Digital transformation is forcing the traditional PMO to evolve

Digital transformation is an essential part of business to drive business growth and is having a huge impact on project management offices

9Nov

Whether it involves implementing new technology, re-designing the way an organization interacts with its customers, or improving access to technology for employees, digital transformation is now an essential part of business. It enables organizations faced with ever-increasing global competition and economic challenges to potentially generate additional revenues, become more competitive and, in turn, more profitable. This is corroborated by research from Gartner, which estimates that 66% of companies who are implementing digital transformation projects expect to generate more revenue as a result and a further 39% expect to see their costs reduced through the adoption of digital technologies.

Yet in spite of the promised rewards, digital transformation projects present unique challenges for larger, global organizations in mature markets – oil and gas companies, construction and engineering, financial services providers, banks, telcos and energy companies. They often have legacy technology in place and ingrained ways of doing business which can present challenges to implement change. Moreover, lengthy compliance obligations and third-party partners that add to their complexity can make them vulnerable to disruption by smaller and nimbler start-ups.

The urgent need to transform among larger organizations is resulting in them facing what has become a continual change programme where time to market is the critical success factor. It is a race to either be early to adopt or fastest to market and is having a huge impact on project management offices (PMO), which have historically been a rather traditional function. Roles are changing and rather than doing more of the same – namely following established and often bureaucratic processes – the PMO needs to evolve and become more proactive. Instead of reactively managing change, the emphasis needs to be on facilitation and proactively managing the resources, investments, and dependencies required to achieve the desired end result for their organizations.


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Research suggests a surprising level of wastage among organizations undergoing digital transformations, with an average of 9.7%, a loss of approximately $126m (£97m) being invested into projects for every $1.3bn (£1bn) invested. This means PMOs are coming under increasing scrutiny and need to adapt accordingly in order to avoid being perceived as part of the problem.

Gartner has predicted a number of key trends that PMOs should be aware of and adapt for, as follows:

Decentralized PMO functions that are currently commonplace will start to disappear, in favor of the centralized enterprise PMO (EPMOs). These will effectively become ‘change hubs’ in a highly connected business network. Over 50% of businesses are expected to have introduced an EPMO model within the next three years. This is even more necessary if the company is adopting agile methodologies, where constant change and re-allocation of resources is the norm.

Agile methodologies will continue to increase and expand beyond the IT sector. PMOs can be at risk of appearing the ‘weakest link’ if they resist change and insist on maintaining traditional waterfall approaches within organizations undergoing digital transformation. Reducing time to market is both a critical success factor and the underlying rationale behind investing in these digital change programmes.

Organizations will need their PMO functions to be less focussed on compliance and adhering to rules or methodologies. Instead, the emphasis needs to switch towards enabling portfolio-level strategy execution. Rather than measuring historical levels of resource utilization, it will be important to focus on the overall value being generated from resources employed and understanding whether a better return could be achieved elsewhere.

Adapting to the so-called ‘new normal’ of constant change and disruption means having the right set of project portfolio management (PPM) tools in place that enable organizations to employ advanced cost and financial controls, communicate intuitively with dashboards and stakeholder reporting, plus offer decision support capabilities, including a what-if scenario planning to enable proactive strategy execution management. As a result of these challenges, enterprise PPM software functionality that enables large organisations to effectively manage a complex portfolio of diverse projects or programmes will be highly sought after.

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