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Performance management for digital
transformation

Jean Vieille, Industrial systems control
j.vieille@syntropicfactory.com

Second 4P Factory online Seminar
Wednesday 16th March 2016

Agenda
IT

transformation

Enterprise

control

Performance
Use

case

management

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

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

IT at the heart of enterprise
Energy

Matter
Y

Product

Information
Energy

Information

Human,
animal

Human

Mechanization Machine

Human

Automation

Computer

Pre-industry

Machine

Electro-mechanics
Pneumatics Electronics
Informatics

Smart Industry
Industrie 4.0
Industrie du
Futur

IoT
BigData
Mobility
Networks

J. Vieille - Performance managment for digital transformation - Second 4P

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

Strategy, Goal
Resource allocation

VSM 5,4
Policy, Global transformation

2. IT planning
monitoring

Technology
awareness

Performance

Global IT Transformation

2.2
Development

1. Requirement
management

2.3
Deployment

2.1 Technology - platform

5.
Industrial
system
model

VSM 4
IT Transformation
(recursion)

4. IT assets and configurations
Business
requirements,
Corrective
maintenance

Local IT Transformation
(recursion)

3. Local
realizations
Operations
Supported by IT

VSM 1,2,3
Operations

Agenda
IT

transformation

Enterprise

control

Performance
Use

case

management

Complexity
Very
complex

Environment

Complex

Enterprise
???

Goal
Make
money

Suppliers, Customers, Contractors, Partners
HR, Marketing,
IRS , Regulations
R&D, Engineering, IT
Natural, Social environment
Sales, Sourcing
Market, Politics, Macroeconomics
Finance, Communication
Employees, shareholders
Planning, Production, Logistics
Bankers, Insurers
J. Vieille - Performance managment for digital transformation - Second 4P

Complexity control
Amplifier
C1/C2

C2/C3

C2

Environment

Operations

C3
Management

C1
C2/C1

C3/C2

Filter

C1 >> C2 >> C3 of Requisite Variety (W.R. Ashby) :
Law
Variety of the controlling system >= Variety of the controlled syste
Variety = number of possible states = f(complexity)
en.wikipedia.org/wiki/Complexity
en.wikipedia.org/wiki/Variety_(cybernetics)
J. Vieille - Performance managment for digital transformation - Second 4P

Take a Country

J. Vieille - Performance managment for digital transformation - Second 4P

How to control such a complex system?
Performance management is
one way for controlling
behaviour beside:
• Competition
• Advertisement, Propaganda,
Brainwashing
• Threat, False flag
• Concealment
• Leaked secrets
• Corruption
• …

Direct control
Behaviour
Organize
control
Influence
Decide
Enforce…
Encourage
Exite…. - Second 4P
J. Vieille - Performance managment for digital transformation

Increase complexity, collective intelligence
Goal
C4 > C3 > C2 > C1
C1

Management

C’2  C2

Direct
control

Deterministic

Behaviour
control C2’

C2

Organize
Decide
Enforce

C3 + C3’
Operation
Operations
s

Effective action

Influence
Encourage
Excite
C5 > C3

Opportunistic

MindC5
s

Elevate Operations complexity

Environment C4
J. Vieille - Performance managment for digital transformation - Second 4P

Enterprise control representation
Behaviour control

5.Policy

Recursio
n

4.Transformation

Environment

Strategic directives
Resource Allocation
and arbitration

Direct
control

HR, Engineering
IT, Contracts, R&D
Finances
Organization
Marketing
Communication

Requirement
Projects

3.Delivery
& monitoring

Sales

Design
Make

Deliver

Source

2.Coordination
1.Operations

en.wikipedia.org/wiki/Viable_system_model
J. Vieille - Performance managment for digital transformation - Second 4P

Agenda
IT

transformation

Enterprise

control

Performance
Use

case

management

Complex system control

Behaviour
control

SS0
Direct
control

SS1

SS11

SS12

SS2

SS21

SS22

J. Vieille - Performance managment for digital transformation - Second 4P

Local aspects: Behaviour propagation in subsystems
SS0
KPIs
Excitation

Reaction
SS2

SS1

Operations
& coordination

Fast loop

Policy

Excitation

Delivery &
monitoring

Reaction

Transformation

Reach performance target
with available means

Transform
itself to
improve local
performance

Induce others’ transformation
to improve local performance

Slow loop

Excitation

Reaction

KPIs

SS11

J. Vieille - Performance managment for digital transformation - Second 4P

Global aspects: Overall Interactional Effectiveness
OIE

Focus all enterprise functions on a global indicator
R * S * Q * OVA/OOE Seeking mission fulfilment

