white paper - performance management diagnostics
TRANSCRIPT
WHITE PAPER ENTERPRISE PERFORMANCE MANAGEMENT DIAGNOSTICS Hans Gillior
2014-06-03
“Every business is a digital business. You cannot be the best in your industry by not being best at IT”
This White Paper has been produced by The Goodwind Company and focus on The Enterprise Performance Management Diagnostics. The paper is describing the background, workings and unique selling points of the Enterprise Performance Management Diagnostics.
Note that the Diagnostics tool can be seen as a generic diagnostics tool to analyze the workings of other IT or business processes such as Innovation, Cost Management, Simplification etc.
For further reading on the topic on Enterprise Performance Management, please read Gary Corkin’s “Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics”.
For further questions or comments, please do not hesitate to contact The Goodwind Company.
Hans Gillior
The Goodwind Company
WHITE PAPER EPM DIAGNOSTICS : INTRODUCTION
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WHITE PAPER EPM DIAGNOSTICS: BACKGROUND
¢ Many IT organization are relying on traditional governance of IT (budgeting, planning and KPI administration) to monitor and control the performance (undefined) of IT with limited effects – little value is created!
¢ A changing business environment (new normal) driven by digitalization resulting higher unpredictability, requires a exact and agile governance of IT with focus on performance (business value creation).
¢ Agile Software Development has created a demand for agile IT governance to support the new ways of creating business value in Software Development.
¢ Enterprise Performance Management is a extensive and complex framework difficult to implement. A method to analyze the current structure and create a roadmap is needed.
Background
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The Performance Management Cycle (plan–do–check–act) is an iterative four-step management method used in business for the control and continuous improvement of processes and products.
Definition
WHITE PAPER EPM DIAGNOSTICS: PERFORMANCE MANAGEMENT CYCLE
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Plan
Do
Check
Act
Plan phase: Defining the strategy of the period and means for execution • Strategic planning process • Guiding Principles • KPI and target setting process
Do phase: Execution of strategy leveraging resources • IT Service delivery • Process improvements • Resource optimization
Check phase: Study the actual results and compare against the expected results to ascertain any differences. • Management reporting • Performance Analysis • Root cause analysis • Performance dialogues
Act phase: Request corrective actions on significant differences between actual and planned results. • Adjusting goals and strategy • Communication • Reward and Celebrate
Business Results
Business & IT Knowledge
Resources
The Performance Management Cycle can be applied to any business environment where a goal or strategy need to be achieved
The Performance Management Enablers represent the engine in the Performance Management framework machinery. Each enabler need to be addressed for each EPM activity.
Definition
Plan
Do
Check
Act
Conceptual design
Processes & Tools
Culture & Behavior
Information
Skills & Competence
Calendar
A design of how to carry out the activities in the PM cycle (roles and responsibilities, guiding principles, objectives, etc.)
Adequate processes and tools to secure efficient and effective ways of working, and data quality.
Organizational culture and behavior (including leadership) to drive optimization of performance (HOW)
Efficient and effective exchange of information between different activities in the Performance Management cycle
The employees responsible for PM cycle activities have excellent skills and competence to manage activities
Adequate processes and tools to secure efficient and effective ways of working, and data quality.
WHITE PAPER EPM DIAGNOSTICS: PERFORMANCE MANAGEMENT ENABLERS
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Enterprise Performance Management is about how to achieve of the strategic objectives by planning, monitoring and ensuring change of business systems or behavior in a (rapid changing) business environment
Definition
The Enterprise Performance Management minimizes the time between the identification of a trend or business change, and the decision to act upon it.
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WHITE PAPER EPM DIAGNOSTICS: DEFINITION
Business Change Forces IT PM Mechanics Change Capacity Result
Plan
Do
Check
Act
Digitalization! Short cycles! Transform!Involve
HR
Key components of Enterprise Performance Management
Hans Gillior • 25/02/2013
Rate of change vs. Agile IT Performance Management
The EPM Diagnostics tool determines the IT organizations position in the diagram (As-Is). The diagnostics tool defines a roadmap to achieve a new position (To-Be) the diagram.
