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Taking Your PMO to the Next Stage
Corporate Headquarters
Growing IT’s Contribution: The 2006 CIO Agenda
56 Top Gallant Road
January 2006
Stamford, CT 06902-7700
U.S.A. Building Business Smarts in IS
+1 203 964 0096 November 2005
Overcoming Change Obstacles in the Public Sector
Europe Headquarters October 2005
Tamesis
The Glanty Applying Enterprise Architecture
Egham September 2005
Surrey, TW20 9AW The CIO’s Personal Contribution Scorecard

Taking Your PMO
UNITED KINGDOM July 2005
+44 1784 431611
Changing Business Processes
Asia/Pacific Headquarters
Gartner Australasia Pty. Ltd.
May 2005
Perception Is Reality: Communication Strategies to the Next Stage
Level 9, 141 Walker Street for Public Sector CIOs
North Sydney March 2005
New South Wales 2060 Contents
Playing to Your Advantage: Proven Practices
AUSTRALIA Executive summary 4
of Midsize-Enterprise CIOs
+61 2 9459 4600 PMOs evolve through three stages as they mature to meet ever-increasing business
March 2005 needs. CIOs must ensure that their PMOs master the basics of their current stage
before evolving them to the next stage.
Japan Headquarters Delivering IT’s Contribution: The 2005 CIO Agenda
Gartner Japan, Ltd. January 2005 Section 1 PMOs must evolve as business needs change 8
As business needs evolve from risk reduction to resource management to business
Aobadai Hills 6F growth, CIOs evolve their PMOs through the project, program and portfolio
Making Time: The Office of the CIO management stages.
4-7-7 Aobadai, Meguro-Ku
November 2004
Tokyo, 153-0042 Section 2 Reduce business risk with a project management
JAPAN The New Shape of IS office 18
+81 3 3481 3670 September 2004 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.
Improving the CEO’s View of the CIO
Latin America Headquarters July 2004 Section 3 Optimize resource use with a program management
Gartner do Brasil office 32
Av. Das Nações Unidas, 12.551 – 9º andar Upgrading the IS Scorecard A program management office can improve resource management across
business and IT projects and programs by combining related business and IS
World Trade Center – Broklin Novo May 2004 projects into programs, as well as by implementing governance, communications
programs and collaboration tools.
04578-903 – São Paulo – SP Preparing for the Upswing: The 2004 CIO Agenda
BRAZIL March 2004 Section 4 Contribute to business growth through a portfolio
management office 46
+55 11 3443 1509
Building Brilliant Business Cases A portfolio management office can contribute to business growth by optimizing
the mix of project and program investments and focusing on benefits realization
January 2004 and knowledge management.
For more information,
visit gartner.com. CIO Credibility: Proven Practices From the Appendix A Organizing the PMO 62
Public Sector Appendix B Representative PMO tools and frameworks 66
November 2003 Further reading 67
Geosourcing IS: Is It Right for You?
November 2003
© 2006 Gartner, Inc. and/or its affiliates. All rights reserved.
Gartner is a registered trademark of Gartner, Inc. or its affiliates.
GARTNEREXPPREMIER20060315 ®

Further reading
Gartner EXP reports Eglund, R., Graham, R. and Dinsmore, P.,
Creating the Project Office: A Manager’s
Aron, D., Tucker, C. and Hunter, R., Show Me Guide to Leading Organizational Change,
the Money: Advanced Practices in Benefits San Francisco, CA: Jossey-Bass, 2003
Realization, Gartner EXP CIO Signature Report,
December 2005 Jeffery, M. and Leliveld, I., “Best Practices in IT
Portfolio Management,” MIT Sloan Management
Tucker, C. and Rowsell-Jones, A., Getting Review, Spring 2004
Priorities Straight, Gartner EXP Premier Report,
September 2002 Maizlish, B. and Handler, R., IT Portfolio
Management Step-by-Step: Unlocking the
Tucker, C. and Woolfe, R., Building Brilliant Business Value of Technology, Hoboken, NJ:
Business Cases, Gartner EXP Premier Report, John Wiley & Sons, Inc., 2005
January 2004
Pennypacker, J. S., PM Solutions’ Project
Portfolio Management Maturity Model,
Core research Havertown, PA: Center for Business
Practices, 2005
Light, M. and Stang, D., “Magic Quadrant for
IT Project and Portfolio Management—2005,” Project Management Institute, A Guide to the
G00129208, June 22, 2005 Project Management Body of Knowledge,
Newton Square, PA: PMI Publications, 2004
Light, M., Rosser, B. and Hayward, S.,
“Realizing the Benefits of Project and Portfolio Rad, P. F. and Levin, G., The Advanced Project
Management,” G00125673, January 4, 2005 Management Office, Boca Raton, FL: St. Lucie
Press, 2002
Light, M., Hotle, M., Stang, D. and Heine, J.,
“Project Management Office: The IT Control
Tower,” G00132836, November 22, 2005 Web sites
Project Management Institute, www.pmi.org
Books and other publications
The Online Community for IT Project Managers,
Layout/Production: Gartner Corporate Marketing Crawford, J. K., The Strategic Project Office: A www.gantthead.com
Guide to Improving Organizational Performance,
Entire contents © 2006 Gartner, Inc. and/or its affiliates. All rights reserved. Reproduction of this publication in any form
New York, NY: Marcel Dekker, Inc., 2002
without 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 opinions
expressed herein are subject to change without notice.

