W






Function of the PMO






Benefits a PMO Can Provide

This knowledge is crucial for organizations undergoing mergers and acquisitions. In the wave of M&A activity, carriers become parts of larger organizations in which the technology and business needs must align internally to improve productivity as well as externally to improve customer service, acquisition, and retention, not to mention management of the corporate brand. Organizations growing through M&A need to integrate the IT infrastructures, which requires an understanding of the business units of the respective organizations and the potential impact of technology rationalization.

Also consider the convergence of insurance and financial services. Insurance carriers now offer more products and product lines. It helps to have dedicated people who keep up to speed on new offerings and on the technologies that will be required to support them. In addition, it helps to have liaisons to the people most knowledgeable about regulations such as Gramm-Leach-Bliley and Sarbanes-Oxleythe better to understand their implications and use technology to facilitate compliance.
PMOs can help manage multiple sales distribution and services channelschannels that provide insurance carriers new opportunities for customer acquisition and retention. But these new sales channels also present the potential for confused customers. PMO staff can anticipate such challenges, address them proactively, and recognize the importance of such issues when they arise.

Among the most critical considerations for the insurance industry today is the need for standards. Continued deregulation and the consolidation of the insurance and financial services industries have led to the adoption of cross-industry standards, many of which are a prerequisite to business initiatives such as STP. A PMO can help make the case for adopting these emerging standards. On a related issue, technology consolidation, the PMO can review the organizations position from the standpoints of both technology spending and technology needtwo very opposing views in many organizations.

Potential Impact of a PMO
As good as the PMO concept may sound, you should nonetheless anticipate the impact establishing a PMO will have throughout the company.

In all too many organizations, IT tends to be perceived as a bastion of techiespeople with (supposedly) limited knowledge of the businesswhen, in fact, the technical staff who support the business applications are likely to possess deep knowledge of the processes that drive the business. One good argument for staffing a PMO with IT personnel is to capitalize on that groups knowledge while making the individuals more accountable to the units they serve. When all is said and done, the business units are likely to be receptive to the idea of having an official intermediary to IT, and IT is likely to appreciate having one of its own working as a liaison for the technical staff, ensuring better communication with the business units.

A key consideration is whether the PMO is given the authority to succeed. The members of the PMO must be given authority if they are to get the right people to buy in. Weve seen projects in which deadlines slipped and timely decisions were not made, all because the project manager did not have sign-off authority. But weve also seen projects that progressed smoothly because both IT and the business units knew the project manager had the ear of the CIO.

Then theres the cost issue. In the current climate, where the pressure is to get leaner and not pile on additional layers, many organizations come up against the question of how to fund a PMO. Reviewing recent projects that suffered delays and/or cost overruns for lack of effective project management may well help justify the cost. In addition, an organization may find less need for consultant services, as the PMO can perform much of this work in-house. A PMO can represent itself as a more nimble and responsive group, with considerable expertiseyet another argument to allocate the dollars for such a group.

Where technology procurement and implementation are concerned, the PMO represents an internal entity that potentially can be more responsive than either traditional IT resources or business resources. In the highly competitive insurance industry, you need the assurance the technology you acquire truly will help the organization achieve its objectives. The PMO approach definitely is a step in the right direction.

The authors are analysts with Doculabs ([email protected], www.doculabs.com, 312-433-7793), a research and consulting firm that helps organizations plan for, select, and optimize technology for their business strategies.
The content of Inside Track is the responsibility of each columns author. The views and opinions are those of the author and do not necessarily represent those of Tech Decisions.

Are You Ready for a PMO?
Most organizations agree in concept with the value of a PMO, but they struggle to find an effective way to organize and integrate an entirely new entity into their already complex structures. As with any long-term solution or strategy that requires increased resources or adding a new function, the question often is, Why add another layer if our goal is to reduce complexity and thereby help us more effectively reach our goals?

Arguments like this can be tough to overcome. Here are some questions to help identify whether the investment in establishing a PMO is worth it for your organization (despite the fact that it requires an additional layer):
For any given initiative youve recently undertaken, do the business units and IT group have a common understanding of the overall drivers and goals? Were both groups satisfied with the outcome?
Does your IT staff typically have an appreciation of how the technical requirements of a given initiative (regardless of how complex) ultimately enhance the business direction of a specific division or the overall organization?
Do your business analysts and project managers recognize the impact their demands have on the overall IT structure? Do they care?
Do your project leaders have the organizational/political savvy to balance the requirements and capabilities of all entities involved in an initiative, as well as manage expectations within the range of practical and effective solutions?

Obviously, few organizations can respond entirely in the positive to many of these questions, but it is possible to get closer to a yes. PMOs are one way to do so. As youre beginning to put together strategies for 2004, it certainly is worth considering how the PMO function could help your organization get closer to the ideal circumstances for implementing the complex initiatives that insurance providers must handle today.