What is your PMI? A Model for Assessing the Maturity of Performance Management in Organizations
Upcoming SlideShare
Loading in...5
×
 

What is your PMI? A Model for Assessing the Maturity of Performance Management in Organizations

on

  • 1,141 views

Presented at the "PMA 2012 Conference: From Strategy to Delivery" in Fitzwilliam College, University of Cambridge, UK, 11.07.2012

Presented at the "PMA 2012 Conference: From Strategy to Delivery" in Fitzwilliam College, University of Cambridge, UK, 11.07.2012

Statistics

Views

Total Views
1,141
Views on SlideShare
961
Embed Views
180

Actions

Likes
0
Downloads
44
Comments
1

2 Embeds 180

http://pm-index.com 177
http://www.linkedin.com 3

Accessibility

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel

11 of 1

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
  • Thank you, this is informative
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    What is your PMI? A Model for Assessing the Maturity of Performance Management in Organizations What is your PMI? A Model for Assessing the Maturity of Performance Management in Organizations Presentation Transcript

    • What is your PMI?A Model for Assessing the Maturity ofPerformance Management in OrganizationsDr. Mika Ahomika.aho@rongo.fiPMA 2012 Conference: From Strategy to DeliveryFitzwilliam College, University of Cambridge, UK11.07.2012
    • Presentation Outline Rationale for Performance Management Maturity Models Background for the study Performance Management Index (PM-Index, PMI) Components Maturity Levels Key Capabilities Example Scores and Results Summary
    • Rationale for Performance Management (PM) Central part of business management and the mechanisms that support decision-making It broadly encompasses all those measures that an organization needs to take in order to achieve specific aims and objectives The range of methods and procedures that an organisation uses to manage its personnel effectively The actions people take are closely related to the organization’s overall strategy Effective PM aims to integrate all these procedures, methods and measures into a single, organization-wide management system by leveraging modern ICT
    • Rationale for Performance Management(from Information and Knowledge point of view) Organizations need reliable, accurate and timely data; these being the fundamental tools of performance management Sometimes, the concept of PM means dealing only with the data for certain pre-defined standards and key performance indicators (KPI) This perception of PM leaves the rest of the data and information in the organization untouched To implement a really comprehensive PM strategy organizations should leverage their data by adding analytical functions to their traditional measurement and monitoring processes The use of analytics helps organizations to proactively seek out and identify trends, and to create alternative scenarios for what might happen in the business
    • Performance Management and Information Technology Information technology acts as an enabler and integrator to support the overall PM initiative in an organisation It integrates all of an organisation’s processes, measures, information and intangible assets so that they support the different phases involved in implementing a strategy, e.g. Visualize and monitor the strategy in a form of dashboards, reports, and analytical tools Create rolling sales forecasts and use those results in the budgeting process In mature organizations, the performance data is often stored in an organization-wide data warehouse PM furnish the decision-makers with all the information they need to make really informed decisions
    • Background for Maturity Models There is nothing new in the idea that the evolution of an organization, or any one part of it, can be described by using maturity models For example the Capability Maturity Model (CMM), have already been in use for several years to demonstrate the evolution of different areas such as Corporate Governance (Weill & Ross, 2004) IT and Strategy Alignment (Luftman & Kempaiah, 2007) Service Oriented Architectures (Perko, 2008) Performance Management (Aho, 2009; 2011)
    • Maturity Models Over the years, organizations have adopted models by which they can improve their own maturity and capability, and that of their procedures Maturity = development from some initial stage to an improved, target stage Capability = what an organization can do and is capable of doing When moving from a stage to another, the target area, or the whole organization, improves in terms of its qualitative and quantitative capabilities over time The higher the maturity level, the more efficiently the organization is performing At the higher maturity levels any procedure is controlled, foreseeable and the targets that have been set for it are achieved At the lower maturity levels, however, there might be considerable variation; the process might be unstable and there are risks associated with it
    • Maturity Models and Performance Management PM and maturity models have not been studied much academically, although some attempts had been made in related areas, such as business intelligence (e.g. Eckerson, 2007; Hostmann, 2006; van Roekel et al., 2009) analytical competition (Davenport & Harris, 2010) performance culture (Dresner, 2010) information technology growth (Nolan, 1979) IT-business alignment (Luftman & Kempaiah, 2007) There are some drawbacks in the existing maturity models They are very seldom based on empirical evidence There are few indications as to why certain components and maturity levels were selected They only concentrate on particular aspects of PM, such as business intelligence or analytical capability, but fail to examine the concept as a whole
    • How to create a Maturity Model for PerformanceManagement?In order to create a maturity model for performance management 1 1. One first needs to identify the components that comprise PM 2 2. Secondly, to define a set of levels that denotes the evolution of PM in organisations 3. 3 Thirdly, to identify the key capabilities for an each component and maturity level combination 4 4. And finally, to build a metric that can be used to assess the PM maturity, and to present the results in a convenient and understandable way