© 2006 Gartner, Inc.

Taking Your PMO to the Next Stage 67

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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.

2 Gartner EXP Premier

PMOs evolve through three stages to perform Ken LeBlanc, EMC Corporation; Merissa
a wider range of work. Each stage builds on Smith, Hallmark UK; Jan Cronje and André
the prior stage. Moving from one to the next Michau, Metropolitan Holdings Ltd.; Avi
depends both on the PMO’s maturity and the Duvdevani and Ron Rigores, New York City
needs of the business. CIOs play a leading role Housing Authority; Richard Shapiro, Royal
in this evolution. Caribbean Cruises Ltd.; Patrick Anglard,
Thales Group; Ana Paula Keil, TIM Brazil;
Chuck Tucker and Hilda Agopian led the
and Valerie Adamo and Katherine McLean,
research on Taking Your PMO to the Next
Workplace Safety and Insurance Board
Stage. This report answers the question, How
(Ontario, Canada).
can CIOs make their PMOs more effective?
Fifteen CIOs, PMO heads and IS executives • Other members of the Gartner EXP research
from 10 enterprises with established PMOs team: Dave Aron, Mark McDonald, Tina
were interviewed as part of this research. Nunno, Andrew Rowsell-Jones and Gartner
Their best practices and lessons learned are adjunct researcher, Barbara McNurlin.
summarized in the report. • Other Gartner colleagues: Nicky Basset,
Francois Bonnel, Lyne Bouchard, Ione de
Many individuals from around the world
Almeida Coco, Tim Goetz, Robert Handler,
contributed to this work, including:
Amanda Hatten, Matt Hotle, David Lentz,
• Contributors to the case studies: San Retna, Matt Light, Anna Maria Nenna, Venessa
AAA of Northern California, Nevada and Utah; Penov, Bridgette Randolph, Jonathan Rosen
Garry Whatley and David McBeth, Corporate and Ruth Steinberg.
Express Australia Ltd.; Mike McLaughlin and


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 business supplying tools and centrally tracking status.
needs change The project management stage is where project
From the case studies it is clear that PMOs are manager training, coaching and mentoring have
not static. They evolve over time through the the most focus.
three stages—even though the term “PMO” is
High-level governance programs and
used to refer to all three. Through this evolution
communications programs are most frequently
the scope of work changes from tactical to
implemented at the program management
strategic, and the scope of initiatives changes
stage to coordinate business and IT projects.
from IT-intensive projects to combined
business-IT programs and finally to The portfolio management stage is where
enterprisewide initiatives (see figure below). benefits realization management and knowledge
management most frequently take place.
Disciplines established in previous stages
don’t disappear. They provide the foundation CIOs play an important role in matching the
to succeed in the current stage. PMO stage to business needs, and planning
the evolution. Getting too far out in front of the
PMOs at all three stages perform the basics of
business or lagging too far behind have similar
maintaining the project management process,
disadvantages.

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
Scope
• Change and risk management
of work
• Coordination of project delivery
• Measurement of results
• Business-IS collaboration

Project management
• Initiation • Deliverables
• Budget • Scope
• Schedule • Risks
• Resources • Metrics

