The enterprise project management office, enterprise PMO, or EPMO concept has gained a lot of traction in recent years. The “PMO” in the acronym can mean “program management office” or “portfolio management office”, but regardless of the label, the concept is gaining in popularity.
As organizations have been looking to elevate their project management practices from tactically focused, constraint driven entities to more strategic ways of working that enable business performance, so there has been recognition that traditional domain PMOs may not provide the support that’s needed. But here’s the thing – unless the function is implemented properly, EPMOs aren’t likely to provide it either.
What is an EPMO?
An EPMO is a functional organization that supports the delivery of strategic portfolio management (SPM). The EPMO focuses on top-down planning, funding and management of the work that the organization plans to execute – aligned with business strategy – in order to deliver the required outcomes. Strategic Portfolio Management was identified by Gartner as the strategic element of project portfolio management, while adaptive project management or APM focuses on the more tactical, delivery aspect.
Strategic Portfolio Management ensures optimal performance in strategic planning, investment management, lean governance, work execution and benefits realization to deliver the best possible return on every strategic investment the organization makes. That is more challenging than ever because work may be delivered using projects, programs, products or even capabilities. And organizations are operating with the tri-modal reality of work delivery.
It is critical to consistent business success in today’s world for organizations to be able to have tight alignment between planning and funding, delivery, and outcome management, and that is what most organizations are looking to improve when they consider an EPMO. It is a function that delivers Strategic Portfolio Management, while connecting top-down strategy execution with the working teams and domain PMOs distributed throughout the organization.
Why is the Enterprise Project Management Office important?
To answer that question, we have to answer a different one – why Strategic Portfolio Management? Strategic Portfolio Management is the best way to deliver sustained improvement in performance against objectives.
Strategic Portfolio Management consists of three elements:
- Strategy Execution Management
- Integrated IT Portfolio Analysis
- Enterprise Program and Portfolio Management
Each of those elements must work together, with the support of the entire organization, to improve the ability to successfully drive project portfolio management and strategy from initial planning and funding through effective outcome management.
Gartner identified SPM as a distinct discipline because they believe, and at UMT360 we agree with them, that traditional portfolio management approaches don’t go far enough to address the strategic element. Instead they are execution focused, aligned with what Gartner refers to as adaptive project management (APM).
Successful strategy execution requires both elements – Strategic Portfolio Management and Adaptive Project Management tightly integrated together from both a process and solution standpoint. Only then can organizations consistently deliver effective transformation through delivery of required outcomes.
12 Signs You Need an EPMO
UMT360 has identified 12 distinct needs or imperatives that drive the need for organizations to implement Strategic Portfolio Management and the enterprise PMO function that goes with it. They are:
- Inability to harmonize across all execution (Tri-modal reality)
- Ineffective management of the business & IT asset portfolios that projects are funded to transform
- Overly stringent project-centric governance models
- Failure to generate project demand from strategy
- Adherence to outdated annual planning process
- Inability to identify and measure outcomes / value realized
- Lack of control / visibility over financial performance
- Poor utilization of your most important asset… Resources
- Inability to generate PMO roadmaps to visualize dependencies
- Lack of effective status reporting on project performance
- Inability to run dynamic what-if portfolio analysis
- Lost the woods for the trees with your bottom up agile transformation (scaling agile)
Any one of these can jeopardize the ability to consistently deliver business objectives, organizations that are experiencing multiple of these challenges need to act now. Too often these imperatives are ignored because portfolio management is too focused on project success for individual projects, not on the consistent delivery of strategic outcomes.
EPMO Roles and Responsibilities
One of the reasons why EPMOs don’t always deliver on the expected benefits is that they aren’t created with consideration of all of the factors that contribute to their success – or failure. EPMOs must be part of an integrated PM ecosystem that leverages departmental or domain PMOs, that considers all of the imperatives surrounding Strategic Portfolio Management, and that deliver the right things in the right way. Here are the key factors to consider.
At a high level, the roles and responsibilities of an EPMO include:
- Establish expectations for all execution-orientated teams
- Standardize communication across the organization to ensure project managers, functional leaders and other stakeholders are all aligned
- Provide the visibility required to increase accountability enterprise-wide
- Orchestrate business transformation
- Enhance organizational agility in order to quickly respond to initiatives and mandates
- Provide comprehensive resource and capacity planning capabilities
- Establish key metrics and performance indicators to measure outcomes
- Foster a culture of continuous planning and analysis
- Encourage buy-in across the organization
The right function, in the right place, with the right people
This strategic function must report to senior levels of the organization to be successful, to have the authority to deliver that integration and alignment. That may mean reporting to the Chief Transformation Officer, Chief Strategy Officer, or perhaps the Chief Operating Officer. That is the level that drives Strategic Portfolio Management and that’s the level that must be accountable for, and drive the actions of, the EPMO.
However, it takes more than just having the right ownership and the right focus to succeed. PMOs are generally associated with project focused staff, but that’s not enough when it comes to effective Strategic Portfolio Management. Those project staff are still critical, but successful and consistent strategy execution and outcome delivery requires all functions to be aligned in their thinking and integrated in their actions.
That means business leaders, technology leaders, finance functions, project delivery staff and other specialties like HR, procurement and others all working together to create an environment that has the best chance of delivering success. And that enables transformation to happen more quickly and with less disruption because every corner of the organization is aligned on the need to deliver on strategic priorities – an alignment driven through the EPMO or similar function.
Identifying & Treating The 12 Symptoms Of Acute Project Executionitis.
Gartner suggests that adopting strategic portfolio management is a key to achieving business agility. Watch this webinar now to learn about the 12 key business imperatives that continue to plague most organizations.
