PPM and the PMO: "The Logical Approach" says PM Solutions' Alan Fein

Posted by Jeannette Cabanis-Brewin in Portfolio Management, Project Management Events, Project Management Office (PMO), Strategy Execution | 2 Comments

Posted by Jeannette Cabanis-Brewin in Portfolio Management, Project Management Events, Project Management Office (PMO), Strategy Execution | 2 Comments

In our final interview addressing questions asked at our webinar covering the State of PPM 2012 research study, PM Solutions Managing Consultant Alan Fein addresses the appropriate organizational structures to support PPM. The research study contrasted PPM processes that were managed by the PMO as opposed to those managed by “the business” and numerous attendees had questions about that divide.

Q: When you say “PPM is the responsibility of the business,” does this include business-based PMOs – like a Sales PMO and an IT PMO within the same firm?

Fein: Yes. We aren’t concentrating on PMOs in this study, we’re concentrating on portfolios; portfolios within the various business units need to roll up to the enterprise level. If you need a PMO to drive the business unit portfolio, fine. If not, and you can get a centralized PMO to drive the various business portfolios, that works, too. Depending upon the organization, of course: some organizations do not want IT people telling them how to run the portfolio. Others do.

Q: How can the PMO be responsible for PPM (as opposed to the "business"). Is this about the process or the decisions? 

Fein: The PMO is the facilitator or the driver of all the processes that accumulate the data needed to make the decision … they aren’t making decisions, they are driving the process that allows informed decisions. PMO representatives are definitely on the steering committee but unlikely to be able to speak to tradeoffs between business units and capital investment. This is where you are looking for business executives to make decisions on what is going to be executed.

In some companies, the PMO does not sit on the committee and has limited involvement in the processes. In the study, in smaller organizations particularly, an executive committee manages the portfolio. That’s what we mean when we say the business is responsible. The study showed that this is becoming less common, and that a larger percentage of organizations – 30% as opposed to 18% in the 2003 study – now rely on the PMO to be the process owner for PPM.

Q: What do you think is more valuable? PPM at business unit level that rolls up to the enterprise, or driving PPM from enterprise level and making business units follow it?

Fein: It depends what the organization has the need or the appetite for. Essentially, PPM is a process to drive information into an aggregate, holistic view of the organization.  Depending on the culture, this can happen bottom-up or top-down. The important thing is that the entire organization is on the same page.

Q: Do you find organizations migrate from business-level to enterprise-level PMOs?

Fein: Yes. It’s the next logical step after the organization sees the value of a centralized view of all the investments that comprise the portfolio.

Q: What impacts to PPM are tied to whether PMOs are centralized or not?

Fein: If PMOs are not centralized it makes it extremely difficult to do prioritization, selection and portfolio optimization because the basic equation is that the organization has x amount of resources and y amount of work they want to do. Its just a fact that y is always greater than x. Given that inequality you need to see everything in the aggregate so you can see that a marketing project over here, given the same investment, will return more money to the organization than a manufacturing project over here. If you don’t have that view, there is no logical way to make those decisions.

Q: Have you seen organization success with the implementation of PPM in non-traditional areas such as Human Resources?

Fein: Yes, we have, we’ve been involved in such scenarios. We’ve implemented PPM processes in new product development – an area that’s tailor made for PPM choices between investment alternatives, where you have to come up with a way to assess these alternatives and find the ones that deliver the greatest value for your constraints.

To read some case studies involving PPM implementation or improvement, visit http://www.pmsolutions.com/case-studies/category/program-portfolio-management/. You’ll see that at least one of the eight cases involves a Human Resources application.

That's a wrap of our four-part series answering questions from the webinar. Do you have a question we did not address yet? Please leave a comment and we'll find the right expert to blog a response.

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