    • ”A Construct for Performance ManagementMaturity Assessment” The study was conducted during 2009-2011 A Constructive Research Approach Empirical evidence was collected from five large Finnish manufacturing companies Methods: interviews, questionnaire, participant observation, literature study Doctoral dissertation published in November 2011 Tampere University of Technology, Faculty of Business and Technology Management
    • Overview of the model(PMI, PM-Index, Performance Management Index) The focus of this paper Maturity Model Metric Main components Web-based tool User interface Sub components Maturity levels Calculation engine Supporting components Questions
    • Main components Scale and Scope Business value Strategy and Decision support business Strategy and objectives Management and Responsibility Performance management processes Performance Measurement and monitoring Communication Organizational culture Data and information analysis Competencies Stakeholders Data and information quality Information Information production, distribution and availability Common structures and master data Intangible Business and technology alignment assets Technology Application architecture Data warehouse architecture Methods and Tools
    • Sub components Scale and Scope Business value Strategy and Decision support business Strategy and objectives Management and Responsibility Performance management processes Performance Measurement and monitoring Communication Organizational culture Data and information analysis Competencies Stakeholders Data and information quality Information Information production, distribution and availability Common structures and master data Intangible Business and technology alignment assets Technology Application architecture Data warehouse architecture Methods and Tools
    • Supporting components Scale and Scope Business value Strategy and Decision support business Strategy and objectives Management and Responsibility Performance management processes Performance Measurement and monitoring Communication Organizational culture Data and information analysis Competencies Stakeholders Data and information quality Information Information production, distribution and availability Common structures and master data Intangible Business and technology alignment assets Technology Application architecture Data warehouse architecture Methods and Tools
    • Maturity LevelsIn CMM PMI Maturity Level PMI Maturity Level Description5 – Optimized Level 5 Performance management has become a strategic tool for management, and Strategic tool it is a central part of the organization’s control and management system. Performance management is also strongly connected to the different phases of strategy implementation in the organization.4 – Managed Level 4 Business becomes more analytical in key business areas. The metrics and Analytical business scorecards are closely aligned to the organization’s strategy.3 – Defined Level 3 Decisions are more often made based on facts, rather than management Fact-based decision-making instinct. The organization’s data is stored in a centralized data warehouse.2 – Repeatable Level 2 The organization understands the value of performance management for its Understanding the value business. Organizational goals and objectives are defined.1 – Initial Level 1 The solutions are local; there are no common standards, no shared resources Information silos or management. As a result the management does not get a clear and consistent picture of the organization as a whole.
    • Maturity LevelsIn CMM PMI Maturity Level PMI Maturity Level Description5 – Optimized Level 5 Performance management has become a strategic tool for management, and Strategic tool it is a central part of the organization’s control and management system. Align with Performance management is also strongly connected to the different phases of strategy implementation in the organization. strategy process4 – Managed Level 4 Business becomes more analytical in key business areas. The metrics and Analytical business scorecards are closely aligned to the organization’s strategy. Leverage data3 – Defined Level 3 and information Decisions are more often made based on facts, rather than management Fact-based decision-making instinct. The organization’s data is stored in a centralized data warehouse.2 – Repeatable Level 2 Build foundation The organization understands the value of performance management for its Understanding the value business. Organizational goals and objectives are defined.1 – Initial Level 1 The solutions are local; there are no common standards, no shared resources Information silos Create management. As a result the management does not get a clear and or understanding picture of the organization as a whole. consistent
    • Key Capabilities case companies LEVEL 5 LEVEL 4 Strategic tool LEVEL 3 Analytical business LEVEL 2 Fact-based • High quality data Understanding the decison-making • Competence centre • Strategy feedback and LEVEL 1 value refinement • Top management • Balanced metrics Information silos • Continuous strategic support • Individual and external • Operations and stakeholder metrics planning development plan • Management• Poor quality data dashboards • Strategy planning and • Strategy scorecard • Data marts analysis • External data sources• No defined measures • Common business • Budgeting vocabulary and master • Rolling forecasts • Integration between• Temporary ad-hoc solutions • Creation of strategic data • Enterprise data architectures and goals • Strategy execution and warehouse (EDW) processes• Solutions made for single business cases • Financially focused monitoring • Service-oriented solution • Planning and forecasting architecture (SOA)• Reports built on operational information • Interactive reporting • Key Performance systems systems Indicators 5,0 • Formal PM method in • Data warehouses use 4,0 3,22 3,53 3,0 2,0 2,61 2,91 3,07 1,0 0,0 Case 1For a complete matrix, please visit http://pm-index.com/matrix/ Case 2 Case 3 Case 4 Case 5
