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Unleashing the PMOs potential How to design a successful project management officeMarch 201913245Management summaryCompanies set up project management offices (PMOs) to ensure an effective organizational response to complex chal lenges in the areas of transformation and implementation. They need to be certain that their project is properly aligned be tween the various stakeholders in the company and can be steered effectively. However, our work with clients shows that very often PMOs do not fire on all cylinders. We wanted to find out why so many PMOs fail to unleash their full potential and what companies can do about it.Of course, no two transformation programs are alike. Their scope can range from challenging a business mod-el to changing an organizations culture, from stream-lining operations and enhancing performance to re-structuring the entire company. The size, complexity and urgency of programs vary, and these factors must be reflected in the structure of the Pnull.To shed light on the success factors for Pnulls, we con-ducted a large-scale survey of top executives and Pnull professionals in companies of different sizes across a range of industries in nullermany, nullustria and nullitzerland. null this paper we present the key findings of our investi-gation. nulle also use these findings and our hands-on ex-perience supporting clients to derive a framework for designing and executing a performance transformation through a structured PnullO process, built around seven core activities. nullnally, we make five recommendations for how companies can maximize the success of their Pnull nullfrom tailoring the Pnull to suit the program and ensuring the right mix of team members, to selecting an appropriate null tool.2 Roland Berger Focus Unleashing the PMOs potentialContents1. No two transformation programs are alike .4Success factors for PMOs vary accordingly2. Why do PMOs fail to unleash their full potential? . 5We asked those in the know3. What distinguishes successful from less successful PMOs? . 11Lessons from the study4. Structuring the PMO process: A framework for success .12Effective programs are built around clearly focused activities 5. Five simple recommendations .15Unleash your PMOs potentialCoverphoto: VLADGRIN/GettyImagesUnleashing the PMOs potential Roland Berger Focus 3Transformation projects vary widely in nature. The success of the PMO depends on how well it is tailored to the program in question.nullrms embarking upon a transformation generally set up a program management office nullnullnull The role of this division or practice within the organization is to steer the program and overcome any challenges with re-gard to implementation. nulldeed, the Pnull has come to be seen as an essential component in delivering effec-tive organizational transformations.The need for a Pnull is widely accepted. nullet compa-nies often fail to realize that the success of the Pnull de-pends on how well it is tailored to the program in nullues-tion. Transformation programs vary widely in nature, from complex pronullcts challenging the business model or the strategic direction, to programs designed to en-hance a companys performance, or even restructuring programs driven by credit institutions. nullo two transfor-mation programs are alike.nullreover, todays companies have to deal with an in-creasingly volatile economic environment, high levels of organizational complexity and growing performance expectations. The list of demands can appear never- ending. nulls a result, the Pnull needs to be customized to reflect not nullust the scope of the transformation program, but also the complexity of the organization and the urgency of the change. nullstead of searching for a one-size-fits-all solution nullan idealized Pnull that can be used whatever the situation null the new challenge is to tailor the Pnull so that it is truly fit for purpose.1. No two transformation programs are alike Success factors for PMOs vary accordingly4 Roland Berger Focus Unleashing the PMOs potentialOur experience shows that most programs led by Pnulls do not unleash their full potential, failing to achieve their targets within the expected time. To find out why, we conducted a survey of almost nullnulltop executives and Pnull professionals working at companies of different sizes across null different industries in nullerman-speaking countries. Their responses provide valuable insights into the situation on the ground. A2. Why do PMOs fail to unleash their full potential? We asked those in the knowA: Comprehensive study of German-speaking countries About our surveySource: Roland BergerWide range of industries covered: automotive, pharma ceuticals, industrial products and services, financial services, TMT (technology, media and telecommunications), etc.10%Switzerland16%Austria74% Germany288 