A PMO costs! It is obvious; there is the money to staff and to run the PMO together with any incurred operational expenses and systems investments and, when the PMO interfaces with other parts of the organisation – as it should, there is associated cost to that time and effort. Of course the belief from those that sponsor a PMO is that the money and time invested will be more than saved by delivering more successful projects. And that is the primary purpose of any PMO, to deliver healthier and more successful projects appropriate to the business strategy of the organisation. Job done!
PMOs are not traditionally a profit centre and as such they don’t generate revenue themselves, although it can be strongly argued that they do facilitate making money through the delivery of those more successful projects.
But there may come a time when there is pressure for the PMO to contribute more than that through:
- Partial cost recovery of the PMO
- Cost neutralization of the PMO
- Profit contribution from PMO
If this moment arrives then you need to be very clear as to ‘why’ you are doing this (or being asked to do this)? If the answer is ‘The PMO has been so successful we want to explore extending its remit to that of potential revenue generation’ then that is a good reason. It offers the opportunity to calmly and objectively consider new ways that the PMO can work in order to achieve these new targets. It could be a very positive extension of the remit of the PMO and new stimulating challenges for the PMO team.
But if the reason is more along the lines of ‘The PMO is too expensive and we need to save costs somehow so we either cut the budget or the PMO makes us some money’ then I would suggest that you are on shaky ground immediately. The PMO will be placed under survival pressures and is unlikely to conduct itself well as it strives to make money, save money, and just keep going. This is an extremely negative and threatening situation for the PMO team.
The right time to ask the question of the PMO, ‘can you now make money?’ and it comes with the caveat ‘without impacting negatively on your current core work’ is when the PMO is:
- Accepted by the organisation
- Is stable in its structure
- Is mature in the services it offers
- Is connected to the business strategy
Tick those off and it is OK to consider the next move. Your PMO can plan its extension of activities in to the money generating world safe in the knowledge that it is on a strong solid platform and it is embedded in to the organisation. If you can’t tick all of these off then the chances are you will end up ‘fighting on two fronts’, that is trying to build the PMO internally whilst stretching to win profitable business, and the chances are in this situation is that you will fail at both.
Let’s now assume that you wish to monetise your PMO for all of the right reasons and that you are in the best possible position to do this.
The best advice I can give here is the old advice of ‘KIS(S)’ – Keep it Simple (you know what the extra ‘S’ is for I am sure).
What is your PMO good at? What have you developed, delivered, proven, packaged and can now offer without any additional investment or risk?
And what can be offered in a discrete way? The risk to any PMO of heading in the direction of money is that the ‘customer is king’ and this means that in any situation of conflict the money-generating customer of the PMO will win out over the budget supporting sponsor of the PMO. So you need to avoid situations where the PMO can get dragged in to long engagements with ‘customers’ that distract from the core PMO activities.
What about Health Checks or Retrospectives/Lessons Learned services? These are discrete, potentially high value but (I hope in your PMO) well proven packages of services that can be offered to external customers. Consider what else fits the bill:
- Already proven practice
- Discrete in length of engagement
- Low risk
- High value
- Offering some skill or experience that the ‘customer’ lacks
Just take a look at your ‘menu’ of PMO service offerings and consider each one for potential revenue generation (if you don’t have a ‘menu’ then ask yourself are you really ready for this move?). Once you have done this only focus on one or two, don’t stretch yourself, but start easy. The organisation has to accept that the journey of the PMO from budget overhead to profit contribution is not an overnight one.
And finally where are these customers coming from?
If we are talking external customers to your organisation then anything that the PMO offers is going to have to align to and integrate with the existing sales and marketing and support channels.
If we are talking about costed services back in to the organisation internally then that has to be carefully planned and communicated. Other departments need to understand this plan and they need to build this in to future budgets. The worst situation a PMO can find itself in is to lose ‘work’ because they now charge for PM training, or project reviews etc. As soon as the PMO becomes disconnected to the project business it loses any value it might have.
A PMO costs! And the first task of a new PMO is to prove the value of that investment through delivering (and tracking) improved project success. A second task it can take on is to offer revenue flow back in to the business, and that is quite possible but takes planning.