Research shows that as organization invest in project management and mature their PPM practices they deliver stronger results. It’s no surprise that where you put your focus and attention is where you will excel, but proving the value of project management and demonstrating real, tangible results is a sure way to support that effort. Organizations that are immature or lack portfolio management processes, have a higher probability of project failures and experience a multitude of problems – including dollars spent on project waste.
Strategically aligning project portfolios must take into account the needs of both your PMO and your organization as a whole to be fully effective as a strategic anchor. Your PMO must work in alignment with the strategic groups and imperatives of the business to form the future profitability and ultimately the success of your organization.
Do you have the right balance of projects to ensure delivery of strategy? If your portfolio doesn’t measure effectiveness against corporate objectives; against short- and long-term ROI/ROO and risk profiles, then you may not be able to deliver strategic results.
Creating processes to measure risk vs. rewards, clearly delineate investment profiles, and run scenarios to meet strategic pivots for competitive advantage or to avoid infrastructure failure are also important in ensuring that your portfolio’s business is perceived as crucial to the business itself.
Applying Strategy to Your PPM Maturity
There are many different project and portfolio management maturity models out there, but they all demonstrate similar milestones that indicate advancement from one tier to the next. A simplified version of a PPM maturity model can be described into 5 categories.
Level 1 / Basic Maturity
The beginning stages of a PMO are often chaotic – figuring out the best way to get projects done, developing KPIs and workflows, managing to unrealistic or undefined goals. This is common in organizations that are just realizing they need a formal PMO or those without a PMO at all but benefitting from formalized project management. These types of organizations often feel the PMO is proving its value and in a very reactive state. They take what comes at them and do the best they can. For teams operating in a basic maturity model, they typically don’t have formalized processes or clear expectations.
Level 2 / Low Maturity
For PMOs that have an established entity but are still very much in a reactive state, they can be classified as a level 2. Key indicators of this zone include mostly ad-hoc projects, formal methodology assigned to most projects, and typically use basic project management tools to help with productivity and management. This likely means a lot of spreadsheets with difficulty reporting but still measurable benefits and return from PMO investments.
Level 3 / Medium Maturity
At this level of maturity the PMO typically has support from executives on what they are working on, they manage projects at the program or portfolio level to gain efficiencies, and they have standards for resource management and prioritization. This is the stage the PMO has more authority internally, can justify saying ‘no’ to projects that do not have capacity and typically they are either leveraging or considering a formal portfolio management solution. Our article on finding the right project portfolio management solution for your PMO maturity can guide you on some of the ways you can innovate and embrace strategic portfolio management practices.
Level 4 / Growing Maturity
PMOs that have strategic direction, measurable business impact, and top down alignment of initiatives to organizational goals can be classified as level 4 of the maturity model. These organizations are seen as strategic business partners, proactive in their communication and reporting to the business, and have clear direction on growth and innovation within the larger organization. Many PMOs at this level are considered EPMOs, supporting multiple business functions, have a centralized planning model and usually integrate with systems of various departments to act as the central source of information. Enterprise-wide PMOs (EPMOs) often outgrow their perception of IT-specific and manage projects of all calibers and methodologies. This might also include bringing products to market as product portfolios get rolled into the PMO.
Level 5 / High Maturity
High performing PMOs are those that drive business innovation and growth. At level 5, the PMO has shed any perception of obrution or administrative burden, they have a balanced portfolio of maintenance, strategic, and innovative initiatives, and they are strategic focused. Instead of reactive or receiving of information, they are often the ones guiding decision making at the highest levels and providing information for strategic direction. These PMOs might have sub-PMOs or department specific PMOs that are dedicated to different areas but all support a common goal of the business.
Apply Strategic Direction Regardless of Maturity
This is a very simplified version of a PMO maturity model but can help illustrate the difference between a high performing PMO and a low performing PMO. It is important to note that size of organization is not a determinant of PMO maturity, and in some cases might actually hinder growth and development of the PMO. Maturity is better assessed by how well the organization is able to deliver on their promises to the business, how it is measured, and what drives their decision making. For many organizations, perception is a big factor in maturity and can take a lot of effort to make changes to how the PMO is seen by other business units. The important thing is that strategic direction is applied regardless of maturity level.
Discover PPM Best Practices that drive strategic heft in the next installment of Mastering Project Portfolio Management.
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