White paper - Performance Management diagnostics

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

[email protected]

WHITE PAPER EPM DIAGNOSTICS : INTRODUCTION

© Property of The Goodwind Company – All rights reserved

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


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


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


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.

Property of The Goodwind Company - all rights reserved

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


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



Good 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)


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)


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.


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”.



: Weak (= 0 green)


Process Purpose and goals of the process

Conceptual Design

Processes & tools Culture & behavior (leadership)



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



: Weak (= 0 green)


Process Sample report templates

Policies, guidelines and frameworks

Processes & tools

Culture & behavior (leadership)



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.



: Weak (= 0 green)


Process Samples or templates

Policies, guidelines and frameworks

Processes & tools

Culture & behavior (leadership)



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.



PLAN PROCESS: SCORECARD (EXAMPLE)

Process Policies, guidelines and frameworks (including governance)

Processes & tools

Culture & behavior



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)


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



Good capabilities



No capabilities 1

2

3

5

6

7

4

Scale



Good 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.


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


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


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


•  Workshop to discuss outcome of analysis

Prioritization: •  In-depth


•  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)


WHITE PAPER EPM DIAGNOSTICS: DETAILED PROJECT PLAN


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



18 •

Hans Gillior Founder & CEO Email: [email protected] Telephone: +46 768 643778 Blog: hansgillior.wordpress.com Web: www.thegoodwindcompany.se