Why the Sudden Proliferation of Program Management Office (PMO) Organizational Structures in Project-Focused Organizations?

While researching and writing this PMO blog, I have observed that, in the last several years, project-focused organizations have increasingly expanded the use of (or created) Program Management Offices within their organizations.

Historically, the PMO concept first appeared in Information Technology or Information Services organizations, principally because those structures advocated and sponsored more disciplined and consistent/repeatable processes including change management, applications development, and project management processes.  From IT and IS organizations, the PMO then became more widespread in Shared Services organizations which served the larger corporate environment by handling common functions such as Procurement, Financial Services, Facilities Management, etc.  Next, the Enterprise Program Management Offices (EPMO) appeared to serve the entire business organization, or some major business/functional portion of a very large organization.

Most recently I have observed that:

1.  Both Home Depot and Lowe’s, two major Fortune 100 home building supply organizations, have formed IT PMOs.

2.  The Federal Reserve Bank of New York has expanded its IT organization to handle projects through a new IT PMO structure.

3.  Progress Energy, the electric utility serving portions of North Carolina and Florida, has recently introduced a Smart Grid Program Management Office (SG PMO) to handle all projects related to its Smart Grid business.

4.  Apple has introduced a PMO in its financial operations, reporting to the CFO.

5.  Cisco, ADP, Sirius/XM, Microsoft, Time Warner Cable, BP, and many many other major firms have employed variations of PMOs to serve portions of their businesses.

The list goes on and on.

It would be very easy to say that this proliferation of PMOs is simply due to organizations “maturing” to recognizing the “value” added by the PMO structure to the organization.  But, my background in science and engineering led me to search for the underlying issues and ask several knowledgeable people who have studied PMOs from within and without for years.

I spoke with Rich Maltzman (who writes a great blog about project management entitled “Scope Crepe” and who also works in a PMO of a major telecom company) and asked him about his impressions of PMO proliferation.  Likewise, I asked Wayne Thompson (author of the well known Project Management War Stories blog) for input on this subject.  Over the last several years, Wayne has interviewed a number of successful PMO managers for a series of podcasts about the functioning of their PMOs in small to large corporate settings.

Rich Maltzman said:  “From my Scope Crepe and consulting work, I see that PMOs have long been the bastion–not only of IT–but also of enterprise-level project organizations.  I think, in fact, there’s a danger in not trying to build a community that goes beyond the IT or customer-facing PMs in an enterprise.  The overriding PM discipline and the community of PMs in an enterprise should be respected as a community and there should – even MUST – be sharing between the IT PMs and those who run the enterprises’ projects with customers (i.e. deploying a network, introducing a new pharma product).  So, a PMO at the enterprise level has value in that it builds a strong sense of community for PMs, honors the discipline, shares artifacts, and allows for the career growth of project managers – including job paths that may intertwine between IT and other enterprise functions.”

Wayne Thompson remarked:  “PMOs originated in IT and since IT was traditionally looked upon as a ‘cost center,’ the same view of that role carried over to the IT PMO.  But clearly, moving to the enterprise level with the PMO, organizations have recognized that the real takeaway in employing a PMO at that level is that it clearly adds value (rather than merely incur cost) to the enterprise’s strategies and should be evaluated as such.  Enterprise PMOs deliver concrete results in a disciplined manner.  In my blog work, I have found that PMOs have been deployed for any number of reasons depending on the business and industry context for that company.   And their scope is still expanding.”

This same reasoning applies to organizations just entering the project management discipline area as well.  A recent article “Dechert Puts Every Project Manager Through Project Management Training” (from The Legal Intelligencer) outlined the fact that law firms are now embracing project management as well.  Traditionally, many law firms felt that they were different, and that the work they did was somewhat unique and could not be managed using a discipline such as project management.  Pamela Woldow, a lawyer with the legal management consultant firm, Altman Weil, gathered feedback from general counsels and in-house counsels that they wanted their law firms to operate more like businesses and deliver their services more efficiently and cost effectively.  Consequently, Pamela has been developing and delivering project management training to partners as well as to associates.

More and more law firms are seeking training in basic project management principles, and Pamela believes this trend will continue as legal firms seek to satisfy the needs of their clients.

Once again, “value addition” from a consistent, repeatable process is the key–just as it has been in the ramp-up of PMO structures in major project-focused firms.

So what does this all mean?

In William Bridges’ ground breaking 1994 book Job Shift:  How to Prosper in a Workplace Without Jobs, in which he summarizes the evolution and transition taking place in the traditional notions of work, jobs, and careers, Bridges states that:

“The single organization pattern that is free from this built-in bias (toward maintaining the status quo in organizations) is the project cluster.  Project oriented structures offer the important advantages of tailor-made design to fit unique tasks, flexible resource commitments, defined termination points, and an absence of enduring commitment that encourages a resistance to innovation.”

In the years since this statement was made, I believe that these “project clusters” have taken on the new structure of PMOs, and that PMOs have been deployed in organizations wherever a “cluster” of projects has been the norm.  The expectation is that PMOs will add lasting and strategic value to the organization.

We are going to see more and more specialized PMOs in organizational settings as time goes on.

I would welcome some comments on these observations as well as supporting or alternative reasoning for the sudden proliferation of PMO structures in organizations.  Your comments are welcome.