Only at 7-Eleven-- a PMO case study
Steve Barton, 7-Eleven, Inc.
In 2004, 7-Eleven, Inc. created a Project Management Office (PMO), which continues today and with remarkable success. The PMO was initiated in the IT area of 7-Eleven, because over 50% of the IT projects were failing to meet the schedule or budget objectives. Using and evangelizing mission statements, PMO goals, a PMO tag line, PMO objectives, best practices, and metrics were integral contributors to the success of the PMO.
The PMO’s establishment and associated key leaders were all about value creation—business-driven processes. The PMO was not about textbook answers, although in-depth research and reading were done. Goals included scalability, service excellence, process expertise; PMO creators became change agents and business innovators. In addition to the tactical aspects of building a successful PMO, the organization had to create a strategic culture that supported the PMO and its stakeholders. The success of the IT PMO was so remarkable that 7-Eleven, Inc. decided to roll out the process across the entire enterprise.
This paper reveals the key steps taken to start the PMO, the top best practices currently being used to keep the PMO vibrant, value based, and application driven. Discover how 7-Eleven, Inc. uses great PMO tools, including RACI charts, process swim lanes, metrics, dashboards, and resource reporting to manage its highly successful PMO. Get the insider’s view of an effective, thriving PMO in this multi-billion dollar company.
In a recent report by CIO Report )Levinson, 2011), it is stated that PMOs that seem to last throughout time are those that are “transformational.” A transformational PMO is one that has five key characteristics: consistency, transparency, flexibility, agility, and educational focus. Consistency means repeatable project management practices across the enterprise using the same standards and requirements for success. In PMOs that are consistent, PMO managers have eliminated redundant, bureaucratic project management practices that bog down projects. Transparency means visibility in progress and cost as well as “what applies for one applies for all.” Flexibility means that PMOs can handle all types of projects with “project management light” and “project management heavy” activities and can adapt to the enterprise’s “specific project and portfolio management needs” as well as to the corporate structure and culture. PMOs could be highly centralized or decentralized, depending on the company culture. Agility means that PMOs and projects run in this environment can respond quickly; they may be using Agile development or other light- weight and nimble processes for product delivery. Lastly, transformational PMOs are educational and train key stakeholders and building communities and forums to share results, best practices, and lessons learned.
In learning about the 7-Eleven PMO, we believe that, like us, you will discover that it is indeed a transformational PMO.
Boy Scouts and the Project Management Office
These entities seem to be two unlikely combinations of topics, but there is actually a high level of correlation between these two units. Over thirty years ago, when Steve was active in the Boys Scouts, one of the things he did on a yearly basis was to go to a Camporee. This event is usually a big campout, where boy scouts and their troop leaders attend and are involved in all sorts of competitions and activities. Even as a scout at an early age, Steve would ask, “What does it take to get to the Camporee? What will we be doing there?”
Along with other scouts new to the Camporee, Steve found out that they would be participating in various competitions, such as knot tying, building a signal tower out of limbs and ropes, communicating by having someone make and use semaphore flags to send signals between teams, and a host of other activities. Goals needed to be established for each team member to do his part, and a schedule needed to be set so that the appropriate activities occurred in the correct sequence and time. The teams approached the competition as a project by setting a vision and scope, identifying the work streams (similar to the Work Breakdown Structure) and dependencies, creating work product through scheduled activities (learning knots, building a tower and semaphore alphabet), and verifying milestones. They would know they had achieved their goals by being able to successfully participate in the competition.
They had to get ready to master those skills and be able to execute the steps so that they could go to the Camporee and compete successfully. They had to meet various individual goals along the way so that when they got there, they could effectively participate in the Camporee. If the scouts wanted to go to the Boys Scouts’ Camporee and participate with the other troops, they had to learn the required skills to be able to compete.