EPM Diagnostics
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WHITE PAPER EPM DIAGNOSTICS: PERFORMANCE MANAGEMENT DIAGRAM
Performance Management Mechanics Change Capacity
Dynamics of Industry
Hans Gillior • 25/02/2013 Property of The Goodwind Company - all rights reserved
7 •
Dynamics of Industry Performance Management Capabilities Change Capabilities Alignment
positioning
1
2
3
5
6
7
4
Level of dynamics
Industry earthquake
Normal dynamics
Heavy dynamics
Extreme dynamics
Weak dynamics Some dynamics
No dynamics 1
2
3
5
6
7
4
PM capability scale
Excellent capabilities
Satisfactory capabilities
Good capabilities
Very Good capabilities
Almost capabilities Weak capabilities
No capabilities 1
2
3
5
6
7
4
Change capability scale
Excellent capabilities
Satisfactory capabilities
Good capabilities
Very Good capabilities
Almost capabilities Weak capabilities
No capabilities 1
2
3
5
6
7
4
Maturity scale
Excellent positioning
Satisfactory positioning
Good positioning
Very Good positioning
Unsatisfying positioning
Weak positioning
Dangerous positioning
Little impact High impact High impact
Plan
Do
Check
Act
Impact of Trends
Maturity
Competition
IT intensive
Leadership
Direction
Culture
Method
Industry dynamics Ability to deliver value Ability to change
Effects
WHITE PAPER EPM DIAGNOSTICS: PERFORMANCE MANAGEMENT DIAGNOSTICS DASHBOARD
The EPM capability levels are a result (As-Is) of the EPM diagnostics analysis (templates)
WHITE PAPER EPM DIAGNOSTICS: DIAGNOSTICS – DYNAMICS OF IT (TEMPLATE)
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1. How is the industry impacted by technological trends? (for example: digitalization, mobile, cloud, big data)
2. How is the industry impacted by changed customer behavior? (for example, new customer channels, social media, new customer demand)
3. How is the industry impacted by new regulations and economical conditions (for example: BASEL 3, Euro crisis)
1. What is the general maturity of the industry? (for example: …)
2. What is general life time of a product or service provided to customers in the industry? (High = < 6 months, Low > 5 years)
3. What is the ‘age of the IT organization’ in the industry? (high= young (innovation); low = mature (structures and routines))
1. How dependent is the industry on information management and IT technology?
2. What is the general purpose of IT in industry? (Low = efficiency gains [internal] , High = value creation [external])
3. What level of customer interaction is through digital channels?
1. How protective are market barriers in the industry to keep new competitors out? (for example: regulations, technology, others)
2. How much power does customers have to influence the industry? (for example: pricing, products, brand)
3. Are there any emerging substitutes to the products or services traditionally provides in industry?
Questions Comments Low Scoring High
.
Trend
Impa
ct o
f tr
ends
M
atu
rity
IT
inte
nsi
ty
Com
peti
tion
The Dynamics of Industry is viewed from four perspectives: Impact of Trends, Maturity of Industry, IT intensity, and Competition.
WHITE PAPER EPM DIAGNOSTICS: DIAGNOSTICS – CHANGE CAPACITY (TEMPLATE)
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The Dynamics of Industry is viewed from four perspectives: Leadership, Method, Direction, Culture
1. The level of power of the guiding coalition to drive strategic change
2. Leaders’ ability to communicate and inspire the shared change vision and strategy
3. Leaders’ ability to work for the best of the company and not for personal gains.
1. The level of urgency in situation to drive change
2. Employees’ understanding and acceptance of the urgency in the situation
3. How well are change obstacles identified and eliminated?
1. Level of obstacles in culture that hinders change (reactive forces)
2. To what level are successful employees (change agents / role models) adopting the change rewarded
3. To what extent is performance a natural part of the culture?
1. To what level is a best-practice change management framework used to achieve change effects?
2. How well are strategic change progress communicated?
3. To what extent are “low-handing fruit” identified and harvested?
Questions
Lea
ders
hip
S
itu
atio
n
Cu
ltu
re
Met
hod
s
Comments Low Scoring High Trend
WHITE PAPER EPM DIAGNOSTICS: DIAGNOSTICS – PM MECHANICS (TEMPLATES)
: Excellent (= 1 green)
: Satisfactory (= 0,5 green)
: Weak (= 0 green)
Purpose Establish the objectives and processes necessary to deliver results in accordance with the expected output (the target or goals). Plan on how to reach the objectives.
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Process Documented Conceptual design
Processes & tools
Culture & behavior
Information platform
People, skills and competence
In planning calendar
Environmental scanning (int./ext./dynamics)
Strategic positioning & scenario
Strategy & vision formulation
Governance of IT (RACI & Guiding principles)
KPI setting process (including target setting)
Financial planning
Process Weighting
Planning Process 35%
Comments: The planning process is considered the most important process in Performance Management, and it is then the foundation for Performance Management is set. The process therefore receives the highest weighting.
Grade No of Greens
Score
7 32 - 35
6 27 - 32
5 22 – 26
4 17 - 22
3 12 - 17
2 6 - 12
1 0 - 6
Outcome Comments
Purpose Implement the plan, execute the process, value creation according to set objectives. Optimizing “Value of IT”.
