture

To move to the program management stage, an enterprise must first institutionalize its project management functions. A programmanagement office cannot manage complexity unless these skills are widely dispersed throughout IS and the business. A programmanagement office cannot focus on managing complex programs if it must spend much time training, coaching and mentoring.

Metropolitan Holdings Ltd. has institutionalized its projectmanagement culture

Metropolitan reports success in establishing a project managementculture companywide. By 2003 it had entrenched its “managing byproject” (MBP) culture by using it to successfully deliver projects, andtraining people on the methodology and mentoring them. Everyoneunderstood that all projects had to use the program support office (PSO) and be monitored by it.

In mid-2004, business units began forming their own project offices,independent of the PSO. The PSO’s main challenge then becameestablishing clear project frameworks and reintroducing the concept of project portfolio management throughout Metropolitan.

Today, Metropolitan’s project management culture is mature. “Projectmanagement is just another management tool. It is a normal disciplinethat each and every manager in the organization uses. It’s the way we do business—an everyday event. It’s not something special that we do,”says Jan Cronje, executive manager, shared solutions. As a result, thePSO is not always involved in delivering projects. It only provides projectmanagement resources when requested. Otherwise, it does not activelydrive project management, training or adherence to Metropolitan’s MBPmethodology.

Consequently, PSO head count has dropped from 55 to 10. The sixproject managers and four project administrators currently support 27projects. “The business units are self-governing and self-driven. They are deriving the benefits to such an extent that we don’t have to use a whip anymore,” says Cronje.

“Our project management officesuccess is due to ourestablishing a culture, not a project office.”

— Jan CronjeExecutive manager Shared solutionsMetropolitan Holdings Ltd.


Metropolitan Holdings Ltd.—Making project management part of the enterprise culture

Founded over 100 years ago and headquartered in Cape Town, South Africa, Metropolitan Holdings Ltd. has grown from a life insurance company to a full-fledged financial services organization. Today,Metropolitan is the third most recognized brand in the insurance industry, employing approximately 7,000 people and insuring the lives of 4.3 million South Africans.

CEO Peter Doyle sponsored Metropolitan’s projectsupport office (PSO) in 1999. His primary goal was todevelop an enterprisewide “managing by project”(MBP) culture and discipline. The PSO reports toshared solutions in the IS organization.

The project support office is flexible

Metropolitan’s PSO was never meant to have a largenumber of project managers. Rather, its staff issupplemented, as needed, with consultants andcontractors. While it looks favorably on projectmanagement credentials, such as PMI certification,project management experience carries more weight.

The PSO provides five services: project portfoliomanagement, project management, projectadministration, project resourcing and projectmanagement training.

The office plays different roles in different types ofprojects. For business change projects, the PSO playsa leadership role, encouraging business participationand ensuring alignment with group strategy. For proof-of-concept projects, the PSO uses a consultativeapproach to align the project with business-criticalsuccess factors. For strategic projects, the PSO uses aflexible methodology to fit the projects’ deliverables tobusiness-critical success factors. And for maintenanceprojects, the PSO uses Metropolitan’s MBP framework.

The PSO currently provides five tools on its Web site: Managing By Project, which it developed in-house using the PMI PMBOK, X-Pert, Word andExcel; Microsoft Project; Time Sheet Professional;Documentum, for storing project documentation; and Project Register.

For low-impact, low-risk projects, Metropolitan uses a “lighter” version of X-Pert project management. Itstwo methodologies are essentially the same. The initialscoping and reporting differ, and the lighter versioncontains only the absolute minimum requirements aproject must meet.

“The PSO has brought great value to Metropolitan,”says Cronje. “It has been a huge turnaround for the company, with great impact. In the past, group executives wasted time discussing project non-performance. Today, projects are generally notdiscussed at the executive level because they are beingdelivered on time, within budget and per requirements.As a result, group executives can now focus onorganizational strategy.”

“We plan to implement project and portfoliomanagement to track the health of projects and ensure that they deliver the critical success factorsneeded by our business strategies,” says AndréMichau, acting head of the PSO. “Information such as implementation status, risks and performance will provide our executives with a quarterly, rather than annual, view of implementation progress.”

Based on interviews with, and material from, JanCronje, executive manager, shared solutions, andAndré Michau, acting head of the project supportoffice, Metropolitan Holdings Ltd., November 2005.

Case Study:


3“The PMO andgovernance structureare achieving buy-inand support from the business. Thiscreates moreopportunities toleverage technology, re-engineer existingbusiness functions,automate processesand drive greaterefficiencies.”

— Avi DuvdevaniCIO Deputy generalmanager for ITNew York City HousingAuthority

Make governance and communications keyprogram management functions

The broader scope of programs requires that CIOs support their programmanagement offices properly to ensure effective joint business-ISgovernance, as well as communicate early and often with the extendedstakeholder group.

New York City Housing Authority governance ensures businessalignment

NYCHA’s governance structure ensures that projects align with thebusiness’s mission and strategy—and gives the PMO teeth. The generalmanager’s operations committee (GMOC) has the people to provide theclout—all the deputy general managers, including the CIO and the CFO,and other directors who report directly to the authority’s general manager(see figure opposite).

The GMOC reviews project status quarterly and determines whichprojects will be funded and their priority. “We can now align priorities,projects and resources with business priorities to meet organizationalneeds,” says Avi Duvdevani, CIO and deputy general manager for IT.

NYCHA’s CIO also linked his PMO to the architecture review board(ARB). Review gates ensure that the ARB provides input on new projectdesign, beginning at the concept stage and extending throughout theproject life cycle. “Linking the PMO with the ARB helps stop externalservice providers from introducing nonstandard architectural componentsinto our environment,” says Ron Rigores, program manager.

The diversity of stakeholders and the high level of projectinterdependencies typical of programs demand that communicationsprograms keep everyone informed and synchronized.


NYCHA’s PMO plays an important role in project and program governance

NYCHA board

NYCHA general manager (GM)

CIO/CFO

PMOProject repository, PM consulting & advice• PM standard methodology

& tools• PMO reporting standards• Assistance & coaching

Dept. project managers

Project manager

Project team

Project steering

committee

GM’s operations committee (GMOC)


Governance body

Provide membership

Input & feedback

Provideliaison

Deputy general managers

or or

Architecture review board

Business unit staffreportingstructure

Monthly executive project status reports

Weekly/monthly project manager status reports


3“Don’t view the programoffice as just a way toprovide visibility andmetrics, but a way to increase programsuccess. Governance,sponsorship andresources are all part of the program officesolution.”

