The Role of the PMO in
Creating a Change
Centre of Excellence
Peter Shirley
INSIGHTS FROM THE
P3O JOURNEY AT
LEGAL AND
GENERAL
The PMO Conference
London
Peter Shirley
11 June 2015
Peter Shirley
© PA Knowledge Limited 2015
2
Agenda/contents
1.
Background
2.
Role of PMO in setting up the COE
3.
Maximising value from investment
4.
Relevant importance of foundational building blocks
BACKGROUND
Background – Legal and General and the project
COMPANY
“Since its first days, Legal & General has maintained a
deeply embedded desire to provide an honest and
diligent service and to do the right thing”.
A FTSE 25 UK based Global Insurance, Pensions and
Investments company with annual profit of >£1bn and 7k
employees,
PROJECT
To ensure it remained competitive, cost reduction and efficiency
was a core focus for the organisation and as part of this
created:
– a 200+ resource change Centre of Excellence
– a new multi-divisional P3O containing PPMO and
Portfolio Office
Key takeaways from this session…..
- Insight from a recent large P3O and COE setup
- Lessons learnt, good and bad, and often from painful experience
- Ideas on approach and prioritisation of P3O activities at different stages
and
- 10 mins for Q and A / discussion
THE ROLE OF THE
P3O IN SETTING UP
THE COE
Role of the PMO – what is a Centre of Excellence?
What is a COE?
Role of the PMO – what is a Centre of Excellence?
Wikipedia?
“a team, a shared facility or an entity that
provides leadership, evangelization, best
practices, research, support and/or
training”
Ghost (signpost) – current chapter title...
Role of the PMO – what is a Centre of Excellence?
The COE was not a call for heroes…………..
Role of the PMO – what is a Centre of Excellence?
For us it was:
“ a right size team that has the capability to efficiently deliver the immediate
investment portfolio as well as the potential to flex as the portfolio moved in
the medium to longer term alongside continuously improving in terms of
efficiency and effectiveness”
Role of the PMO – what is a Centre of Excellence?
For us it was:
“ a right
size team with the capability to efficiently
deliver the immediate investment portfolio as well as the
potential to flex as the portfolio moved in the medium to
longer term alongside continuously improving in terms of
efficiency and effectiveness”
Scope of the new P3O
Change
Control
Portfolio
Prioritisation
Strategy
support
Financial
Control
MI and
reporting
Resource
Management
Develop
new P3M
frameworks
Portfolio
Governance
Risk
management
Business
case
support
Status and
progress
reporting
Scope of the new P3O
Change
Control
Portfolio
Prioritisatio
n
Strategy
support
Financial
Control
MI and
reporting
Resource
Managemen
t
Develop
new P3M
frameworks
Portfolio
Governance
Risk
managemen
t
Business
case
support
Status and
progress
reporting
P3O
EVOLUTION
P3O
EVOLUTION
The formation history of the P3O function
1. Strategy formation
The formation history of the P3O function
1. Strategy formation
2. Cost reduction
The formation history of the P3O function
1. Strategy formation
2. Cost reduction
3. Operating model
The formation history of the P3O function
1. Strategy formation
2. Cost reduction
3. Operating model
4. Go live
The formation history of the P3O function
1. Strategy formation
2. Cost reduction
3. Operating model
4. Go live
5. Maturity gains
Role of the PMO
STRATEGY
FORMATION
Our vision was to set the backdrop for creating a P3O through aligning
Portfolio and PMO teams that enabled:
• close working with strategy and corporate planning teams during the
formation of strategic vision and annual / 3 year plans
• the establishment of relationship with Exec team and other senior
managers
• P3O capability to be increasingly valued by stakeholders across the
organisation
Role of the PMO – strategy formation - delivery and lessons learnt
Close liaison with strategy and corporate
planning
• Largely achieved through close relationships with
Strategy Exec Director and her close her direct team
Established relationship with Exec team
• Achieved in full
• Initial momentum achieved through presenting the
P3O vision and early Portfolio plans alongside
emerging strategy
P3O viewed as increasingly valuable
