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 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 Io. T Big. Data Mobility Networks J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar

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

Strategy, Goal Resource allocation 2. IT planning monitoring Technology awareness Performance Global IT Transformation 1. Requirement management 5. Industria l system model VSM 5, 4 Policy, Global transformation 2. 2 Development 2. 3 Deployment 2. 1 Technology - platform Business requirements, Corrective maintenance VSM 4 IT Transformation (recursion) 4. IT assets and configurations Local IT Transformation (recursion) 3. Local realization s 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 4 P Factory online Seminar

Complexity control Amplifier C 1/C 2 Environment C 2/C 3 C 2 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 syste Variety = number of possible states = f(complexity) J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar

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

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

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 Influence Encourage Excite C 3 + C 3’ Operations Effective action C 5 > C 3 C 5 Minds Opportunistic Elevate Operations complexity Environment. C 4 J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar

Enterprise control representation Behaviour control 5. Policy Recursion 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 4 P Factory online Seminar

Agenda IT transformation Enterprise control Performance Use case management

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

Local aspects: Behaviour propagation in subsystems SS 0 KPIs Excitation Reaction SS 1 SS 2 Operations & coordination Fast loop Reach performance target with available means Excitation Delivery & monitoring Transform itself to improve local performance Reaction Policy Transformation 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

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 Innovation Speed (Working Capital Need) Sales Design Quality Source Overall Value Added Make Overall Operating Expenses Deliver J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar

Global aspects: Overall Interactional Effectiveness OIE R * S * Q * OVA/OOE Social Responsibilit y Speed Overall Value Added Quality (Working Capital Need) Overall Operating Expenses Enterprise Policy Transformation, Delivery & monitoring Coordination Deliver Operations Performance Innovation Sales Design R S Source Q OVA Make OOE Performance IT Delivery & monitoring Change requests Transformation Performance IT Transformation J. Vieille - Performance managment for digital transformation - Second 4 P Factory online Seminar

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 A/C Operational Performance 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

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

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

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

Agenda IT transformation Enterprise control Performance Use case management

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

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

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 Organisational 4% 19% Potentiality 380 ELN delivery budget Latency R&D IT delivery & monitoring 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 4 P Factory online Seminar

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

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

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