the role of the pmo in creating a change centre of...

The Role of the PMO in Creating a Change

Centre of Excellence Peter Shirley

© PA Knowledge Limited 2015 2 Peter Shirley

INSIGHTS FROM THE P3O JOURNEY AT LEGAL AND GENERAL

The PMO Conference

London

Peter Shirley

11 June 2015

1. Background

2. Role of PMO in setting up the COE

3. Maximising value from investment

4. Relevant importance of foundational building blocks

Agenda/contents

BACKGROUND

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

Background – Legal and General and the project

“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,

COMPANY

PROJECT

- 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

Key takeaways from this session…..

THE ROLE OF THE P3O IN SETTING UP THE COE

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...

The COE was not a call for heroes…………..

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”


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

Portfolio

Prioritisation

Develop

new P3M

frameworks Resource

Management

Strategy

support

Business

case

support

Risk

management

Portfolio

Governance

MI and

reporting

Status and

progress

reporting

Change

Control

Financial

Control

Scope of the new P3O

Portfolio

Prioritisatio

n

Develop

new P3M

frameworks Resource

Managemen

t

Strategy

support

Business

case

support

Risk

managemen

t

Portfolio

Governance

MI and

reporting

Status and

progress

reporting

Change

Control

Financial

Control

P3O

EVOLUTION

The formation history of the P3O function

Close working

with Exec team,

finance, change

and business

leaders

Product focus

Technology

focus

Capability review

80 / 20 rule with

80% cost

reduction in

change and 20%

from BAU

Modelling PnL’s

Calculating the

current and

target cost of

change

Wider BUs

Centre of

Excellence

P3O Capability

targeting vs

portfolio

complexity

Recruitment

Day one op

model

Tooling

Single currency /

process / data Breadth vs depth

of gains across

perspectives

Early wins

What pace –

quality vs

progression

1. Strategy formation


Close working

with Exec team,

finance, change

and business

leaders

Product focus

Technology

focus

Capability review

80 / 20 rule with

80% cost

reduction in

change and 20%

from BAU

Modelling PnL’s

Calculating the

current and

target cost of

change

Wider BUs

Centre of

Excellence

P3O Capability

targeting vs

portfolio

complexity

Recruitment

Day one op

model

Tooling

Single currency /


of gains across

perspectives

Early wins

What pace –

quality vs

progression


2. Cost reduction


Close working

with Exec team,

finance, change

and business

leaders

Product focus

Technology

focus

Capability review

80 / 20 rule with

80% cost

reduction in

change and 20%

from BAU

Modelling PnL’s

Calculating the

current and

target cost of

change

Wider BUs

Centre of

Excellence

P3O Capability

targeting vs

portfolio

complexity

Recruitment

Day one op

model

Tooling

Single currency /


of gains across

perspectives

Early wins

What pace –

quality vs

progression


2. Cost reduction

3. Operating model


Close working

with Exec team,

finance, change

and business

leaders

Product focus

Technology

focus

Capability review

80 / 20 rule with

80% cost

reduction in

change and 20%

from BAU

Modelling PnL’s

Calculating the

current and

target cost of

change

Wider BUs

Centre of

Excellence

P3O Capability

targeting vs

portfolio

complexity

Recruitment

Day one op

model

Tooling

Single currency /


of gains across

perspectives

Early wins

What pace –

quality vs

progression


2. Cost reduction

3. Operating model

4. Go live


Close working

with Exec team,

finance, change

and business

leaders

Product focus

Technology

focus

Capability review

80 / 20 rule with

80% cost

reduction in

change and 20%

from BAU

Modelling PnL’s

Calculating the

current and

target cost of

change

Wider BUs

Centre of

Excellence

P3O Capability

targeting vs

portfolio

complexity

Recruitment

Day one op

model

Tooling

Single currency /


of gains across

perspectives

Early wins

What pace –

quality vs

progression


2. Cost reduction

3. Operating model

4. Go live

5. Maturity gains

Role of the PMO

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

STRATEGY

FORMATION

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

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

COST

REDUCTION

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

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%)

Role of the PMO – operating model options

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

OPERTAING

MODEL

Role of the PMO

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

GO-LIVE

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

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

MATURITY

GAINS

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

Risk Mgt Stakeholder Mgt Finance Mgt Resource Mgt Org Governance Mgt Control Benefits Mgt

Portfolio Management Programme Management Project Management

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




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.




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


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:



key areas and we






of implementing the

improvement:

1



key areas and we






of implementing the

improvement:

1 1



key areas and we






of implementing the

improvement:

1 1

3



key areas and we






of implementing the

improvement:

1 1

3 4

• 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 Resource Management…

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

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 Risk 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 – improving Benefits Management…

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

Role of the PMO in COE setup – lessons learnt…?

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


Portfolio

Delivery

Portfolio Selection

Coherent Strategy


Portfolio

Delivery

Portfolio Selection

Coherent Strategy

“Direction”

“Energy”

“Do things

right”

“Do right

things”

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

If you can

only choose

one - which

is most

important to

deliver

value?

Organisation

al

Collaboration

Portfolio

Selection

Efficient

and

effective

delivery

Coherent

strategy

Relative importance – what we thought

Assumed portfolio selection most

important

Efficient and effective delivery

focused on to ensure project

outcomes delivered and predictability

improved

Organisational collaboration felt least

important as support was so strong

for the new function

Organisation

al

Collaboration

Portfolio

Selection

Efficient

and

effective

delivery

1

3

2

Coherent

strategy

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

Organisation

al

Collaboration

Portfolio

Selection

Efficient

and

effective

delivery

1

2 2

Coherent

strategy

The importance of collaboration – functional relevance

One area where we were

able to drive collaboration

Achieved through working

groups at a senior manager

level, with influence over the

Exec team

Finance

IT Change

Management

Functional

Collaboration

The importance of collaboration – cross divisional relevance

Some success in this area but

cross Group much more

difficult than cross Divisional

influence

Many different motivators and

interests, ever changing

Business

Unit

Functional

Teams Group

Divisional Collaboration

The importance of collaboration – delivery relevance

Weakest area of influence

and not focused on enough

Should have spent time

glue-ing these parts

together, albeit this would

have meant less progress

on maturity in P3O function

Centre of

Excellence

3rd party

suppliers Sponsors

and

stakeholder

s

Delivery Collaboration

QUESTIONS AND DISCUSSION

PETER SHIRLEY

Peter Shirley Business Transformation

123 Buckingham Palace Road

London

SW1W 9SR

Tel: 07917 092 126

E-mail: [email protected]

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