respondents9% Others71%Executives20% PMO professionals56% 15 years20% 510 years 24% 1115 years Long professional experienceFocus on executives and PMO professionalsCharacteristics of respondents Characteristics of responding companies15% Active in 1 country only40% Active in over 10 countries45% Active in 110 countries21% Under EUR 100 million49%EUR 100 million to EUR 1 billion30% Over EUR 1 billionBroad geographical footprintVarying sizes (annual revenue)Unleashing the PMOs potential Roland Berger Focus 5nulls economic conditions change, so does the nature of Pnull-led programs. null the survey we were mainly inter-ested in two nulluestionsnullnullich business situations most often trigger Pnull initiativesnullnulld which concrete fac-tors drive Pnull initiatives as a rulenull BThe survey results show that in recent years more than half of Pnull-led programs were triggered by nor-mal operations, as companies experienced revenue growth. Our recent work with clients reveals another trend, toonullnullre and more Pnulls are now being trig-gered by strategy, income or linulluidity crises nulla clear re-flection of ongoing economic uncertainty. The main underlying drivers of PnullO-led transformation programs are challenges relating to complexity and revenue growth. These two factors were considered nullelevantnullor nullighly relevantnullreasons for launching an initiative by over fifty percent of the respondents in the survey. The complexity factor is something that we increasingly ob-serve in client pronullcts, whether driven by mergers and acnulluisitions nullnullnull a change of business model, digita-lization or macro-economic uncertainty. nulless frenulluent drivers of Pnull programs are cost increases nullited by nullust under half of respondentsnull sudden events and declin-ing revenues.nullother important nulluestion is whether Pnull pro -grams actually achieve what they set out to do. nullre, the survey provides a startling insightnullnullspite the high lev-el of maturity and commoditization of Pnulls as a pro -gram management tool, the overwhelming manullrity of Pnull-led programs fail to meet their targets within the original timeframe. null fact, nullust three percent of those surveyed reported target achievement of over nullnullper-cent, and in null percent of cases, target achievement was under null percent. COf course, a certain nullilution risknullis normal when implementing transformation programs. nullt even al-lowing a buffer of null percent nullthe figure we use as a rule of thumb in our day-to-day business nullwe need to under-B: More than half of PMO programs are triggered by normal operations Complexity and revenue growth are the two strongest driversSource: Roland Berger *Share of respondentsIrrelevant Highly relevantTriggers for PMO programs58%59%48%44%Total = 28833%Relevant/ highly relevant*Number of respondentsAverage scoreOverwhelming complexityChallenging revenue growthCost increaseSudden event (e.g. carveout)Decline in revenuesDrivers of PMO programsNormal operations16573Strategy crisis44Income crisis6Liquidity crisis57%25%15%2%6 Roland Berger Focus Unleashing the PMOs potentialC: The overwhelming majority of PMO programs fail to achieve their targets Percentage of target achievement within the original timeframestand why Pnull programs so often fail to realize their targets. nulle can shed some light on this by examining the correlation between various factors and the success of transformation programs. D EOne key factor for target achievement by Pnulls is management priority. The survey showed clearly that pronullcts accorded low priority by management only achieved on average slightly over one-third of their tar-gets, while pronullcts accorded high priority achieved more than two-thirds.nullother manullr factor is the degree of external sup -port for the implementation of the program. nulle found the highest success rate in the case of mixed Pnull teams consisting of both internal and external members. nulle-cifically, teams with null to null percent external members are the most successful on average.Pronullcts are also more successful where the company recognizes the importance of the nullnull toolnullnullthat is to say, the null tool that the Pnull uses to manage the pronullct and organize its work. nullere the tool is not considered important, pronullcts have a success rate of nullust null per-cent, compared to null percent where it is considered im-portant.The duration of support for the implementation pro-vided by the Pnull is another key factor. nullccording to the survey, Pnull-led programs take on average five months to set up nullncluding defining and calculating the expect-ed impact of actionsnulland the Pnull then supports them for a further null months. The survey results suggest that programs are significantly more successful where the Pnull supports them for a longer periodnullwe found a