Benchmarking Your PMO
By Tushar Patel
Every year, Innotas conducts a survey of project management professionals – Project Managers, PMOs, CIOs, and IT Management – to help get a sense of trends in project and portfolio management. Over the years, several trends seem to continue, while new insights always seem to enter the forefront, regardless there is always something interesting to share, debate, and reflect on.
Here are my favorite findings from the 2016 survey:
Over 70% of organizations report not having enough resources to meet incoming project demand
This is one of those findings that I do not find surprising, in fact, I am surprised that this number is not 100%. I have never come across any organization that has resources sitting on the sidelines, just waiting to be utilized. There is always more work to be done than available resources to carry out the work. The question always is, “Are my resources working on the right things?” They are always busy and you are always resource-constrained, but how effaective are your resources? What is particularly interesting is that this number was 60% in 2015’s survey. I believe this is indicative of where the macro-markets are heading. There is concern over the upcoming election, public markets are volatile, unicorns are falling, and venture capital investments are starting to pull back as compared to years before. All of this uncertainty, in my opinion, is causing organizations to re-think their hiring strategy and create urgency to get more done. In addition to most reporting not having enough resources, 46% also reported that resourcing is their #1 challenge – even more challenging than prioritization, alignment, or benefits realization. Bottom line is that no one has more resources than they need and proper resource optimization will become more important over the next 12-18 months.
75% have a formalized PMO
Project management offices (PMOs) are gaining popularity. It seems that organizational stakeholders have increasingly seen the value of a PMO over the years. In 2014, our survey results showed only 61% reported having a formal PMO – this year that number increased to 75%. Most organizations would agree that their PMO is critical for planning and executing key projects and initiatives. As such, they are typically chartered with driving efficiency and governance of project management standards. It would only make sense that we would expect to see an increase in PMO adoption in more competitive times. This trend may also directly be related to the popularity of agile and lean methodology adoption; it may be inferred that the continued increase in PMO adoption is an effort to increase standardization of the project delivery process.
Primary goal of the PMO and project success metrics are misaligned
Organizations seem to have evolved away from focusing their PMOs on cutting costs, as 50% reported their PMO’s primary goal is “on-time and on-budget project delivery.” We have been conditioned to deliver under any and all circumstances, so it is natural to focus on project completion over project outcomes (business impact). When asked how project success is measured, almost 2/3 of respondents reported measuring project success with “on-time and/or on-budget metrics” – this is in line with the primary goal of most PMOs – but the most important measure of project success was reported as “meeting stakeholder expectations” at 68% (Note: multiple responses were allowed). Alternatively, “meeting business outcomes” was also in the top three in 2016 as a project success metric, with a 61% response rate – implying that outcomes are equally important and measured as commonly as outputs.
There is a clear disconnect between how most PMOs are measured (on-time and on-budget delivery) and how project success is measured (meeting stakeholder expectations). This could play a significant factor in the reported project failure rate of 55%. Having aligned metrics is critical to ensure your PMO has a positive perception and the reported disconnect demonstrates an opportunity for improvement.
The bottom line
Some of the reported responses from the survey are not alarming; these are some of the same things we have heard or struggled with for decades. However, what is unacceptable to myself is that we, as project management professionals, are allowing the status quo to continue. Today, we have so many tools and knowledge at our disposal – collaboration software, project portfolio management (PPM), predictive analytics, and great visualization tools – we should challenge our organizations and stakeholders to be better. Markets are only going to get more competitive and organizations must invest in the proper tools and processes to improve the effectiveness of their IT and PMO organizations.
Regardless of how you feel about some of my opinions, knowing where your organization stands is the first step.
This blog post previously ran on blog.innotas.com
Tushar Patel is Vice President of Marketing at Innotas. Innotas is a leader in Leader in cloud solutions for Project Portfolio Management and Application Portfolio Management.