5 Ways PMOs are Driving Strategic Growth

When business uncertainty is the "new normal," project management offices become critical in supporting strategic business priorities.

By Dave Blumhorst, VP of Professional Services, Daptiv

According to a recent study conducted by Harvard Business Review, the average cost overrun of an IT project is 27 percent, with one in six projects going over budget by an average of 200 percent. With these figures, the role of the Project Management Office (PMO) is becoming more critical in supporting strategic business priorities. Historically, the PMO has gained respect in the enterprise by proving its worth as the air traffic control tower for IT -- aligning project selection with business priorities and enabling visibility into projects status (including delivery dates, budgets, and business value delivered). During this time of economic uncertainty, many of the changes in IT will revolve around the principles and bottom-line results that have made the PMO successful.

Why are PMOs so important? Here are the key trends we see in their growth and value.

Businesses are investing regardless of the "new normal" of business uncertainty. Economic factors have placed a greater value on efficiency, intelligent investments, and cost optimization. In this environment, the PMO – a trusted advisor in the enterprise-- is leading the charge in helping organizations to narrow their focus and more effectively prioritize projects and resources. This also reinforces the importance of PMO leaders to partner with and provide C-Level executives with the right project intake process to pick investments that will align with strategic goals.

PMOs is evolving from being tactical, support-based organizations to becoming a strategic player within the enterprise. To remain relevant, PMOs must prove their worth through integrated planning, consistent metrics for performance, flexible, and adaptable methodology frameworks, and accountability for results. In exchange, they will be seen as champions of increased productivity, visibility, and community support. Strategic PMOs garner strong organizational support and implement best practices such as collaboration with PMO training, consistent use of PPM tools across the enterprise, portfolio management alignment, and involving project managers with the departments or groups they serve.

More enterprises are taking lessons from the IT PMO's playbook and applying them to other business units. Business disciplines such as strategic portfolio planning, project selection, and portfolio measurement that have been perfected in IT are expanding to prioritize and fund strategic initiatives that span both business units and IT departments. Portfolio management will continue to grow in importance because it enables an organization to be responsive, rather than reactive, to macro-environmental change.

The conversation is expanding from "Projects" and "Project Portfolio" to "Programs," "Products," "Applications," and "Services." PPM tools, which have traditionally been used to manage projects, are extending their reach to support management of end-to-end service portfolios, product delivery, application life cycle management, and change management programs.

Agile development and project management are gaining momentum. A recent survey by Forrester Research and Dr. Dobb's found that 35 to 45 percent of respondents use some sort of agile methodology for development projects. The use of frameworks such as agile will grow dramatically, as organizations realize the benefits of creating a culture of continuous feedback and a narrowed focus on delivering high quality projects. This new methodology, long thought to clash with traditional project management techniques, has been found to be an effective complement. In fact, Daptiv predicts that in 2012, more PMOs will develop PPM frameworks that allow both agile and traditional projects to coexist, while enabling executives to effectively monitor the status of any project.

With enterprise IT budgets largely expected to stay the same or be reduced, the importance of the PMO will only grow in this era of business uncertainty. Predicting the future can be dangerous business, and even the experts get it wrong each year for enterprise IT. However, it seems fairly certain that the trend of change and uncertainty will be sure to continue into 2012. Organizations that recognize this early, and take the necessary steps and precautions to counter this trend, will be the successful companies in 2012.

Dave Blumhorst is vice president of professional services at Daptiv, a provider of project management and collaborative business software. Dave is a seasoned executive who has run IT, professional services, and finance departments. Throughout his 30+ year career, he has always found innovative ways to use technology to create business value. You can contact the author at dblumhorst@daptiv.com