The scouts started by creating measurements and verifications so that, as they prepared, they could verify that each person knew how to perform his tasks. Each scout had to properly demonstrate the skill of tying his knots or building the tower to hold the semaphore flags and so on. They had to make sure that as a team they could perform the required element and verify that they could build it in the allotted time frame with the proper knots and so forth. Throughout this process, they were able to gain feedback and to know for themselves that they could perform these required tasks. The scouts showed themselves and the troop leaders that they could be successful. Knowing that, they confidently went to the Camporee. Steve took the project lessons he had learned as a young boy scout and applied them as a project manager to the creation of the 7-Eleven, Inc. PMO.
The principle of preparing for the Camporee is the same when a business entity needs to create a PMO. First, the need has to be identified. The question, “What’s driving the need for having a PMO?” must be answered. Projects may be struggling with completion in the time allotted or they may be over budget. In other cases, although projects are being completed, they are finished only because of Herculean efforts. The need may be due to the fact that the organization cannot develop a core of project managers with the needed skills and processes. Once the need is determined, then the solution to meet the needs can be agreed upon and delivered.
Types of PMOs
It is common in the industry to strive to appropriately label different types of PMOs. What is more important is to determine what the business actually needs. What type of PMO really meshes with the culture of the company and even the culture of the different divisions must be determined. At 7-Eleven, the types of PMOs considered were a process and procedure PMO or a PMO that manages and delivers projects.
Each type of PMO has characteristic disadvantages. For example, one disadvantage of a PMO process and procedure PMO is that the PMO team members can be perceived as the “project policemen” with a “do-the-job-check-the-box” mentality, which does little good and is generally disliked by everyone involved. No one wants to be a part of the PMO and no one really works cohesively. A disadvantage of the project delivery PMO is that project managers become so focused on delivering the project and they tend to neglect other essential elements in the process. Typically, in a project delivery PMO, the PMO group gets reabsorbed back into the organization, because upper management assumes that the problems of project delivery are solved and they no longer see the need for a “stand-alone” PMO group. This action leads to the breaking down of the PMO, with project managers going back into the units. The problems that troubled the business before the establishment of the PMO return and the business suffers.
In either type of PMO, if these inherent issues are not successfully addressed, support for participation is lost and the PMO is not able to show results. Essential PMO activities are neglected and subsequent project management issues in the business ensue. In either model, the need for creating the PMO must be firmly identified and goals must be developed to show that the PMO is meeting the identified need so that the life of the PMO is assured. This process must be accompanied by measurement and verification feedback as well.
The Need for a PMO at 7-Eleven
The overriding need for 7-Eleven as a retail company in the early 2000s was to get projects out the door on time and within budget. There was actually a multi-year roadmap of multimillion dollar projects that needed to get done and built one on top of the other. The first layer of projects had to be completed so that the second layer, then the third layer, and so forth could be accomplished in turn. The paybacks in this cycle of projects really didn’t occur until the third and fourth layers of the cycle of projects were completed. The first two cycles were basically infrastructure projects but, nonetheless, a strong foundation had to be built. It is common knowledge that without a strong foundational layer, skyscrapers will not stand up; the same principle applies to a series of projects.
The first step was in determining what type of PMO 7-Eleven was going to be. They chose to be a consultative process and procedures PMO, with little to no policing. The only policing 7-Eleven would incorporate was measurement and verification as opposed to just utilizing a meaningless checklist. They actually didn’t start stage gating, which can be perceived as a policing activity, until three years later. The stage gating was started because during this time they also decided to outsource. Most of the work and stage gating was used as a governance control with partners and with delivering the solutions.
The compelling problem at 7-Eleven was that projects were way over budget or over time. From project to project there was no consistent project management or product development work effort being done. For example, requirements documents would look differently for project “A,” project “B,” and project “C,” even though they might be sharing team members on multiple projects during the process. This practice was significantly confusing to 7-Eleven users at that point.
