Does Your Organization Need an Enterprise PMO?

This article covers some key advantages of having an enterprise PMO and whether your organization should create one.

What Is an Enterprise PMO?

An enterprise PMO is a centralized, strategic function within a company. They’re responsible for overseeing and managing the organization’s portfolio of strategic projects, programs, and initiatives.

The EPMO maintains a bird’s eye view of the portfolios, making sure the programs and products being planned, prioritized, and funded get the company closer to achieving its overarching strategic goals and objectives.

An overview of the EPMO’s roles and responsibilities

Typically, the enterprise PMO guides the executive leadership team with insights into the portfolio of strategic initiatives. One of their most critical roles is acting as the organization’s strategic enabler.

The EPMO plays a considerable role guiding leaders in deciding which initiatives to undertake and how funding gets distributed while keeping strategy connected to delivery.

An effective enterprise PMO provides governance, visibility, and best practices to facilitate strategic alignment and streamline work delivery. They can make it easier to determine which programs to begin, continue, or abandon based on your organization’s strategic goals – even as those goals change due to internal or external factors.

One way effective EPMOs streamline work delivery is through flexible governance. They support different operating models, such as shifting from a project to product model, and multiple work delivery methods – waterfall, Agile, and hybrid. The aim is to empower teams to do their best work.

The EPMO wears many hats. Other key responsibilities include:

• Demand management: Capturing business requests across the enterprise, advancing initiatives that drive strategic goals, and managing progress across the pipeline.
• Resource planning: Using historical data, in-flight work, and planned initiatives to ensure resource capacity needed to deliver successfully across the business.
• Financial planning and management: Improving the organization’s ROI by aligning investments with the enterprise’s high-level strategy. Work is funded (or defunded) based on whether it delivers strategic value to the organization, tracking expenditures and comparing it with the value delivered from the outcomes.

At the core of the enterprise PMO’s responsibilities are two essential themes: visibility and strategic enablement.

The EPMO creates visibility across the business, making it easier for project teams to align their work with the big-picture strategy, and easier for executive leadership to measure the performance against strategic initiatives.

PMO or EPMO: What’s the Difference?

Now that we’ve covered the basics, one question remains. What’s the difference between an enterprise PMO and a PMO?

This can be confusing because there’s some overlap between the two. Both are important for creating smooth project delivery but differ in scope, focus, and responsibilities.

A traditional PMO typically focuses on the planning and delivery of a portfolio of projects and work within a specific department or function.

An EPMO operates just under the C-suite. They focus on the broader strategic level, with a strong emphasis on aligning portfolios of projects and programs with enterprise strategic objectives. They also play an important role optimizing resource allocation across the organization.

As such, one function doesn’t automatically replace the other.

A PMO does not necessarily need to be transformed into an EPMO, nor does an enterprise PMO negate the need for a PMO. The two can work together harmoniously to help the organization efficiently achieve its goals.

The enterprise PMO

There is only one enterprise PMO within even the largest organizations. As the ultimate portfolio management governing body, they designate the tools, resources, and processes project management teams across the enterprise must utilize. They confirm that when there are limited resources, those resources are properly allocated to prioritized projects that drive enterprise strategy.

The EPMO plays a crucial alignment role in strategic portfolio management. This includes aligning portfolios across the business with the overarching strategy, then ensuring the delivery of strategic value.

The PMO

There’s only one EPMO, but there can be multiple PMOs within an organization. The EPMO enables the PMOs through sharing knowledge and best practices, establishing governance, and collaborating on some initiatives.

Traditionally, the PMO focuses on the execution and delivery of projects and work, optimizing the tools, processes, and resources. They ensure projects are on track for on-time/on-budget delivery and achieving defined goals.

When Do You Need an EPMO?

Not all organizations require an enterprise PMO, so how do you know it’s time to establish one?

Typically, an organization considers an enterprise PMO when it needs a higher level of cross-enterprise program management oversight and strategic alignment. As a company grows, operations and the strategic project portfolio gain complexity. Building an EPMO can ensure your organization’s funding is used effectively and they invest in initiatives that deliver strategic value.

1. Silos

Poor communication between departments and competing priorities create inefficiencies that frequently delay strategic initiatives and increase costs. If your departments are operating in silos instead of collaborating and are not aligned to deliver strategic outcomes, it may be time to establish an EPMO.

2. Strategic misalignment

Silos undermine transparency, and having no visibility leads to misalignment and strategic drift. If teams deliver work with little strategic value, this ultimately results in wasted resources, time, and budget spending.

3. No visibility into demand

Understanding future demand or the bigger picture is important when prioritizing programs and making strategic trade-offs. Without it, it’s incredibly difficult to balance competing priorities to ensure that constrained resources go to the initiatives that deliver the most strategic value to the organization.

Benefits of having an EPMO

Using the three red-flag scenarios above, we can see where an enterprise PMO brings specific benefits.

In situations where projects involve multiple departments or business units, an EPMO:

• Fosters collaboration
• Facilitates communication
• Harmonizes portfolio planning and delivery practices to minimize silos and redundancies

Your organization wants to ensure consistent alignment of strategy, investments, and execution connected to strategic objectives. An EPMO helps prioritize, orchestrate, track delivery, and measure outcome performance of programs that support the company’s strategic goals.

