Introduction

How does a large organization at a mature stage of growth preserve the best of its entrepreneurial spirit in an increasingly complex, volatile, and uncertain business environment? One way is for strategy to be set at the top but enacted bottom-up.  Front-line teams closest to the external business environment are empowered to collaborate through lean processes that prevent complexity from degrading into chaos while maximizing freedom of action. At Microsoft, the Customer Service and Support (CSS) division has made this link between Strategy Management and customer-facing teams by transforming its portfolio management capability.  This case study will describe several phases of this transformation, including how this transformation aligns with OPM3, and how OPM3 is providing guidance for ongoing improvement.

Background

Microsoft’s Customer Service and Support (CSS) division is a global organization focused on helping customers and partners maximize the use of their technology investments. Serving millions of customers around the globe, in more than forty languages and 75 locations, the organization supports all customer segments from consumer, developer, and IT Pros to partners and the enterprise. Through direct contact with customers and partners, CSS is a core driver of the Customer Partner Experience (CPE) at Microsoft, and continuously evolves policies and processes based on feedback received from customers and partners.

Figure 1:  Customer Service and Support Model

On an ongoing basis, CSS provides service and support for all of Microsoft’s products, using the model shown in Figure 1.  Using this model, CSS is constantly seeking to improve the overall service and support experience for the customer, by improving their support delivery or even through driving improvements to the product itself to avoid the need for support altogether.  Because of this challenge, CSS needs to continuously drive improvements throughout the entire system of support, including close interaction with the product groups to improve product usability. 

As CSS evolved a more holistic view of support their mission and goals were refined.  They coalesce around the three goal areas of Customer Partner Experience (CPE), fiscal efficiencies, and employee satisfaction, and became more strategic about improving these.

With these shared goals, CSS has needed to grow into a more global organization, and internal initiatives have become larger, more complex, and of greater importance to the organization and Microsoft as a whole.  In the spirit of continuous improvement, CSS has matured the quality and quantity of project and portfolio management processes to meet this challenge and drive significant business value for Microsoft.

One important note:  The Microsoft culture is entrepreneurial and constantly changing, which poses unique challenges and opportunities when institutionalizing and maintaining processes.  Any process improvement must serve a direct business goal, and the need for it must be clear to the business.  At the same time, the business can absorb rapid change, if the business case for it is evident and well-understood.   While averse to adopting processes for the sake of processes, Microsoft pushes accountability and decision-making to the edges of the organizational structure, which focuses process capability on empowering individuals and teams to act in the interests of the company within a flat organization structure. Microsoft has a very strong model of commitment based performance that carries throughout the organization.

Commitments are set at the organization level and the individual level for everyone in the organization at annual and midyear reviews, and meeting these commitments is critical to success.  Commitments ensure that the organization moves forward together, towards larger goals.  These cultural norms and organizational structure were key drivers for the approach that was taken in this project. 

The Journey

As described above, CSS set out to improve its ability to execute on business commitments, and began a journey that transformed the way it performed strategic planning, portfolio management and project management. Ultimately, this led to an understanding of the OPM3 framework, and to a better understanding of how this journey aligned to this framework.

This journey had a number of phases and cycles, shown in Figure 2 below, and described in greater detail below:

Figure 2:  Major Phases and Milestones in CSS OPM3 journey

At the onset of this improvement cycle, CSS created a divisional PMO to support high impact, strategic projects for the vice president of CSS and business segment leaders.   The PMO undertook four initiatives:

• Centralize and grow a team of senior full-time project manager resources who could be successful in Microsoft’s decentralized environment;
• Develop standard project management tools and training, in order to standardize delivery practices and leverage these across CSS including outside of the PMO;
• Create a project intake and review process with high level criteria to ensure PMO resources where working on the right projects
• Manage the PMO Project Inventory and Project Statuses

These improvements in project management were welcomed by the organization. By the end of the first year a great many projects had been successfully delivered, project benefits were being realized, and the PMO project manager resources became almost too popular.  There was very high demand for limited resources, and it became critical to develop a prioritization model to add to the intake and review process to determine which projects would receive the resources. Without this process, and given Microsoft’s entrepreneurial culture, people became very creative in securing these resources.  For example, in order to keep a high performing project manager assigned to their team, a number of managers began to create “extensions” to their projects – even though the extension actually had nothing to do with the original project!   When this failed, typical organizational politics were tried, with predictable chaotic results and an inability to ensure that maximum business value could be obtained through the current allocation of PMO resources.

Initially, in the spirit of lean process and low overhead, a “simple model” was put into place for managing a portfolio of divisional projects, and making decisions about projects.  High level information was collected about the portfolio and provided to the governance group.  However, the deficiencies in this model quickly became clear:

• Because there were only high level details, with no supporting information, the data could have been stronger;
• The lack of standards and data definitions meant that many of the categories used to describe the portfolio were insufficient to support decision-making;
• The executive team found that the portfolio as described didn’t give them the level of information necessary to help them make the business decisions they needed to make

This first phase, implementing the “simple model,” served as a foundation and a learning experience, and led to the approval of a pilot to develop a more effective approach that addressed these deficiencies, setting the stage for a virtuous cycle of improvements in project management and portfolio management. To address the shortfalls in the simple model the PMO agreed that they would need to collect summary level data, but it had to be supported by details.  The initial approach of only collecting summary level data had not been sufficient, and had created credibility issues.  In addition, when more details were needed about a particular project to make a decision, this created a delay while the data was collected.  They realized that they would need to collect and maintain the details about all proposals and projects, and then would need the ability to summarize and roll up this data into relevant summaries and traffic lights. 