— Patrick AnglardGroup CIOThales Group

Thales Group’s program offices keep all stakeholders informed

Thales is a global aerospace, defense and security contractor. It has longbeen in the program management business for its customers, managinglarge, multiyear defense and aerospace programs. The divisions fullyunderstand and use this discipline.

But there is no central program management office. Instead, specificprogram offices are established for large initiatives, such asenterprisewide ERP rollouts and the rationalization and outsourcing ofvoice and data networks. Each has its own dedicated program officeand governance structure. Besides planning, budgeting and qualityassurance, each program office is responsible for:

• Providing all stakeholders with global visibility into budget, resources,schedule and functional and technical contents

• Communicating all major events and disseminating general information

Help business and IS project teams coordinatetheir work

In addition to being the communications hub, a program office canfacilitate collaboration between business and IS project teams that areworking on the same program. The PMO can schedule both parties’resources to ensure that the best resources are assigned to the mostimportant programs at the right time.

The PMO can also provide collaboration tools. NYCHA’s PMO usesMicrosoft Windows Share Point Services. EMC’s PMO usesDocumentum eRoom. It is important to capture the outcomes ofcollaboration activities so they can be used elsewhere in the enterprise.PMOs in the next stage (portfolio management offices) supportknowledge management systems for this purpose.

Educating the business about its program management responsibilities is also a best practice.


Thales Group—Linking multiple program offices via a consistent process and tool

The Thales Group is headquartered in Paris and hasrevenues of 10 billion euros (US$12.3 billion). Itdevelops advanced technologies for its customers,leveraging a global network of 60,000 experts and thehighly complementary nature of its aerospace, defenseand security businesses.

The Thales Group is in the process of simplifying itsbusinesses and centralizing IT. Ten business groups(lines of business) have been reduced to six divisions,each with its own divisional CIO. Patrick Anglard, group(corporate) CIO, is responsible for centralizing control ofIT enterprisewide. He reports to the COO and has 20direct reports: six staff executives, six divisional CIOsand eight executives for IT domains such as ERP,infrastructure and geographic regions.

To enable centralized control of IT, Anglard created agovernance structure that makes decisions on ITbudgets, project priorities and central funding todevelop technologies. The divisions submit their ITbudgets to Anglard for approval. After approval thedivisional CIOs manage their own projects, architectureand contracts, and subcontract to the Thales GroupServices division for recurring services, such asapplication maintenance, desktop, local area networksand data center operations. The Thales Group Servicesdivision provides IT services to Thales units, as well asto the open market.

Each major initiative has a dedicated programoffice

Divisions temporarily transfer program managers tomanage the design, build and roll-out phases of major transverse initiatives. These program managersare coached by the corporate IT domain managers in charge of the enterprisewide initiative. Programmanagers come out of the divisions and return to thedivisions once the programs are delivered. Much of theactual implementation work is outsourced to the ThalesGroup Services division.

Program offices play an important role in providingvisibility for informed decision making and keepingcommunication channels open. Each program office isresponsible for: providing all stakeholders globalvisibility into budget, resources, schedule and functionaland technical contents; planning delivery dates,deadlines and resource requirements; managingbudget and resources; ensuring quality for all projects;and communicating all major events and disseminatinggeneral information.

A consistent process unifies the program offices

CIO Anglard is unifying project and programmanagement processes across the enterprise toimprove project execution performance, make riskstransparent and managed and ensure consistencybetween program and financial views.

Group IT spent 18 months designing the standardPMO process and selecting Primavera as the tool tosupport it. Eighty percent of the effort involved processdesign, and only 20 percent was spent on toolselection and establishing parameterization. Fundingcame from Group IT and the COO.

Thales Group will use a single instance of Primaveraparameterization for program planning and trackingacross all programs. The ERP system will provide timeand cost reporting. To institutionalize this new PMOprocess, the company is undertaking a major changemanagement and user training program becauseprogram management changes the way program staffand finance staff cooperate.

“Having a standard process and tool will reduce therisk of divergence. By being able to measure progressin a standard way across divisions, we expect toimprove project execution,” says Anglard. “We arebeing explicit in formally defining and documenting whodoes what in the process to ensure we have no roleambiguity.”

Based on interviews with, and material from, PatrickAnglard, group CIO, Thales Group, November 2005.

Case Study:


3Hallmark UK’s program management office fosters business-IScollaboration

Educating business executives about the need for program managementhas been a challenge at Hallmark UK. PMO management therefore tooksmall steps, first showing the benefits of basic project managementdiscipline, then getting business management to think about selectingthe right projects and their desired outcomes. Hallmark’s culture had toshift in five areas:

• Change had to become a joint business IS-responsibility, not just an IS responsibility.

• IS had to have a seat at the table when business changes wereplanned.

• Teams had to explore interdependencies and overlaps among businessand IT projects.

• Management had to integrate different parts of the business and ISwhen considering projects.

• Management had to consider projects to rationalize previousacquisitions.

An early success combined three projects with common objectives andclose start dates into one program. The PMO also held cross-functionalworkshops for the three projects to jointly define their commonrequirements. In another case, the executive board challenged thestrategic misalignment of an in-progress project. The project wasstopped, its scope was realigned, and the revised project was restarted.


Hallmark UK—Moving its PMO out of IS into the business

Hallmark UK was established in 1958 and through a series of mergers and acquisitions is now the U.K.’s leading greeting card publisher, representing 60 percent of Hallmark’s international business.Headquartered in Bradford, Yorkshire, U.K., thecompany’s 3,100 employees produce approximately 2 billion cards a year, with almost 20,000 designs.

Established in January 2005 by Merissa Smith,European program delivery manager, Hallmark UK’sprogram management office (PMO) is responsible fordelivering strategic business initiatives. Its four projectmanagers support 24 projects.

The PMO began in IT, with accountability to theboard

The PMO has been part of the IT organization. Smithreports to the CIO for international IT, but she also has had dotted-line accountability to Hallmark UK’sexecutive board. This board comprises the managingdirectors of the lines of business and the functionalheads of finance, human resources, international IT and operations. These executives are the businesssponsors for most of the PMO’s major projects. Smith’sdual reporting structure fosters business-ITcollaboration.

Smith initially recommended that the board use nineproject-prioritization criteria in its decision making:benefits, risks, impact on people, and support for eachof the six key business strategies. At first, executivespresented the PMO with lists of the projects theywanted. But over time Smith has gotten them toconsider the interrelationships among projects,Hallmark UK’s collective goals and the realities of costsand resources.

