As organisations increasingly adopt Agile to deliver projects within individual business units, what role does governance have to play?
As organisations adopt Agile environments as part of their project delivery capability, the way organisations are adopting it is changing how projects are delivered. Some organisations are going all-out and becoming exclusive domains of Agile, while others are being more selective about Agile techniques that suit the business and blending them into the existing waterfall or iterative methodologies.
As Agile is increasingly adopted in varying degrees, there is an unforeseen impact on the traditional PMO, in particular, the concept of centralised governance and portfolio management.
Which makes us ask the question: Is the concept of a PMO still valid and what are the unintended consequences of Agile for centralised governance and portfolio management disciplines?
Why has Agile become part of the norm?
Agile as a project methodology began some twenty years ago, aimed at providing a fit-for-purpose methodology for rapid software development. Agile looks to delivery against requirements in increments or sprints. The bigger picture of what will be delivered at the end of a project is not always well-defined and the project outcomes unfold in bursts.
Agile projects are more self-contained than traditional waterfall projects in the sense that the people involved (both business and project staff), the governance and, critically, the funding is often quarantined from the rest of the delivery portfolio – and the team is left to get on with the job.
The value-add of a highly functioning PMO
There are many types of PMOs: enterprise, program, technology and more. An organisation can deploy the PMO it needs to focus on the required value proposition, from the gatekeepers of methodology, tools and templates to centralised reporting functions.
One of the primary value-adds of a highly functioning PMO is the concept of centralised governance and portfolio management. This is a central body that assists the organisation with project prioritisation, deciding where the money will be spent (i.e. which projects) and then tracking the progress of projects through their lifecycle via portfolio management.
This enables better resource levelling, risk management and dependency management amongst other disciplines. It also helps to ensure that the executive knows what they are getting for their money.
It is the final two PMO disciplines – centralised governance for project spend and portfolio management – that are most challenged in the Agile world.
The funding model for Agile
Typically, to get a business case approved and funding allocated a project’s outcome and benefits need to be stated upfront, then validated against the strategy and prioritised against other competing business cases. The decision about which projects move ahead and when is made for the overall betterment of the business and is traditionally facilitated and managed by the PMO.
In an Agile environment, the PMO function of regular, centralised planning to select the portfolio of projects to execute is less necessary.
Funds are often split and allocated directly to business units, such as marketing and sales, to decide which projects they will execute and when. The need for competing business cases is no longer needed as the funding choices are being made locally within the business units and the traditional role of the PMO is not as essential.
One of the unintended consequences is as control of the money moves further away from the centralised PMO, the organisation has less insight into exactly how the money is being spent.
Is centralised portfolio management still needed?
As business units take over which projects will be executed and when they will be executed, the ability to generate a centralised portfolio view of the project activity and status is eroded.
The portfolio management function has shifted to business units to perform with varying degrees of success. As the project decision-making and reporting is more decentralised in an Agile environment, the traditional PMO function of being able to report and control the projects at a portfolio level becomes seriously limited or potentially is no longer required.
The move away from centralised portfolio management makes it difficult to develop a point-in-time, accurate and value-add portfolio view across the entire organisation of the in-flight project status and activity.
The potential dark side of Agile
Organisations need to seriously consider making Agile a part of how it delivers projects. The rapid pace of change – both technological and in terms of consumer sentiment – means that the ability to fail and fail fast (a guiding Agile principle) when delivering projects, increase speed to market and implement business change will only get more compelling. The executive knows and understands its implications and are agreeing to Agile as an approach for that reason.
But there is a potential downside in the rush to be all-things-Agile and the resulting erosion of the traditional value-add functions of a PMO, such as:
- Losing the ability to control a centralised funding pool that ensures the right projects are getting funded
- The ability to display and track an overall portfolio view of project activity
There remain many challenges around governance in Agile and these are considerations that manifest in a very real way for the executive. The ability to find out what money is being or has been spent on and the status of the project are just two questions that a pre-Agile PMO has always been able to answer.
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