“In the five years since we last researched PMO status, performance and capability, PMOs have solidified their organisational role, becoming strategic partners and a powerhouse of execution within their organisations.” The State of the PMO 2022 – PM Solutions
I can’t quite pinpoint the exact moment the PMO pivoted from being seen as a questionable cost to being universally regarded as a pivotal asset. Maybe it was just after the pandemic, when ROI (return on investment) came under heightened scrutiny, perhaps it was when external forces (Brexit, IR35, etc) put such demands on the talent market and strategic resourcing became an essential survival skill, or maybe PMOs were organically trending that way anyway as part the evolution of the last half a decade or so – in almost every organisation that I deal with, the PMO is now a fulcrum for business strategy.
The PMO no longer just underpins business strategy, it is the linchpin! And that brings with it new problems.
Alastair, a PMO leader told me once about a tense meeting in 2008 – just 15 years ago! In the wake of the global economic crisis, Alastair had been summoned by the board to justify the existence and demonstrate the viability of his newly formed IT Project Management Office. The business was taking a last-in-first-out approach and, as the paint was still wet on the Project Management Office door, the axe was hovering!
In 2008, PMOs were still rare and were largely exclusive to IT. Glancing around other industries, companies and sectors for an idea of economies to be made, a CEO could be forgiven for surmising that as none of these other organisations had a PMO, perhaps it was something they could live without too.
It seems unthinkable now, but possibly even as little as five years ago, a business looking to make savings might have had a thick red marker hovering over the words Project Management Office. It shows how far we’ve come, incrementally enlarging our circle of influence, but success brings new challenges.
More recently, Alastair told me that 2008 moment with the board was a “walk in the park” compared with the challenges of today, “Back then I had to justify our existence, these days I feel we’re responsible for everything’s existence,” adding, “and I wouldn’t have it any other way.”
TODAY’S PMO CHALLENGES
Pushed on what the challenges are, Alastair told me the same that every PMO leader will probably tell you, things that, as a provider of Project Management resources as a Service, we hear regularly too. Actually, they were the same things highlighted by The State of the Project Management Office (PMO) 2022 – lack of resources, lack of capabilities and a lack of PMs.
The silver lining, I guess, is that these inadequacies and gaps underline the importance of the PMO! I mean, it’s harder to get rid of an integral cog without breaking the machine, so the days of having to justify your existence are a distant memory.
The important thing, for me, is that the progression of the last five years, the rise and rise of the PMO isn’t hampered in its natural trajectory over the next five years by those challenges we discussed. In other words, PMOs must not get so bogged down by firefighting and dealing with inadequacy that they take their eye off where they could (and should) be when PM Solutions revisit the PMO for their 2027 report.
THE PROFIT-CENTRE PMO – THE FUTURE?
I stated by summarising the evolution of the PMO in the last five years as a switch from “a questionable cost” to “a pivotal asset”, the next logical step, in my eyes, is to complete a ten-year progression from cost centre to profit centre.
According to the research, broadly speaking, PMOs are still far more likely to be “cost centres” than “profit centres” (44% cost centres as opposed to 11% profit centres), and this is interesting on many levels.
In my experience, so anecdotally, PMOs in smaller organisations are more likely to be profit centres which stands to reason – the lower your headcount, the more your bottom line demands a return from every team member and department. It’s a lesson that larger organisations should learn, I know of a handful of companies that have elevated their PMO to a status where it is almost viewed as a separate business within the business, i.e., the PMO is not just traditionally impacting company revenues (with better resourcing, cost control etc) it is now generating revenue of its own (by identifying opportunities, scalability, untapped areas for growth and additional deliverables).
As business environments continue to be challenging for all, taking a leaf out of the book of these smaller organisations makes sense. Profit-centre PMOs demonstrably perform better than their cost-centre counterparts, again the research found cost-centre PMOs are far more likely to be “low performers” than profit-centre PMOs (55% vs 16%). Intuitively, this feels right but there is science behind the “feeling”. Also, Profit-centre PMOs are more likely (than cost-centre PMOs) to engage in valuable practices like implementing/managing a benefits realisation framework; monitoring/controlling performance over time; and operating like a consulting business.
For me, the logical evolution for the majority of PMOs is to become profit centres and, currently, they are – in 16% of smaller organisations (vs 9% in mid and 8% in large organisations) and 35% in professional/technical services organisations. Some beautiful room for growth there – so what’s stopping it happening? What might prevent the next PMO review reporting on the growth of PMO profit centres?
Well, we need to address those challenges: inadequate resources; capability gaps; and too few PMs.
STONESEED’S STARS ALIGN!
Firstly, let’s chalk off those challenges! Stoneseed’s Project Management as a Service (PMaaS) gives you access to project professionals, resources and tools – when you need them and for how long you need them. It’s a true end to end service, from IT Technical Advisory, Business Analysis and PMO Services (more on this in a moment) through to Programme & Project Delivery – available onsite or remote (we were experts in Remote Project Delivery before it became ‘fashionable’).
Stoneseed’s team are experienced across multiple technology solutions, sectors and industries, and we work on all types of projects and programmes such as Business Change, Transformation, Infrastructure, Digital and IT Project Delivery. From project resources to more budgetary resources, flexibility and control are baked in to PMaaS.
Stoneseed’s pioneering and innovative on-demand resource model allows you to dial up and down IT project resources in sync with delivery needs. With some reasonable planning, PMaaS opens up a universe of project skills, made available against your demand schedule, from a single Project Manager, Business Analyst, Technical Advisory or PMO expert for a few days, right through to a large team of fully utilised project professionals.
All Stoneseed’s PMaaS services are, and at a flexible and predictable cost thanks to our straightforward commercial model. We’ll work with you to forecast the project resources required and then provide a straightforward rate card with resources defined by type and skill set. Resources are called off against your demand schedule and can flex up and down throughout the period. A key benefit of this model is you are simply billed for the resources consumed at the end of each month.
PMaaS enables you to align resources as and when you need them, on a cost effective, full-time or part-time basis.
PMO – PLANNING FOR THE NEXT FIVE YEARS
So, we’ve established the value of nurturing a profit-centre mindset within your PMO, or incrementally increasing the impact and influence that your PMO has on organisational strategy and revenues, or even just further sharpening your PMO practices to super-align IT project and business strategy – none of this is rocket science. And with PMaaS, we’ve now got a solution for those top 3 challenges, so what of the PMO itself?
There’s an amazing trajectory here from questionable cost centre to strategic powerhouse in five years … so what now? Do we rest on our laurels, or do we take this momentum and put rocket burners under it (ahhh maybe it is rocket science!!!)? I’m choosing the boost it with burners option! So, how can we sharpen our PMO performance?
Stoneseed offer a complete Project Management Office (PMO) range of services from PMO Consultancy (if you have a PMO you want to refine and improve), to provision of single resources to a team of PMO experts to fill any capability gaps and even a full PMO service package via a Managed Service.
At the heart of every successful project team lies a Project Management Office, ensuring well defined processes and governance, planning, forecasting, project resourcing – the very foundations for success. That invaluable link between your business strategy and IT project delivery is only going to become more vital, the margins between success and failure are narrowing, now is the time to sharpen our tools.
For PMOs, the opportunities ahead are exciting, let’s put ourselves in a position to nail this.