The executive board has taken ownership for the entireportfolio of PMO projects. Small projects—which onlyimpact a single function and require less than a monthof work—are managed by a business user, mentoredby the PMO.

The PMO is responsible for mentoring all program and project team members and managers. Smithencourages all program and project managers to get

their practitioner qualification, a professionalcertification based on the Managing SuccessfulPrograms (MSP) curriculum.

The PMO is also responsible for methodology. It usesMicrosoft Project on the desktop and Visio as its basicproject management tools. Its project managementmethodology is adapted from Prince 2. It is consideringusing PlanView as its portfolio management andworkflow tool; it is used by its parent company in theU.S.

In the past, benefits estimates were used solely to gainfunding approval for projects. But recently the PMObegan reviewing actual benefits achieved six and 12months after project delivery, to improve return oninvestment.

The PMO is moving from IT to the businessimprovement organization

The PMO is transitioning from the international ITorganization into a new central function called businessimprovement, chartered to deliver strategic programs. It reports to Hallmark’s PLC board. The move will putproject ownership and accountability squarely in thebusiness.

Quality management is also part of the businessimprovement department, as is the businessimprovement team, which challenges currentprocesses, and documents, maps and analyzes them to identify improvement opportunities.

As part of this reorganization, Smith became director of business improvement. She plans to make the PMO more formal and structured. “Combining the three groups will focus the conversation on businessstrategy first, before discussing projects or programs.The new department is expected to drive bestpractices, develop a better understanding of prioritiesand influence the business on how to become a world-class organization,” says Smith.

Based on interviews with, and material from, MerissaSmith, director, business improvement, Hallmark UK,November 2005.

Case Study:


3Assess your program management office againstbest practices

If you’re already at the program management stage, or planning toevolve there soon, compare your PMO with the identified best practicesby scoring yourself on the self-assessment opposite. Determine whatneeds to be done and where you can help the most.

CIOs must lead in establishing effective PMO governance and ensuringclear communication channels with all stakeholders.

CIOs with mature program management offices should start thinkingabout evolving the PMO to the portfolio management stage. That’s the subject of the next section.


How effective is your program management office?


0


1

Done somewhat well

2


3

1. We have combined related business and IT projects into programs, including those sourced externally

2. We have institutionalized our project management discipline; our PMO focuses on program management

3. We use program-level visibility to identify and reduce resource contention and improve resource utilization

4. We educate business, IS and external stakeholders about their shared responsibilities for ensuring program success

5. We have expanded the PMO governance board membership to represent the wider set of stakeholders

6. We have established communications programs to keep all stakeholders informed and committed to program success

7. We provide collaboration tools to facilitate the work of internal and external project and program teams

Scoring:17 – 21 You’re in good shape; prepare for the next stage10 – 16 Determine what else stakeholders need and fill in the gaps 0 – 9 Focus on the basics; educate the business and get buy-in for program management

Total score

Contribute tobusiness growththrough a portfoliomanagement office


CIOs can contribute to business growth by evolving their PMO to the portfoliomanagement stage. By optimizing the mix of project and program investments, aportfolio management office can increase the benefits the enterprise realizes fromthese investments.

4



4Portfolio management offices focus on enterpriseportfolio optimization

As members of the enterprise’s senior management team, CIOs useportfolio management as a way to optimally allocate resources toward an organization’s objectives, factoring in risk, desired returns, resourceavailability and interrelationships between investments. Portfoliomanagement can drive business-IS alignment, consistent justification,risk management, disciplined execution and benefits realization.

Portfolio management contributes to business growth by optimizing theenterprise’s portfolio (see top figure opposite).

The case-study PMOs at the portfolio management stage focus onactively managing the project portfolio, ensuring that benefits are realizedand making project management knowledge easily available. At thesame time, they retain the most common functions from both theirprevious project management and program management stages (see bottom figure opposite).

Ontario, Canada’s Workplace Safety and Insurance Board (WSIB)oversees Ontario’s workplace safety education and training system,provides disability benefits, monitors the quality of healthcare and assists in early and safe return to work. WSIB’s strategic PMO hasresponded to changes in business needs and evolved to the portfoliomanagement stage.


Portfolio management focuses on optimizing the mix of enterprise initiatives

Strategic


Program management


Tactical

Project management

• Portfolio scope definition• Overall investment, benefit, risk optimization • Active portfolio performance monitoring• Business environment change adaptation

Scope of work


Benefit

Focus

Scope


Role

Engagement

Tools

Skills

Metrics



Investment optimization, benefits realization

Proposals/projects/assets

Outside IS, e.g., CFO, COO

Investment advisor, portfolio overseer

Senior management decision makers

Portfolio management, knowledge management


Portfolio and PMO performance

Portfolio management offices focus on portfolio optimization and benefits realization

Knowledge management

Benefits realization management

Project portfolio management







Portfolio management office functions Portfolio management office case-study frequency

Most common portfolio management office functions

Most common program management office functions maintained by a portfolio management office

Most common project management office functions maintained by a portfolio management office

Portfolio management office


4WSIB’s PMO has evolved to the portfolio management stage

Over five years’ time, WSIB’s CIO evolved the PMO’s role, organizationalplacement and name:

• In 2000, Valerie Adamo, WSIB’s CIO and vice president of businesstechnology services (BTS), formed a program management office(PMO) to manage the complexities of a large transformation initiative.

• In 2002, the PMO transitioned out of BTS, and became the enterprisePMO (EPMO) in the agility program led by its vice president. The intentwas to expand into project portfolio management.

• In 2003, EPMO returned to BTS to focus on improving projectexecution.

• In late 2003, management increased the EPMO’s strategic focus tomanaging all business change projects. It was transferred to a newdivision called Corporate Strategy, in the Prevention Services cluster, and renamed the strategic PMO (SPMO).

• In late 2005, the SPMO moved under the chief corporate servicesofficer as part of the Strategic Communication, Policy and Researchgroup.

The benefits of this evolution are clearly stated in the PMO’s valueproposition (see figure below).

“The entireorganization ismaturing faster now.The controllershipframework, includinggovernance, hasimproved as a resultof widespreadexposure to projectmanagementdiscipline.”

— Valerie AdamoCIOVice presidentBusiness technologyservicesWorkplace Safetyand Insurance Board

WSIB’s strategic PMO charter communicates its value proposition

Charter

SPMO’s mandate is to assist in creating and managing an effective portfolio of projects that:• Are well managed• Realize their deliverables• Create value (ROI)The SPMO exists to facilitate project success by enabling informed and effective decision making by senior management

Source: Adapted from Workplace Safety and Insurance Board (WSIB).

