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Why strategic initiatives should be organized under the umbrella of a Corporate PMO |
To survive in today’s ever changing market environment, companies need
to adapt fast. To achieve the required “organizational agility”
companies have to frequently launch strategic initiatives to either
implement crucial enhancements in their business operations or expand
their business scope. Those strategic initiatives can extend from the
implementation of improved processes and technology, the setup of new
organizations, introduction of new products and services or business
restructuring initiatives.
Organize business enhancements effectively
To survive in today’s ever changing market environment, companies need
to adapt fast. To achieve the required “organizational agility”
companies have to frequently launch strategic initiatives to either
implement crucial enhancements in their business operations or expand
their business scope. Those strategic initiatives can extend from the
implementation of improved processes and technology, the setup of new
organizations, introduction of new products and services or business
restructuring initiatives.
Despite the importance to companies’ success, these strategic
initiatives are often implemented very poorly and many inevitably fail.
According to a study conducted by the Standish Group, 90% of initiatives
do not meet their time, cost or quality targets. Only 9% of large, 16%
of medium and 28% of small initiatives were completed on time, within
budget and most importantly delivered measurable business and
stakeholder benefits. Many companies discover that solutions either
don’t bring the expected benefits or initiatives drag on forever and
never get fully implemented.
What happens? Why do so many crucial business enhancement initiatives fail to deliver the promised business benefits?
To answer these questions we need first look at how companies
traditionally approach these initiatives. A common approach to strategic
initiatives is that an enhancement idea is given from Top Management to
one of more middle managers for implementation. The middle managers
then assign respective tasks to their subordinates on top of their day
to day work. This approach sounds good in theory as it utilizes eventual
idle time of the experts in the line organization. However, experience
shows significant short comings. Often one year after the initiative has
been assigned Top Management realizes that actually not much has been
implemented.
There are four challenges that implementation teams typically face when
trying to implement strategic initiatives out of the line organization:
Insufficient Focus of team members - Changes in an existing business
setting are usually very complex and need to be well thought through.
Since change always involves people, change management aspects are
crucial for complete implementation and benefit realization. Running the
initiatives out of the line organization means that necessary tasks are
assigned on top of people’s day to day job. Chances are very high that
the initiative gets lowest priority. Meetings tend to be postponed,
issues are not being addressed properly and delays in delivery
milestones are mostly being justified through some urgent work for
customers. The initiative will take forever or die quietly.
Lack of cross-departmental empowerment and communication - most
strategic initiative don’t stops at department boundaries. Initiatives
that are run out of the line organization often suffer limited support
from other departments. In addition to this, the department in charge
also has insufficient understanding of what is required in other
departments. People have insufficient end to end process overview and
come up with silo-designs that are not effective to the overall company
context. Furthermore, those initiatives often need to integrate with
other initiatives of other departments. It’s often seen that initiatives
end up in a catch 22 situation where every department is waiting on
deliverables of another department.
Lack of Project Management Skills - The nature of working in a
larger initiative can be very different from a line organization. While
line organizations are driven by day to day schedules of external or
internal customers and continuous analysis of business performance
figures, projects are dominated by clear milestones and deliverables
that have to be achieved within scope, quality, time and budget. In many
organizations, middle management and team members have insufficiently
understanding on basic project management principles that would help
them to manage the dynamics of cross-functional initiatives.
Insufficient focus of Top Management - Often Top Management has very
limited visibility about the status of the strategic initiative. On the
other hand, the working team may have insufficient visibility on the
current company strategy. It’s been seen often that implementation teams
spend time and resources on ineffective solutions because they are not
aware about potential changes in the overall business strategy and
direction. If top management had more transparency about the project
status and content, they would have given more direction and resolved
issues quickly.
A crucial step to ensure effective implementation of strategic
initiatives is to setup a Corporate PMO (Corporate Program Management
Office). A Corporate PMO or Enterprise PMO usually reports directly to
the CEO and ensures that investments in business improvement initiatives
are effective, i.e. expected benefits are realized as fast as possible,
costs are controlled, solutions are aligned with the overall strategy
and risks to operations are managed.
Many Thai companies have already implemented a PMO for their IT
department to multiple concurrent and dependent IT projects in a
standard project governance framework. A Corporate PMO takes on very
similar responsibilities on corporate level, e.g.:
- Facilitate investment decisions and ensure alignment with Corporate Strategy
- Create full transparency on project status, e.g. progress, issues, costs
- Manage the Masterplan of strategic initiatives - ensure everything is in sync and issues are addressed
- Facilitate sourcing of right skilled internal resources (team members) and external vendors
- Ensure project members are well trained about core
project management processes, e.g. planning, issues resolution, risk
management or benefit realization
- Facilitates the knowledge management process, e.g. organization of key learnings
Implementing a Corporate PMO can be quite challenging since the
respective working culture requires high discipline and strong
commitment to achieve planned milestones in time, scope, quality and
budget. However, it’s worth the initial investment. As per a KPMG survey
of 252 organizations, 69% of project failures are due to lack and/or
improper implementation of project management methodologies and project
governance. It’s seen that more and more Thai companies recently started
setting up a Corporate PMO to optimize large investments and also make
their business move faster.
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