• Strong performance, support from both CIO and
CFO as well as Group Board Executive backing
Role of the PMO – cost reduction
COST
REDUCTION
Our vision was for an emerging P3O capability that:
• took capped budget and drove prioritisation
• presented a clear and compelling portfolio
• developed sound governance and MI for decision making
Role of the PMO – cost reduction – delivery and lessons learnt
Capped budget and drove prioritisation
• Some success in this area and well supported by CFO
and CIO
• Difficult relationships with business areas that felt they
‘lost’ in the prioriitisation model – early portfolio maturity
Presented a clear and compelling portfolio
• Achieved in full
Developed sound governance and MI
• Too early to do this and didn’t work with a decentralised
team
Role of the PMO – operating model options
OPERTAING
MODEL
Hybrid, hub and spoke PMO model selected to enable:
–
Simpler formation and adoption of common standards
and frameworks
–
Stronger governance and decision making through an
aligned structure
–
Team sized based on expected service requirements
and % of total cost of change (3-5%)
Centralised Portfolio office chosen to allow a strong focus on:
–
Business case formation and common adoption /
signoff
–
Approvals, gateways and governance
–
Medium to longer term (3-12 months) resource
management
Role of the PMO
GO-LIVE
Our vision was to deploy the new P3O capability:
• recruit a capable team and implement operating model
• maintain and refresh a clear and compelling portfolio
• gain support for plans to mature the P3O capability
Role of the PMO – go-live – delivery and lessons learnt
Recruit team and implement op model
• Team formed very quickly and op model embedded
• Difficulties in moving for mold to new process operations
Maintain a clear and compelling portfolio
• Easy on day one, ongoing re-priortisation more difficult
but largely achieved
• Good early wins through material budget rotation across
divisions and projects stopped
Gain support for P3O maturity plans
• Achieved, although funding for maturity project not
provided in addition to running the operational P3O team
• Should have stopped at this point until funding made
available
Role of the PMO – maturity gains
MATURITY
GAINS
Our vision was to mature the new P3O capability to a level 2/3 out of 5
(PfMM3) within 18 months:
• Mature the P3O alongside implementing a new / centralised COE of
200+ resources
• Approach P3O maturity as a project in its own right
• Align COE formation and maturity plans with P3O plans
Role of the P3O – gaining maturity and supporting the COE formation
Where to start?...P3M3 maturity assessment –
highlighted weak spots and a base on which to decide
where to focus short, medium and longer term effort
Portfolio Management
Org Governance
Mgt Control
Programme Management
Benefits Mgt
Risk Mgt
Stakeholder Mgt
Project Management
Finance Mgt
Resource Mgt
Project level maturity was relatively strong with expected weakest areas within
Benefits Management (largely due to there being no common framework) and
financial management (largely die to different governance and approaches across
different business areas).
Management control was reasonable at project level but inconsistent across business
areas.
Role of the P3O – gaining maturity and supporting the COE formation
Portfolio Management
Org Governance
Mgt Control
Programme Management
Benefits Mgt
Risk Mgt
Stakeholder Mgt
Project Management
Finance Mgt
Resource Mgt
Programme level delivery was less mature than project level with more frequent
inconsistency re Resource Management as the size of deliveries became larger,
more complicated and complex. There was not a coherent link to strategy.
Management control was reasonable at programme level but inconsistent across
business areas.
Role of the P3O – gaining maturity and supporting the COE formation
Portfolio Management
Org Governance
Mgt Control
Programme Management
Benefits Mgt
Risk Mgt
Stakeholder Mgt
Project Management
Finance Mgt
Resource Mgt
Portfolio level was the least mature with pockets of string governance and control
but without common consistency. Particular areas of weakness were Benefits,
Risk, Financial and Resource Management .