Services

• Expert project management• Project portfolio selection

facilitation and oversight• Project management support

and guidance• Project management compliance

Benefits

• Informed decision making: Facilitate and consolidate project proposals to enable senior management decision making

• Strategic alignment: Ensure that the project portfolio is strategically aligned with the organization’s objectives

• Quality assurance: Ensure that project deliverables meet customer expectations


Workplace Safety and Insurance Board—Accomplishing much with a small PMO staff

Headquartered in Toronto, Ontario, Canada, theWorkplace Safety and Insurance Board (WSIB)oversees Ontario’s workplace safety education andtraining system, provides disability benefits, monitorsthe quality of healthcare throughout the province andassists in early and safe return to work. Its 4,400employees administer a budget of C$4.5 billion(US$3.9 billion) and operate a network of 14 offices.

“Our strategic project management office has resultedin the business asking for fewer projects,” says ValerieAdamo, CIO and vice president of business technologyservices, “and those requests are better justified andplanned. Project execution and results are enhancedbecause the business owns the work. We haveincreased collaboration between the business and IS,and we enforce our project management discipline.”

Katherine McLean, director, strategic programmanagement office and business advisory services, has 12 full-time staff on her SPMO team: eightproject/program managers (PMs), two projectmanagement specialists, a chartered accountant and a business administrator.

The SPMO’s operational budget is C$1.1 million(US$950,000), or 3.7 percent of the annual projectbudget. It supports three major programs covering 31 corporate, business and IT projects. The projectsrepresent C$13.3 million (US$11.5 million) in expenseand C$7.4 million (US$6.4 million) in annual capitalinvestment.

The SPMO sources all program and project managersfor corporate WSIB project work. Project managersmanage projects costing up to C$5 million (US$4.3million) and lasting one or two years. Programmanagers manage very large-scale programs that lastthree years. They coordinate the work of three to fiveproject managers and typically have seven to 10 yearsof project management experience.

Project and program managers have solid-line reportingto their project’s business owner and dotted-linereporting to the SPMO. Subject-matter experts, suchas project architects and organizational effectivenessconsultants, also report on a solid line to the projectowner and on a dotted line to their home base.

To attract PMs, WSIB uses a “hot market” concept,initially implemented for Y2K work. Project managerscan temporarily work as program managers andreceive additional compensation.

The PM specialists in the SPMO provide portfolioselection facilitation and oversight and report projectstatus monthly and quarterly to WSIB’s executivecommittee and project owners. The accountantanalyzes projects costs and oversees the portfolio from a financial perspective. McLean also draws onprofessional contractors and part-time employees tohandle peak workloads.

The SPMO is improving its processes

With the basic disciplines implemented, the SPMO isworking to streamline its processes.

WSIB’s executive committee maintains an absolute“override capability” so that for specific situations,senior management can exercise its judgment andoverride assigned priorities, as appropriate. Theseexceptions are made visible and explained.

“Projects must be owned by the business leader mostimpacted by them, and the project portfolio must bemanaged by the most senior decision makers,” saysAdamo. “A difficult aspect has been agreeing ondecision criteria and weighting for project prioritization.WSIB has selected four criteria: alignment with thestrategic plan, financial viability, business continuity andrisk mitigation.”

McLean is working with PMs to adjust their level ofrigor and discipline to fit project and program size while still following the methodology rules andguidelines. She is considering a number of long-term,innovative ideas for the SPMO, such as developing a PM mentoring program, developing a set of PMconferences and even exchanging PMs with otherorganizations to learn from the experiences of others.

Based on interviews with, and material from, ValerieAdamo, CIO and vice president business technologyservices, and Katherine McLean, director, strategicprogram management office and business advisoryservices, Workplace Safety and Insurance Board,October 2005.

Case Study:


4Position the portfolio management office outside ISfor greater independence

The case-study CIOs evolving to the portfolio management stage havemoved their PMO outside IS to ensure its independence and to avoidany perception of bias. Operating independently of IS and reporting tothe CFO, COO or other senior executive give a PMO the clout to raiseportfolio management issues to the highest levels and make decisionsbased on the best interests of the entire enterprise. Maintaining thatindependence and objectivity is critical for long-term success.

To prepare for this stage, some CIOs have separated the tactical andstrategic functions so that each can be more focused and have theappropriate resources.

Royal Caribbean Cruises Ltd., a global cruise and vacation company, has split its PMO’s strategic and tactical functions into two units. TheCIO made program administration responsible for project and programmanagement (PPM) tools, methodology, auditing project plans, and the knowledge base of best practices, standards and lesson learned.Program administration, which has a staff of six full-time equivalentsincluding its manager, reports to the director of IT finance, who reports to the CIO.

The tactical functions—essentially, project execution—are handled by the project management office, which reports to the CIO. The PMOsupervises the 40 project managers, oversees capital and large expenseprojects on a day-to-day basis, collects and presents monthly executivestatus reports and ensures use of best practices.

The advantages of this split are that program administration can take alonger-term, enterprisewide view of the project portfolio, unencumberedby the daily demands of managing 200 capital projects and 800 smallprojects. The PMO, on the other hand, can focus on project execution,tracking the time and skills of 500 IT full-time equivalents and improvingthe skills of its 40 project managers.

“We have moved thePMO from reportingto me in IS, toreporting to thefinance director[CFO]. This gives the PMO a neededlevel of autonomy,where it can be seenas successful apartfrom IS.”

— Garry WhatleyCIOCorporate ExpressAustralia Ltd.


Royal Caribbean Cruises Ltd.—Separating strategic and tactical PMO functions

Royal Caribbean Cruises Ltd. (RCCL), headquartered inMiami, Florida, is a global cruise and vacation companythat operates Royal Caribbean International andCelebrity cruises. RCCL has 29 ships in service andthree under construction. The company’s 36,000employees also offer unique land-tour vacations inAlaska, Canada and Europe through its cruise-tourdivision.

Two factors shaped RCCL’s approach to project andprogram management. First, management wasfrustrated with the lack of alignment between ITprojects and the business. Second, as IT projectsbecame more strategic and expensive, IT had tobecome more efficient, productive and reliable.

To address these issues, RCCL created two PMOunits. Program administration, the strategic unit,manages the portfolio. The PMO, the tactical unit,handles project execution. They work side by side.

