Performance management for digital transformation

Performance based digital transformation

Jean Vieille, Industrial systems control

[email protected]

ARC EUROPEAN INDUSTRY FORUM

Industry in transition: smart, secure, safe and sustainable manufacturing March 2-3, 2016Mercure hotel Amsterdam City, the Netherlands

mailto:[email protected]

J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016 2

Agenda

IT transformationEnterprise controlPerformance managementUse case

3

Context

Hyper-connected World◦ Increasing complexity, opportunities

Enterprises keep morphing to adapt to the changing environment

IT keeps progressing, pushing new technologies and hypes to support them

Industrial IT is aging, intricate◦ Need to improve IT support to business, ◦ Need to leverage opportunities and technologies◦ Without compromising operations, limiting risks

J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016

4

Questions

How to handle IT transformation ?◦To serve business◦While leveraging technology

How to link IT improvement to enterprise bottom line ?◦Budget for IT operations◦Budget for projects◦Priorities


5J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016

IT at the heart of enterpriseEnergy Matter

Information

ProductY

Energy Information

Pre-industry Human, animal

Human

Meccanization

Machine Human

Automation Machine Computer IoTBigDataMobility

Networks

Electro-mechanicsPneumatics Electronics

Informatics

Smart Industry

Industrie 4.0Industrie du

Futur


IT transformation Challenges

Requirement management◦ Business Values, Priorities; Leverage new technologies

IT planning◦ Large projects, continuous incremental delivery

Deal with heterogeneity◦ Legacy new technologies, partial migration,

interoperability, MDM, Promote standardization or leverage local

initiatives◦ IT efficiency or creative diversity

Up to date representation of◦ Industrial system, IT asset

IT delivery performance management◦ Link IT operations to enterprise success◦ Set priorities, budgets


Operations

Policy+ Global transformation

IT Transformation

Local transformation (system recursion)

Local realizations

Strategy, Goal Resource allocation

Transformation activities

Deployment

PlanningMonitoring

Development

Technology - platform

OperationsSupported by IT

IndustrialSystem model

IT asset and configurations

Corrective Maintenance

Requirement management

Technology awareness

Business requirements

Performance


Agenda



ComplexityVery

complex Complex

Environment

Suppliers, Customers, Contractors, PartnersIRS , RegulationsNatural, Social environmentMarket, Politics, MacroeconomicsEmployees, shareholdersBankers, Insurers

Enterprise

HR, Marketing, R&D, Engineering, ITSales, SourcingFinance, CommunicationPlanning, Production, Logistics

???

Make money

Goal


C2/C3

C3/C2

C1/C2

C2/C1

Complexity control

Environment

Operations

Management

en.wikipedia.org/wiki/Complexityen.wikipedia.org/wiki/Variety_(cybernetics)

Law of Requisite Variety (W.R. Ashby) :Variety of the controlling system >= Variety of the controlled systemVariety = number of possible states = f(complexity)

C1

C2

C3

Amplifier

Filter

C1 >> C2 >> C3

https://en.wikipedia.org/wiki/Complexity

https://en.wikipedia.org/wiki/Variety_(cybernetics)

https://en.wikipedia.org/wiki/Variety_(cybernetics)


Take a Country


How to control such a complex system?

Direct controlOrganizeDecide

Enforce…

Behaviour controlInfluence

EncourageExite….

Performance management is one way for controlling behaviour beside:• Competition• Advertisement,

Propaganda, Brainwashing

• Threat, False flag• Concealment• Leaked secrets• Corruption• …


Increase complexity, collective intelligence

C4 > C3 > C2 > C1

Direct control

Environment

Management

OrganizeDecideEnforceDeterministic

Goal

C2

C4

C1

Operations

C3

Elevate Operations complexity

C5 > C3Operations

+ C3’

Effective action

Behaviourcontrol

MindsOpportunistic

C2’

C5

InfluenceEncourageExcite

C’2 C2

Auteur

A développer, animer

Auteur

L'oval de l'entreprise pass en dacagone, car on augmente sa complexité


2.Coordination1.Operations

Enterprise control representation5.Policy

3.Delivery & monitoring

4.Transformation

HR, EngineeringIT, Contracts, R&D

FinancesOrganization

MarketingCommunication

…Environment

en.wikipedia.org/wiki/Viable_system_model

Strategic directivesResource Allocation and arbitration

RequirementProjects

Direct control

Behaviour control

Sales Design Source

Make Deliver

Recursion

https://en.wikipedia.org/wiki/Viable_system_model



Agenda



SS12 SS21

SS1 SS2

SS0

SS22SS11

Complex system control

Behaviourcontrol

Directcontrol

17

Local aspects: Behaviour propagation in sub-systems


SS1

Excitation Reaction

Excitation Reaction

SS11

SS0

SS2

KPIs

KPIs

Reach performance target with available means

Delivery & monitoring

Operations &

coordinationFast loop

Induce others’ transformation to improve local performance

Slow loop

Transform itself to

improve local performance

Policy Transformation

Excitation

Reaction


IT Transformation

Enterprise Policy

IT Delivery & monitoring

Transformation,Delivery & monitoring

Coordination Operations

Global aspects: Overall Interactional Effectiveness

S Q OVA OOER

Performance

Performance

Performance

Focus all enterprise functions on a global indicatorSeeking mission fulfilment

Sales Design Source Make Deliver

Change requests

Transformation

OIER * S * Q * OVA/OOE

Speed(Working Capital

Need)

