Transcript: Why You Should NOT Outsource Your PMO
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In the consulting side of my business, I’m often called upon to help build or rescue a PMO for an organization. Sometimes, the CEO that calls me says they are considering outsourcing the company’s PMO. While this might be the dream situation for many consulting firms out there, I’ll tell you why, as a consultant, I’m against it. While there is certainly more revenue for a consulting firm in being able to hire all of the staff for the PMO and run the organization, there are far greater risks to the organization (and eventually the consultant), ultimately making it a lose-lose situation.
Before I was a consultant, I spent 17 years as the PMO leader and executive looking to improve project and program delivery, as well as overall governance and portfolio management for the organization I was working in. I know, firsthand, how hard it can be to drive change in an organization and build the kind of PM capability necessary for sustained improvement in project delivery.
Even in organizations where you don’t hit much change resistance, there are still challenges when you are transforming the way an organization functions. If you are going to make an investment in improvement like this, you will want to give that improvement every possible opportunity for success. For many organizations, when you don’t have that capability internally, it can seem appealing to turn it over to a consulting firm that can just “handle it” for you. While that certainly is appealing to let an outside company “handle things” for you, especially when you have so many other priorities, there are some serious risks to the ultimate success of that endeavor that must be considered.
There are some serious risks to the ultimate success of that endeavor that must be considered. Now, is this the scenario 100% of the time? Probably not, but it’s so frequent that it does lead to a lot of the PMO failures that we hear and that we talk about and the core of the problem is how we are treating this investment. That’s right. When we outsource our PMO or when we do our PMO ourselves, we are making an investment, an investment in time, energy, focus resources and of course funding. So we want to make sure we give that investment as much opportunity for success.
So before you consider outsourcing your PMO, I’d like you to think about the ways that you could be creating a lot more risk for that investment than necessary. I’ll also talk to you about what you can do instead of true 100% outsourcing to get your PMO set up and running in a way that will truly make the impact you’re trying to make will truly help you deliver on the organization’s strategy and not drive you absolutely crazy in the process.
Here are some things to consider before outsourcing your PMO…
1. You will lose some control.
When you outsource your PMO, you are giving up some control in areas where you may not want to have your hands tied. Ultimately, you will not be able to control things like staffing changes and how important this effort is for the team running the PMO. When it’s owned and run by internal resources, the organization will have greater control over the priority and resourcing.
So one example might be choosing which staff are hired. Another example might be how they perform their internal functions, how they engage with your rest of your organization, how they’re building relationships, and how they’re developing the platforms, the order of priority for the various projects they want to roll out and ultimately where and how they focus their energy.
Here’s the thing, if you’re so busy doing other things and the PMO is a completely outsourced function, when you’re not looking, they’re going to do what they’re going to do, and that may sound crazy, but I’ve seen it so many times. They’re going to have their process that they follow. They’re going to have the “trust us, we know better” kind of approach which IMPACTS everything.
Don’t worry. We’ll talk about the things you can do differently after we talk about these risks. You need to be looking for when you are bringing in outsiders to run a function that truly belongs inside your organization.
2. The culture.
The culture of your PMO will be one that is based upon the culture and the individual beliefs and value system of everybody that’s in the PMO and if none of those people come from inside your organization, it is very possible that the way they operate, that subculture that they build is not in alignment with the morals, the values and the culture and belief system of your organization. Every organization has a culture, a way that they operate, a way that they engage, a way that they build relationships, a way that work gets done. There’s the formal structure in the informal structure. There’s so many dynamics that go into culture and I truly believe what people say that culture eats strategy for breakfast.
Therefore you can have the best strategy in the world. You can have an outsourced PMO that was completely approved and supported and everyone’s very excited about how it’s going to implement the PMO services and capabilities, how it’s going to help the organization deliver strategy and then you have a culture that’s built in this PMO that is not in alignment with the culture of your organization. It will be a disaster. So consider that as one example of the way that you will lose some control and the organization just won’t feel like it belongs if it doesn’t suit the culture and fit the culture. Here’s another example. Strong relationships will be a lot more difficult to foster. So much of the PMO build out an operation is dependent upon building key relationships with stakeholders that interact with the PMO, not just the senior leadership team. I can remember being inside one organization and I was a top level executive in the organization and we brought in a very large firm that was going to help us build out our capabilities and help us with all the transformation work that we were going to do.