Five portfolio managers (PFMs) in the IT department actas relationship managers and business analysts. Theywork with the lines of business to identify and definelarge projects by developing concepts and scopingnew project opportunities, preparing preliminary projectcost estimates and developing project business cases.

Governance is tailored to project size

RCCL divides its projects into three types. Each isgoverned in a different way.

Projects over US$100,000 and capital expenditures aregoverned by the business opportunity council (BOC),which comprises the COO, CFO, CIO and other seniorvice president-level executives. It meets monthly toreview requests and review the status of large projectsunderway.

New expense projects reviewed by the BOC are thengoverned by the expense project initiation committee(EPIC), which comprises senior IT management. Itmeets quarterly to review new projects.

Small projects, such as fixes, support and smallenhancements, are governed by the “checkbook”approach. At the beginning of each year, the portfoliomanagers budget these expenses in terms of grosshours. During the year, they work with businesssponsors to stay within budget by monitoring the burn rate.

RCCL’s project and portfolio management system,which is based on Computer Associates’ Clarity, helpsthe company comply with Sarbanes-Oxley standardsby providing documentation and consistency. Claritystores all project plans and efforts, providing acomplete audit trail of all labor costs. It tracks anddocuments due-diligence paths, enabling seniormanagement and auditors to review standards projectby project. It also provides project plan templates andguidance to PMs, ensuring consistency across allproject plans.

Richard Shapiro, manager of program administration,sees three areas that need continued improvementover the next few years. The first is management of theresource pool. An ongoing topic of discussion is: “Howbest do we maintain the skill-set inventory of our 500 ITstaff and contractors and allocate these personneloptimally to projects?”

The second challenge is increasing granularity inresource tracking, from the project level down to thetask level. Finer granularity would make staffcommitments and availability more visible, enablingimproved resource allocation.

The third challenge is interfacing Clarity with theRemedy Change and Problem Management system.Then data could be interchanged and total-cost-of-ownership information better captured and reported.

Based on interviews with, and material from, RichardShapiro, manager, program administration, RoyalCaribbean Cruises Ltd., October 2005.

Case Study:


4“We are changing our PMO focus from on-time,on-budget projects toimproving businessbenefits realization.”

— David McBethManager, PMOCorporate ExpressAustralia Ltd.

Extend the portfolio management office’s influence

The CIO can lobby to extend the portfolio management office’s influenceby getting it involved in strategy formulation, on the front end of aproject’s life cycle, and remaining involved through benefits realization, on the back end of a project’s life cycle (see figure below). This helps thePMO keep projects aligned with business strategy, as well as contributeto shaping it.

Focusing on benefits realization contributes to business growth. Whilemany case-study interviewees expressed the need for better benefitsrealization at the project and program stages, they get most seriousabout it at the portfolio management stage. A best practice is tointegrate benefits realization into all PMO processes, reviews andreporting (see the December 2005 Gartner EXP CIO Signature report, Show Me the Money).

AAA of Northern California, Nevada and Utah provides automotive andtravel insurance and other financial services to motorists in the westernU.S. Its enterprise portfolio management office (EPMO) reports outside IS to the CFO. It has end-to-end responsibility for all business and ITprograms, from strategy formulation to benefits realization.

AAA's EPMO has a staff of 30, including program managers but notproject managers. It supports a portfolio of 15 major programs coveringmore than 80 business and IT projects, with an annual investment ofUS$150 million to US$200 million. The EPMO operating budget is US$5 million.

Extend the portfolio management office’s influence beyond the project life cycle

Portfolio management office

Project life cycle

Strategy formulation

Strategy translation

Initiation Feasibility Execution Delivery Implemen-tation/closure



AAA of Northern California, Nevada and Utah—Supporting strategic investments andmanaging how projects are executed

The second largest of the more than 70 auto clubs inNorth America, AAA of Northern California, Nevada andUtah serves 4 million members from its San Francisco,California, headquarters. Its 6,000+ employeesgenerate over US$2 billion in revenues from a widearray of automotive, travel, insurance and financialservices.

AAA’s project management office (PMO) was formed in1999 to improve IS’s execution. In late 2002, SanRetna was recruited from a major consulting firm aschief portfolio officer (CPO). He reports to the CFO, atthe same level as the CIO.

Retna reorganized, moving the newly named enterpriseportfolio management office (EPMO) outside the ISorganization. His charter was end-to-end responsibilityfor all business and IT programs enterprisewide,covering six areas: strategy formulation, strategytranslation, portfolio management, programmanagement, project management and benefitsrealization.

Retna inherited a staff of 28, but their skills did not fitthe EPMO’s expanded mission. He replaced them withmore senior candidates with extensive consultingexperience, mostly from outside AAA. His current staffof 30 has developed and nurtured a portfolio of over200 project and program stakeholders.

From a strategic perspective, the EPMO works withgroups in AAA to define activities, projects andprograms to reach AAA’s strategic objectives. At theexecution level, the EPMO manages how the companyexecutes the projects and programs in the portfolio.

EPMO benefits have been impressive

The EPMO uses a comprehensive set of metrics tomeasure success. Two core measures—deliveryexcellence and benefits realization—account for 70percent of the EPMO’s overall performance rating.Customer satisfaction is the third main component.

Retna explains: Delivery excellence is the number ofprojects completed on budget, in scope, on scheduleand with the required quality; benefits realization is thepercentage of planned benefits actually achieved; andcustomer satisfaction comprises quarterly onlineassessments by 250 project managers and projectstaff on how well the EPMO supported their work.

Progress on these metrics has been impressive, hesays. “The initial rating for delivery excellence was 33percent; its current rating is up to 88 percent. The initialrating for customer satisfaction was 65 percent and isnow over 80 percent. Benefits realization goes againstthe trend. Its initial rating was 88 percent and it’s now82 percent because of the increased complexity andrisk of recent projects, coupled with more aggressiveplanned benefits.”

Each percentage point increase in the combined scoreof delivery excellence and benefits realization translatesto some US$2 million of benefit to AAA’s bottom line.“Balancing executing well, delivering benefits andcustomer satisfaction is how we measure success,”says Retna.

EPMO tool use increases as it matures

The EPMO started with the basic Microsoft Office tools,and now Microsoft Office Project Server has becomethe standard for project management. Time-reportingtools feed into PeopleSoft, and ProSight Portfolios hasbeen added for top-down portfolio management.

The EPMO is considering using the earned valuefunctionality of Project Server in the future. Retna isalso looking at improving the precision of the revenuebenefits realization metrics, which are now based oncorrelation. By developing an integrated driver model,the EPMO will be able to show greater causalitybetween program delivery and revenue increases.