EPMO vs PMO
At a basic level, a PMO is concerned with execution while an EPMO is concerned with strategy. The EPMO’s job is to ensure the execution element of portfolio management is integrated with upstream Strategic Portfolio Management elements. It is critical to the success of the portfolio, and domain PMOs must therefore not only exist and be effective, they must have a close relationship with the strategic function. While the EPMO aligns with Gartner’s Strategic Portfolio Management concept, domain PMOs are more concerned with what Gartner’s Adaptive Project Management approach.
EPMO transcends execution
For some organizations this strategic, top down, Strategic Portfolio Management driving function, is an enterprise project management office. But for others it has other names. Perhaps it’s a transformation office, a Strategy Execution Office or Strategy Realization Office (SRO). Sometimes it has another name that is meaningful to the organization. In many cases that name doesn’t matter.
But sometimes it does. The project management office concept is generally associated with fairly tactical work supporting project managers and teams to execute on projects. It is seen as something that operates at a departmental level with a focus on efficiency and effectiveness of delivery. Putting an E in front of the name and elevating the function to the corporate level instead of the domain level doesn’t change that.
If that’s how EPMOs are perceived then that is the role they will be asked to take on – an elevated domain PMO instead of a strategic function. That has to be avoided, and that alone may be reason enough to avoid using the EPMO label for the function.
Domain PMOs are still relevant
The strategic function, whether labeled an EPMO or something else, cannot succeed in isolation. It still requires domain PMOs aligned with the execution and delivery teams to enable to delivery of work using any one of the tri-modal realities. Whether it’s traditional project management and project managers, agile delivery methods, or ad-hoc management, PMOs have a role to play. Similar, whether work is being delivered as project, program, product or capability, oversight and guidance should be delivered through domain PMO models.
Domain PMOs have an opportunity with Strategic Portfolio Management
Domain PMOs frequently find themselves challenged to justify the function they perform. They are often perceived as reactive functions concerned only with report consolidation or process compliance. By aligning with EPMOs and visibly contributing to Strategic Portfolio Management, functional level PMOs help demonstrate the considerable value they can bring.
At optimal levels of performance the EPMO and domain PMO relationship is the embodiment of the integrated Strategic Portfolio Management and Adaptive Project Management approach to transformation. The EPMO manages the strategic elements represented by strategic portfolio management while the network of domain PMOs ensures adaptive project management is implemented and managed in a way that optimizes execution performance across all work methods and modalities.
At the same time, by helping project managers understand the context for their work, domain PMOs extend strategic concepts to the front line of work delivery. This elevates them from simple enablers of project success and supporters of project teams, to true strategic partners of the business, contributing to the ability to deliver business objectives.
Enterprise PMO and PMO relationships
The EPMO and the various domain project management offices must be aligned in their purpose and must support effective communication and workflow to optimize the performance of the portfolio. Domain PMOs should continue to report to the business function with which they are aligned but their work is enabled and facilitated by the planning, funding and governance that occurs within the EPMO or similar function.
There must be a strong ‘handshake’ integration of this work to allow PMOs to manage execution of strategic initiatives regardless of how that work is structured or which of the tri-modal delivery methods is being used. In addition, there must be clear, complete, accurate and timely information flowing from work teams through domain PMOs to the EPMO to enable effective adjustments to plans, changes in funding, etc. as needed by the changing circumstances.
EPMO best practices
For many organizations, simply creating an Enterprise PMO and then integrating that function with domain PMOs and the project management functions across the organization is not enough. There must also be consideration to ensuring that processes and approaches are optimized to deliver strategic transformation.
Many organizations have project portfolio management approaches and methods that align far more closely with Adaptive Project Management and Strategic Portfolio Management. If all these companies do is create enterprise project management offices then not much will change. They must also elevate their approach to ensure their ability to connect strategy from initial planning to outcome management is as effective as possible.
UMT360 can help your organization to achieve that with our proven VIC framework that assists in the creation of ways of working that deliver Strategic Portfolio Management and Adaptive Project Management in a way that is integrated from the setting of strategic objectives and planning, through funding and governance, to delivery in all formats and outcome management.
The need for Strategic Portfolio Management software
That level of integration and communication isn’t enabled by spreadsheets! But it also doesn’t happen with traditional PPM solutions that focus more on the Adaptive Project Management aspects of portfolio management. Gartner has recognized UMT360’s Strategic Portfolio Management software by including it in their first ever Magic Quadrant for Strategic Portfolio Management.
By implementing a best of breed Strategic Portfolio Management solution like UMT360’s, senior management of organizations can support strategy from initial planning through outcome management. And by integrating that solution with as many different execution focused tools as they need to deliver work effectively, these organizations allow work to be delivered using whatever combination of structures and delivery methods they need.
Such tools, and more specifically the ability to integrate them seamlessly, enable effective insight into what is happening, how that varies from what was expected and provide decision support to help implement the adaptive planning approaches that will ensure optimal alignment between strategy and outcomes. And they help the EPMO and domain PMOs support that work at every step.
EPMO, which stands for Enterprise Project Management Office, is a functional organization that supports the delivery of strategic portfolio management.
EPMOs tend to be more strategically focused, PMOs focus on work delivery. The EPMO operates at an enterprise level with just one per organization. PMOs usually operate at a department level with one for each business area that regularly conducts projects.
Because EPMOs tend to focus at a more strategic level they often leverage strategic portfolio management platforms to help with investment and resource planning, performance management, communication, etc.
It’s not about processes, it’s about establishing a clear mandate to support optimized strategic portfolio management, engagement in planning, delivery and outcome management, and an effective leader reporting to the strategy execution function of the organization.