In terms of project management activities, there was no effective way to communicate what was happening in a project. Projects would have a complex work breakdown structure with an exhaustive list of specific tasks but there was no recap at an appropriately higher milestone or reporting of achieved milestones. In a milestone level, all work streams are driving together to get work done. They needed to have a reference for a tool kit of activities. As part of that tool kit, the PMO prioritized the process and procedures to occur in dependent order. The establishment of that process and procedure was the first change.
The second part of the change was that the PMO instituted status reporting, using a manual spreadsheet on a weekly basis in line with 7-Eleven’s enterprise weekly reporting method. The project managers reported on how many projects were over budget and over scheduled as they finished, so there was verification to show the true baseline. There was actually a big exercise to come up with the definitions of what to call a project that was over budget or over scheduled. The agreed on definitions were communicated to everyone involved so that it was applied in a verified manner. The project managers agreed to use these values as standards based on defined ways that projects fall and then to verify the project status to the organization.
PMO Manager and Development of the Toolkit
7-Eleven picked Steve Barton to install the PMO, because Steve was the go-to-person for failing projects and turning around troubled projects. Basically, Steve had demonstrated the ability to actually deliver projects on time and schedule; he did so in an informal way because he had no PMI certification. He achieved his successful track record from a background of learning from his dad, who was an engineer in the aerospace industry, in a veritable apprenticeship of project management activities. Steve’s father’s brought those professional principles home, where they were instilled in his children as parts of the childrearing process.
In the Boy Scouts, Steve used those same skills and carried that practice forward through the Navy for the ten years he served. Subsequently, Steve joined 7-Eleven and became the person other professionals turned to in order to get work done. When the need for the establishment of a PMO occurred, Steve was tagged to lead the effort. He liked to help others “get things done” in the model of being a servant leader and was the logical choice.
The first step Steve took in establishing the 7-Eleven PMO was obtaining a copy of The Complete Project Management Handbook. He actually looked up PMO on the Internet to find a handbook that had a reference to Project Management Institute. He then went to the PMI website and looked in the glossary of their books for PMO.
By reading various books, Steve discovered that there was a matrix of some twenty activity areas to support within a project management office. Then he determined which PMO areas could be supported while providing a quick and sure return. As the leader, Steve was able to establish the project management processes and procedures, which became the toolkit of activities to successfully deliver projects by supporting project managers.
Some project managers struggled with the sheer number of project management activities. They complained: “Steve, I can’t figure out the schedule here. All my partners give me these 1000-lined MSP project plans and I need to schedule a meeting! I have to update the notes to the meeting! I have to review the material! I must get the formal sign off for the material! They give me all these tasks!”
Steve responded: “How did they decide what those tasks were? Do you have a work breakdown structure of the activities to deliver the functions that you scoped for this work effort?” This type of response forced a change in thinking that elevated the project managers to start managing milestones based on the functions that were being delivered and to integrate project management activities to that end.
The First Steps in Setting up a PMO for 7-Eleven
The first activity agreed on was the institution of the weekly project management meeting, which complied with the enterprise practice in 7-Eleven. Both then, and currently, the business entity actually takes input from throughout the field, from 6000 stores, and within a week, the highest issues get elevated up to the CEO of the company. Staff members are then responsible for getting back to the field within a week with a response to the problem. Since the field operates in a weekly format, then the store support center operates weekly as well; therefore, projects needed to have a weekly meeting.
The decision was made that the weekly project management meeting would cover four key areas: (1) Sub-milestone graph, (2) risks, (3) issues, and (4) scope change requests. Each of these areas is critical in keeping the project on time, in budget, and within scope.
The first area focused on the time delivery of the project—the milestones. At 7-Eleven, they changed the terminology from “timeline” to “sub-milestone,” because most projects are cross-functional with many stakeholders, and single milestone dates are at too high a level to address the needs of each stakeholder, as shown in Exhibit 1.