And they spent all of their time building relationships with the C suite. And what I found was that they didn’t invest any time in building relationships with the people that were going to be impacted or influenced by the outcomes of the work we were doing. In fact, they never met with those people at all. They never met with the stakeholders in other parts of the organization. They came in, they got the check signed by the executive, and they worked only with the executives to help build out the services and capabilities and the new processes that were going to be run. So what happened when it came time to start rolling out all of this capability in these services, they didn’t have any relationships with the stakeholders that were impacted. And in fact, it felt very, very ugly to engage with those resources. And the eyes of the stakeholders because they felt like things were just being done to them and they hadn’t been a part of the process at all.
When the resources are external, it can be a lot harder to forge strong bonds among the PMO staff and the internal stakeholders that are going to benefit from the services and capabilities that are going to be delivered.
3. Strong relationships can be more difficult to foster.
So much of the PMO build out and operation is dependent upon building key relationships with all stakeholders that interact with the PMO. When those resources are external, it can be a little harder to forge strong bonds among the PMO staff and the internal stakeholders.
4. It won’t be their idea.
What I mean is it won’t be the idea of the people inside the organization. It’s one thing to leverage consultants to bring in new ideas or help you in articulating the ideas that you would like to execute in the organization in an industry backed kind of way. It’s another thing completely to turn over the ownership of implementing those ideas to a third party. By outsourcing your PMO, you risk alienating all of those that are responsible for interacting with the PMO. It’s someone else’s idea agenda or plan and the people internally won’t necessarily have a sense that they can provide input into the process or that they can call it their own because it’s not.
You will need the internal staff of the organization to ensure your PMO is effective and sustainable by bringing them into the process early and often to develop the approach and participate in the execution, you are positioning the PMO for the best possible success from the start. When you do that, here’s another challenge you have related to relationships and stakeholders.
5. There will always be someone else to blame.
One sure way to prevent driving accountability in an organization is to give it to a consultant. If you want your team to truly embrace the PMO and interact with the organization, build it internally, as a team. You can certainly leverage consultants to support the effort, but the main driving force and those that are truly accountable for the delivery should be well-respected internal staff with the proper authority to deliver the results expected.
Think about it. Even if at the top level your PMO leader is a consultant, they still don’t have the same authority or relationships or ability to truly be accountable to the organization for the IMPACT the PMO was making. Here’s another risk that comes up.
6. You could have an us and them mentality.
When you outsource the creation or operation of your PMO to an outside vendor, you risk the organization treating it as an “outside” thing that they don’t really have to be a part of. Some service organizations can be outsourced with some good success, but a PMO is so integral to the execution of the business strategy of the organization that outsourcing it is putting your company’s future in the hands of an outsider. Once you do so, you position those in the organization to treat the organization as a separate entity that they can distance themselves from, therefore setting the PMO up for extinction from the start.
7. You aren’t building capability internally.
You may have heard of the saying, “Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime.” I believe very strongly in teaching the people in organizations how to fish for themselves instead of doing the fishing for them. In fact, I insist on it in every consulting engagement we do. Every good relationship will someday come to an end. Meaning, that for many different reasons, some of which may be the above, you may want to take over the management of your PMO. If you have not invested in building that capability internally, you will essentially have to start over.
Remember, a good half of PMOs fail and this is one of the reasons why if you have not invested in building that capability internally, you’re essentially having to start over and here’s a couple more things to consider before we talk about what you can do, the leverage outside consultants to help you along your journey.
8. You are very likely to get a cookie cutter approach.
You’re very likely to get a cookie cutter approach. I have seen this time and time again and I’ll dive deeper into this and the upcoming episode where I talk about what to look for when hiring a consultant, but for now, just think about this. If this is what this company does and they go into organization after organization after organization and they’ve got their process and their framework, you’ve got to make sure that they aren’t applying a cookie cutter approach to the actual execution and delivery.
It’s one thing to have a framework. In fact, my students and my consulting clients go through the same framework to help them build and run a PMO to help them evolve their PMO to continue to meet the shifting business needs. It’s my IMPACT Engine PMO training program and framework and it works every time. However, what I don’t prescribe in there is a cookie cutter approach to project delivery. For example, I don’t say all projects must look like this. All projects must have these 55 templates that you need to fill out. All projects follow this waterfall methodology or this agile methodology. What I help you build is the PMO that fits the needs of the organization. In fact, the whole second module is about assessing the organization for IMPACT opportunities and building what suits that organization. When you have an outsourced PMO, you are very likely going to get a cookie cutter approach to addressing the problem.
