Under What Conditions do PMOs Naturally Emerge?

I remember reading Tolstoy’s War and Peace in high school.  The book (tome may be more accurate), if you haven’t read it, depicts life during and after the Napoleonic invasion of Russia.  The book tells a story, for sure – but it’s also a very (very) long essay on one fundamental question:  Does history make the man…..or does the man make history?  Let me restate the question in terms more relevant to what I do….do PMOs make the environment they operate within…..or does the environment create a PMO?  More specifically, perhaps, what are the conditions upon which a PMO naturally emerges – whether or not it’s actually called a PMO.  In what environment does a PMO-like structure naturally emerge?  The goal in asking this question is not to identify what PMOs actually do – but rather, in what environments, where a PMO doesn’t exist, it should.  In what circumstances should we look to create a PMO function when none exists?

To answer that question, I first looked at the different domains in which PMOs typically exist.  What role does a PMO play in each of these domains?  Can we extrapolate any truths that cross domains to govern when PMOs naturally form?

PMOs within the IT Domain

I know I’ll oversimplify this and probably make some folks cringe, but the basic narrative, which I’ve never really had reason to question, is that PMOs formed in IT right around the run up to the Y2K remediation exercise.  They sprung up to support the coordination of massive numbers of critical tasks and resources that needed to be coordinated to remediate coding issues.  Subsequently, PMOs have stuck around, generally to provide a portfolio alignment capability within IT and process compliance.  Hence, from looking at the IT domain, we might surmise that PMOs emerge under the following conditions:

  1. Large number of tasks that need to be coordinated with a shared resource pool.
  2. Aligning the work of IT to best provide business value.

I might theorize that IT PMOs are required to also drive process compliance, i.e. to mitigate the risk of unscheduled outages in organizations ever more dependent on IT.  The interesting thing here though is that many other domains, such as manufacturing, tackle the challenge of process compliance in different ways, without PMOs.  My theory here is that perhaps IT policies are rapidly evolving, and as such the PMO is required to continually monitor process compliance in a world where process keeps shifting.  In that sense, we may be able to conclude that PMOs should exist when process compliance is an imperative, and when that process compliance governs technology or conditions that are inherently dynamic.

Now the original question may not make sense in the IT domain context.  Of course IT needs a PMO.  That’s been accepted wisdom for years.  But what about other domains?  What about other domains with the same needs but without the same acceptance as to the value of the PMO function?  What about PMOs in oil and gas exploration and production?

PMOs for Exploration and Production

Historically, exploration and production has been a slow, methodical capital driven process where projects required multiple year ramp ups.  In the new world of unconventionals, that paradigm is shifting and organizations are reorganizing and restructuring around a more nimble paradigm.  Historically, that paradigm has been based on local optima, where each group was responsible for managing its piece of the oilfield.  In the new world of depressed commodity prices, that pattern is changing, and unconventional organizations are moving to knit their operations together more holistically and support the ability to shift tasks and schedules based on changing priorities.

Hence, PMOs are appearing in the unconventional E&P space.  Admittedly, some of these PMOs have been around for years, but there’s a growing awareness in the industry of the role and value that may play.  Hence, going back to the original thesis of this article, the appearance of PMOs in unconventional E&P portfolios appears driven by:

  1. The sheer volume of tasks that must be performed in synchronization to generate value and reduce cost in the oilfield.
  2. The need to constantly recalculate and reprioritize the work being performed based on enhanced data and real world performance.

Now, let’s skim a rock over other domains that I typically play within.

PMOs for Professional Services

PMOs seem to often take less of a role in professional services organizations.  In these organizations, projects are generally undertaken for a clear, profit driven reason.  These projects were proposed, went through an economic review, and drive margin for the company.  As a result, there’s less of a need for the PMO to ensure portfolio alignment – but more of a need for the PMO to drive margin through risk avoidance/process compliance.

Going back to the initial discussion, the role of the PMO in a professional services portfolio is to enforce process compliance to deliver results in a rapidly evolving field.

Program Execution

Finally, we have program PMOs – which perform a coordination function required to coalesce many disparate disciplines into a single endeavor.  Again, here we are leveraging the coordination model….made all the more important as the groups are probably not used to working together and need the central coordinating body to ensure work is performed in the appropriate sequence.

Other Examples

I could run through other examples, but as I thought through them, I pretty much end up with the same conclusions.  PMOs tend to emerge when the following conditions are identified:

  1. A portfolio of work loosely aligned to profitability and/or the overall goals of the organization.
  2. A portfolio of work that outpaces the ability of a centralized resource pool to support.
  3. A portfolio of work performed by many agencies that is continuously shifting in response to external factors.
  4. High risk processes that must be adhered to in a domain that is rapidly evolving.

Identify those requirements within your organization, and chances are you need (or have) a PMO.

Under What Conditions do PMOs Naturally Emerge?

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