Delivering Value by Moving From a PMO to a Product Centric Organization

As we emerge (hopefully) from the global financial crisis, project management organizations have their work cut out for them. The focus is moving from one of simple cost cutting and initiative cancellations to one of driving and delivering rapid innovation to move the business forward. This acceleration of the rate and pace of innovation is required to ensure that the business not only survives, but more importantly flourishes.

Unfortunately, their IT organization may not be structured to effectively address these changes.

Being asked to do more with less whilst meeting the acceleration of agile development methodology is becoming the “norm” not only within IT, but also for the business itself. For instance, the business rather than doing a 12 month feasibility study into a new business opportunity may choose to make a small investment — putting maybe a toe in the water. They understand the opportunity and if it is successful, the business will then move forward with a more intensive investment.

The traditional PMO organization has focused on the project and the project delivery, while following a waterfall methodology. Success metrics are typically project-based such as “on-time project delivery,” “project within budget” and “delivery within scope.” Even when these metrics are met, the business still believes it often takes far too long for the solution to be delivered and when it is, it’s not up to snuff.

When you think about the traditional delivery, the project starts from behind the eight ball. For example, in many organizations the demand management process takes weeks or even months from concept to initial funding. Then there are further delays while the proposed investment is approved by a demand governance process and evaluated against other opportunities (there are always more ideas than available money and resources). Once the initiative is categorized as critical, which again can take weeks to months, the funded project can get underway. But the reality is that the average “traditional project” can then take more than six months, leaving the business with the impression that idea to delivery could take years!

To become more business aligned and centric, forward-thinking organizations are changing their focus from applications to product. They are also changing their funding mechanisms so that instead of all of the organizational initiatives being compared against each other, budget is allocated on the division or organizational level and the governance process is deferred to the line of business. The focus at the product or line-of-business allows for the rapid approval and trading off capability against capability. More importantly, this new focus enables the delivery of incremental value to the organization more often, so that the business receives a cadence of constant value delivery.

A major banking organization provides a good example of the move from application centric to product centric. The bank’s retail division recently formed blended product teams that incorporate business representatives and application developers, with their areas of responsibility bounded by solution sets that the business derives value. An immediate benefit was the delivery of mobile-based capabilities directly to customers. As the CIO told me, the change meant that the business had a greater influence on solution delivery and operated much more effectively and efficiently.

Many would argue that the industry has not yet developed a good definition of a “product centric” organization. But if your organization is defining solutions from a business product perspective, as opposed to an IT perspective, then you’re moving in the right direction. If you’re more concerned about the complete lifecycle of the capabilities, including costs, from idea to capability retirement, and not as concerned about the delivery medium, then you are on the way!

Resource: CA

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