Why PMO as a Service?

March 31, 2022

Author

Jon Webster

The most common reason why PMO as a Service is chosen by organisations is because either the existing PMO has lost its way or the function simply does not yet exist. But there are plenty of other reasons too.

For many, PMO as a Service is a rapid and flexible way of getting more of what you value out of a PMO without the sunk costs and time of building a mature in-house function.

Specific PMO as a Service benefits

Using a PMO managed service has many specific benefits over building and maintaining your own inhouse function. In fact, there are many reasons why you would want to use a managed service as a solution to business challenges¹. But specifically to PMOs, they include:

#1 – On demand – you only pay for what you use

For many organisations, it makes little sense to support the fixed costs of an inhouse PMO function when the demands on it’s time and expertise will inevitably be variable. Opting for a PMO provided as a service allows the costs to vary with demand, resulting in a more cost-efficient solution. In short, you only pay for the capability you are actively using.

The exception is a very large organisation that has a portfolio so vast and long-term that there is a perpetual need for a large PMO function. However, even for these organisations, while demand may remain high, the nature of the function may need to change very quickly and a service provides flexibility where an inhouse function does not.

#2 – Re-orientate PMO capability quickly and painlessly

A good inhouse PMO function will be able to re-orientate to meet the changing needs of the organisation and change portfolio. However, it won’t be able to adapt as quickly and painlessly as a PMO as a service. The reason for this is that staff can be rotated out more quickly and replaced with resource with the needed expertise.

An example would be where a new but time-limited challenge emerges. Say your organisation acquires another organisation and its project management staff. You need to get those project managers up to speed quickly with the project standards and ways of working of your organisation to fully integrate the two businesses. But the existing team does not have the capacity, and any freelance PMO resource you might bring in to supplement it will be equally ignorant of those standards and ways of working. A good managed service provider however, will have the materials and processes to mobilise new team members quickly and can much more painlessly scale to meet the challenge.

#3 – Scale up and down with the programme portfolio

Most companies go through cycles of change and transformation. The net result of this is that the number of projects and programmes within the change portfolio grow and shrink over time – often with long lulls between times of high activity.

This is usually predictable² but even so, it’s very difficult to maintain morale and motivation within an inhouse PMO team during frenetic times if the threat of cutbacks looms just over the horizon. Consequently, most companies tend to keep the numbers in the inhouse PMO fairly consistent through peaks and troughs in demand.

This risks the PMO becoming over-stretched during the peaks and becoming subsumed with justifying its own existence during the troughs – often leading to convoluted processes and reporting for little benefit. Over time, this had led to a vicious cycle where increasingly complex PMOs are unable to meet the core needs of their organisations effectively when it’s needed most. This focus on mechanics over outcomes is better covered in our article on the evolution of the PMO.

By contrast, PMO as a Service avoids this situation by being able to easily flex up and down, redeploying staff between client organisations to load-balance optimally and remain fit-for-purpose. No intellectual capital is lost and the service is kept fit-for-purpose through KPI measurement and regular services reviews that a traditional inhouse function is not subject to.

#4 – Change PMO type rapidly

Changing the type of PMO is an area where a service has a natural advantage over a traditional team. If a project management office needs to become a programme management office then a PMO managed service can simply adjust the team make-up, moving it to a bigger focus on governance and programme-level coordination. This is relatively painless as the service provider can simply move staff to another client where those skillsets are in demand and rotate in those with a programme management office background. Very often, because staff within a managed service are exposed to many different client environments and receive a higher level of training, such a transition can be made with a minimal staff changes, enabling greater continuity through the transition to the new state.

#5 – Lower staff overheads

PMO as a service is pure Opex³, eliminating the Employer National Insurance and pension costs of a permanent team. Equally, team members can be changed without attracting recruitment and severance costs. Combined with the ability scale up and down, there are naturally lower staffing overheads to a managed service PMO.

However, be careful that the number of staff in the PMO you are being provided are linked in some way to the commercials. We have come across less scrupulous providers charging as much as £2m per annum for a PMO consisting of just two people – where the link between value, effort and charge had entirely broken and was being masked behind the service agreement.

#6 – The best tools and templates

A PMO managed service provides tools and templates. This is a significant benefit because it means you do not have to research and develop your own and then train staff on how to use them. A well-established PMO as a Service provider will have more than just good tools and templates, they will have tools and templates that meet the needs of a wide variety of organisations. This is important because not every organisation will be at the same level of organisational maturity around project and programme management. In fact, each organisation will have its own unique culture and set of circumstances. What distinguishes a great service provider from a merely good one is its ability to tailor those tools and templates to the needs of the individual client.

Other commons advantages from PMO as a Service

Seasoned expertise

On average, a professional PMO service will have greater expertise and higher experience than an inhouse team. This is not to defame every inhouse PMO team, many of which are highly skilled, but an alarmingly high number simply are not.

In our experience and others⁴, it is common to discover that one of the reason’s an organisation’s PMO function is failing is because it’s staffed with a combination of poorly supported junior staff and non-professionals seconded from elsewhere in the business.

Knowledge transfer

One of the capabilities of a good PMO, whether inhouse or as a managed service, is its ability to coach and mentor project and programme management staff. However, not every organisation has a good PMO and so one of the reasons to replace it with a service is to bring in a structured approach to knowledge transfer and upskilling, with clear KPIs and deliverables.

Bringing in a PMO as a Service enables an experienced professional team to be provided quickly to address issues and begin uplifting the PMO capability of the organisation through structured knowledge transfer, coaching and mentoring of junior staff.

Lifting the fog

One of the signs that a PMO is failing is that it has become bureaucratic and overly focussed on the mechanics over the outcomes. The key symptom here is that sponsors and stakeholders are labouring under PMO reporting that is high in slide/page count but low in meaning.

Bringing in a PMO as a Service is an opportunity is to lift the fog of bureaucracy and put in place simpler, fit-for-purpose and outcome-orientated processes. For example, reports that tell you what you actually want to know, enable you to make timely decisions and tailor the format and frequency to your needs.