Based on interviews with, and material from, SanRetna, chief portfolio officer, AAA of Northern California,Nevada and Utah, October 2005.

Case Study:


4“To add portfoliomanagement value, youhave to start top-down at the enterprise leveland have a seat at thepriority-setting table.Otherwise, you’re fightinga losing battle, and youare only doing demandmanagement.”

— San RetnaChief portfolio officerAAA of NorthernCalifornia, Nevada and Utah

Portfolio management is the focus of AAA’s EPMO

Introducing portfolio management was key to AAA answering four seniormanagement questions:

1. Are we investing in the right programs and projects?

2. Do we have the operational capacity to execute?

3. Can we absorb the impact of executing multiple projects?

4. Are we realizing the expected benefits from our investments?

AAA’s EPMO provides a wide range of portfolio management services so that the company can create, execute, balance, manage and realizebenefits from its portfolio of internal investments. By bringing togetherpeople and processes from disciplines throughout the enterprise, theEPMO is the focal point for delivering portfolio success. Enterpriseplanning drives the five major processes of AAA’s enterprise portfoliomanagement model (see top figure opposite).

AAA’s EPMO provides a common language, approach and toolset for all levels of the enterprise, as shown in the bottom figure opposite. The EPMO provides four major services:

1. Core disciplines are common management processes that aredeployed at the project, program and portfolio levels to ensureeffective execution.

2. Program management is a guide to increase the likelihood ofachieving expected business results through the program life cycle,and the detailed financial management processes to accuratelyaccount for program costs.

3. Portfolio management describes the processes and tools required toobtain funding and sets expectations on performance reporting at alllevels of the portfolio.

4. Enterprise transformation considers the entire portfolio and assesseswhether organizations have the capacity to support initiatives, andfocuses on defining and monitoring the benefits of all programs.

These services map well to the project, program and portfoliomanagement stages framework of this report.


AAA’s portfolio management model is driven by enterprise planning

Strategic direction

Create portfolio• Initial prioritization• Collation• Compilation• Reconciliation

Balance portfolio• Forecasting/analysis• Fund appropriation• Continuous

prioritization• Capacity mgmt. • Variance mgmt.

Execute portfolio• Funding release• Audit• Data compilation• Business case

validation

Realize benefits• Definition• Calculation• Post-implementation

reviews

Operational performance

Resources

Depreciation

Operational capacity

Asset management

Enterprise governance (program management team, EPMO)

Project/program management

Source: Adapted from AAA of Northern California, Nevada and Utah.

Operational direction

Enterprise planning

Manage portfolio• Issue mgmt.• Risk mgmt.• Financial mgmt.• Trends and analysts• Control

Enterprise operating

ratio

AAA’s EPMO provides the enterprise with a common language, approach and tools

Enterprise transformation

Enterprise EPMO

Portfolio managementPortfolio management team

Program managementProgram managers

Core disciplinesProject managers

EPMO services

Enterprise transformationEnterprise transformation considers the entire portfolio and assesses whether organizations have the capacity to support initiatives, and focuses on defining and monitoring the benefits of all programs.

Portfolio managementPortfolio management describes the process and tools required to obtain funding, and sets expectations on performance reporting at all levels of the portfolio.

Program managementProgram management is a guide to increase the likelihood of achieving expected business results through the program life cycle, and details financial management processes to accurately account for program costs.

Core discipline managementCore disciplines are common manage-ment processes that are deployed at the project, program and portfolio levels to ensure effective execution.


Program manage-ment

Project management

Enterprise transformation


Operational capacity

Change assessment


Funding process

Performance reporting

Capacity assessment

Program life cycle

Financial management

Program capacity

Program reporting

Comm-unications

managementRisk

managementIssue

managementChange

managementQuality

assurance


4“Probably any of the tools in the leader’squadrant of the GartnerIT project and portfoliomanagement MagicQuadrant will work. But80 percent of the work,and the critical successfactors, involve workingon the process andmethodology and gettingstaff adherence.”

— Richard ShapiroManagerProgram administrationRoyal CaribbeanCruises Ltd.

Design governance to focus senior management’sdecision making on strategic issues

While choosing which projects and programs to approve and which tostop must remain the responsibility of senior management, the PMO can facilitate the process. It can provide objective information andanalysis, ensure that the right people have input, and provide thedecision makers with a consistent process and rational decision criteriabased on strategic concerns for making and monitoring decisions. PMOstaff competencies must now include strategic planning and investmentanalysis.

“Portfolio management governance is very important at AAA because it’s the framework that supports our strategic investments,” says SanRetna, chief portfolio officer. Governance bodies operate at the businessstrategy, portfolio and program/project levels, to ensure alignment fromtop to bottom (see top figure opposite).

Implement tools to facilitate informed portfoliodecision making and organizational learning

As portfolio size increases and different stakeholders require differentportfolio views, more powerful tools are needed. Many vendors providetools for project and portfolio management (see bottom figure opposite).And best-in-class portfolio management offices provide seniormanagement with a realistic overview of an enterprise’s project portfolio,complete with standard reporting across business units and functionalareas. When important problems or opportunities appear, the PMOanalyzes the information and makes recommendations.

Portfolio management offices track benefits realization, portfolioalignment and health, and PMO performance. They teach managers how to measure, manage and report benefits, not just costs.

They also implement knowledge management tools to capture lessonslearned and promote positive change. And they share lessons learned,best practices and research, and foster a culture that uses thisexperience to make project decisions and take actions.


AAA’s governance operates at three levels to ensure alignment

Executive decision making and involvement

Prioritization and investment

decisions

Oversight and accountability for

enterprise portfolio

Consistent, repeatable program and project delivery

Executive leader team

Strategic initiative

roundtable


team

Steering teams

Program teams

Business strategy

Strategy and financial guidance

Program and project management process


Program and project

management


Implement tools to support decision making at the portfolio level

Ability to execute

Completeness of vision

Challengers

Oracle ProjectsSAP xRPM

Microsoft Project EPM

Lawson Software

MercuryIBM RPMCompuware

Primavera Niku

PlanView

Planisware Artemis Interna-tional

Business EngineSciformaPacific Edge

ProSight

UMTPowerSteering SoftwareInstantis

ITM SoftwareAs of June 2005

TenroxAugeo Software

eProjectGenius Inside

Automation CentreAtlantic Global

LeadersEPM=Enterprise Project

Management

RPM=Rational Portfolio Manager

UMT=United Management Technologies

Niche players Visionaries


4Royal Caribbean Cruise’s PMO provides a knowledgemanagement system

Royal Caribbean Cruise’s program administration developed an IT life-cycle (ITLC) knowledge base that contains all IS standards, practices,policies and procedures. The ITLC is available to all IS team members via the company’s intranet. Items are cataloged by life-cycle phase or activity, for easier search and retrieval. Process guidance is alsointegrated with “Tool How-Tos,” where appropriate, to mentor IS staff. Inaddition to the specific life-cycle guidance, the knowledge base includescross-enterprise disciplines that span life-cycle and functional areas,such as project management (see box opposite). The 500-member ISdepartment contributes content to the ITLC knowledge base.