Now, I’m not saying this happens 100% of the time, but I have seen multiple consulting companies come in and give me the same cookie cutter approach that they gave the last five clients and you know what? It often didn’t work, and by the time we ended up customizing it or changing it to fit our needs, we wasted a lot more time than if we had just focused our energy on assessing the organization for where we should be focusing our important time and energy and solving those business problems. You see, they might say, well, first you have to build a project management methodology. Second, you have to put a template set in place. Third, you have to create a, an implement a tool. Fourth, you have to, you see the idea that’s not the way it should be done every time. That’s why it’s so important to really know your organization’s business needs and really understand where the opportunities are to create value and create value quickly as opposed to spending a year or more.
And yes, that’s what a lot of PMOs take to get set up a year or more, frankly used to be two years, but nobody has the patience for that anymore, so they jam it all into one year and it’s still the same cookie cutter approach. Instead of saying, you know what, right now we can survive just fine with spreadsheets. We got to figure out what the heck we’re trying to solve here, what business problem we’re creating a solution for. In fact, most of the organizations that I’ve gone in and worked with, I have told them, if you start with a tool, I do not want to be in business with you and if you start with templates and if you start with grading a whole bunch of methodology, we’re off track already because first we’ve got to really peel back the layers and understand where the pain points are and how you can help build credibility for your PMO and for yourself as a leader by addressing those pain points first.
Then you can have a conversation around how are we going to, then you do evolve the organization to meet the shifting needs or meet additional needs and we talked a lot about this when we went through my techniques for building and running and sustaining a PMO in episodes 19 through 24 so if you want to dive deep on that on the right way to do it, all of that is there for you.
9. It’s a lot more likely to be an administrative function than a true partner to the organization.
Think about it. They’re either applying this cookie cutter approach or they are outsourced, meaning the source of all of this energy and building and running of the PMO is something someone else is doing. Think about it physically and mentally. We are seeing that organization as something that’s separate from us and if you’re lucky you aren’t missing the opportunity to build the relationships and all that.
Somebody’s still doing it, but the actual functioning becomes very administrative. Administrative PMO is never truly going to earn a seat at that table because you will always be seen as box checkers. You will always be seen as overhead. You will always be seen as a cost center.
In fact, I heard something recently that I’m going to need to address on an upcoming episode because it hit me so hard and not in a good way. Someone said that the PMO is not a profit center. It is a charity and I disagree with that whole heartedly. The PMO is not a charity. The PMO can absolutely contribute to the bottom line and sure as heck should be if it wants to stay around the PMO absolutely should be responsible for contributing to how the organization makes an impact and we as PMO leaders need to make sure that we know how to show that impact, measure that impact and contribute to the bottom line.
We absolutely should be focused on return on investment and how we’re helping to drive the strategy delivery in the organization and we absolutely should get credit for that but we don’t get credit for it if we aren’t measuring or if we aren’t looking for it. Again, we’ll talk about that on another upcoming episode, but just think about that. We’re not a charity, we’re not administrative overhead. We are responsible for driving value, driving return on investment for whatever that investment is and whatever that return looks like for the organization. We need to be contributing to the bottom line. If we want to be a part of the PMO of the future where PMOs are going is not administrative overhead. The entire agile movement slaps the administrative PMO in the face and it should because if we are a box checking organization, we are not going to be a part of the PMOs of the future.
The PMOs of the future are much more nimble and flexible and yes, even agile in helping the organization achieve its goals and helping to accelerate performance and helping to drive greater delivery, helping to achieve a higher return on investment. So we absolutely do not want to think of ourselves as an administrative function, nor do we want the PMO to be set up as one and if you have an outsourced PMO, how are they going to be able to build those relationships? How are they going to truly be able to get a seat at that table and help drive the decisions for the organization if they’re just an outsourced function? One final thought on all this before, we consider ways that we can make consultants and outsourcing work and it’s probably the most important of all.
Let’s say you put a solid risk management plan in place to address every single one of these issues related to the relationship building, the administrative overhead, the us and them mentality, looking for someone else to blame it, not being their idea, culture challenges, not having control.
All of the things that we’ve talked about so far. Let’s say you address all of that and your outsourced PMO is at least somewhat or even mostly successful and then the funding dries up and then it’s time for the consultants to leave and then what happens? Your outsourced PMO can fall apart completely because you didn’t take the time to build that capability internally.
In fact, if they built those relationships, those relationships were built between the stakeholders in your organization and these consultants that are leaving. If you took time to gain that credibility, the credibility is with the consultants that are leaving. If they conquered the us and them that us and them was conquered between the consultants that are leaving and your stakeholders, the control was with that consultant, not with you. So all of the risks that we’ve talked about thus far, if you are not careful, if you don’t watch those, if you don’t build the capabilities internally, if you don’t build those strong relationships with people that are going to be around the people that are actual employees of the organization, if you don’t make it the idea of the stakeholders, it shouldn’t even be the PMO leaders idea.
