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Beyond Portfolio Reporting – The Challenges and Reality of Portfolio Management

article5Early December in London’s Fleet Street and PMO Flashmob – the PMO networking group – hosted the first ‘PMO Managers’ Lunch’. These events bring together PMO Managers, from a number of different industries, to talk in-depth about a particular PMO topic. At this lunch, the subject was “Beyond portfolio reporting – the challenges and reality of portfolio management”.

>> Download the full report – Inside PMO

As organisations look to improve on the returns from strategy development and increase maturity in programme and project management delivery capability, portfolio management has increasingly taken centre stage as a business function to support that. Portfolio management is seen as the ‘glue’ or ‘bridge’ between strategy and strategy execution (delivered by programmes and projects). The PMO or Portfolio Office is the place where portfolio management practices become a reality for an organisation.

Over three hours, PMO Managers discussed the realities of portfolio management in their respective organisations, beginning with how portfolio management started within their organisations. For some it was a top down decision. With problems in performance and senior executives unable to see what delivery commitments are being made, a structured portfolio management view provides some headway to making change visible across the organisation. For others, portfolio management was driven bottom up. Recurring problems within the programmes and projects drove the PMO to investigate and start to understand and address the root causes of failures. The group had examples of initial portfolio management implementation stemming from the side; the PMO and middle management layer:

“It was the middle management level with demands from executives above on how things were going to happen and pulling information from the people below on what’s actually happening. The middle management layer has said we need to come up with a model which manages upwards and manages downwards and it’s grown from there”

For PMO Managers tasked with implementing portfolio management within organisations it serves as a reminder that, “as PMO people we often wait for permission and it very rarely comes in this format (CEO backing)”.

article2Lack of Understanding around Portfolio Management

The bottom up and sideways drive of portfolio management is partially in response to the lack of understanding about what portfolio management actually is and what it can achieve for senior executives and their organisations.

The majority of PMO Managers stated that their organisations didn’t specifically ask for ‘portfolio management’, instead articulating ideal outcomes:

“They knew what their strategy was and then approached PPM practitioners to articulate that they wanted projects and programmes of work that would meet these strategies. They knew what they wanted to enable the strategy to be realised. In terms of the processes in order to do this, the senior executives left it to the PMO to work out how that should be done.”

In another example the PMO Manager had to work with the seemingly impossible:

“PMO Managers have to work through the ‘even though we didn’t ask for this, now we’ve got it, we now understand that’s what we want’ with their senior executives.”

One thing is clear; in order to obtain the senior executives backing and support for portfolio management, the PMO has to hold conversations, provide information and be able to answer questions from a strategic business perspective.

Talking the Language of the Business

Successful PMOs leave the theoretical language of Portfolio Management (PfM) and Portfolio, Programme and Project Office (P3O) to one side. They concentrate on providing information that enables answers to questions from senior executives like, “how can I improve my bottom line?”, “how can I make my customers happier?” and “how can I prioritise the right things for our business that takes us forward with the strategy that I’ve just told you about?”

The role the PMO plays in portfolio management brings them closer to business areas such as finance, strategy planning and legal whilst still focusing on programmes, projects and change. A wider remit naturally means a focus on developing wider business skills.

So if portfolio management is still little understood in its current form and PMO Managers are attempting to enable portfolio management and provide the ‘glue’ from the side, how are they doing this?

article1Theoretical Portfolio Management as a Guide

Each PMO Manager agreed that the current thinking and best management practice is there just as a guide. It is the combination of theory (about 30%) and experience, driven by business needs, that allows them to start implementing portfolio management. One PMO Manager put it down to ‘skill, risk and innovation’, after all; there is no practical manual on how to set up portfolio management, PMO Managers carrying out this role today are at the forefront, creating their own metaphorical manuals.

In most cases, the initial, real job of the PMO Manager is not to dive in with a vision, portfolio processes and templates but rather a three step programme of work that can take up to 18 months. It is a commitment that shouldn’t be undertaken lightly.