Social
Responsibilit
y

Innovatio
n

Speed
(Working Capital
Need)

Sales

Design

Quality

Source

Overall Value
Added

Make

Overall
Operating
Expenses

Deliver

J. Vieille - Performance managment for digital transformation - Second 4P

Global aspects: Overall Interactional Effectiveness
OIE
R * S * Q * OVA/OOE

Social
Responsibilit
y

Speed

Quality

(Working Capital
Need)

Overall Value
Added

Overall
Operating
Expenses

Enterprise
Policy

Transformation,
Delivery & monitoring
Coordination
Deliver
Operations
Performance

Innovatio
n

Sales

Design

R

S

Source

Q

Make

OVA

OOE

Performance

IT Delivery
& monitoring

Change requests
Transformation

Performance

IT Transformation

J. Vieille - Performance managment for digital transformation - Second 4P

Dynamic performance management
Organizational
Performance

The reachable, desirable target

Potentiality (transformation investment)

Critical for long term survival

A/P

Policy
Transformation

C/P
Long term strategic gap
Conditions survival

Latent
Performance

Feasible performance target

Capability With the current resources

Delivery & monitoring

A/C
Operational
Performance

Actuality

Short term efficiency
Ability to leverage available resources

Current performance measure

Coordination
Operations

en.wikipedia.org/wiki/Viable_system_model
J. Vieille - Performance managment for digital transformation - Second 4P

Example
We produce an average of
600 products a week
Our equipment has a full
capacity of 20 products per
hour

Actuality

600

Capability

800 (20*8*5)

We operate 8 hours a day,
5 days a week

Operational P.
(A/C)

We have 2 equivalent
machines that cannot be
operated simultaneously

Organ. P. (A/P)

Potentiality

Latent P. (C/P)

6720 (20*24*7*2
75%
12%
9%

J. Vieille - Performance managment for digital transformation - Second 4P

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
Capability

= backlog of critical requirements

= selected priority requirements for given

resources
C/P

= IT Latency for serving strategic objective

◦ Informed financial arbitration

Conflict resolution
Conflicts
PM

-> uneasiness, discomfort, complaints

as a likely cause,

◦Compromises effective contribution to fulfil enterprise
objectives
◦Due to failed assumptions about local performance
relevance
Need

for continuous monitoring of arising conflicts

◦and KPIs’ relevance

Agenda
IT

transformation

Enterprise

control

Performance
Use

case

management

Context
R&D

department of a large company (2000 researchers)

Deployment

of ELN software

Issues

◦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 assumptions

Objective
Ov
l
l
a
r
e

Ad
d
e
d

Va
e
u
l

Group Policy

e
s
a
e
r
c
n
I

Group transformation

Educated
guess…
Numerous, effective
inventions

Boost Innovation
Resource
allocation

R&D Policy
& transformation

y
v
i
t
c
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d
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r
p
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t
a
m
r
o
f
n
I
e
g
a
r
e
v
e
L

R&D IT Policy
& transformation

e
g
d
e
l
w
o
n
k
e
r
a
h
S

Resource
allocation

Educated
guess…

Resource
allocation

Contractor IT Delivery,
coordination and operations

Implement ELN

Fast, cost effective
ELN Deployment

J. Vieille - Performance managment for digital transformation - Second 4P

User coverage KPI and responsibilities
Group Policy & transformation
Directives to R&D
R&D budget

R&D Policy & transformation

Poor performance.
Will this target actually help
boosting innovation?

Potentiality

2000

Latency

Directives to IT
IT budget

R&D IT Policy &
transformation

4%

380

ELN delivery
budget

R&D IT delivery & monitoring

Organisational

19%

Potentiality

Latency
Capability

Numerous, effective
inventions

135

Organisational

36%

23%
Fast, cost effective
ELN Deployment

Operational

Contractor operations
(VSM recursion)

Actuality

88

65%

J. Vieille - Performance managment for digital transformation - Second 4P

Conflict resolution
ELN full deployment justification
Improve
experimentatio
n productivity

n
o
i
t
a
t
n
e
m
i
r
e
p
x
e
e
g
d
e
l
w
o
n
k
e
r
a
h
S
Promote
research
sharing

Enable
creativity

Protect individual IP

e
z
i
d
r
a
d
n
a
t
S

Numerous,
effective
inventions

Data
rather
process
oriented

Experimentation
freedom

Researchers requirements
en.wikipedia.org/wiki/Evaporating_Cloud
J. Vieille - Performance managment for digital transformation - Second 4P

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

Questions?
Q
S
R

O O
V O
A E

OIE
Transformation
Responsibility
Performance

Conflicts
Behaviour
J. Vieille - Performance managment for digital transformation - Second 4P