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Analysis / Enterprise

Digital Transformation Is Forcing The Traditional PMO To Evolve

Digital Transformation

Whether it involves implementing new technology, re-designing the way an organisation interacts with its customers, or improving access to technology for employees, digital transformation is now an essential part of business as usual. It enables organisations 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 reduce through the adoption of digital technologies.

Yet in spite of the promised rewards, digital transformation projects present unique challenges for larger, global organisations in mature markets – Oil & Gas companies, construction and engineering, financial services providers, banks, telcos and energy companies for example. They often have legacy technology in place and ingrained ways of doing business with makes change more difficult. 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 organisations is resulting in them facing what has become a continual change programme where time to market is the critical success factor. It’s a race to either be early to adopt, or fastest to market and it’s is having a huge impact on PMOs, 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 organisations.

It is challenging. Research suggests a surprising level of wastage among organisations undergoing digital transformation, with an average of 9.7 per cent (that’s £97 million of the total being invested into projects being lost) for every £1 billion 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:

Decentralised PMO functions that are currently commonplace will start to disappear, in favour of the centralised 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 3 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 PM methodologies will continue to increase and expand beyond the IT sector. PMOs are at risk of appearing the ‘weakest link’ if they resist change and insist on maintaining traditional waterfall approaches within organisations that are undergoing digital transformation. This is because cutting down on time to market is both a critical success factor and the underlying rationale behind investing in these digital change programmes.

Organisations 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 utilisation, 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.

Ultimately, PMOs need to appreciate that what we call digital transformation will never actually be completed. Adapting to the so-called ‘new normal’ of constant change and disruption means having the right set of PPM tools in place that enable organisations to employ advanced cost and financial controls, communicate intuitively with dashboards and stakeholder reporting, plus offer decision support capabilities, including what-if scenario planning to enable proactive strategy execution management. As a result of these challenges, true 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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Gioacchino Gaudioso, CEO, co-founded Project Objects in 2006 and as CEO has organically grown the company to become a leading international provider of software, consultancy and best practice expertise for Enterprise Project & Portfolio Intelligence Management (PPM). Project Objects was awarded a Visionary PPM accreditation by Gartner in its most recent Magic Quadrant for PPM solutions and the company has enterprise users based worldwide.