Quality

Overall Value Added

Overall Operating Expenses

Social Responsibi

lity

Innovation

www.interaxys.fr

http://www.interaxys.fr/


Delivery & monitoring

CoordinationOperations

PolicyTransformation

Dynamic performance management

Actuality

Capability

Potentiality

Feasible performance target With the current resources

Current performance measure

The reachable, desirable target(transformation investment) Critical for long term survival

LatentPerformance

Long term strategic gapConditions survival

C/P

OrganizationalPerformance

A/P

en.wikipedia.org/wiki/Viable_system_model

Operational Performance

A/CShort term efficiency Ability to leverage available resources




Example

We produce an average of 600 products a weekOur equipment has a full capacity of 20 products per hourWe operate 8 hours a day, 5 days a weekWe have 2 equivalent machines that cannot be operated simultaneously

ActualityCapabilityPotentialityOperational P. (A/C)Latent P. (C/P)Organ. P. (A/P)

600800 (20*8*5)

6720 (20*24*7*275%12%9%


IT budgeting

Many formulas for guesstimating IT ROI and functional / projects budgets◦IT in industry hardly delivers tangible

value, difficult to prove after implementation

OIE focuses IT on critical requirements

Potentiality = backlog of critical requirements

Capability = selected priority requirements for given resources

C/P = IT Latency for serving strategic objective◦ Informed financial arbitration

22

Conflict resolution

Conflicts -> uneasiness, discomfort, complaints

PM as a likely cause, ◦Compromises effective contribution to

fulfil enterprise objectives◦Due to failed assumptions about local

performance relevanceNeed for continuous monitoring of

arising conflicts◦and KPIs’ relevance J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016


Agenda


24

Context

R&D department of a large company (2000 researchers)

Deployment of ELN softwareIssues

◦ Slow and costly delivery of complex experimentation templates

◦ Sensitive relationships Business / IT / Software provider

◦ Researchers goals (IP protection) conflicts with project goal (leveraging shared knowledge)

Example for a simplistic metrics showing the bottom-up chain of responsibilities and flawed assumptionsJ. Vieille - Performance based digital transformation - ARC European Industry Forum 2016


ObjectiveIncrease

Overall Added ValueGroup Policy

R&D IT Policy & transformation

Leverage Information technology

Implement ELNContractor IT Delivery, coordination and operations

Group transformation Boost Innovation Numerous, effectiveinventions

Educatedguess…

Resourceallocation

Improve experimentation

productivity

Share knowledgeStandardize

experimentation

Improve research productivity

R&D Policy & transformation Educated

guess…

Resourceallocation

Fast, cost effectiveELN Deployment

Resourceallocation


26

R&D IT delivery & monitoring

User coverage KPI and responsibilities


Group Policy & transformation

R&D Policy & transformation

R&D IT Policy & transformation

Contractor operations(VSM recursion) Actuality 88

135Capability

Operational 65%

Potentiality

Latency

380

Organisational36% 23%

PotentialityLatency

2000

Organisational

19% 4%

Directives to R&DR&D budget

Directives to ITIT budget

ELN delivery budget

Poor performance.Will this target actually

help boosting innovation?Numerous, effective

inventions



ELN full deployment justification

Conflict resolution

Standardize experimentationShare knowledge

Promote research sharing

Numerous, effective

inventions

Improve experimenta

tion productivity

Data rather

process oriented

Researchers requirements

Protect individual IP

Experimentation freedom

Enable creativity

en.wikipedia.org/wiki/Evaporating_Cloud

https://en.wikipedia.org/wiki/Evaporating_Cloud

https://en.wikipedia.org/wiki/Evaporating_Cloud


Conclusion

IT continuous transformation◦Support enterprise ongoing

transformation ◦Leverage new technologies

IT performance management is an essential component in this process ◦To focus efforts on enterprise goal /

objectives◦To set IT budgets

Better understanding through system approach◦Complexity management, Behaviour

control◦Overall Interactional Effectiveness◦Responsibility, Conflict resolution

29

Questions?


Transformation

Performance

Behaviour

OIE

SQ O

VA

OOER

Responsibility

Conflicts

Leadership & Management

Performance management for digital transformation