Executive Support: Demonstrating the Value of PM

Executive buy-in and support: more comments on the first results of the PMI Value of PM study, earlier posts (here , here, here, here, and here).

Value measures should first focus on the tangible (e.g., ROI, better margin) or making the intangible more tangible (e.g., tying customer satisfaction to revenue or reduced escalation costs).  In addition, I would also suggest that one should also look at how much value one’s executives attribute to project management.  Of course, the initiative has to have delivered results.  But many PMOs forget to ensure that senior leadership understands exactly how PM improvement translates to the firm’s bottom-line, top-line, brand value, etc.

One of the most powerful endorsements of SAP’s project management efforts came from the current CEO of SAP America, Greg Tomb.  During our global services leadership summit, each regional leader presents a short presentation on the “whats and whys” of his/her unit’s performance.  When Greg was discussing the excellent revenue, margin, and customer satisfaction results in the Americas, he explicitly credited project management as the foundation for all three.

“Public” and vocal executive references are some of the best intangible value proof points.  Not only was the recognition appreciated by the Americas PMO leadership, it also reinforced the global PMO message to the rest of the global leadership team: project management works.

Why DID we need the value of PM study?

Per a recent comment by Dr. Paul Gianmalvo (URL here, post and comment here), the results of the value of PM study do sound like they simply confirm the value of motherhood, apple pie, and clean living.  As Paul notes:

Yes, project management adds value. Of course it does!!! What alternatives are there?

I agree that the answer is obvious: competent project management is indispensable.  In fact, I believe that outstanding project management is a competitive advantage.  But that fact hasn’t always been obvious to the folks who approve project management: senior executives.  When pitching PMO and other project performance improvement initiatives, too many project management professionals launch into assertions of the value of PM.  I know… I’ve done it and see it again and again.

To me, the stunning results from the study are not that PM has value, but how poorly we still calculate and communicate the returns on our organizations’ investments.  Only 50 percent of PM organizations bother to calculate ROI?  Those must be some confident, complacent, or perhaps foolish PMOs.

When it comes time to show benefits from a PM improvement program’s outcomes, silence is death.

Increased Customer Satisfaction: Demonstrating the Value of PM

SAP PM-specific success stories: 2004-2006

Showing customer value: more comments on the first results of the PMI Value of PM study, earlier posts (here , here, and here).

SAP customer satisfaction scores have shown strong improvement over the last few years, but project management satisfaction is rising faster than the overall SAP Consulting customer satisfaction. While we have surveys that demonstrate this result, an even more tangible measure of this satisfaction is the huge increase in project management success stories.

The field loves success stories, because they highlight the role of SAP Project Management in ensuring customer success during implementation projects.  Customers go “on the record” to make powerful statements about exactly how SAP Project Management supported their projects and programs.  For examples in a number of industries, click here for a list of SAP Project Management success stories (or search here using the search string “SAP Project Management” success stories).

Demonstrating the ROI of project management

Guess which color is maturity and which is costs...

Guess which color is the maturity rating and which is cost/revenue...

Re: demonstrating tangible value — comments on the first results of the Value of PM study — earlier posts (here and here), the study’s preview PDF (here) and a 90 minute presentation by the lead authors (embedded here).

Only half of the case study organizations could demonstrate tangible value from their project management efforts and initiatives. The study had several observations about these two groups, the first applies directly to our PMO: “Organizations That Could Calculate ROI… those that deliver projects for customers”

The fact that we support units responsible for customers, revenues, and profit made a huge difference in our ability to measure ROI.  In no small measure, SAP’s increased margins over the past four years have come from our ability to better bid, monitor, and control projects.  Continue reading

Sustaining the Value of Project Management

As promised, I’m going to blog on the Researching the Value of Project Management study that PMI will release soon (preview PDF here).  This conclusion about value growth and persistence struck me first:

Where Value Is Being Sustained And Continuing To Grow, There Is On-going Focus And Improvement Underway

Well, that sounds a bit obvious. One would expect that value would grow with “on-going focus and improvement”. But is value already demonstrated and delivered automatically “being sustained”? The answer apparently is “No”…

Organizations That Stop Focusing On Value, Or Believe That They Are ‘Done’:
– Stop demonstrating value
– The act of not enhancing value appears to destroy value

Ah… now that’s something to remember. Our PMO fell into this trap.  We thought our “Level 2″ project management training was just fine, thank you. Unfortunately, our customers didn’t think so.  It got to the point where one of our most important regions developed its own training to replace ours. 

Some of the value decline was real: our training missed topics that had emerged since its development.  However, the most critical part of the value decline was perceived.  Our unwillingness to address pain points — and the need for one of our customers to become self-sufficient — undermined our relevance. 

The bottom line is simple.  If my group doesn’t stay focused on sustaining and building value, people start to ask: Why do we have a Global PMO anyway?

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