There was no coherent link between the portfolio and strategy and therefore no
prioritisation of activities or usage of scarce resource
Role of the P3O – gaining maturity and supporting the COE formation
Effort focussed on four
key areas and it was
decided that priority
would be given in the
following order based
on overall gain from
improvement and ease
of implementing the
improvement:
Role of the P3O – gaining maturity and supporting the COE formation
1
Effort focussed on four
key areas and we
decided that priority
would be given in the
following order based
on overall gain from
improvement and ease
of implementing the
improvement:
Role of the P3O – gaining maturity and supporting the COE formation
1
1
Effort focussed on four
key areas and we
decided that priority
would be given in the
following order based
on overall gain from
improvement and ease
of implementing the
improvement:
Role of the P3O – gaining maturity and supporting the COE formation
1
1
3
Effort focussed on four
key areas and we
decided that priority
would be given in the
following order based
on overall gain from
improvement and ease
of implementing the
improvement:
Role of the P3O – gaining maturity and supporting the COE formation
1
1
4
3
Effort focussed on four
key areas and we
decided that priority
would be given in the
following order based
on overall gain from
improvement and ease
of implementing the
improvement:
Role of the PMO – improving Resource Management…
• Single repository of planning / demand
data
• Common planning standards and
approach
• Supply planning and flex modelling
• Capability assessment
• Skills database
• Recruitment and on-boarding
Role of the PMO – improving Financial Management…
Project cross charging using standard rates
Day rates
Resource mix targeting
Utilisation targets
Budgetary control, planning and reforecasting
Portfolio level contingency
Rapid budget re-use if projects stopped or
underspend
Link prioritisation and planning to product PnL
affordability through FD community
Role of the PMO – improving Risk Management…
Single Risk data repository
Implemented new Risk Management framework
Embedded risk mgt into all governance
meetings and reporting
Provided the link between change delivery and
wider organisation risk mgt framework
Included Risk consideration into portfolio
shaping and prioritisation
Developed delivery framework capable of
flexing according to levels of risk
Role of the PMO – improving Benefits Management…
Collated single source of Benefits data for all
projects and programmes, capable of
consolidation to portfolio level
Devised a Benefits management framework,
tailored to work alongside the Finance process
already in existence and the flexible delivery
framework.
Strengthened and standardised business case
approach and governance
Implemented ‘red team’ pre Exec signoff.
Role of the PMO in COE setup – lessons learnt…?
1. Getting reliable data is the first priority – simple
first steps but ensuring consistency is the best
approach
2. Use lean approach to review processes and
devise new ones – don’t be afraid to radically
change existing process if there’s a more efficient
or effective way
3. Ensure Financials are absolutely tied down asap
4. Put in place a basic benefits framework – focus on tangible financials – don’t
underestimate how long even the simplest approach will take to gain acceptance
5. Balance progress across PMO and Portfolio
6. Team for set-up is different to the team for BAU
7. Ensure extremely tight governance and control re P3O maturity project – if no
support from sponsor or Exec – stop until there is
MAXIMISING THE
VALUE ACHIEVED
FROM INVESTMENT
IN CHANGE - THE
ROLE OF THE
PORTFOLIO OFFICE
Maximising the value achieved from investment – the key questions….
• Is our organization getting the appropriate ROI from every
project in its portfolio?
• Can we effectively gauge financial performance of every
project?
• Are the investments in each project in line with our overall
corporate strategy?
• What is the strategic value of our portfolio?
• Are we utilizing our discretionary budget in the best way?
• Do we know how much we’re spending in aggregate on projects
and programs?
…so what is required
to drive value from
investment?
