Project Portfolio Management (PPM) was initially an approach aimed at helping IT departments deliver results in a more efficient and effective way.
Over the years, companies and senior managers realized that the PPM methodology could be applied more widely throughout the organization. Since then, PPM methodology has changed and today is able to support companies in different areas and departments (R&D, M&A, and many others).
To get the most out of PPM, some companies have used this methodology to manage their enterprise portfolio. In fact, these companies have created their own Enterprise Portfolio Management Offices (EPMOs) and developed processes and best practices to achieve success and obtain better strategy alignment and business results.
From traditional PMO to EPMO
A traditional Project Management Office (PMO) is a group or office within a business or company that defines and maintains standards for project management across an organization. The main goal of a PMO is to ensure standards and best practices. At the same time, a PMO does not assume a lead role in strategic goal alignment.
There are companies today that feel the necessity for a business function in order to get through challenges faced by traditional PMOs, such as resource allocations and resource management across the organization.
For this reason, these companies, especially the ones that have entities in multiple countries or numerous business units, are creating such a structure in order to become more effective and obtain better results.
These organizations are establishing a business function that is named Enterprise Portfolio Management Office (EPMO).
An EPMO is a centralized business function that operates at a strategic level along with senior managers. An EPMO has the same responsibilities as a traditional PMO, and it also provides enterprise-wide support to align all project, program, and portfolio activities with company strategic objectives.
It is important to say that before moving from a traditional PMO to an EPMO, it is useful to assess the company structure, cultural barriers, and factors that could influence the success of this change.
The importance of EPMOs
An EPMO uses the PPM approach at a strategic level in order to obtain better investment strategy alignment and business outcomes.
Companies that establish an EPMO can align the knowledge, skills, and abilities of the EPMO staff to support the strategic service focus. This means that there is a move from a centralized model to a service-based model.
EPMOs use PPM tools to define enterprise-wide standards and reporting, allowing senior managers to control activities and initiatives that are critical for the success of the company.
An EPMO is very important for companies that have entities in multiple countries. In fact, it provides coordination among multinational PMOs that are geographically spread out, improving efficiency and performance.
Moreover, to improve cooperation among the projects running under different business functions, all PMOs of a company such as sales PMO, IT PMO, finance PMO, marketing PMO usually report to the EPMO.
Keep in mind
In today’s uncertain business environment, organizations try to do more with less. They focus on cost-cutting and better resource utilization. In this context, EPMO can represent the solution to companies’ struggles.
In addition, companies that have entities in multiple countries can use a centralized PMO (EPMO) at the enterprise level in order to control all activities and projects undertaken in the organization.
As traditional PMOs operate at the tactical and operational level in order to do things right, EPMOs help companies achieve their strategic goals and objectives.
Establishing an EPMO can give many benefits to a company. At the same time, before moving from a traditional PMO to an EPMO, it is important to assess the company structure, cultural barriers, and all the elements that could influence the success of this change.
Francesco Pecoraro, PMP, PSM, PSPO, SSYB, SSGB, SSBB, CL, CC is the founder of francescopecoraro.com where he shares useful and practical information about project management, program management, project portfolio management, and agile methodology. Francesco has extensive experience as a project, program and portfolio manager, project management officer (PMO), digital transformation and strategic consultant. He is also considered a communication, public speaking, and leadership expert. Francesco writes about project methodologies, program, and portfolio management.