Assess your portfolio management office againstbest practices

If you are considering evolving to the portfolio management stage, or arealready operating at that level, compare yourself with the best practicesidentified by completing the self-assessment opposite.

CIOs considering the move to portfolio management should use theassessment as a checklist to plan what needs to be accomplished.

CIOs already at the portfolio management stage should use theassessment to determine how effectiveness can be improved, even if it means relinquishing control of the PMO.

Mature PMOs at the portfolio stage refine the techniques and metricsthey use. AAA is evaluating earned value analysis to better measureproject status, and an integrated driver model to better tie revenueincreases to program delivery.

According to AAA chief portfolio officer Retna, “Portfolio management isa long, arduous journey. You won’t see immediate results, so you needto manage expectations carefully and ensure that you have sustainedcommitment from senior management.”

The three-stage framework and self-assessments can help you manageexpectations, fill in gaps and plan when and how to take your PMO tothe next stage.


ITLC knowledge base topics

• Project management

• ITLC templates

• Financial management

• Metrics

• Enterprise standards

• Peer reviews

• Configuration management

• Resources

How effective is your portfolio management office?


0


1

Done somewhat well

2


3

1. We have positioned the PMO outside IS to give it independence and senior management sponsorship

2. We have extended the PMO’s influence to reach from strategy formulation through benefits realization

3. We have designed governance to focus senior management on strategic issues

4. We have integrated benefits realization into our processes, starting with planning, and we report on it regularly

5. We have implemented tools that provide high-level portfolio visibility and analysis to decision makers

6. We have broadened PMO staff competencies to include strategic planning and investment analysis

7. We have implemented tools to capture, categorize and distribute our best practices and lessons learned

Scoring:17 – 21 You’re in good shape; see what needs fine-tuning10 – 16 Determine what else stakeholders need and fill in the gaps 0 – 9 Focus on the basics; educate the business and get buy-in for portfolio management

Total score


Appendix A: Organizing the PMO

EMC Corporation’s IS and PMO organization

CIO

Client services Global technology

FinanceIT PPMG/Operations

SPO/ESG/G&A

Mergers & acquisitions

Security & risk PPMG

Global technology

PPMG

Client services PPMG

IT communi-cations &

mktg.

IT PMO & cross-functional

services

Source: Adapted from EMC Corporation.

3 project managers 2 business analysts

Customer operations/Field mktg.

Enterprise programs

Applications development

Human resources

Office of info. security & risk

mgmt.

NYCHA’s IT organization and virtual PMO

CEO/General manager

Director information

management

Business unitsProgram

manager virtual IT PMO

Enterprise architect

Office of the CIO

Quality assurance

Information security office

Director business enterprise system

transformation

Senior directorIT infrastructure

Business decision makers

CIO/deputy general manager information

technology


1 manager, and consultants

Director application

development


TIM Brazil’s IT PMO structure

CTO

Business IT

Senior manager PMO

Outsourced PMO(13 FTEs)

Manager• Portfolio management• PMO tools• Project follow-up

Portfolio management:• Alignment• Project prioritization

Methodology:• Implementation• Coaching• Metrics & scorecard• Interface with

president’s PMO

Special projects:• 4 projects• 8 task forces

• Requirements management tool• PMO management tool• Project management tool• Time tracker

• SharePoint development center • Collaboration portal tools

Weekly follow-up:• 300 projects• 750 open requirements• 4 special projects, 8 task forces• 500 risks/issues

CoordinatorPMO tools

1 analyst3 outsourced resources

3 analysts

Coordinator special projects

2 analysts

Consultant

Manager• Methodology• Metrics & reports• Special projects

Source: Adapted from TIM Brazil.

Metropolitan Holdings’ project support office

Group CEO

Group technology & strategy (GTS)

Marketintelligence

Shared infrastructure

Shared solutions

Shared facilities

Group technology

planning

Group procurement

Businessprocessanalysis

Solutions design &

development

Project support office

6 project managers4 project administrators

Solutions management & maintenance

Problemmanagement

Relationship management

RetailCorporate InternationalMetHealth group

Source: Adapted from Metropolitan Holdings Ltd.


Hallmark UK’s PMO is part of its new business improvement organization

PLC exec board

Directorbusiness

improvement

Quality Management System (QMS)

Businessimprovement

Program management office (PMO)

4 program managers

Source: Adapted from Hallmark UK.

Workplace Safety and Insurance Board’s strategic PMO organization

President

Chief prevention & corporate

strategy officer

Prevention

Corporate strategy

Health & safety associations

Service delivery

Program development

Specialized claims services

Business services

Health services

Finance

Investments

Actuarial services

Internal audit

Business technology services

Human resources

Legal services

Regulatory services & appeals

Communications, policy & research

8 project/program managers 2 project specialists1 chartered accountant1 business administrator

Strategic project management office

Chief operating

officer

Chief corporate

services officer

Chief financial officer

Source: Adapted from Workplace Safety and Insurance Board.


AAA’s enterprise portfolio management office organization

CEO

CFO

Chief portfolio officer EPMO

Special projects

Portfolio strategic services

Strategic initiative

roundtable


team

Portfolio manager

Portfolio manager

Program manager

Program manager

Program manager

Businessconsultant

Program manager

Program manager

Program manager

Businessconsultant

Businessconsultant

Business consultant

Governance body

Portfolio operational

services


Royal Caribbean Cruise’s PMO organization

CIO

Director IT finance

Manager project management

office

Manager program

administration

2 technical support

1 financial analyst FTE

2 analysts 40 project managers

2 business analysts

Source: Adapted from Royal Caribbean Cruises Ltd.


Representative PMO tools and frameworks

Project portfolio management • Artemis (Artemis 7, Viewpoint)• Compuware (Changepoint)• IBM (Rational Portfolio Manager)• Lawson (Services Automation)• Mercury (ITG) • Microsoft Project (w/Business Engine,

Pacific Edge, ProSight)• Niku (Clarity)• Oracle (Enterprise Project Management)• PlanView• Primavera (Prim. IT Proj. Offc.; Prim. IT Ops.

