Why set up a PMO?

The rise of cross-functional projects

Digital acceleration creates major adaptation and transformation challenges for companies, resulting in an explosion in the number of cross-functional projects and transformation projects, especially digital ones.

This proliferation of projects has multiplied the structural and cultural obstacles for organizations. Yet they have an almost vital need to innovate efficiently to see all these cross-functional projects through, without thereby destabilizing what works in the business verticals.

Numerous examples have shown that these transformation projects are essential to the very survival of the company. However, they generate many new problems, including the failed-project syndrome: around 70% of projects fail (McKinsey, IBM and Project Management Institute studies).

Silo projects and transformation, the perfect oxymoron

The vast majority of transformation projects are cross-functional and have a digital dimension, with departments showing more or less appetite for that aspect.

When they are carried out in isolation within each department, we see a waste of resources, with duplicate projects run by several departments, sometimes simultaneously.

When projects are run in silos, learning by trial and error costs the company dearly. The lack of openness to the outside world and to other departments cuts teams off from the feedback needed to make project management simpler and more effective.

Then, with single-department governance of transformation projects, many projects end up abandoned in the implementation phase — largely due to non-compliance with company processes and to the poor upstream involvement of the other departments.

What's more, with this single-department governance, you enter a “techno push” dynamic, often driven by a misunderstanding of business needs (or a need relegated to second place behind the agenda of the department in question), creating a heavy climate around these projects and a client/supplier dynamic between the business teams and the department in charge — with, in the worst cases, ego wars and political games reinforcing resistance to change.

Rather than rallying people around company goals, projects run “in silos” generally end in relative failure, generating frustration and a feeling of wasted time. In the process, this spreads a toxic dynamic for the rest of the company's transformation and, above all, does nothing for the engagement of employees “worn out” by this kind of systematically failing project.

Let's remember: a single business department cannot transform the entire company on its own. It's a collective challenge that requires everyone to be able to find their bearings, adapt and project themselves forward. A transition in which silos become a real structural problem.

Further on, we'll also look at another failure of silo projects: the inability of the various departments to collaborate.

The HR impact of cross-functional projects

Teams are underwater? What if we added an extra cross-functional project manager hat on top?

With this surge of new projects, new roles and people are obviously needed to carry them out. These projects often require business knowledge, while only rarely justifying tying up a full FTE.

More and more is asked of key employees — often already stretched by their main activities — to work on ever more projects, and to do so in best-effort mode.

In reality, cross-functional project management is not as straightforward as it seems; as projects multiply, it needs structure and it needs to rest on a strong culture.

Because of the multiplying workload and tasks, the mental load, or the deprioritization of projects and the lack of meaning for the teams, we very often see a lack of employee engagement in projects — the necessary, essential driver of their success.

We also often see very poor adoption of solutions and technologies, which contributes a little more to disengagement and project failure.

This can also be explained by the fact that, to be carried out successfully, projects require a number of skills that keeps growing — and which, without training and without additional resources, ends up setting teams up for failure.

For some projects you can justify hiring specific skills to meet these new needs, particularly on the digital side; however, these profiles are in short supply and increasingly hard to recruit because they're increasingly in demand. Moreover, if digital isn't the company's core business or isn't deeply rooted in the organization, the odds of making hiring mistakes go up.

Finally, even when outsourcing and subcontracting, you need a minimum of this knowledge in-house to be able to monitor and challenge these external services.

Here the PMO has a strong role to play: it can help employees better adapt their project management to make their limited time more effective, as well as guide them on best practices and the realities of the digital market.

Difficulties getting the various departments to collaborate

Here are a few well-known barriers that prevent collaboration:

• Time and resources to allocate to projects in conflict with the main activities
• Different ways of working from one department to another
• Difficulty identifying who could help in other departments, asking for help, not managing to work together.
• Ego wars
• Reluctance to give time on a best-effort basis
• Communication and difficult follow-up
• Inability to operate effectively in project mode, with the right methods and tools

A PMO can act here to resolve or anticipate the problems above. Its role is to put in place and adapt tools and a culture designed to help close out these issues.

Project management: if you ask, everyone knows how to do it

If we think of project management as a process of managing and executing a defined set of tasks, then most employees, whatever their role, do project management. The cognitive bias we frequently encounter goes like this: if an employee has been able to deliver one or more projects within their department, then they'll deliver a cross-functional project — because cross-functional or business-specific, a project is a project.

However, your project managers will face many additional difficulties — sometimes new and very poorly documented — whether soft skills (e.g. how to influence/manage stakeholders with no reporting line and without triggering ego wars) or hard skills (e.g. methods for managing open-innovation and cross-department projects, integrated and effective portfolio management, etc.).