Exhibit 1: Sub-milestone Chart/Timeline
The process began simply using an Excel format showing, for example, an arrow for design work, another arrow for build work, another for test work, and then another arrow for User Acceptance Testing (UAT). A line is drawn each week indicating actual achieved versus planned achievement. The previous week is a dotted line and the solid line is the current week. It is easy to see if a project area is behind schedule; it is also easy to see if the project is back on schedule in a week. The point is to be able to clearly articulate throughout the different work streams that everything is in place for the next activities to occur within the agreed-upon timeline.
The process includes the development partner or partners; if there are three different development partners, they’ll each have their own swim lane as well as a swim lane for operations business readiness, which could include training and organizational training activities. There could be a testing swim lane, because the testing activities need to occur throughout the life cycle of a project. They can even have business contracts if they are involved with the units. In this way, everyone is able to communicate all the activities that are required for a successful project, with all stakeholders being able to review activities. The chart is presented on one piece of paper that is accessible to everyone involved for review. In a brief viewing, everyone knows the status of the project. The timeline is of paramount importance to company executives, because they allocate funding for a project based on a designated timeline.
In reviewing the sub-milestone chart, one of the first things of note is the “divits to the left” which represent the fact that the actual activities completed is less than was planned. The chart shows the number of days expected to get caught up. In that case, issues have to processed and managed. During the weekly meeting, issues are discussed in terms of what is being done to resolve them. Some of the issues may be on the chart, whereas others are not because some take longer than a week to get resolved and do not affect the timeline. Risks are also discussed at the weekly meeting. Problems are identified as potential risks, and actions are agreed upon to mitigate the risks.
When the status of a project is discussed, it is designated as a color. Your status could be red, yellow, or green. Simple definitions were developed: Red means the project could not meet the schedule and budget; yellow means the corrective actions are working and the project could meet budget and schedule; and green means the project is on target to meet the budget and schedule.
The status summaries state whether or not the project can be completed in time and within budget. In the end, the process is simple. All the executives who approve the money really care about is whether the timeline, budget, and functionality are on track. Are there measurable results from the allocation of funds to the project? In the end, business is about making money; if no one makes any money, nothing else matters.
The last item addressed at the weekly meeting is change request. Project managers know that when something is not working, then something needs to be done differently. It is necessary to determine if the need was in the baseline or not. A one-page document process flow identifies if the concern is an issue, , or change request for each item brought up. A six-page full procedure provides documentation for risks, change requests, status reports, and timelines. However, project actions are reported on a one-page flow chart, where the question is asked: “Does this action change the baseline to the project?” If it does, then it is moved over into the Change Request process, because it is changing a baseline; it is not an issue or risk that it being dealt with. Is it a problem today? If the answer is yes, then the project manager needs to work the problem through the issue process. If the issue is pertinent to the “today” of the project, then it will be a risk in the future and is managed in the risk process.
The time frame solves a lot of the discussion. Project managers want to define the points of issue, risk, and change request. That focus is not germane to business users or even within the department for delivering projects. It really doesn’t matter which process you use because you will get to the right one eventually. There has to be a starting point for any process.
7-Eleven had a lot of change requests frequently coming out of projects, because typically projects would take too long and conditions would change. That is why the change requests were also a function of scope based upon the vision. These change requests were the first set of deliverables for providing the tools for project managers to do their jobs. It was of paramount importance to have these weekly meetings for every project with designated points to discuss. The last item on the weekly meeting agenda was to ask basically for any concerns from all the stakeholders.
As the PMO leader, Steve would ask the stakeholders: “Are the project managers meeting your needs? In the end, when they deliver this project, will you be satisfied?” Everyone began to realize that the meetings and decisions were really affecting them and they wanted input so they would be successful. In addition, they did not want people leaving the meeting and saying, “Everything needs to be in the meeting and needs to be discussed.” The weekly meetings were set up for every single project.
What 7-Eleven learned over time was that they needed to track and monitor processes for a project based on risk. The riskier the project, the more project management processes needed to occur; the less risky a project, the less project management processes needed to occur. They did not need to saddle the small projects with more governance processes or more project management processes. They just agreed to activities that would occur based on what was appropriate for that project.
