Similarly, offering a project investment model to the head of the portfolio delivery group becomes redundant as by that stage, the investment decision is fait accompli. Project managers, for example, want specific methodologies and tools that make it easier for them to deliver their projects.
It's important that the PMO targets the products it sells at the right customer segment. Taking a scatter gun approach is often why PMOs are process-driven, costly and can, on occasion, hinder the project investment, execution and value realisation effort.
By standardising and right-sizing their solution offering, PMOs effectively lower project environment and individual project overhead while intensifying or expanding their relationships with their customers.
Building a strong framework and cost model
The fundamental challenge of PMOs is that, whilst important, a strong value proposition will only take them so far. What's needed is a set of best practices bundled as products and services, integrated within a strong framework (the PPM operating model).
This ensures that the entire PPM lifecycle — project investment to execution to value realisation — benefits the organisation.
In this way, modules of capability or product can be sold to various PMO customer segments based on requirement — cost effectively, with inbuilt and highly streamlined processes, business rules and reporting standards.
PMOs represent an overhead and it can be an expensive one. Gartner and McKinsey seem to agree that an 8 per cent PMO "administration" cost per project or program (in the form of governance, methodologies, tools and leadership) is best-practice.
The average in most Australian PPM environments is somewhere between 18 to 45 per cent so it's understandable that many c-level executives, especially CIOs, see PMOs as too expensive.
By selling streamlined, highly efficient modules (solutions) from within the operating model, project environment overhead dramatically reduces.
Once PMOs adopt a customer service/product approach, defining the cost of their products and services helps to build an understanding of the value PMOs deliver. It changes the executive dialogue from defending those costs to a discussion of the value they deliver.
Developing powerful PMOs that provide solutions and products to valuable customers is much more a management and organisational challenge. PMOs need to demonstrate that projects will be executed properly and customers will perform better as a result of their guidance.
Clearly, getting the right products and services to the right customer segment in the best way dramatically improves the value PMOs offer to an organisation. PMOs need to sell their value to customers — efficiently and at the lowest possible cost.
There is a balance point where PMOs offer exactly what customers want and will pay for. They simply can't do this by merely delivering process.
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