Tactical
Scope of initiatives

IT Business-IT Enterprise

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


Reduce business risk with a management functions. A PMO cannot manage
project management office complex functions if it still spends most of its
time on the basics.
Defining and implementing an end-to-end
project management process is the first step At this level CIOs must focus on establishing
in establishing a project management office. an effective governance structure and
This requires implementing a flexible project communicating early and often with the
management process and basic tools for programs’ extended stakeholder groups.
project planning and reporting.
In addition to being the communications hub, a
CIOs should also devote resources to program office facilitates collaboration between
developing competent project managers business and IS project teams that are working
through formal training, coaching and in the same program.
mentoring. Not all projects require the same
CIOs with mature program management offices
level of experience. Use a mix of internal and
who can demonstrate improved program
external hires, contractors and external service
delivery and resource utilization should start
providers to provide project manager staffing
thinking about moving the PMO out of IS and
flexibility.
evolving to the portfolio management stage.
Once you have best practice basics in place,
demonstrated improvement in project delivery Contribute to business growth
and gained credibility, consider broadening the through a portfolio management
PMO’s scope beyond IT-intensive projects and office
evolving to the program management stage.
Portfolio management offices contribute to
business growth by optimizing the enterprise’s
Optimize resource use with a portfolio of projects and programs. They
program management office allocate scarce resources toward enterprise
The next stage in the PMO’s evolution is to objectives, while factoring in risk, desired
become a program management office. returns and interrelationships between these
Program management offices coordinate related investments.
business and IT projects. Programs usually
The portfolio management office typically
impact multiple stakeholders, last longer and
operates independently of IS, reporting to the
involve external resources, so they are more
CFO, COO or other senior executive. This gives
complex to manage. Cross-project visibility and
it the clout to raise portfolio management issues
focusing on the interdependencies between
to the highest levels and make decisions based
related projects allow program management
on the best interests of the entire enterprise.
offices to ensure that the right business and IS
resources are used at the right time. CIOs can help extend the portfolio management
office’s influence by getting it involved in
To move to the program management stage, an
strategy formulation and benefits realization.
enterprise must first institutionalize its project


They can upgrade governance to deal with The figure below summarizes best practices
portfolio-level issues. for improving PMO effectiveness. The three-
stage framework and the self-assessment at
PMO staff now require new competencies, such
the end of each section can help CIOs manage
as strategic planning and investment analysis,
expectations, fill in gaps and plan when and
and more powerful tools to measure, manage
how to take their PMO to the next stage.
and report benefits realization, portfolio
alignment and health, and PMO performance, See Appendix A to see how case-study
as well as capture lessons learned and promote CIOs organize their PMO resources. Refer
positive change. to Appendix B for representative examples
of PMO tools and frameworks.

Summary of PMO case-study best practices

Reduce business risk with a Optimize resource use with a Contribute to business growth
project management office program management office through a portfolio management
office

1. Establish a flexible, end-to-end 1. Expand PMO oversight to include 1. Position the PMO organizationally
project management process that business and IT projects, and outside IS to give it indepen-
balances rigor with overhead projects sourced externally dence and senior management
sponsorship

2. Support the process with 2. Institutionalize project manage- 2. Enlarge the breadth of PMO
simple-to-use tools to plan, ment discipline into the culture influence to extend from strategy
manage, track and report all to free up resources to focus formulation through benefits
project activities on program management realization

3. Make the tools available over 3. Use program-level visibility to 3. Design governance to focus
your intranet along with examples identify and alleviate resource senior management on strategic
and instructional support contention issues issues

4. Provide formal training, coaching 4. Educate the business, IS and 4. Integrate benefits realization into
and mentoring to both IS and the external stakeholders about their the entire life cycle starting with
business to develop competent shared responsibilities for planning, and report on it
project managers ensuring program success regularly

5. Be flexible in sourcing and 5. Expand governance body 5. Implement portfolio management
providing project management membership to represent the tools that provide high-level
resources expanded stakeholder set of visibility and analysis that inform
programs decision makers

6. Provide project management 6. Establish communications 6. Broaden PMO staff competen-
assistance, e.g., consulting, programs to keep all stakehold- cies to include strategic planning
problem solving, audits and ers informed and committed to and investment analysis
expertise program success

7. Provide collaboration tools 7. Implement knowledge manage-
to facilitate the work of the ment tools to capture, categorize
business, IS and external and distribute best practices and
project teams lessons learned


PMOs must
evolve as business
needs change


1
As business needs change—from risk
reduction to resource management, to
accelerating business growth—CIOs
must help their PMOs evolve through the
associated project, program and portfolio
management stages in a planned fashion.


1
PMOs 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 analysis
uncovered a three-stage pattern of PMO maturity, shaped by the PMO’s
own capabilities and by the changing needs of the business.

But there is no standard terminology. All 10 case-study PMOs use
different names for the office (see figure below). They also have different
reporting relationships and organizational structures, which may or may
not 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 the
program management and then the portfolio management stages. The
scope of work changes from tactical to strategic, while the scope of
initiatives broadens from IT-intensive projects to enterprisewide business
and IT initiatives (see figure opposite).

A project management office is usually created to solve a specific
problem: generally, the IS organization’s inability to deliver IT projects
on time, on budget and in scope. It focuses on implementing the basic
project management process, introducing simple tools and developing
competent project managers. Project managers may “live” in the PMO,
or in different IT units, such as application development, or in the
business. 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 Case-study organization

Enterprise Portfolio Management Office (EPMO) AAA of Northern California, Nevada and Utah
Program Management Office (PMO) Corporate Express Australia Ltd.
IT Project Management Office (IT PMO) EMC Corporation
Program Management Office (PMO) Hallmark UK
Project Support Office (PSO) Metropolitan Holdings Ltd.
Virtual IT Project Management Office (VPMO) New York City Housing Authority (NYCHA)
Program Administration (PA) and PMO Royal Caribbean Cruises Ltd.
Program Office (PO) Thales Group
IT Program Management Office (IT PMO) TIM Brazil
Strategic Project Management Office (SPMO) Workplace Safety and Insurance Board (WSIB)