In order to make this possible, two things were needed:   

• Standards and processes needed to be defined and enforced for the collection of the project details, so that data could be collected consistently across projects. 
• They would need to develop a technical solution for the capture of the data, reporting, and to manage these emerging standards and processes

For the Pilot solution, the PMO was able to use a new version of the Microsoft EPM suite, which included Microsoft Office Project Portfolio Server 2007.  This tool was developed to address these challenges exactly and brought some additional thinking to the table as the tool’s capabilities were explored.  The PMO began to work with groups across CSS to develop these standards, model it in the pilot, and develop the solution.
In addition, soon after this proof of concept was approved a new Strategy Management Group was formed and the PMO became part of this group.  This created an opportunity to further extend and improve the pilot, modeling strategic definition and alignment for the portfolio that now extended across CSS and not just within the PMO.  The following section describes the improvements that were undertaken in the next phases.

Key areas for improvement identified

The newly formed Strategy Management Group and the CSS Leadership Team refined the goals and strategies and set commitments for the organization. They acknowledged that they had to tie the portfolio to business commitments, and manage those.  Given the strong Microsoft culture of managing business commitments, every project needs to directly support a business commitment, or it will quickly become abandoned.  It was critical to make this business commitment relationship explicit and to document it in the portfolio details.  The CSS PMO did this in a number of ways, but one outcome was the development of a detailed framework for representing project impacts on the organizational goals and projected benefits.  An example of part of this capture is shown below:

Figure 3:  Example of benefits collected for each project

Next, leadership realized that they would need to manage the portfolio, not just the projects.  While the individual business leaders were responsible for driving successful delivery of their individual projects, given the number of global projects, the interdependencies, and the breadth of change management needed for these larger initiatives, this in itself was no longer sufficient to ensure success across the organization.  Microsoft CSS executives and the PMO realized that they would need to manage the portfolio collectively, understand the interdependencies, and be able to confidently predict when benefits would be achieved. This created momentum for the continued standardization of processes.

Third, the PMO identified that they would need to put governance in place for the portfolio, at the right level.  In order to be meaningful, this portfolio would need to be reviewed by executive managers regularly and used to make decisions about project priorities.  Managers needed to realize that this was happening and receive feedback that reinforced this governance.  The PMO made sure that there was early communication to the project leads so that they could update their portfolio data.  However, the best motivator for them and their teams came at the first meeting.  As the portfolio was reviewed by the executive team, many e-mails were sent during the meeting with additional requests for data, and validation of the data that was there.  Based on this reinforcement, there was a significant effort prior to the following meetings to ensure that their data was solid.

Portfolio success means business success!

The greatest value of this solution became more apparent over the next year.  As described previously, project benefits were collected with considerable details.  Because these benefits were directly tied to the business commitment for the management team, they were very interested in ensuring that these benefits were realized in the projected timeframe.  A process was put in place for the managers and their teams to update the projected benefits for the projects as they completed analysis and planning.  These benefits rolled up into the overall portfolio benefits, which also translated into a complete picture of the expected business commitments that could be met.  These portfolio benefits were reviewed quarterly in the Executive Team meetings, and the results became intensely tracked. 

At the first meeting after the portfolio was approved, there were a number of updates to the project benefits, and it was clear that several of the proposed benefits had been adjusted downward as measurements and processes improved.  This trend continued throughout the next quarterly meeting, as the executives and their teams strove to ensure that the benefits here were achievable in the projected timeframe.  The downward trend in benefit projections is shown in Figure 4 below, for the first two reviews (the blue column represents the projected benefits for the portfolio; the yellow line represents the business targets that had been set). By the middle of the third quarter it became clear that the business unit was in critical danger of not meeting their projections (and thus their commitments) for the following year.  While this was a major concern, it was soon enough to adjust to keep their commitments on track – which is exactly what they did.  Working quickly together and with their teams, additional projects were identified that could provide the value needed, and projects that had become uncertain were halted.  The portfolio was adjusted, and the projected benefits began to increase.  Ultimately, the benefit projections actually exceeded the target, and the business was kept on track. 

OPM3 Insights

As CSS began to share with other groups their success and lessons learned, they gained even greater insights into their own journey.  One insight came by learning more about OPM3 and seeing how their story aligned to the OPM3 model and framework.  CSS decided to perform an OPM3 assessment to better understand how their current maturity mapped to this framework, and to gain additional insights into areas for growth.   As of the writing of this case an OPM3 benchmark assessment for Portfolio Management has been performed (Project Management and Program Management have not yet been assessed).  This assessment has validated improvements to date and also identified areas of opportunities for improving some current processes and adopting the few processes that have not been adopted. The summary level results from the OPM3 assessment were:

• CSS has begun to perform some but not all Portfolio Management processes recommended by the PMI OPM3 Standard.
• Opportunities for CSS include formalizing Process Governance to a) determine whether the remaining Portfolio Management processes recommended by OPM3 should be adopted, b) articulate policies to distinguish which processes are mandatory and the acceptable exceptions to compliance, and c) formalize the collection of metrics on these processes to cause the intended behavior and enable analytics for process improvement.
• In addition to process capabilities, CSS has begun to implement many best practices pertaining to cultivating the organizational environment and culture for successful Portfolio Management. These practices are called “Organizational Enablers” in OPM3.

In our conclusion we will discuss how this assessment and the overall case study are being used to set future direction with our leadership team.  This completes the discussion of the journey, and the next section will provide additional analysis of the overall approach and lessons learned from our study. To read the next section, log into http://www.gantthead.com/content/white-papers/259359.cfm. Registration is free.

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