Mgmt.)• SAP (xRPM) • Sciforma (PS Next)• United Management Technologies (UMT)

Requirements management • Borland – CalibreRM• IBM Rational – RequisitePro• Serena – Requirements Traceability

Management• Telelogic – DOORS• UGS – Teamcenter

Project management methodology • IBM Rational• PlanView• PM Solutions• PMI Project Management Book of

Knowledge (PMBOK)• Primavera• PRINCE2 (Projects in Controlled

Environments)

Content and document management• EMC/Documentum• FileNet• Hummingbird• IBM/Lotus Notes• Interwoven• Open Text• Stellent• Vignette• Xerox

Project management • Microsoft Project • Niku (Clarity)• PlanView• Primavera • X-Pert

Quality management • Compuware• Empirix• IBM Rational• Keynote Systems• Mercury• Segue Software• Telelogic

Maturity models • Gartner• PM Solutions• Project Management Institute

(PMI) • Software Engineering Institute

(SEI)

Collaboration • Cisco/Latitude• EMC/Documentum/eRoom• Genesys• IBM• Intralinks• Microsoft/Placeware• SiteScape• Vignette/Intraspect• Webex

Risk management • C/S Solutions: Risk+ for MS

Project• Palisade: @RISK• Pertmaster: Risk Expert• Primavera: Monte Carlo• Risk Services and Technology:

Risk Trak• RMC Project Management• SmartOrg: Portfolio Navigator

and Decision Advisor• Welcom: WelcomRisk

Time reporting • Best Software• Journyx• Kronos • Replicon• Tenrox

Training and certification • Association for Project

Management• Boston University• CompTIA• ESI International• George Washington University• International Institute for

Learning• PM Solutions• Project Management Institute

(PMI)• Project Solutions Group• Stanford University

Appendix B: Representative PMOtools and frameworks

Entire contents © 2006 Gartner, Inc. and/or its affiliates. All rights reserved. Reproduction of this publication in any formwithout prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinionsexpressed herein are subject to change without notice.

© 2006 Gartner, Inc.

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Gartner EXP reports

Aron, D., Tucker, C. and Hunter, R., Show Me

the Money: Advanced Practices in Benefits

Realization, Gartner EXP CIO Signature Report,December 2005

Tucker, C. and Rowsell-Jones, A., Getting

Priorities Straight, Gartner EXP Premier Report,September 2002

Tucker, C. and Woolfe, R., Building Brilliant

Business Cases, Gartner EXP Premier Report,January 2004

Core research

Light, M. and Stang, D., “Magic Quadrant for IT Project and Portfolio Management—2005,”G00129208, June 22, 2005

Light, M., Rosser, B. and Hayward, S.,“Realizing the Benefits of Project and PortfolioManagement,” G00125673, January 4, 2005

Light, M., Hotle, M., Stang, D. and Heine, J.,“Project Management Office: The IT ControlTower,” G00132836, November 22, 2005

Books and other publications

Crawford, J. K., The Strategic Project Office: A

Guide to Improving Organizational Performance,

New York, NY: Marcel Dekker, Inc., 2002

Eglund, R., Graham, R. and Dinsmore, P.,Creating the Project Office: A Manager’s

Guide to Leading Organizational Change,

San Francisco, CA: Jossey-Bass, 2003

Jeffery, M. and Leliveld, I., “Best Practices in ITPortfolio Management,” MIT Sloan Management

Review, Spring 2004

Maizlish, B. and Handler, R., IT Portfolio

Management Step-by-Step: Unlocking the

Business Value of Technology, Hoboken, NJ: John Wiley & Sons, Inc., 2005

Pennypacker, J. S., PM Solutions’ Project

Portfolio Management Maturity Model,

Havertown, PA: Center for Business Practices, 2005

Project Management Institute, A Guide to the

Project Management Body of Knowledge,

Newton Square, PA: PMI Publications, 2004

Rad, P. F. and Levin, G., The Advanced Project

Management Office, Boca Raton, FL: St. LuciePress, 2002

Web sites

Project Management Institute, www.pmi.org

The Online Community for IT Project Managers,www.gantthead.com

Further reading

Gartner Headquarters

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Gartner EXP Premier Reports

Growing IT’s Contribution: The 2006 CIO AgendaJanuary 2006

Building Business Smarts in ISNovember 2005

Overcoming Change Obstacles in the Public SectorOctober 2005

Applying Enterprise Architecture September 2005

The CIO’s Personal Contribution Scorecard July 2005

Changing Business ProcessesMay 2005

Perception Is Reality: Communication Strategies for Public Sector CIOsMarch 2005

Playing to Your Advantage: Proven Practices of Midsize-Enterprise CIOsMarch 2005

Delivering IT’s Contribution: The 2005 CIO AgendaJanuary 2005

Making Time: The Office of the CIONovember 2004

The New Shape of ISSeptember 2004

Improving the CEO’s View of the CIOJuly 2004

Upgrading the IS ScorecardMay 2004

Preparing for the Upswing: The 2004 CIO AgendaMarch 2004

Building Brilliant Business CasesJanuary 2004

CIO Credibility: Proven Practices From the Public SectorNovember 2003

Geosourcing IS: Is It Right for You?November 2003

Taking Yo

ur P

MO

to th

e N

ext S

tage

ma

rch

2006

Contents Executive summary 4

PMOs evolve through three stages as they mature to meet ever-increasing business needs. CIOs must ensure that their PMOs master the basics of their current stage before evolving them to the next stage.

Section 1 PMOs must evolve as business needs change 8 As business needs evolve from risk reduction to resource management to business growth, CIOs evolve their PMOs through the project, program and portfolio management stages.

Section 2 Reduce business risk with a project management office 18 A project management office can reduce the risk of project schedule slippage, cost overruns and scope creep by focusing on a standard project management process, basic tools and project manager development.

Section 3 Optimize resource use with a program management office 32

A program management office can improve resource management across business and IT projects and programs by combining related business and IS projects into programs, as well as by implementing governance, communications programs and collaboration tools.

Section 4 Contribute to business growth through a portfolio management office 46

A portfolio management office can contribute to business growth by optimizing the mix of project and program investments and focusing on benefits realization and knowledge management.

Appendix A Organizing the PMO 62Appendix B Representative PMO tools and frameworks 66 Further reading 67

march2006

Taking Your PMO to the Next Stage

®