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How to create a value-centric PMO in 5 steps

How to create a value-centric PMO in 5 steps

“You have to put the focus on delivering value”. This is a statement that you, as the person in charge of the PMO or IT teams in your organization, have probably heard constantly from company executives. This is the great challenge faced by Project Management Offices at present: to manage an IT and Project portfolio that must, on the one hand, be aligned with the strategic objectives of the organization. And, on the other hand, to satisfy the needs of customers and users who are increasingly demanding in terms of the products and services they consume.

And, when that doesn’t happen, you know what the consequences are. Unhappy customers, executives and stakeholders who ask for an explanation for excessive costs incurred on projects that are irrelevant to the organization, teams that are unmotivated and disconnected from the reality of the company and the customer, etc. Do you want to turn this picture around and make your organization’s portfolio focus on delivering value? In this article, we explain how to accomplish this in just 5 steps.

Delivering value, the big dilemma for PMOs

Value delivery is by no means an unfamiliar concept for the IT teams or portfolio managers. It’s an idea that is constantly repeated in methodologies such as ITIL or PMBOK. Value delivery is one of the ITIL’s guiding principles, on which this conglomerate of principles and best practices that every IT product and service manager must follow is based.

This guiding principle, which is called “Focus on Value“, emphasizes the importance of linking all activities within the organization to the delivery of value. This value can be reflected in various ways, such as higher customer satisfaction, increased revenue, opening up new markets or customer segments, cost optimization, increased productivity, etc.

Following what is established in the first of the ITIL guiding principles, all IT teams and staff responsible for the organization’s IT portfolio must focus all their activities on delivering value. However, many of them do not succeed in the attempt. But why?

In an organization there are many players with their own perception of what value is (customers, executives, employees, shareholders, development teams), and what activities and projects bring or do not bring value to the organization. Moreover, as specified in methodologies such as PMOK, the value can be:

  • Tangible (e.g., monetary assets, market share, facilities, tools, etc.).
  • Intangible (brand recognition, reputation, trademarks, etc.).

This further complicates agreement on what is and is not valuable in an organization. It is at this juncture that PMOs and IT team leaders lose focus and prioritize, as they have always done, delivering projects on time and on budget, without considering the importance of those deliverables to the organization.

This has, as you may already know, serious consequences for the performance of the organization and the PMO itself. These are some of the most obvious ones:

  • Development teams deliver products, services and functionalities that do not meet the needs of customers and/or users.
  • Inefficient management of the organization’s resources as a consequence of the absence of a strategic vision and planning in the project portfolio.
  • The financial management of the project portfolio is inefficient due to the fact that in many cases very high budget items are allocated to projects that do not provide any value to the organization.
  • Unmotivated teams and employees who focus their work on operations and on delivering projects on time and neglect improvement initiatives.

Moving towards a value-centered PMO

And, in this context, what can the PMO manager do to change the organization’s focus towards value delivery? It can be summarized in 3 words: LEAD THE CHANGE. If the PMO continues to act as an office that only monitors and reports on the status of projects, where the organization’s objectives and user needs are not taken into account, then it will be perceived as an unnecessary expense for the organization.

How can the PMO lead change and focus on continuous value delivery? You will first need to analyze where your organization is today in order to establish a roadmap. To do this, you will need to answer the following questions:

  1. Is the PMO aware of the organization’s objectives and strategic vision?
  2. Does the PMO understand the needs of the organization’s customers and how to meet them?
  3. What are the organization’s value streams? What is the importance of each of them?
  4. Are IT teams and project managers informed and aligned with the organization’s strategic objectives?
  5. How can the PMO measure the value that the IT and project portfolio provides to the organization?

If you go through this exercise, you will be surprised to find that you will probably not be able to answer some of these questions. And that’s normal. When a Project Management Office focuses only on delivering projects without considering their importance and value to the company and its customers, it is very common to have these information gaps.

But this is a step you need to take to tackle the next part of the plan, which will take you in just 5 steps to focus the PMO and the organization it serves towards continuous value delivery.

The 5 steps are as follows:

  1. Knowing the organization’s value streams.
  2. Align the project portfolio with the strategic objectives of the organization.
  3. Active listening to customer needs.
  4. Break down silos and foster a customer-centric mindset.
  5. Prioritizing outcomes instead of outputs.

1. Knowing the organization’s value streams

The PMO must know the value that the organization delivers to customers and stakeholders. To do this, you must list all value streams at the program and portfolio level. Then, you must prioritize them according to:

  • The importance of each value stream to the organization.
  • The resources, both human and financial, required to deliver value in each flow.

This preliminary study of value streams will allow PMO managers, Project Managers and IT Managers to focus on those project portfolios and programs that really bring value to the organization.

2. Align the project portfolio with the strategic objectives of the organization

Once the value streams have been listed, it is necessary for the PMO to know the mission, vision and strategic objectives of the organization. To this end, communication with the company’s executives must be constant and fluid, in order to determine which value streams are most important for achieving the organization’s objectives.