null percent success rate if the support is between one and three years, compared to null percent if the support lasts less than a year. Pnull programs lasting more than one and a half years achieve significantly higher success rates on average than those that end soonero further success factors are structure and capa-bility. The survey revealed a clear correlation between In 41% of cases, target achievement was under 50%Source: Roland Berger8%025%33%2550%43%5075%13%75100%No. of responses (total = 288)24 96 123 36 93%100%Unleashing the PMOs potential Roland Berger Focus 7D: The universe of PMO success factors Broad range of factors can support the PMOaverage target achievement and each of these two fac-tors. nulldeed, Pnulls that lack a clear structure achieve less than null percent of their targets on average.nullompanies would also be well advised to consider further supporting factors, such as process, capacity, methodology, culturenullehavior and incentivesnullnforce-ment. nulllthough the survey did not find a clear statistical correlation between these factors and the success of Pnull initiatives, they, too, contribute to a successful and problem-free implementation.Source: Roland BergerPMO SUCCESS FACTORSPMO toolCapabilityManagement priorityProcessCapacityMethodologyExternal support for imple mentationDuration of support for im plementationIncentivesStructureCulture/ behavior8 Roland Berger Focus Unleashing the PMOs potentialOUR EXPERIENCEnullw does this match up to the realitynullnull our work sup -porting clients, we often find that although companies generally set up a Pnull, this is not viewed as a priority by top management. nullstead, the nullard expects their nullon-trolling department and functional heads to carry out the tasks involved. nullontrolling departments are usually prepared to take on this responsibility, albeit reluctant-ly, but they often lack the renulluired understanding of the operational challenges involved. null the same time, func-tional heads see monitoring and steering the program as burdensomenullThey lack the necessary capacity and are unwilling to engage in potentially confrontational discussions. nullsides making the Pnull a priority, top management should be actively involved in the imple-mentation. The companys leaders need to be regularly informed about the current status of the pronullct, nullust as the workforce needs to be kept up to date with steering decisions to ensure their ongoing motivation.nulln terms of external support, our experience shows that Pnull teams are often afraid or reluctant to approach senior staff within the company with follow-up renulluire-ments, or to exert the pressure needed to ensure progress. The reasonnullnull most cases Pnull employees are worried about nullopardizing their own careers within the company and putting valuable relationships at risk.null terms of capability, we find that companies gener-ally recognize the need for skilled Pnull resources. nullt they have difficulty finding people that have the neces-sary broad range of skills nullfrom financial prowess to the ability to create a clear pronullct structure and communi-cate effectively with a broad range of stakeholders. The importance of the Pnull tool is also borne out by our experience. nullompanies frenulluently neglect the task of selecting a tool in the setup phase of the pronullct, spending insufficient time choosing a tool that matches the specific renulluirements of the program. They do not view this as a core activity, resulting in the use of outdat-ed in-house tools nulla regrettable example of nullusiness following nullnullrather than nullT following businessnullnullnally, with regard to the duration of support by the Pnull, it is not unusual to find that the strong commit-ment, focus and motivation of the organization during the setup phase drops off significantly during the imple-mentation phase. nullfter all, tracking progress and carry-ing out follow-up actions can be tedious work. In our work supporting clients, we often find that setting up a PMO is not viewed as a priority by top management. Instead, the Board ex-pects their Controlling department and func-tional heads to carry out the tasks involved.Unleashing the PMOs potential Roland Berger Focus 9Source: Roland BergerAveragetargetachievementRecognition of importance of PMO toolStructureCapabilityExternal support for implementationDuration of support for implementationE: Quantifying the importance of PMO success factorsCorrelation between selected factors and target achievement in PMO programsManagement priorityVery low Very high80%100%60%40%20%0% = 0.96Very lowNot importantNot importantVery highVery importantVery important80%100%60%40%20%0% = 0.99Averagetargetachievement80%100%60%40%20%0% = 0.8480%100%60%40%20%0% =0.851.5 years 3 years80%100%60%40%20%0% = 0.84
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