It can easily take two to three years for a project business and IS resources.
management office to build a track record of
delivery performance. The disciplines Evolving to a portfolio management office
established at the project management stage starts when greater visibility into program costs
underpin the two subsequent stages. Once the (provided by the program management office)
PMO has earned credibility with the business, prompts senior executives to question whether
it usually receives requests to help manage the enterprise is making the right investments
business projects. At this point it needs to and getting the best returns. The portfolio
evolve to the next stage. management office provides the information,
analysis and oversight to answer these
A program management office manages
questions enterprisewide. Governance focuses
programs as well as projects. A program is a
group of related business and IT projects that senior management on strategic issues. The
support a common goal. The PMO focus shifts PMO is supported by portfolio management
to the more complex management of programs, and knowledge management tools.
which are larger, take longer, require more
For clarity and simplicity, this report assumes
business-IS collaboration and involve a more
a single PMO in an enterprise. In reality, large
diverse set of stakeholders. Program-level
enterprises may have many, both in the
visibility and governance give a program
management office a way to better coordinate business and IS, and at different stages.

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

Strategic

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

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

Project management
• Initiation • Deliverables
• Budget • Scope
• Resources • Metrics

Tactical
Scope of initiatives

IT Business-IT Enterprise



1
As they evolve, PMOs add new functions
PMO characteristics change significantly at each stage. The disciplines
established in previous stages don’t disappear; they provide the
foundation, credibility and competencies to succeed in the current
stage. Each stage builds on the accomplishments of the previous
stage(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 portfolio
management stage. But some are also planning their evolution, or
are in transition, to the next stage. The bottom figure opposite lists the
functions 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 of
maintaining the project management process, supplying tools and
centrally 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 frequently
implemented.
• The portfolio management stage is where benefits realization
management and knowledge management most frequently occur.


The characteristics of each PMO stage differ

Project management Program management Portfolio management

Benefit Reduce risk Optimize resource use Contribute to growth

Focus Project mgmt. process, Program coordination, Investment optimization,
project manager development governance, communications benefits realization

Scope Individual IT projects Multiproject programs Proposals/projects/assets

Typically CIO or application Usually CIO, but sometimes to Outside IS, e.g., CFO, COO
reports to development the business

Role Project manager Program coordinator, program Investment advisor, portfolio
overseer overseer

Engagement Primarily IT project managers Business leaders, external Senior management decision
and project owners partners, ESPs makers

Tools Time tracking, project Program management, Portfolio management,
management, risk mgmt., resource management, knowledge management
deliverable templates collaboration

Skills Process implementation Change management Benefits realization

Metrics Project and project manager Program performance and Portfolio and PMO
performance resource utilization performance

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

PMO functions Case-study frequency

Knowledge management
Portfolio
management Benefits realization management

Project portfolio management

Communications programs
Program
Governance body support
management
Management and delivery of programs

Project manager mentoring and coaching

Project manager training coordination

Project Standards, methods and best practices
management
Centralized tracking/reporting for all projects

Tool selection/implementation/support

Process development/implementation/support


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

Corporate Express (CE) Australia Ltd. is one of Australia and New
Zealand’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). The
figure 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 actual
running of projects.
2. Competency Services provides education and training services for
both the business and IS and acts as the center of excellence and
repository for project management knowledge.
3. Strategic Services handles portfolio management, strategic alignment
of projects and operational and management reporting.

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

PMO

Operational Services Competency Services Strategic Services

• Provides PMO methodologies, • Provides project management • Reports at a strategic,
templates, tools and governance expert assistance executive level

• Project managers directly “run” • Offers project management • Manages strategic priorities
projects training to project managers and and milestones for projects
the business
• Prioritizes and aligns projects
• Acts as central repository of to the business strategy and
project management knowledge objectives

Tactical Strategic

Source: Adapted from Corporate Express Australia Ltd.


Case Study:

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

Corporate Express (CE) Australia Ltd., headquartered in steering committee will be able to select projects that
Sydney, is one of Australia and New Zealand’s leading support the business strategy and stop or reorient
suppliers of business essentials, such as office and those that don’t.”
computer supplies, business furniture and print
management services. Its 2,100 staff in 42 locations CE is expanding its PMO education to business
generate revenues of AU$1 billion (US$750 million). people, to help them be better project sponsors,
team members and system testers. The PMO
CE’s IS organization faced similar issues as other IS methodology is also expanding to include a detailed
organizations: how to better deliver infrastructure and change management strategy and its associated
development projects, how to more effectively use communications plans and computer-based training.
existing operational resources and how to maximize
business benefits in an environment of too many PMO management is evaluating using the enterprise
projects. To meet business expectations, IS needed content management systems as the central repository
greater control over its projects, which meant instituting for all project documentation. And the PMO is
governance. implementing a scorecard that initially measures the
overall performance of the PMO and all projects, the
CE’s business culture was not project-oriented. In fact, progress of each individual project, the performance of
the business executives feared that a PMO would add each project manager and the effectiveness of risk
bureaucratic overhead and reduce their entrepreneurial management.
success. But CE’s need to comply with Sarbanes-
Oxley and the PMO’s success in delivering projects The long-term aim is to measure each competency
changed management’s mind; they saw the PMO’s area in the Project Management Institute Project
value and became its advocates. Management Book of Knowledge (PMBOK). Benefits
realization will also become a new and central focus
of the PMO.
Moving toward portfolio management
The CIO formed a PMO steering committee,
Lessons learned
comprising himself, the CEO, COO, CFO, chief
logistics officer and the general managers of major The following factors have contributed to the success
regions and strategic supply. The committee’s charter of CE’s PMO:
is to prioritize and align all proposed projects against
• Getting the basics implemented quickly and matching
the organization’s strategic plans to ensure maximum
project management methodology and approach to
benefits realization from investments, enforce the
CE’s maturity level
project management process and identify and eliminate
roadblocks to project success. • Improving the delivery on a few very visible projects,
to demonstrate value, earn credibility and develop
To consolidate projects and provide the basis of
key business advocates to help sell the concept
portfolio management, the PMO is implementing
enterprisewide
Microsoft Project Server and the Enterprise Project
Management (EPM) tool suite. “It is critical that all • Investing in tools ahead of the need, to deal with
projects align with the business strategies to ensure expected challenges, such as managing resources
control and the delivery of business benefits,” says across multiple projects
David McBeth, manager, PMO. “This will help us
identify potential resource contention and give us an Based on interviews with, and material from, Garry
enterprise-level view of the project portfolio and the Whatley, CIO, and David McBeth, manager, PMO,
organizational resource commitments. The PMO Corporate Express Australia Ltd., December 2005.


1
“Understand the role Plan to evolve your PMO to meet changing
the business wants business needs
the PMO to play. Don’t
Because of the long lead time required to set up a project management
deliver a battleship
office and to demonstrate results, planning should start as soon as the
solution you can’t
need is recognized. This is the job of the CIO because the initial work of
support and that the
PMOs is typically with IT-intensive projects. From there, though, the
business doesn’t need.”
PMO can evolve.
— Mike McLaughlin
Director New York City Housing Authority (NYCHA) is the largest housing
IT PMO and cross- authority in the U.S., serving 417,000 tenants. It has a three-year
functional services
EMC Corporation 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 business
needs. Getting too far out in front of the business or lagging too far
behind have similar disadvantages, as shown in the bottom figure
opposite.

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 delivery
and 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’s
project portfolio and its realization of benefits—to contribute to
business growth.

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


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

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

PMO stage

PMO is seen as overkill

Portfolio PMO has capabilities the ds
management business does not value nee
ness
usi
et b
to me
ties
Program
pabili
management t ca
righ
the
O has
PM PMO is seen as ineffective

Project PMO does not have the capabilities
management to meet business needs

Enable
Reduce resource Contribute
risk management to growth

Primary PMO benefit


Reduce business
risk with a project
management office


2
CIOs in enterprises with weak project
management capabilities need to focus
on the basics. By implementing a standard
project management process, providing
basic tools and developing competent
project managers, a project management
office can reduce the risk of project
schedule slippages, cost overruns and
scope creep.


2
Project 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 PMO
stages. The basics include a repeatable project management process,
simple tools for project planning and reporting, and competent project
managers—usually developed initially for IT-intensive projects (see top
figure opposite).

The PMOs in all four case studies at the project management stage
focus 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 and
developing the competencies of the project managers (see bottom
figure opposite).


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

Strategic
Project management
Benefit Reduce risk

Focus Project management process,
project manager development

Scope Program management Scope Individual IT projects
of work
Typically CIO or application development
reports to

Role Project manager
Project management
• Initiation • Deliverables Engagement Primarily IT project managers and
• Budget • Scope project owners
Tactical • Resources • Metrics Tools Time tracking, project management,
risk management, deliverable templates

Scope of initiatives Skills Process implementation

IT Business-IT Enterprise Metrics Project and project manager
performance

Project management offices develop the process, tools and managers that
deliver projects
Project management office functions Project management office case-study frequency
Project manager mentoring and coaching
Project manager training and coordination
Standards, methods and best practices Most common project
Centralized tracking/reporting for all projects management office functions

Tool development/implementation/support
Process development/implementation/support

Project
management office


2
“We’d like our IT PMO EMC Corporation’s IT PMO is driven by the business’s need for
toolset to function cost and resource control and SOX compliance
like an MRP for IT.”
EMC Corporation is a leader in information storage and management
— Mike McLaughlin products and services. Its IT project management office (IT PMO)
Director
focuses on process compliance, reporting and training.
IT PMO and cross-
functional services
It aims to improve compliance by implementing project management
EMC Corporation
standards, increasing the use of project management tools and
improving the accuracy of project information for the business, senior
management and the CIO.