The first step is gaining an understanding of exactly what programmes and projects are currently running within the organisation – and what has already been approved to start. Secondly, understanding what the business strategies are – because in some organisations, strategic planning is still something which is neglected. Finally, understanding the links between the two – which projects and programmes will meet which strategies? Often, the PMO Manager will need to facilitate these discussions, articulate the implications to the executive before portfolio processes like evaluation; prioritisation and benefits management can be implemented.

Previous experience from the PMO Managers says that senior executives who want all the answers day one have the wrong approach to successful and sustainable portfolio management. Yet true portfolio PMOs are still a young concept. There is no right, proven and tested approach. The PMO to date has either been administrative, controlling or a custodian of good practices. For many, this foray into becoming more dynamic and strategic is a recent step and it is not without its challenges.

PMO Managers today are still focused on what would seem like the basics. There are still concerns about the success and maturity of programmes and projects. The impact of the lack of effective sponsorship. Processes like benefits management and project prioritisation are not fully in place. Concerns about meeting the current levels of service as transition from a controlling/analytical PMO to a more strategic, portfolio management one brings extra pressures on existing staff capability and capacity within the PMO. Still not having the right technology in the form of PPM tools – or the resources required to manage the increasingly complex data that portfolios, programmes and projects provide. When discussing technology required, each of the PMO Managers agreed that the way forward should include recruitment of a Data Analyst into the team – a nod to just how much data and information plays in making change visible across the organisation.

With much work still to do with the realities of making portfolio management work within their organisations, the PMO Managers also turned their thoughts to the future.

2015-12-03 16.12.28The Future of Portfolio Management PMO

It has already been well documented that the main success factor for the different types of PMOs is strong executive support. Portfolio PMOs need this support because ultimately it is these executives who drive the health and wealth of the organisation by linking strategy planning to strategy execution. Senior executives need to keep asking the questions that matter most to them, which in turn keeps pushing the PMO to find the answers.

It is also clear that the PMO is still in evolution – ‘where it is going’ and ‘what it is becoming’ as a business function changes as the business need changes. With the Portfolio Office the remit can be to guide and facilitate; pulling information and enabling the right decisions from executives to happen. On the other hand, is the role of the Portfolio Office more disruptive than that? The Portfolio Office can have a part to play in changing business processes for example like the strategy or business planning cycle?

“Maybe the next paradigm shift is that portfolio management is seen to be the same thing as business planning. A series of paradigm shifts are needed, the next shift has to be that business planning is not an annual, or three, or five year thing. It has to be more dynamic to deal with volume and increasing change in organisations, and that can be portfolio management.”

The Portfolio PMO has to remain independent if it is to really able to hold up a mirror to the organisation:

“The PMO has to be Switzerland, you cannot have an opinion about what is right and wrong in the organisation, you just have to give the right information to the right people so they can make those decisions…One of the worse things that can happen is people don’t want the PMO to have that responsibility or the reverse which is where people find the portfolio office a powerful thing and therefore want it in their division rather than centrally. The PMO has to be independent.”

Portfolio management, with the relatively simple strapline of “doing the right projects” has led PMO practitioners into new unchartered waters, where approaches and techniques are in their infancy, not yet tried and tested. Over three hours it became clear that these PMO Managers are working in an area which has the potential to provide real answers to questions that executives face each day. In order to be successful it is, of course, going to take risk, skills and innovation on their part. They’re also going to need their own wider PMO community and forums to tap into how others are writing their Portfolio PMO manuals.

>> Download the full report – Inside PMO

Inside-PMOAttendees included:

John McIntyre – Ticketmaster
Chris Walters – Vodafone
Brett Dalby – Met Police
Rachel Cook – Lloyd’s of London
Jane Cosgrove –                DHL
Lisa Chellar –Equinix
Stuart Collins – BBC
Harri Sharples – Deloitte
Anke Bysouth – CAFOD
Simon Harwood – IFDS
Julie Black – Ofgem
Ken Burrel – Pragmatic PMO

Hosted by Lindsay Scott and Eileen Roden, PMO Flashmob.

This article was previously published in Project Manager Today

 

 

 

About Lindsay Scott

Lindsay is the founder of PMO Flashmob. She's also the creator of London's first dedicated PMO Conference; Director of Arras People and PMO enthusiast

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