Performance management for digital transformation Jean Vieille Industrial

Performance management for digital transformation Jean Vieille, Industrial systems control j. vieille@syntropicfactory. com Second 4 P Factory online Seminar Wednesday 16 th March 2016

Agenda �IT transformation �Enterprise control �Performance management �Use case J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 2

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 managment for digital transformation - Second 4 P Factory online Seminar 3

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

IT at the heart of enterprise Energy Matter Product Y 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 Io. T Big. Data Mobility Networks J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 5

IT transformation Challenges � J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 6

Strategy, Goal Resource allocation 5. Industri al system model VSM 5, 4 Policy, Global transformation 2. IT planning monitoring Technology awareness 1. Requiremen t managemen t Performance Global IT Transformation 2. 2 2. 3 Developmen Deployment t 2. 1 Technology - platform Business requirements, Corrective maintenance VSM 4 IT Transformation (recursion) 4. IT assets and configurations Local IT Transformation (recursion) 3. Local realizatio ns Operations Supported by IT J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar VSM 1, 2, 3 Operations 7

Agenda �IT transformation �Enterprise control �Performance management �Use case J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 8

Complexity Very complex Environment Complex Enterprise ? ? ? Goal Make money Suppliers, Customers, Contractors, Partners IRS , Regulations Natural, Social environment Market, Politics, Macroeconomics Employees, shareholders Bankers, Insurers HR, Marketing, R&D, Engineering, IT Sales, Sourcing Finance, Communication Planning, Production, Logistics J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 9

Complexity control Amplifier C 1/C 2 C 2/C 3 C 2 Environment Operations C 3 Management C 1 C 2/C 1 C 3/C 2 Filter C 1 >> C 2 >> C 3 Law of Requisite Variety (W. R. Ashby) : Variety of the controlling system >= Variety of the controlled s 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 4 P Factory online Seminar 10

Take a Country J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 11

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 Behaviour control Organize control Influence Decide Enforce… Encourage Exite…. J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 12

Increase complexity, collective intelligence Goal C 4 > C 3 > C 2 > C 1 Management C’ 2 C 2 Behaviour control C 2’ Direct control C 2 Deterministic Organize Decide Enforce C 3 + C 3’ Operations s C 5 > C 3 C 5 Minds Opportunistic Elevate Operations complexity Effective action Environment Influence Encourage Excite C 4 J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 13

Enterprise control representation 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 Source Deliver 2. Coordination 1. Operations en. wikipedia. org/wiki/Viable_system_model J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 14

Agenda �IT transformation �Enterprise control �Performance management �Use case J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 15

Complex system control Behaviour control SS 0 Direct control SS 11 SS 12 SS 21 SS 22 J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 16

Local aspects: Behaviour propagation in subsystems SS 0 KPIs Reaction Excitation SS 2 SS 1 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 SS 11 J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 17

Global aspects: Overall Interactional Effectiveness OIE R * S * Q * OVA/OOE Social Responsibilit y Innovation Speed (Working Capital Need) Sales Design Quality Source Focus all enterprise functions on a global indicator Seeking mission fulfilment Overall Value Added Make Overall Operating Expenses Deliver J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 18

Global aspects: Overall Interactional Effectiveness OIE R * S * Q * OVA/OOE Social Responsibilit y Speed Quality (Working Capital Need) Overall Value Added Enterprise Policy Overall Operating Expenses Transformation, Delivery & monitoring Coordination Deliver Operations Performance Innovation 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 4 P Factory online Seminar 19

Dynamic performance management Organizatio nal Performanc e The reachable, desirable target Potentiality (transformation investment) Critical for long term survival A/P Policy Transformation C/P Latent Performanc e Long term strategic gap Conditions survival Feasible performance target Capability With the current resources A/C Operational Performanc e Actuality Delivery & monitoring 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 4 P Factory online Seminar 20

Example We produce an average of 600 products a week Our equipment has a full capacity of 20 products per hour We operate 8 hours a day, 5 days a week We have 2 equivalent machines that cannot be operated simultaneously Actuality 600 Capability 800 (20*8*5) Potentiality 6720 (20*24*7*2 Operational P. (A/C) 75% Latent P. (C/P) 9% 12% Organ. P. (A/P) J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 21

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 J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 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 relevance �Need for continuous monitoring of arising conflicts ◦ and KPIs’ relevance J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 23

Agenda �IT transformation �Enterprise control �Performance management �Use case J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 24

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 J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 25

Objective Group Policy Increase Overall Added Value Group transformation Boost Innovation Resource allocation R&D Policy & transformation Resource allocation R&D IT Policy & transformation Educated guess… Numerous, effective inventions Improve research productivity Improve experimentation productivity Resource allocation Contractor IT Delivery, coordination and operations Educated guess… Share knowledge Standardize experimentation Leverage Information technology Implement ELN Fast, cost effective ELN Deployment J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 26

User coverage KPI and responsibilities Group Policy & transformation Directives to R&D budget Poor performance. Will this target actually help boosting innovation? R&D Policy & transformation Potentiality 2000 Latency Directives to IT IT budget R&D IT Policy & transformation 19% Potentiality Organisatio nal 4% 380 ELN delivery budget Latency R&D IT delivery & monitoring Capability Numerous, effective inventions 135 36% Organisatio nal 23% Fast, cost effective ELN Deployment Contractor operations (VSM recursion) Actuality 88 Operatio nal 65% J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 27

Conflict resolution ELN full deployment justification Improve experimentatio n productivity Numerous, effective inventions Share knowledge Promote research sharing Enable creativity Protect individual IP Standardize experimentation Data rather process oriented Experimentation freedom Researchers requirements en. wikipedia. org/wiki/Evaporating_Cloud J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 28

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 J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 29

Questions? Q O O S V O R A E OIE Transformation Responsibility Performance Conflicts Behaviour J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar 30