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


Case Study:

EMC Corporation—Focusing on process compliance, reporting and training

Based in Hopkinton, Massachusetts, U.S.A., EMC accurate project status information. Then they will be
Corporation is the world leader in products, services comfortable canceling projects that are not meeting
and solutions for information storage and its criteria. “Being able to establish get-well plans early on
management. EMC had 2004 revenues of US$8.2 and track progress can make all the difference in
billion and employs nearly 23,000 people worldwide. ensuring timely and cost-effective delivery of solutions
to our customers,” says McLaughlin.
EMC’s IT PMO has a staff of three project managers
(PMs) and two business analysts (BAs). It is part of the The BAs handle project reporting and support cross-
IT group that handles central operations and IT portfolio functional IT projects. They report project status and
and process management. PMOs in other parts of performance to the CIO for shared services, application
EMC are responsible for very large projects and development and client services. Information tracked
corporate initiatives such as Six Sigma. includes the number of projects and the number of
business cases reviewed, approved and rejected.
The IT PMO handles work typical at the project Service-level statistics include applications uptime and
management stage. It is responsible for supporting and service desk statistics, such as time-to-answer and
enforcing technical process standards, tracking project time-to-resolve. Annually, the IT PMO reports on total
and portfolio metrics and providing core training for spend and resource allocation.
PMs and BAs.

One PM is managing the initial definition and design Project manager training is key
phase for a project and portfolio management (PPM) EMC developed its project manager training with
system. The new system will augment five systems a local college. The training covers such topics as
the IT PMO currently uses: Documentum’s eRoom, business case development, business case financial
which is used for project tracking and collaboration; an and risk analysis and management, estimating
internally developed time-tracking system; Excel, which techniques, requirements gathering, project
is used for project and portfolio management; and two management methodology and client engagement.
systems used to track smaller maintenance and Some BAs are involved in training PMs and BAs in
enhancement projects. other EMC IS departments.

The system will answer questions such as: “What will “People will operate under the radar if they don’t see
the next project gate require?” and “What is the real the IT PMO’s value,” says McLaughlin. “So we offer
status of a project based on milestones, spend and training. Our approach is to influence and direct, rather
estimates-to-complete?” than dictate. I also expect to use more industry-
standard approaches and tools, such as supporting
The other two PMs are currently working on
Project Management Institute training and certification.”
implementing IT Infrastructure Library (ITIL) processes.
Based on interviews with, and material from, Mike
Timely and accurate reporting builds trust McLaughlin, director, IT PMO and cross-functional
services, and Ken LeBlanc, senior director, IT business
To improve the IT PMO’s processes, Mike McLaughlin,
operations and IT portfolio management, EMC
the office’s director, is working on gaining the trust of
Corporation, November 2005.
business management by giving them timely and


2
“Because the Implement a flexible project management process
toolset enforces and basic tools
the methodology
Defining and implementing an end-to-end project management process
and standards, I
is the first step for a project management office. Being flexible and
don’t have to be
having “just enough process” is a best practice. To ensure consistency
the bad cop. I
many enterprises use a standard methodology, like the one from the
have more time to
Project Management Institute (PMI). But they develop a “lite” version to
coach and advise
achieve a balance between process rigor and overhead.
to increase project
management skills.” Corporate Express (CE) Australia Ltd. provides a good case in point.
— Ron Rigores When David McBeth was hired as the manager to set up the PMO in IS,
Program manager he focused initially on improving IT project delivery. During the first year,
Virtual IT project he developed a streamlined project management methodology, with a
management office
New York City toolset and controls to support it. “Because CE is a fast-growing,
Housing Authority entrepreneurial enterprise, we wanted ‘just enough’ methodology to
improve 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, project
plans 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 process
compliance with tools

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

NYCHA’s IT PMO has taken its tools to the next level. The toolset not
only provides templates, examples and procedures, but also enforces
process compliance and delivers just-in-time training for project
managers 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 enterprise
projects, 12 infrastructure projects and proposed business projects.