Prioritized value streams based on how important they are to the business, PMO will then be able to align the project portfolio with the strategic objectives that have been determined by Senior Management. This will ensure:

  • More productive IT teams and Project Managers by putting their efforts into the projects that really matter.
  • A PMO focused on continuous value delivery, with a portfolio of projects aligned with the needs of the organization.

3. Active listening to customer needs

Executives should not be the only valid interlocutors within an organization. The customer experience when consuming the organization’s products and/or services is critical for the continuous delivery of value. Understanding users’ needs and how products and services help them achieve their goals is key to any business’ success.

How can the PMO serve as a channel for listening to user needs? It can do so in two ways:

  • Understanding what outcomes customers expect when consuming our products and services, and thus being able to better prioritize the organization’s portfolio.
  • Promoting the importance of focusing on value and understanding the needs of the users in order to develop solutions in accordance with these principles to all the organization’s personnel, whether they are Project Managers or IT managers.

4. Break down silos and foster a customer-centric mindset

For an organization to continuously deliver value to its customers, it is necessary to break down departmental silos in your company. You already know that silos are one of the main obstacles an organization can face when it comes to delivering value. And not only because the silos think only of their own interests and leave aside the objectives of the organization, but also because they do not care at all about customer needs (and this is really critical for value delivery).

The PMO can act as the backbone of the organization’s product and project portfolio and foster cooperation between the different areas of the organization. It should also promote active listening to customers’ needs to ensure that all departments of the organization focus all their actions on delivering value to customers, from operations to continuous improvement initiatives.

7 ways to break down enterprise silos with Triskell Software

5. Prioritizing outcomes instead of outputs

Many PMOs focus on delivering as many projects as possible within the agreed-upon timelines and budgets. However, how many of those projects have delivered value to customers? How many projects have not been supported by the Senior Management of the Organization because they have not delivered the expected results?

Once the PMO has internalized the importance, on the one hand, of aligning the portfolio with strategic planning and, on the other, of placing customers and users at the center of value streams, your mindset will change. The focus will move from the number of projects delivered to the results obtained by the organization and its customers’ thanks to the project portfolio.

Measuring PMO’s success and the IT project portfolio

All of these initiatives, which aim to focus PMOs and IT teams on value creation, also seek to ensure that the Project Management Office is perceived as a value-creating element throughout the organization. Therein lies its success or failure: that managers, teams and other stakeholders perceive the value that the PMO brings to the organization as a whole.

Value, despite the highly subjective component of this term, is measurable. Therefore, KPIs can be established to assess how valuable the PMO and the project portfolio is. Measuring these indicators and presenting them to Senior Management in detailed reports and dashboards will be your best asset to demonstrate the value that the Project Management Office provides to the organization.

There are many metrics we can use to measure value, but these are the most important:

  • Net Present Value (NPV): it corresponds to the present value of the organization’s cash flow originated by an investment.
  • Expected Commercial Value (ECV): a quantitative metric that shows the commercial attractiveness and value that the portfolio will bring to the business taking into account budget constraints and all deliverables of the organization’s portfolio.
  • Accounting Rate of Return (ARR): formula used to measure the annual earnings or profit expected to be obtained from an investment, in this case with the project portfolio.
  • Efficiency and productivity metrics: you should define indicators with which to measure the productivity of the project portfolio for the organization, such as team productivity, net profit or CSAT.
  • Market positioning metrics: Data such as sales growth, new leads, cost of acquisition or customer experience should be taken into account when measuring the value of the organization’s project portfolio.

Triskell, the PPM software that will move your PMO towards continuous value delivery

In order to achieve value-focused portfolio management, it is also necessary to get rid of those unproductive and time-consuming tasks that are typical of project management. Reporting, tracking the hours of each of the resources or managing manual tasks such as sending communications or monitoring the implementation of each of the tasks are some of the most time-consuming actions to complete.

Triskell Software is the PPM solution that will not only assist you in automating these repetitive tasks. It will also be your best ally to drive your PMO towards continuous value delivery thanks to all the solutions it contains, which make it much more than a PPM tool. For example:

  • You will be able to align the project portfolio with the organization’s strategic objectives, scoring the strategic priority of each deliverable.
  • Maximize the use of resources and anticipate changes that may arise during portfolio management thanks to the What-If Simulations integrated into our PPM solution.
  • Break down organizational silos: with Triskell you can monitor the status of your project portfolio and communicate progress to all levels of the organization.
  • You will be able to prepare customizable reports and dashboards, with which you will be able to inform and demonstrate the value that the PMO is bringing to the company to the different stakeholders and executives of the organization.

Request a demo of Triskell Software

Want to learn more? Request a free demo of Triskell Software and you will discover the PPM software that best suits your business needs.