Portfolio, Program, Project and PMO – Understanding The Org Hierarchy
Now this is the second series of article in Real World Free Project Management Training with Example. If you are new to this series, then let me tell you in brief that it is my effort to help new project managers on how project management processes are carried out in real world with the help of real world examples.
Now before we move forward its very necessary to understand some key concepts.
Now as its part of the series of real world example we will start with a company called IDEOLISTIC. The full name of the company is IDEOLISTIC BUSINESS SOLUTIONS INC. with website as www.ideolistic.com. Now ideolistic is an IT services based company which provides management consulting services, IT Services, Development Services (Mobile and web) and also a hosted Call Centre.
Now IDEOLISTIC provides a lot of services and has a lot of departments and teams which have different operations and operate independently and also in conjunction depending on the situation.
Now you all know every corporation has goals which they want to achieve. These goals could be achievable in short term like one or two quarters or a year sometimes these goals are to be achieved in coming years. A lot of initiatives(steps) are needed to achieve these goals. These initiatives need not to be linked to each other or of same type but they should align towards reaching the corporate goals either short term or long term. This is called portfolio management. Where all the efforts directly or indirectly lead to a common goal.
Now lets consider the example of IDEOLISTIC BUSINESS SOLUTIONS their goal for next year is to increase their profit by 12 percent. To achieve this goal several initiatives are required.
Some of the initiatives could be
- Upgrade IT infrastructure.
- Power efficient lighting
- Increase in Sales
- Launch of new services or product.
Now these initiatives are called Programs (Some of them could be projects well discuss later about that). These programs doesn’t seem to be connected directly but eventually they will all lead to same CORPORATE GOALS which is increase in profit by 12 percent.
Now lets see the Program Reduction of Operating Cost, now this could be done in several ways, the management must have come with ides how are they planning to do it and what’s feasible and out of all available options which has the highest impact or what could be achieved the earliest.
So for e.g. let’s say the following could be done for upgrading infrastructure.
- Migrating the existing servers to Virtual Servers.
- Migrate from existing analog phones lines to VoIP.
- Buy new desktops for employees.
These sub-units are called Projects. They are temporary if one project ends then the other one might still be active. But they definitely have an end. A program may consist of several of these projects.
A Portfolio doesn’t need to have only programs under it. The portfolio can also have projects under it. For e.g. Power efficient lighting is a project some people may argue that it could be a program in it self but for now it is considered as a project and when all the lights are replaced with power efficient LEDs then the project is complete and that’s the definition of project which has a start and an end and its never ongoing else it is termed as a process.
Now what’s the PMO or the project management office, if you are going by the book definition or working towards your PMP certification then for you PMO is the governing body for all your projects. It helps you during all your project activities including providing with materials, resources, best practices and guidance on how to proceed with the projects. PMO is not a single person it’s a group of people (depending on the organization) who make sure the projects are going towards success and are aligned with corporate goals. For eg. If you are assigned as the project manager for Migrating the existing servers then in lay-man terms PMO will be your go-to person. If you are facing difficulties with the project or need guidance on RFPs then PMO will come into play. The PMO will provide you with methodology guidelines as well.
Now the question arises does the PMO also govern the Portfolio and Programs. The answer is YES and NO both. The answer varies from company to company, some companies have PMO just to manage and keep track of projects. The corporate goals are set by executives who are not part of the PMO.
In some organizations the PMO has executives who can take corporate level decisions and could steer new programs. Generally big organizations tiered PMOs as well which could be classified as enterprise PMO, Organizational (Departmental) PMO and Special Purpose PMO.