: Excellent (= 1 green)
: Satisfactory (= 0,5 green)
: Weak (= 0 green)
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Process Purpose and goals of the process
Conceptual Design
Processes & tools Culture & behavior (leadership)
Information platform
People, skills and competence
PPM & Investments • Business case • Portfolio
Management • Investment
steering
Service Management • Change Mgmt. • Incident Mgmt. • Problem Mgmt. • Capacity mgmt. • Service Catalogue
Strategic Initiatives • Lean • Innovation • Cost Reduction • Risk Mitigation • Reduce
Complexity • Simplification
Process Weighting
Do Process 10%
Comments: The Do process consist of a number of proposed enhancement processes that are voluntary. The weighting of the process is therefore the lowest in the Deming cycle. The process is important in the way that this is where the value is produced and enhanced.
Grade No of Greens
Score
7 39 - 42
6 33 - 38
5 28 – 33
4 21 – 27
3 15 - 21
2 7 - 15
1 0 - 7
Outcome Comments
: Excellent (= 1 green)
: Satisfactory (= 0,5 green)
: Weak (= 0 green)
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Process Sample report templates
Policies, guidelines and frameworks
Processes & tools
Culture & behavior (leadership)
Information platform
People, skills and competence
In Feedback Calendar
Service Quality & Responsiveness
Customer (Business) Value Reporting
Quality/Maturity & Productivity (Value Stream) Reporting
Project and Investment benefit realization reports
Cost / Risk management Reporting
Employee & Leadership performance
Employee satisfaction & motivation
Performance dialogues (incl mgmt reporting)
Process Weighting
Do Process 35%
Comments: The Check process plays a pivotal role in Performance Management to validate if the strategy and goals are being fulfilled.
Outcome Comments
Grade No of Greens
Score
7 50 – 56
6 44 – 49
5 35 – 43
4 28 – 35
3 20- 28
2 12 – 20
1 0 – 12
Purpose Study the actual results and compare against the expected results to ascertain any differences.
: Excellent (= 1 green)
: Satisfactory (= 0,5 green)
: Weak (= 0 green)
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Process Samples or templates
Policies, guidelines and frameworks
Processes & tools
Culture & behavior (leadership)
Information platform
People, skills and competence
In Feedback calendar
Performance analysis including root cause analysis
Strategy / Goal adjustment process
Team development
Employee development
Handling high/low performers
Celebrate success
Process Weighting
Do Process 20%
Comments: The Act process plays an important part in adjusting the direction of the organization in a structured and effective way.
Outcome Comments
Grade No of Greens
Score
7 32 - 36
6 27 - 32
5 22 – 26
4 18 - 22
3 12 - 17
2 6 - 12
1 0 - 6
Purpose Request corrective actions on significant differences between actual and planned results. Analyze the differences to determine their root causes. Determine where to apply changes that will include improvement of the process or product.
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PLAN PROCESS: SCORECARD (EXAMPLE)
Process Policies, guidelines and frameworks (including governance)
Processes & tools
Culture & behavior
Information platform
People, skills and competence
In planning calendar
Environmental scanning (int./ext./dynamics)
Strategic positioning & scenario
Strategy & vision formulation
Governance of IT (Guiding principles per governance function)
KPI setting process (including target setting)
Financial planning
Grade No of Greens
Score
7 32 - 36
6 27 - 32
5 22 – 26
4 17 - 22
3 12 - 17
2 6 - 12
1 0 - 6
Outcome Comments
Key issues: • Limited skills and competences in filed of Strategic planning
• Immaturity in strategic planning process (conceptual level)
• Need to establish functional planning calendar
• Tools and processes are working fairly well
16p
WHITE PAPER EPM DIAGNOSTICS: PM DIAGNOSTICS TEMPLATE (EXAMPLE)
EPM Enablers: EPM Enablers act the engine of EPM machinery
Diagnostics scoring: The diagnostics scores are based on available of artifacts and subjective evaluation.
EPM Sub-Activities:
The sub-activities included in the EPM
activity (Plan) according to best-
practice.