Year 1 – The PMO Setup
The process in the early stages of the PMO setup was to define issues that needed to be addressed by the organization and determine the impact of that issue to the organization, followed by prioritization and then determination of a resolution. Following that, the project managers executed the resolution for that issue and then verified, and this established the process.
The procedures were developed using swim lanes with all involved. Each one defined what to do and the deliverables from that action and it is defined within the procedure. If something needed to be created, those involved created and executed the procedure. Whatever process that needs to occur with associated activities that need to be accomplished do not actually provide the procedure of how to do it. If there is a process, the procedure to execute along with the deliverables that come in the intermediate time frame or at the end need to be provided.
In setting up the PMO at 7-Eleven, a methodology had to be chosen. 7-Eleven explored several methodologies and settled on A Guide to the Project Management Body of Knowledge (PMBOK® Guide) as the best and most appropriate one. The implementation had to be generic, meaning that the methodology needed to be able to be used effectively across the enterprise; not only for IT, but also for merchandizing and training departments and the like. 7-Eleven was established to be an enterprise project management office, not the IT PMO.
7-Eleven created a mission statement for the PMO to match that of the IT department, which helped to explain the PMO to the people but it is not what ultimately met their needs. The other question was to determine how to meet the need going forward. Communication activities had to focus on goals stating, “Here is what the PMO is and here are our goals.”
The PMO took the procedures for issues verbatim from the PMBOK® Guide. The PMBOK® Guide was the reference for issues, and the 15 or 16 steps within risk management were also adopted from the PMBOK® Guide.
They operated from the concept that basically everyone was grandfathered. If something was previously successful, then it was continued. Unless there was a legal issue, they did not disrupt what was working well. As new projects started, the first thing asked was, “Who is the project manager? When is the project management meeting? Where’s the sub-milestone chart?”
The next level, which was creating a project management plan, would be a little bit more encompassing; however, the first part was determining the project meaning and having the project management meeting to review the issues. The PMO tried to follow the 80-20 rule, in which 20% can provide 80% of the results. It was boiled down to what the real tactical things were that moved a project forward.
The IT Cost Estimator
The one tool 7-Eleven most often updates is a workbook called the IT Cost Estimator. Within this Excel workbook are 17 worksheets that recap everything. There is a worksheet for software development costs, internal and external combined together, the cost of software itself, including the licensing of software, cost for hardware, cost for training, cost for testing, cost for security, cost for network, and so forth. The key is to determine an estimate that is agreed to at the funding of the project and then verify it at the completion. It is vital to record the initial estimate.
Even though 7-Eleven has a detailed PMO process structure, which includes over 47 processes, the top seven processes that have been described here are those that are critical to the successful evolution, growth, and sustainment of a business-driven and value-centered PMO. Those seven key processes: the weekly project management meeting, sub-milestone chart, risk report, issue report, scope change request report, weekly status report, and the IT Cost Estimation Workbook are those items that, when done well, will be the beginning of a transformational PMO, along with verification of the results. These processes are not rocket science or even new concepts, but when these simple processes are followed consistently, a healthy, business-driven, and value-centered organization is the result.
The proof is in the pudding, not just the recipe. Exhibit 2 shows the results obtained at 7-Eleven since 2003. Clearly, with these results, the reader should be encouraged to try some of the principles proposed herein.
Exhibit 2: Historical Success Metrics at 7-Eleven
Levinson, M. (2011, April 12). Project Management: 5 Characteristics of ‘Transformational’ PMOs, CIO Report, from Margo Visitacion, Are You Ready to Transform Your PMO? Tackling Today’s Challenges to Prepare For Tomorrow, Forrester Research. Retrieved from: http://www.forrester.com/rb/Research/are_you_ready_to_transform_pmo/q/id/58510/t/2
© 2011, Tom Sheives and Steve Barton
Originally published as a part of 2011 PMI Global Congress Proceedings – Dallas/Ft. Worth, Texas