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 project Develop competent project managers through
management skills, we formal training, coaching and mentoring
use and support the
CIOs should plan on devoting resources to developing competent
Project Management
project managers to ensure long-term success. Case-study enterprises
Institute methodology,
use many kinds of training. The Project Management Institute (PMI) is
membership,
an often-used source. Many of the case-study enterprises use PMI for
professional
professional development and certification.
development and
certification for our Project management education and training are critical to Corporate
project managers.” Express Australia Ltd.’s success. The focus is on two areas. One is how
— Katherine McLean to use the methodology and tools, develop clear business requirements
Director, strategic and track benefits realization; both project managers and the business
program management receive this training, but the project managers receive more detailed
office and business
advisory services training. The second area is understanding what a PMO is and how it
Workplace Safety and achieves buy-in; the business receives this training.
Insurance Board
One of the most difficult changes that Mike McLaughlin, director of
EMC’s IT PMO and cross-functional services, has experienced while
coaching and mentoring project managers is helping them overcome the
fear of marking their projects yellow (at risk) or red (in trouble). Yet doing
so escalates the problem, gets management’s attention, resolves issues
and can gain additional support. By identifying problems and getting help
early, project managers can get their projects back to green status while
they 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., their strategic importance all visible. Projects are more
with 13,300 employees overseeing 36,700 residential consistent, and the project management process is
buildings and 181,000 apartments, as well as 86,000 continually improving.
leased housing units. NYCHA serves 417,000 tenants.
NYCHA has realized significant benefits from its virtual
NYCHA recently developed an enterprisewide IT PMO. First, it has avoided spending US$1.2 million
governance model (see page 38) and virtual IT project hiring additional project managers. Second, it has
management office (VPMO). Together they align increased business unit satisfaction and collaboration
NYCHA’s business and IT strategy and address four with IT. Third, it has streamlined the business-IT five-
major IT shortfalls: year strategic planning process. Fourth, it has improved
the quality, timeliness and cost-effectiveness of its
• High project failure and slippage rates
strategic IT programs. And fifth, it has increased IT
• High rates of projects over budget capital spending because the business is confident the
work will be well managed.
• Senior management inability to mitigate delays,
failures and financial losses in a timely fashion
Five factors have contributed to success
• Lack of transparency/visibility of project plans and
CIO Duvdevani attributes PMO and governance
status reports
success to five factors:
The PMO is virtual in that the project managers report 1. Negotiating and developing an IT governance model
elsewhere. “The PMO integrates process flows, that supports the use of a consistent and repeatable
templates, online tools and collaborative techniques project management methodology
to standardize IT project selection and management
throughout the organization,” said Ron Rigores, PMO 2. Aligning business and IT strategic initiatives by
program manager. He reports to Avi Duvdevani, CIO fostering a strategic partnership with senior
and deputy general manager for IT. management

The PMO toolset makes the virtual PMO possible. 3. Allowing the governance framework to guide the
Rigores leverages the toolset, which uses mainly the business through the project management life cycle,
Microsoft Enterprise Project Management (EPM) suite, developing a project management tool to enforce
delivering it via a Web-based project management compliance and letting the business determine the
application integrated with Microsoft Project Server. technology portfolio

4. Meeting frequently to review the IT project portfolio
Via its IT governance framework and toolset, the PMO
transfers project management skills to NYCHA staff, 5. Investing in project management training and
including the business units and IT strategic partners. mentoring
Projects are managed by NYCHA staff, not the PMO.
The PMO assists and mentors these dispersed project “Together with the business, we can identify new
managers in using the toolset, often on a just-in-time revenue-generation and cost-saving opportunities.
basis. Creating a partnership between IT and the business
owners leads to a more effective use of technology
and more successful projects,” says Duvdevani.
PMO benefits are evident
The PMO procedures and toolset have fostered Based on interviews with, and material from, Avi
organizational collaboration, document management Duvdevani, CIO and deputy general manager for IT,
and control over standard reporting. The PMO has also and Ron Rigores, virtual IT project management office
improved governance of IT projects by making the program manager, New York City Housing Authority,
projects, the issues and risks surrounding them and November 2005.


2
“We have seen a Provide flexible project management staffing
direct impact on
Demand for experienced project managers varies. Not all projects
project success
require the same level of experience. A PMO best practice is to be
rates as a result of
flexible by providing project manager resources from internal sources,
implementing the
hiring externally and using contractors and external service providers.
PMO. Early warning
and intervention in Corporate Express Australia Ltd.’s PMO selects qualified contractors as
troubled projects project managers to get the right expertise and experience for each
have really begun project, as well as to flex staffing levels based on demand. Initially,
to pay off.” finding the hands-on, jack-of-all-trades type of project manager for its
— Ken LeBlanc mid-size business was challenging. The PMO learned to avoid selecting
Senior director project managers from very large companies because their approach
IT business was “overkill.”
operations and IT
portfolio management
TIM Brazil has outsourced part of its PMO
EMC Corporation
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 external
resources she has increased her staffing flexibility, added specialized
project management expertise and taken advantage of some of the
consultants’ tools. Her staff supports approximately 300 projects. The
project managers reside in other IT departments, such as application
solution delivery.