An effective EPMO should:

• Develop and establish governance processes and best practices
• Ensure consistency and performance insights increase productivity
• Drive efficiencies that maximize program and initiative success and ROI
• Identify internal and external risks early for a more proactive response to change

Having an enterprise PMO can help bolster leadership buy-in as well. It becomes much easier to win support with robust reporting and insights that help senior leadership forecast the future demand pipeline and balance resources to improve demand management.

For organizations experiencing these pain points we covered, an enterprise PMO can often right the ship – especially when equipped with an effective strategic portfolio management (SPM) solution.

An SPM solution reveals insights EPMO leaders can use to determine whether:

• Prioritized projects align with company objectives
• Strategic investments are on track to generate the highest rate of return

It provides the foundation and structure for:

• Strategic planning
• Funding initiatives
• Resource planning
• Business capability assessments
• Governance

All of which are important for helping your EPMO overcome common challenges.

What Challenges Does the EPMO Face?

Creating Visibility

The enterprise PMO needs transparency in order to create alignment between strategy and execution.

However, creating transparency is difficult if there’s too much data to collect and analyze from multiple, disconnected sources. Adopting an SPM solution can provide visibility into the different aspects across the business, looking at portfolios, resources, risks, demand, and their dependencies.

Support

New governance policies almost always come with pushback. Sometimes, the EPMO is viewed as an unwanted enforcer that complicates the status quo, at least at first.

For example, introducing new processes can create confusion and resistance if teams aren’t used to governance. But the EPMO can become an enterprise resource by providing “just enough” oversight to support teams to do their best work – regardless of how they work.

Misalignment

The enterprise PMO’s mission is to facilitate alignment across the organization. The company’s strategy must be communicated throughout the organization, so project teams understand how their work fits into the greater strategic picture.

Strategic alignment is critical when planning, prioritizing, and funding projects. But achieving alignment can be difficult without good processes and tools, like an SPM solution, that maintain alignment and prevent strategic drift.

EPMO Best Practices

Define it and continually improve it

The EPMO provides company-wide project management governance, yet it still requires its own defined structure, responsibilities, and processes to maximize efficiencies and ensure accountability. Taking a page from the Agile playbook, EPMOs should seek to learn from experience to continually improve and then model that mindset and approach for the rest of the organization.

Hire correctly and build the right culture

The EPMO is a team of people, making who you hire essential in establishing the culture you want to promote. As you build your team, focus on hiring talent with diverse skill sets who can work well with other team members, as collaboration is a fundamental pillar of project management.

Finally, attitude can make or break how the organization views the enterprise PMO. Teams and function units must demonstrate resiliency and empathy when disruptions require a shift in plans.

Prove it or lose it

The EPMO’s job is to ensure projects, programs, and portfolios align with organizational goals and bring value. This precept demands justification for every project in the portfolio.

Projects should only enter the pipeline with a solid business case that demonstrates strategic alignment and includes Objectives and Key Results (OKRs) to provide direction and KPIs to measure success.

Going further, CIO says, “As company-wide goals change, EPMOs should re-evaluate projects and programs to ensure they are still in alignment with the direction of the company and not be shy about cutting projects that no longer align with the business.”

Empower teams to do their best work

Every team has its preferred way of working, and an effective EPMO encourages team feedback and supports their chosen work methodologies as long as everyone plays by the rules.

The enterprise PMO should form the parameters, standards, and tools but offer flexibility in how teams accomplish their established goals. Whether traditional Waterfall, Agile, or hybrid, an EPMO should empower teams to do what they do best in a manner that suits them to complete the work.

Build your arsenal

Enterprise PMOs can succeed with technology that provides visibility into the portfolio, demand, investments, and resource capacity.

If your organization is to the point where it is considering an EPMO, then things have become too complicated for spreadsheets.

An SPM solution supports strategy execution by pointing leaders to the right data when making informed decisions around investments, priorities, resources, and risks. It removes the barriers preventing you from visualizing any disconnects between strategy, plans, delivery, and outcomes.

Understanding the Value an Enterprise PMO Brings

Implementing an enterprise PMO can be a catalyst for organizations – especially when facing constant change, competition, and issues that impact the efficient execution of projects and programs. They’re one of the top strategic enablers of your organization.

For many, the first steps are gaining leadership buy-in, initiating cultural changes, and adopting appropriate tools.

An SPM solution will provide the EPMO with early warning indicators to help address challenges like strategic drift and misalignment.

The ability to continuously scenario plan enables you to balance trade-offs, weigh total costs versus the benefits of your strategic investments, and confidently pursue the initiatives that deliver the most value to your enterprise.

Building an effective enterprise PMO takes time, but the benefits justify the effort.

Access the on-demand demo of Planview’s Strategic Portfolio Management solution to see how it can drive business outcomes by connecting strategy, planning, and delivery, all while accelerating the speed at which your enterprise turns ideas into impact.