I recently read a blog by a colleague called Meet the new PMO. In it, he talks about the different types of Program or Project Management Offices (PMOs) that have emerged from the agile movement we've seen over the last decade.
It got me thinking about all the functions of a traditional PMO and the increasing need to adapt to new ways of working in order to achieve true business agility. What if we started thinking differently about the role of the PMO in an enterprise and started implementing agile methodologies to help transform the traditional PMO into a VMO – or Value Management Office?
For vendor management, silos are the enemy of business agility
While there are many areas we could study in this case, I’d like to spend some time taking a closer look into one function specifically - vendor management. Vendor management enables organizations to control costs, drive service excellence and mitigate risks to gain increased value from their vendors throughout the engagement lifecycle.
However, in a world where business agility is critical, most vendor management teams are still contracting by silos or functions, even as they attempt to become more cross-functional. Talk about the law of unintended consequences! The predictable result is an environment that, by definition, inhibits the new ways of working.
Here’s a very common example: a company selects a vendor to perform quality assurance, the vendor can be (and normally is) held contractually accountable for performance targets as described in their service level agreements (SLAs) and key performance indicators (KPIs). This leads to extra processes in the SDLC to be put in place to mitigate the risks of SLA and KPI failures. This extra work usually includes strict formal reviews and gated, sign-off procedures, which in turn drives extra effort to gather empirical evidence before the project can move forward. The outcome; clients and vendors waste time and effort pointing fingers instead of solving problems. Some testing contracts’ SLAs go even further and penalize the vendor for not finding defects, which is – to put it mildly – a bit of a head-scratcher for me. Is it not the goal to "build-in” not "test-in" quality? Quite often, this also leads to having separate agile development teams and testing teams, thus inhibiting the delivery of value within a sprint.
A new approach to vendor management: making the shift to agile team-based contracting
A major shift is starting to take place around contracting, moving away from traditional time and materials to more agile, team-based contracting models. With this modern approach, companies mobilize entire scrum teams to address the specific needs of the program backlog. Teams can be configured in multiple ways, even provisioning a specialized skill-set team to address short-term gaps in the organization. In more complex structures, you could create teams that function on a follow-the-sun model with members across a global network delivering value around the clock. You can tie SLAs to those teams and align them to a scrum framework where the vendor is accountable for commitments to a number of stories to be completed by the end of the sprint. This provides the best of time and materials and traditional outcome-based contracting while staying true to agile principles and practices.
Concepts like agile team-based contracting are critical when Value Management Offices need to align the value the organization is expecting to gain with the current available capacity.
If you’re looking to transition your PMO from tracking motion to tracking value delivered and pivot to a Value Management Office model, here are three key actions to start you on your journey:
- Partner with an influential stakeholder on the business team. Successful VMOs understand that it is no longer only an IT function, rather a partnership, blurring the lines between business and IT, that drives successful business agility practices.
- Make sure you have the tool (or tools) that allow tracking of the value requested, from concept to cash, in real-time. You must also tie value to the enterprise and portfolio strategy and vision. There have been numerous value stream mapping tools surfacing over the last few years.
- Adopt the agile principles and practices within your VMO. One cannot pivot to business agility by leveraging outdated, rigid waterfall methods - throw out your enormous project plan and move to prioritized backlogs! If it makes you feel better, you can still provide the GANT charts most are used to.
At CGI, we continue to help clients make the leap from agile as an “IT developer’s tool” to one that drives value throughout an organization. Learn more about how applying agile principles in functional areas such as legal and contracting can transform your PMO into a VMO.
Learn more about how we’re helping clients transform into true agile organizations here.