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


Case Study:

TIM Brazil—Upgrading its IT program management office

TIM Brazil, headquartered in Rio de Janeiro, is a • Commenced weekly follow-up on all projects in the IT
subsidiary of Telecom Italia S.p.A. It provides mobile portfolio
phone services to 20 million subscribers in Brazil.
• Developed the ToDoList application to manage
Its 7,500 employees generate revenues of over
project follow-up
US$1 billion.
• Worked with the presidential-level PMO to define an
TIM Brazil created its first PMO to manage the rollout of IT portfolio aligned with company strategies
its GSM network. Now it has seven PMOs. A strategic
PMO reports directly to the president. The six major • Managed special projects for IT organizational
lines of business, including IT, each have their own change and balanced scorecards
PMO.
• Customized the Microsoft Enterprise Project
The IT PMO’s mission is to ensure that the IT portfolio Management (EPM) suite to support the new
aligns with company strategy, all the way through methodology
project follow-up. Its budget is 2 percent of the total IT
In 2005, Keil created 10 task forces to focus IT
capital expenditure, which includes PM tools and
resources on important company problems. Their
resources to follow up on projects. The IT PMO is
work is reviewed daily. At midyear she transferred
responsible for: portfolio management, to ensure
responsibility for demand management to a newly
alignment between IT projects and company strategies;
created relationship management function.
project follow-up, to ensure on-time, on-cost, quality
project delivery; selection and support of PMO tools; This PMO function consolidates and reports all
methodology, skills and coaching of project managers; information about IT projects, including:
and metrics and reports.
• Weekly reports to the IT steering committee and to its
Italian parent
The IT PMO is upgrading its capabilities and tools
Ana Paula Keil became senior manager of the IT PMO • Monthly status reports for all IT projects and task
in mid-2003, reporting to the head of business IT. Her force work
staff of 25 includes external consultants but excludes • Semiannual and annual performance summaries
project managers who reside in the other IT
departments, such as application solution delivery. She • On-demand presentations about IT projects or IT
also draws on external resources to gain staffing strategic plans
flexibility, project management expertise and tools. In 2006, Keil expects to be more involved in developing
the IT strategic plan and reporting the status of the
Her first priority was to develop a complete project
project portfolio to the board. She will work with the
management methodology. What she developed is
presidential-level PMO to extend EPM to the other
based on the Project Management Institute Book of
PMOs, and to include non-IT projects. “We will
Knowledge (PMBOK), which transformed TIM Brazil’s
integrate projects into programs and develop high-level
view of PMOs from managing IT projects to managing
company views of all programs, not just IT, for senior
business projects.
management,” says Keil.
During 2004, Keil rapidly upgraded the PMO’s
Based on interviews with, and material from, Ana Paula
capabilities and tools:
Keil, senior manager, IT program management office,
• Implemented a subset of the new PM methodology; TIM Brazil, November 2005.
divided the IT PMO team into strategic and
operational activities


2
Assess your project management office against
best practices
Focusing on IT projects is the universal starting point for project
management offices. CIOs should ensure that they have the basics
in place before attempting to broaden the PMO’s scope beyond IT
projects. If you’re starting from scratch, plan to recruit an experienced
PMO leader and to spend at least two years establishing a consistent
process, gaining compliance, improving delivery and measuring results.

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

CIOs with high-scoring project management offices can start building
management support for the next stage—a program management
office—by demonstrating project management office successes and
having business leaders advocate for the PMO by communicating why
they value it. This will create momentum for expanding the PMO’s scope
to include business projects and integrated programs comprising related
business 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/ Done somewhat Done Done well/
not at all poorly somewhat well completely
0 1 2 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 Total score
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


Optimize resource
use with a program
management office


3
CIOs can improve resource management and
ensure that the best resources are available
for the most important projects by combining
business and IT projects with common goals
into programs that are managed by a program
management office.


3
“As the project and Program management offices focus on
system managers coordinating related business and IT projects
become more skilled
CIOs increase the scope of their program management offices
in project management,
by integrating business projects and focusing more on the
the PMO will shift
interdependencies between related projects, to ensure that the right
focus from ensuring
business and IS resources are used. Programs usually impact multiple
delivery to improving
stakeholders, last longer and include external resources, so they are
project integration
more complex to manage. CIOs should provide leadership in setting
and planning for
up governance bodies and communications programs because both
interdependencies at
are needed to make coordinated decisions across the organizational
the program level.”
boundaries that programs cross (see top figure opposite).
— Ana Paula Keil
Senior manager All four case-study PMOs at the program management stage focus on
IT program the management and delivery of programs, governance body support
management office
TIM Brazil and communications programs. All also retain three of the most common
project 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 services
organization, distinguishes between project and program management
not 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 the
business—affecting a few thousand people or spanning multiple
disciplines. Some large programs are subdivided and managed as
individual projects but report at a program level. Ultimately, the project
board decides “program” or “project.”


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