Assignment 11

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Originally published as a part of 2011 PMI Global Congress Proceedings – Grapevine, Texas

Only at 7-Eleven - PMO Case Study

By Tom Sheives, Unstuck Company, and Steve Barton, 7-Eleven, Inc.

Abstract

In 2004, 7-Eleven, Inc. created a Project Management Office (PMO) that continues today 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.

Its 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 was 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 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.

Introduction

In a recent report by CIO Report

1 , it is stated that PMOs that seem to last throughout time are those that

are “transformational.” A transformational PMO is one that has 5 key characteristics: consistency,

transparency, flexibility, agility, and educational focus. Consistency means repeatable PM practices

across the enterprise using the same standards and requirements for success. In PMOs that are consistent,

PMO managers have eliminated redundant, bureaucratic PM 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 “PM light” and “PM 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, training 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. Thirty plus 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

Originally published as a part of 2011 PMI Global Congress Proceedings – Grapevine, Texas

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, then 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 their tasks. They had each scout demonstrate properly the skill of

tying their knots or building the tower to hold the semaphore flags and so on. They made 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. Through 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 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 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

Originally published as a part of 2011 PMI Global Congress Proceedings – Grapevine, Texas

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 mangers 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 and then the third and so forth could be accomplished in turn. The paybacks in this cycle

of projects really didn‟t occur until the third and fourth layer of the cycle of projects was 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 that 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‟ and 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 upon definitions were

communicated to everyone involved so that it was applied in a verified manner. The project managers

Originally published as a part of 2011 PMI Global Congress Proceedings – Grapevine, Texas

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 a non-formalized training because he had no PMI certification.

He received 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 the children as a part of the child-

rearing 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 that other professionals

turned to in order to get work done. When the need for 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 for Steve 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 which had a

reference to the Project Management Institute. He then went to the PMI website and looked in the

glossary of their books for PMO.

Through 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 that could be

supported while giving 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 manager 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.

First Steps in setting up a PMO for 7-Eleven

The first activity agreed upon 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 to get 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.

Originally published as a part of 2011 PMI Global Congress Proceedings – Grapevine, Texas

The decision was made that the weekly Project Management Meeting would cover 4 key areas: 1) Sub-

milestone graph, 2) Risks, 3) Issues, and 4) Scope changes 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” since most projects are cross-functional with many

stakeholders and single milestone dates are at a too high of level to address the needs of each stakeholder,

as shown in Figure 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 for User Acceptance Testing (UAT).

A line is drawn each week indicating actual achieved verses 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 in 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

executive. They allocate funding for project based on a designated timeline.

Originally published as a part of 2011 PMI Global Congress Proceedings – Grapevine, Texas

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 while 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. 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;

Green means the project is on target to meet budget and schedule.

The status summaries states 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 cares 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 base line or not. A one page document process flow identifies if the concern is an issue,

risk 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 CR process since 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 is 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 that you use because you will get to the right one

eventually. There has to be a starting point for a process.

7-Eleven had a lot of change requests coming out of projects frequently 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 stake holders.

As the PMO leader, Steve would ask stakeholders “Are the project managers meeting your needs? In the

end when they deliver this project, will you be satisfied?” Everyone begin 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 need 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 more risky the project was the more project management processes needed to occur; the less

risk for a project, the less project management processes needed to occur. They did not need to saddle the

Originally published as a part of 2011 PMI Global Congress Proceedings – Grapevine, Texas

small projects with more governance process or more project management processes. They just agreed to

activities that would occur based on what was appropriate for that project.

Year 1 – PMO Setup

The process in the early stages of 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. That established the process.

The procedures were developed using swim lanes with all involved. Each one defined what to do and

deliverables from that action. 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 give 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 needs to be provided.

In setting up the PMO at 7-Eleven, a methodology had to be chosen. They explored several

methodologies and settled on the PMBOK as that the best, most appropriate one. The implementation had

to be generic, meaning the methodology needed to be able to be used effectively across the enterprise; not

only for I.T., but also for merchandizing and training departments and the like. 7-Eleven was established

to be an enterprise project management office not the I.T. PMO.

They created a mission statement for the PMO to match that of the I.T.‟s department. That helped to

explain the PMO to people but it is not what ultimately met their need. The other question was to

determine how to meet the need going forward? Communication activities had to focus on goals saying,

“Here is what The PMO is and here is what our goals area.”

The PMO took the procedures for issues verbatim from the PMBOK. The PMBOK was the reference for

issues. The 15 or 16 steps within risk management were also adopted from the PMBOK.

They operated from the concept that basically everyone was grandfathered. If something was previously

successful, then it was continued. Unless there was a legal issues, they did not disrupt what was working

well. As new projects started, the first thing asked was, “Who is the PM? When is the PMM? 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 PMM to review the issues.

The PMO tried to follow the 80-20 rule where twenty percent can provide eighty percent of results. It was

boiled down to what were the real tactical things that moved a project forward.

IT Cost Estimator

The one tool 7-Eleven most often updates is a workbook called the I.T. Cost Estimator. Within that Excel

workbook are 17 worksheets that recap everything. There is a worksheet for software development costs,

internal and external combined together, cost of software itself, including the licensing of a software, cost

for hardware, cost for training, cost of testing, cost for security, cost for network, etc. 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.

Originally published as a part of 2011 PMI Global Congress Proceedings – Grapevine, Texas

Conclusion

Even though 7-Eleven has a detailed PMO process structure that 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 results.

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

References 1 Meredith Levinson, Project Management: 5 Characteristics of 'Transformational' PMOs, CIO Report,

April 2011 taken from Margo Visitacion , Are You Ready To Transform Your PMO? Tackling Today's

Challenges To Prepare For Tomorrow, Forrester Research.