Project management offices grow more essential during recession

Kristen Caretta, Associate Editor

Project management offices (PMOs) are becoming more critical to the midmarket during the recession, as they offer important IT governance in making sure all IT projects are aligned with corporate goals while also cutting out waste.

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Though often created during booming economic times to focus resources and priorities on the most strategic projects, PMOs are no luxury in tight economic times, interviews with midmarket CIOs indicate. Today, project management offices are uniquely positioned to cut projects that have spiraled out of control and identify those critical to meeting changing business needs and increasing business efficiency. They have even staved off IT layoffs.

At extreme sports goods maker Sole Technologies Inc., the PMO "actually has a stronger role now: analyzing and making sure we're doing the proper work in the most cost-effective way and separating the nice-to-haves from the need-to-haves," said George Bock, vice president of IT at the Lake Forest, Calif.-based company.

"I look at the PMO as a critical part of what we do today. In relation to our IT projects alone, it helps us understand what we should be working on. I can't afford to not have a PMO," Bock said. "If we lost it, we'd be going back to a somewhat archaic structure. We operate so much more efficiently now because of it."

In fact, other departments at the 400-employee manufacturer have expressed interest in the PMO's processes, to organize and operate more efficiently themselves, he said.

From bureaucratic entity to effective business partner

The project management office was not always regarded as an effective arbiter of priorities and cost savings, as a lot of businesses consider it today. Approached incorrectly, the PMO can seem like a "process cop," said Steven Rollins, chief project strategist at ALLPMO Network Inc., a worldwide PMO consulting and training company. Rollins has worked with and seen project management offices evolve during the past 30 years.

Avoiding the process-cop approach is vitally important to the success of the PMO. Organizations need to ensure the project management team is aligned with the project goals while providing an efficient means to an end. "I look at the PMO acronym in two ways: project management overhead and project management opportunity," Rollins said. "If people fear you, they will never use your service. But if common practice focuses on efficiency, there's true value to that."

New software, standardized models and portfolio management training has modernized the PMO, he said, providing clearer trends in efficiency and greater understood value.

Project transparency should also be a key objective of a PMO, Rollins said. Creating transparency throughout the project lifecycle ensures that everyone involved is familiar with the priorities, budget and status of the project -- painting a clear picture of who's doing what and how staff resources are allocated.

"A great analogy is that of a baseball batter. If the batter can see the pitch, they can hit the pitch. If not, it becomes more about luck and timing," Rollins said.

Avoiding IT layoffs with a PMO

At Baylor Health Care System, a nonprofit health care system with 13 facilities in the Dallas/Fort Worth area, a PMO has helped CIO David Muntz focus on more pressing projects and resource allocation.

"Our process is so trusted and understood, no one fussed when I sent out a letter detailing the projects we will or won't be doing this year. If they understand how you rank and order things and have confidence in the process, they don't complain," Muntz said.

A great [PMO] analogy is that of a baseball batter. If the batter can see the pitch, they can hit the pitch. If not, it becomes more about luck and timing.

Steven Rollins, chief project strategist, ALLPMO Network Inc.

In fact, the PMO has helped Baylor avoid IT layoffs, said Nayan Patel, corporate manager of portfolio management.

"We time-track every project to concretely show where our teams are spending their time. Especially with the economy and the way that it is, we've been able to cut costs without letting people go by specifically tying resources in with the work that needs to be done," Patel said.

Patel shares project requests, project approvals, costs and completion announcements in weekly governance meetings with all the project directors, the vice presidents and the CIO. The regular communication keeps everyone aware of the status of all projects and is also a way to justify resource allocation. By time-tracking each project, linking time spent with labor costs, the team can see exactly where the money is going. The health care system uses Planview Inc., an independent portfolio management vendor, which has supported the company governance process since 2006.

"Cost is the biggest driver, and every project is ultimately viewed as an investment," Patel said. "We can translate the amount of hours spent to the associated cost, cutting out that 'pie in the sky' type of budget."

Muntz agreed that the project management office has provided leverage for budget decisions and more. "Anytime you add what might appear to be a process, you always get a little bit of pushback," he said. "But the benefits are huge -- how we justify our employees, managing our resources, asking for more resources and how we spend our time -- and I am very enthusiastic about our current PMO."

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