Maximising value achieved form investment in change – the foundational
blocks
Portfolio Selection
Coherent Strategy
Maximising value achieved form investment in change – the foundational
blocks
Portfolio
Delivery
Portfolio Selection
Coherent Strategy
Maximising value achieved form investment in change – the foundational
blocks
Portfolio
Delivery
Portfolio Selection
Coherent Strategy
Maximising value achieved form investment in change – the foundational
blocks
Portfolio
Delivery
Portfolio Selection
Coherent Strategy
Maximising value achieved form investment in change – the foundational
blocks
“Energy”
“Do things
Portfolio
right”
Delivery
Portfolio Selection
“Do right
things”
“Direction”
Coherent Strategy
Maximising the value achieved from investment – coherent strategy
•
Documented the initial portfolio’s
strategic alignment
•
Built an entrance process that included
strategic fit
•
Continued to work closely with Strategy
team to ensure quarterly refreshes
aligned
•
Challenged sponsors and business
areas to provide more detailed
information earlier in the delivery
lifecycle
•
Challenged Strategy and Business to
produce more detailed strategic
plans(and CSF’s / measures) rather than
high level vision statements
Maximising the value achieved from investment – portfolio selection
•
Ongoing new entrant process and
quarterly refresh cycle
•
Provision of decision making
mechanism re benefits profiles vs cost
•
Input of MI and reporting to decision
making process, particularly re cost and
resource mgt as maturity gains were
made in these areas
•
Ensured strong link between Exec
community through strong stakeholder
management
•
Ensured budget could only be used for
approved projects – if projects stopped
then budget returned for re-prioritisation
Maximising the value achieved from investment – effective delivery
•
New flexible frameworks delivered and
embedded – in conjunction with delivery
community
•
Increased focus on benefits, particularly
at programme level
•
First consolidated risk reporting
•
First view of cross business
dependencies
•
Re-skilling and recruiting of delivery
teams
Maximising the value achieved from investment – organisational
collaboration
•
Community of interest groups
•
Practice leads for skills groups
•
Cross function working groups
for Finance / Strategy, IT and
Change
•
Communications and
stakeholder plans
Maximising value achieved form investment in change – lessons learnt
•
More focus on stakeholder,
communications and sponsor
•
Should have slowed maturity on
perspectives to focus on ‘softer’ areas
•
Difficult to undertake meaningful
portfolio processes without strong data
inputs
•
If doing again, rather than fight on all
fronts I would:
1. get very basic data on
financials and resources
2. Focus on maturing data
through PMO
3. Finally focus on increasing PfM
maturity
THE RELATIVE
IMPORTANCE OF P3O
ACTIVITIES
The P3O activities
Coherent
strategy
If you can
only choose
one - which
is most
important to
deliver
value?
Organisation
al
Collaboration
Efficient
and
effective
delivery
Portfolio
Selection
Relative importance – what we thought



Assumed portfolio selection most
important
Efficient and effective delivery
focused on to ensure project
outcomes delivered and predictability
improved
3
Coherent
strategy
Organisation
al
Collaboration
Organisational collaboration felt least
important as support was so strong
for the new function
2
Efficient
and
effective
delivery
Portfolio
Selection
1
Relative importance – and the reality
 Support was strong but fell
away as accountabilities and
organisational landscape and
pressures changed
 Portfolio selection still
probably more important than
efficient delivery but a
planned and staggered
approach was required to
gain incremental maturity
across each capability
2
1
Efficient
and
effective
delivery
Coherent
strategy
Organisation
al
Collaboration
Portfolio
Selection
2
The importance of collaboration – functional relevance
 One area where we were
able to drive collaboration
Finance
 Achieved through working
groups at a senior manager
level, with influence over the
Exec team
Change
Management
IT
Functional
Collaboration
The importance of collaboration – cross divisional relevance
 Some success in this area but
cross Group much more
difficult than cross Divisional
influence
Business
Unit
 Many different motivators and
interests, ever changing
Group
Functional
Teams
Divisional Collaboration
The importance of collaboration – delivery relevance
 Weakest area of influence
and not focused on enough
Centre of
Excellence
 Should have spent time
glue-ing these parts
together, albeit this would
have meant less progress
on maturity in P3O function
Sponsors
and
stakeholder
s
3rd party
suppliers
Delivery Collaboration
QUESTIONS AND
DISCUSSION
Peter Shirley
Business Transformation
123 Buckingham Palace Road
London
SW1W 9SR
Tel: 07917 092 126
E-mail: peter.shirley@paconsulting.com
PETER SHIRLEY