Activity Scoring: The accumulated
activity scoring based on diagnostics
scores (RAG score)
EPM activity issues: Description of strength and weaknesses in EPM activity. Issues to be addressed. RED: Ad-hoc approach, no artifacts
(obstacle for performance)
GREEN: Structured approach, great artifacts (driver for performance)
AMBER: Work ongoing, some artifacts (neutral performance)
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12 •
Dynamics of Industry Performance Management Capabilities Change Capabilities Alignment
positioning
1
2
3
5
6
7
4
Industry earthquake
Normal dynamics
Heavy dynamics
Extreme dynamics
Weak dynamics Some dynamics
No dynamics 1
2
3
5
6
7
4
Scale
Excellent capabilities
Satisfactory capabilities
Good capabilities
Very Good capabilities
Almost capabilities Weak capabilities
No capabilities 1
2
3
5
6
7
4
Scale
Excellent capabilities
Satisfactory capabilities
Good capabilities
Very Good capabilities
Almost capabilities Weak capabilities
No capabilities 1
2
3
5
6
7
4
Scale
Excellent positioning
Satisfactory positioning
Good positioning
Very Good positioning
Unsatisfying positioning Weak positioning
Dangerous positioning
Effects
1
2
3
5
4
Scale As-Is As-Is
1
2
3
1
2
3
As-Is
1
2
3
As-Is
Score
Impact of trends
5,6
Maturity 4,0
Competition 4,7
IT Intensity 5,0
Trend
Score
Plan (35%) 3,0
Do (10%) 5,0
Check (35%) 5,0
Act (20%) 4,0
Total
3,5
Score
Leadership 4,0
Situation 5,0
Culture 3,6
Method 2,7
Total
3,8
WHITE PAPER EPM DIAGNOSTICS: PM DIAGNOSTICS DASHBOARD (EXAMPLE)
EPM Components: The three
components that make up EPM.
EPM Component scoring:
The scoring is aggregated for each
component (score 1-7).
EPM Component dimension scoring:
The scoring of each dimension of the
EPM element. EPM Score: An aggregated score combining the scores
of each EPM component.
EPM Position: The position in the
EPM diagram to highlight the current
conditions and relevant actions.
Hans Gillior • 25/02/2013
13 •
1 2 3 5 6 7 4
Level of Industry Dynamics
1 2
3 5
6 7
4
Lev
el o
f P
M&
CM
C
apab
ilit
ies
Profitable Growth
Vicious Circle
Urgent Transition
Driving Change
Change Repellent
Prudent Transition
Urgent Transformation
• A situation with a high dynamics re-shaping the industry but with limited Performance Management agility. The situation is quite urgent to invest in Performance Management to move into “Profitable growth” section.
• The action is to assess the situation carefully and make the right decisions to more in the right directions. Property of The Goodwind Company - all rights reserved
WHITE PAPER EPM DIAGNOSTICS: EPM DIAGRAM POSITIONING
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Recommendations
• All recommendations will be documented in separate templates and in aggregated lists
• All recommendation will be prioritized based according to IT and business value
• All recommendations will be achievable in 4 weeks (support Agile Business Development)
Conclusions
• The conclusions will be validated by reference group before discussed in workshop.
• The conclusions will be broken down into PM enablers and sub-tasks in PM cycle
• A short conclusion on Industry Dynamics and Change Capacity
• Workshop to discuss outcome and set focus
Interviews & Workshops
• All interviews and workshop will include business and IT representatives
• All interviews and workshops will be based on standardize questionnaire
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WHITE PAPER EPM DIAGNOSTICS: HIGH LEVEL PROJECT PLAN
16
• The purpose of the IT PM Diagnostics tool is to quickly assess the current PM structure – and identify a prioritized list of improvements and “burning platform” for change.
Purpose
Process
Initiation Data
gathering & analysis
Validation Prioritization Final report
Initiation:
• Setting expectations
• Identifying stakeholders (20-30 managers)
• Getting infrastructure in-place
3 weeks 2 weeks 1 weeks 2 weeks
Data gathering & analysis: • In-depth
interviews with key stakeholders (Business & IT)
• First draft of analysis
• Steering Group Meeting
Validation: • In-depth
interviews with key stakeholders (Business & IT)
• Workshop to discuss outcome of analysis
Prioritization: • In-depth
interviews with key stakeholders (Business & IT)
• Workshop to prioritize the identified improvements
Final report: • Writing final
reporting including recommendation
• Presentation to key stakeholders
• Steering Group Meeting
• The process aims to drive a constructive discussion to identify a strategic positioning and action plan going forward (list of prioritized initiatives)
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WHITE PAPER EPM DIAGNOSTICS: DETAILED PROJECT PLAN
Hans Gillior • 25/02/2013
17 •
WHITE PAPER EPM DIAGNOSTICS: UNIQUE SELLING POINT
¢ The EPM Diagnostics framework is the only framework in the market that analyzes and evaluates the IT Performance Management Capabilities. How prepared IT is to deliver business value in digital era.
¢ The EPM Diagnostics framework defines strengths and weaknesses of the current set-up, and highlights appropriate recommendations for improving situation.
¢ The EPM Diagnostics utilizes SCRUM methodology in managing recommendations and change management activities – to secure optimal business effect.
¢ The EPM Diagnostics framework is a generic tool that can be used in other business circumstances.
USP
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Hans Gillior • 13/05/2013
18 •
Hans Gillior Founder & CEO Email: [email protected] Telephone: +46 768 643778 Blog: hansgillior.wordpress.com Web: www.thegoodwindcompany.se