A PMO will be more experienced in managing this type of project and operation, and will be used to these new kinds of interpersonal relationships. One of the PMO's advantages is its openness to the outside — by the nature of the role, but also through its appetite for seeking out lessons learned and best practices; its position and the new communication channel it opens make it easier to spread them across the company.

Spreading the right project culture to give teams breathing room

The challenge is to take a “radical” managerial turn. To move from a culture of controlling task execution, chasing employees, even hunting down reports, to the posture of a “cultivator” of a project culture suited to the company. An open culture that clarifies and helps create a de-siloed vision.

The PMO's actions should drive a leveling-up within the teams in terms of skills and business knowledge.

If it comes with genuine exemplarity from the leadership team, this new context can contribute to a real increase in operational efficiency and boost the ability of the company and its management to transform faster and, above all, continuously.

The first challenge will be to set new rules of the game. To create stable, motivating reference points so everyone can better adapt to the technological and organizational changes shaking up their jobs. To anchor projects within programs. Among other things, this can keep the status quo from settling in — a real poison in the face of accelerating innovation.

In short, the PMO's role thus helps to harmonize project approaches, optimize efforts and bring in the right tools, which leads to higher-performing, more pragmatic project portfolio management. With new tools, processes and behaviors, the solution will largely lie in involvement and the commitment of all.

At team level, this involves the creation of a common language, cross-department project coordination, clarifying what projects mean for employees, and defining a clear role for each person — sparing them from wasting time on “how” to run the project so they can focus more effectively on the substance.

This gained efficiency will reduce the impact of best-effort commitments and lower the mental load tied to these projects, making employees not only better at running projects but, above all, more serene.

Communication, project clarity and better decisions

In a previous article, we discussed decision-making that is often too slow or partial — identified among the major causes of transformation project failure.

Failures that could be blamed on the lack of information, of easy access to information and of clarity on projects — which lead to half-decisions or non-decisions in the steering committee.

Thanks to its work on project culture and its connection with departments and employees, the PMO can bring a de-siloed, cross-company vision — with the right tools. It can thus play a decisive role in how top management cognitively processes information, bringing clarity to all the projects that were hard to read until now; in the end it will enable better decisions and, above all, much faster ones.

Invest in your teams through a PMO

When a project grows in scale, or is more complex or more ambitious, the reflex is often to hire a project manager. Most companies can't hire one project manager per cross-functional project to run — even when giving several projects to a single FTE.

Every employee has an element of project leadership in their activities, more or less simple. Project delivery problems are usually tied more to engagement, collaboration, efficiency and best-effort management issues than to the number of available project managers. You can do better with less, if you adopt a suitable project culture and invest in upskilling the company's people.

Upskill your workforce and invest in people so that everyone works better together on a shared platform, and the company becomes effective at executing its digital transformation roadmap. Hire less, train better — and bringing in a PMO will be the most pragmatic way to get there.

When is the right time, and what is the right company size, to set up a PMO?

Of all the questions, this is the one that comes up most often: when is a company big or mature enough to set up a PMO? We've often heard “But we're too small to take on a PMO” or “We're not structured enough to open a PMO position”.
Well, precisely — before answering the question, let's comment on those last two recurring points:

• It's not the size of the company that matters, but the number of projects and the investment they represent. The smaller the workforce and the closer the company is to absorbing strong growth, the more relevant it is. There will be fewer people to bring on board the new project culture and, once adopted, it will spread more easily to every newcomer to the company. Let's say there will be less effort to make and less resistance to change.
• The fact that the company isn't well structured yet, or is in the middle of getting there, is not a problem — on the contrary, it's a real opportunity: the PMO's job is precisely to help structure an approach that lets you absorb more cross-functional projects and increase their chances of success. What's more, since this approach and culture increase the teams' efficiency, it will help absorb even better the ramp-up the company is structuring itself for.

A good indicator for setting up a PMO is when the sum of cross-functional or transformation projects reaches €400K to €500K. Provisioning 10% to 20% of your portfolio's value for setting up a PMO seems to be a good practice to secure these current investments and also improve future project investments. It will also let you make gains on the time employees spend on projects.

One last word… beyond the best rational, ROI-able indicators… there's a third criterion you can take into account when considering creating this role… When your CRM/ERP project has been slipping for 18 months and your CEO has the feeling you're struggling! OK, we're deep into subjectivity here… but it may be the sign that it's time to govern your transformation differently.

To go further, read our article on how to set up a PMO.

To dig deeper, discover how the PMO should position itself with the leadership team.