Side note: In-sourced or outsourced. It’s not even supposed to be the PMO that has the idea. It comes from the stakeholder pain points and the needs the stakeholders have. So all of these things need to be watched very carefully and think about it when those consultants leave, if everything came from them, if everything was under their authority, if they were making the decisions, if they were building the relationships, if they were driving the change, it is going to be like starting over. If you have to then fill all the gaps once they leave. That’s why you can build it with them and you can build the relationships with the stakeholders in the organization directly and then just leverage the consultant for the expertise and the knowledge and the support and the manpower to execute on your internal vision, not the vision of those outsourced consultants.
From the consultants perspective…
For all of my consultants listening, think about it this way. Those risks that I just talked about, there is just a sampling of the scenarios that could lead to overall PMO failure, which means you as the consultant fails to if the PMO isn’t effectively delivering the benefits as expected that are worth the investment that’s being made, the organization is not sustainable, the client is not getting what they bargained for. The client is not getting their return on investment. This can lead to payments not being made, reputations being ruined and loss of future business. When the client wins, the consultant wins. And I know this because my consulting business has been referrals and reputation. And here’s the cool thing. If you do this right, if you get the big win for the client, not only do you get so many referrals from that business because you’ve created a raving fan with that organization, but they will find other ways to work with you because you’re becoming a trusted partner and when you become a trusted partner by solving that problem, they’re looking for other ways to call on you in the future.
In fact, I’ve had executives move from one organization to the next, and then when they get to that next organization, they’re looking for ways to bring me in. They’re looking for opportunities to engage me because they want that same high IMPACT outcome that made them look so good in the last organization. Okay, so what can consultants do and how can you leverage consultants to be a huge help to you? When you are building and running a PMO? Can you effectively leverage consultants to help you set up or even rescue your PMO? Absolutely. In fact, not only can you, in some cases, you should be leveraging a consulting firm to help you. However, I would highly encourage you to build a partnership with a consulting firm, maintaining ultimate ownership and a hands on interest and investment in the PMO development and operation to ensure the longterm success of the PMO.
This is ultimately better for you and for the consulting firm because the PMO is being set up for success from the start. Everyone wins.
PMO Consultants can help, here’s how
Let’s look at a few areas where you can leverage a consulting firm to help you without 100% outsourcing.
Providing external industry perspective.
They can help you by providing external industry perspective. They can tell you what other organizations are doing. They can tell you what’s working. They can give you ideas, look out for that cookie cutter, but they can actually give you some perspective on what others are doing.
Helping you establish the best PMO framework and services for your organization.
They can help you establish the PMO framework and services for your organization that best fits your organization.
Interviewing internal stakeholders and assessing your current environment.
One really great way to use consultants, depending on the culture of your organization, is to interview internal stakeholders and help you with assessing your current environment. Sometimes your stakeholders will tell everything to a consultant and see things they might not say to you.
Now, this isn’t always the case and so, so much of this depends on the culture of the organization, but that can absolutely be useful if you know you’re in an organization where they just don’t really tell you to your face what they’re thinking. You know those organizations, you might even work in one of those.
Defining best practices and approaches that have been proven in your type of organization.
They can help you by defining best practices and approaches that have been proven in your type of organization or that are proven to work in certain scenarios, but it’s gotta be based on the pain points you’re having. It can’t just be, “first we do this, then we do this, then we do this from a process templates, tools kind of perspective.” It’s got to really be based on here’s the pain point we’ve identified in our interviewing of stakeholders, in our assessing the current environment in us talking about the pains we’re experiencing and here is a solution that has worked for that insider tip here.
Make sure that you ask them for an example of where they’ve done this before and have them talk about the pain that company was experiencing. Have them be very specific about that pain and if they’re not say, “tell me more.” Hear the story of the pain that they helped somebody solve using exactly what they’re recommending for you. You want to be listening for that because that helps you understand if what they’re recommending actually works and if they truly have experience implementing that thing.
Education and resources to help you build your own capability internally.
They can also provide education and resources that’ll help you build your own capability internally. For example, in my consulting practice, one part of the program is that they have to go through my IMPACT Engine signature course because that PMO course takes you through so many of the fundamentals, the foundation that you need to learn and that you need to understand and everybody there’s a part of the PMO takes that program and then we’re able to accelerate our actual impact and our delivery of services and capabilities because everyone’s on the same page and everyone knows exactly what to expect and they have this whole shift in mindset about what the PMO can do and about will, how they’re going to serve the organization.
And I’m telling you this program is the favorite of executives because the executives are thinking and often saying, finally someone that’s speaking my language, somebody that’s helping me solve real business problems as opposed to project problems. That’s a really good way to leverage an outsourced consulting organization to help you with education and resources to save you time and energy in having to figure it out the hard way. And what about all those risks that we talked about when it comes to outsourcing the PMO?
Don’t lose control, stay engaged in the process with your PMO, own the development and delivery of the PMO and one really important way to do that is to use internal resources. Now you can absolutely bring in staff to augment the PMO, but you want to make sure that you have someone or multiple people that are actually in the organization that know the organization, that have relationships in the organization to help you build that PMO.
Many of the times that I was hired as a PMO leader inside organizations, I was an outsider brought in as an employee and so I still had to do the work to build the relationships and to understand the culture and figure out those pain points. But I was an employee and I was treated like an employee. I wasn’t a consultant, I wasn’t a contractor, I was there as a part of them. I became one of them and I focused a lot of my energy on building those strong relationships and instead of outsourcing the, or even outsourcing the team, we pulled team members from different parts of the organization that were doing PMO or project management, like activities. So for example, if there were six departments in the organization and I was building an enterprise PMO, we actually got somebody from each department and brought them into the PMO.
And the cool part of that is that everybody now had a stake in the outcome. Everybody had to give a little to participate in creating a better PMO solution for the entire enterprise. And there were so many advantages to the fact that each one of those people that were pulled from other parts of the organization had relationships in that part of the organization. So instead of having a bunch of outsource people that knew nothing about the organization, we pulled in one person from each department, they had the relationships, they were somebody that had reputation for being a bridge builder, for being somebody that could help make things happen. That was an influencer. And so the PMO had instant credibility because we had an influencer and somebody with relationships already in the PMO that could work with each of those departments. So when we were doing reach out, when we were trying to sit down and have conversations with them about the pain points, one, that person actually knew a thing or two about the pain points they were experiencing, but also had the relationships and knew how to get on the calendars of the people in that part of the organization.
They were so much more effective helping us move the needle and helping us get on the calendars, have the meetings, have the right conversations, and ultimately implement the capabilities. So an alternative to outsourcing is in sourcing and bringing those people from other parts of your organization into the PMO so that everybody has a stake in the game. For example, if the finance department gives up one of their resources to come be a part of the PMO, then they’re going to be very interested and invested in making sure that that PMO is successful. They’re also going to have an inside look at what’s going on. And you want that. One of the biggest reasons that PMOs fail is that they’re treated even if they are built with internal staff as outsourced functions. If you treat it like it’s an outsource function, meaning there’s no relationship building, they’re not a part of the culture, they’re not having the right conversations with stakeholders, not bringing stakeholders through the process with them, then you’re going to have a just as difficult time building a PMO that actually is embraced by the organization.
So everything you do needs to be about finding ways to continue to foster those relationships and build credibility by solving those business problems quickly. So you’ve got to be engaged, you’ve got to have your finger on the pulse of what’s going on in the organization. So if you do bring in resources, if you do look for ways to engage third parties to help you with the process, here’s what I’d recommend. Don’t have it be the PMO leader themselves. Make the PMO leader a strategic hire for your organization and a full time employee so that it’s about us, not us and them. Then if you can’t borrow resources permanently from other parts of the organization, you could treat it as a job rotation. You could make it a one year job rotation that’s all about career development, skills development for that individual. Or if you can’t even do that and you’ve got to bring people from the outside, then they should be reporting to someone that is an employee, that PMO leader that you’ve either hired as a strategic hire or that you have pulled into this role from another part of the organization.
And we’ll talk a lot about staffing and hiring in some future episodes that I’m doing, but just consider this, the PMO leader does not actually have to be an expert at project management or building or running PMOs. It’s helpful if they built and run PMOs before, but if you don’t have anyone like that in your organization, what’s most important is that they know the culture, they know how to solve business problems, they understand relationships and they’re really good at hiring because then you can bring in outside consultants to work for that PMO leader to help with the knowledge gaps. So that’s a great place to bring in PMO resources if you have to bring them in from the outside is those areas we talked about that external experience, that training, that knowledge, having frameworks, having other resources that you can leverage. All of that can come in but should always come in to an internal employee that’s leading the PMO and has ultimate accountability for the PMO and when you avoid those risks and when you find ways to really truly make this a PMO that belongs to and is of your organization.
By building those partnerships in the organization by making sure that it is treated as an internal function, we avoid all of that “us and them” conversation. We avoid all of that. We don’t have to engage cause that’s you guys over there that we’re not a part of. You can really make a big impact with the PMO.