    • Descriptions for each maturity level andcomponent combination ” At the third maturity level a common organizational culture starts to evolve. The management, in particular, begins to appreciate the benefits to be gained from performance management. People in the organization start to adapt fact-based decision-making, and their decisions and actions are based on their understanding of performance management systems. People are starting to understand better the factors that have an impact on the business. The performance management initiative gets support from top management. The organization begins to form a performance management competence centre where specialists from both business and IT are joined together to meet the needs of the end users. The organization has a common set of standards and vocabulary. The shared terms and metrics are standardized across the organization. From the technology point of view, one characteristic of this level is that there are data warehouses ” that have more actionable and better quality data…
    • Process for identifying the components Questionnaire Questionnaire Questionnaire Questionnaire and interviews results Questionnaire Questionnaire results results results results Project plans, minutes of meetings, internal Other documentation etc. sources Structured Structured Structured results Structured Structured results Participant observation results results results (~125 days) Field journal Summary Summary Summary by Case Analysis of the Structured Structured Summary by Case Summary by Case empirical evidence Transcribed bycompany Case interview interview interview bycompany Case company (1) (2) company company Interview (15) Literature study
    • Process for identifying the componentsLiterature Analytical unit (n=475) Grouped Category analytical units (n=56)Empirical • Timeliness of information • Common Data andevidence helps decision-making business information • SAP forces to go towards vocabulary common vocabulary • Master Data • MDM system in place • Data quality • Master data has accountable and validity • Common business vocabulary from ERP project • Data quality is challenging • Data producer is responsible Methods: for its validity • Quantifying • … • Theming • Typing • Content analysis
    • Process for identifying the components, cont. Infrastructure Information Information distribution Information Source and availability production system Data and Information Data quality Data input and validity
    • Process for identifying the maturity levelsand the key capabilities N=759 Level 1 Level 2 Level 3 Technology Application Spreadmarts Data Marts Data architecture (Eckerson, 2007a) (Eckerson, Warehouses 2007a) (Eckerson, Traditional back- 2007a) office applications Applications are Literature and existing (Luftman & siloed Hybrid N=374 Kempaiah, 2007) (Hostmann, technologies maturity models in the area 2007) (Hostmann, Spreadsheet 2007)E.g. Brudan, 2009; Balanced Scorecard Institute, applications are2011; Moncla, 2004; Hostmann, 2007; Luftman & frequently used ImprovedKempaiah, 2007; Eckerson, 2007; Hagerty, 2006; (Hostmann, 2007) reportingDavenport & Harris, 2007; Davenport & Harris, 2010; systemsWettstein & Kueng, 2002; Curtis et al., 2009 (Brudan, 2009 … … … … N=385 Empirical evidence
    • Validating the Model Construct validation Maturity model Metric validation validation Building the Building the Group Changes to the maturity model Questionnaire Analysis maturity model metric interviews Metric calibration Literature Observations Prestudy InterviewsMaturity model validation Metric validation• No statistical methods were used • Definition of the 283 statements• Construct validity increased when the construct was • Questionnaire was sent to key employees in the case- incrementally developed companies in four parts• The components and their suitability were examined based • Analysis of the data, selection of proper calculation model on literature, direct observations and interviews • Interview with the case companies• The selection of the components are justified well • Later the index was further refined and calibrated
    • Validating the Construct, cont.The dimensions of a weak market test The extent of usage Strategic Team or Division Entire One person business department or country organization unit Regular use replacing old Rongo system(s) Regular use The intensity in parallel of usage with old system(s) Ad hoc Case Weak usage Logica companies market test passed Case Used once companies Weak market test Tried once but not actually used not passed Reject after unsuccessful implementation trial Rejected after considering implementation Rejected before considering implementation (Labro & Tuomela, 2003)
    • A web-based tool for assessing the PM maturity and topresent the results
    • A web-based tool for assessing the PM maturity and to present the resultsStatement 1 2 3 4 5 0Performance Management solution supports strategy monitoring xThe performance metrics used in our organization are in balance xPerformance data is used to devise alternative scenarios xThe technological architecture and infrastructure are flexible xData and information are high quality xData quality problems are openly communicated in our organization xTop management supports performance management initiative xThe owner of Performance Management comes from the business, not IT xThrough scorecards, the employees participate to strategy execution every day x
    • Example scores and results Strategy and business Strategy and business 5 5 4,1 Management and 4 3,8 4 Performance responsibility 3,0 3 3 2 2Scale and scope Intangible assets 1 1 0 Business value Strategy and objectives Decision supportMethods and tools Information Communication Technology Strategy and business 5 4,1 3,9 4 3,7 3,8 3,4 3,0 3 2,5 2 1 0 Management Business value Methods and Scale and scope Strategy and Communication Decision and tools objectives support responsibility
    • Example scores and results Strategy and business 5 Management and 4 Performance responsibility 3Scale and scope 2 Intangible assets Communication 1 5 3,7 3,9 4 3,2 3,4 3Methods and tools Information 2 1,7 1 Communication Technology 0 Technology Information Intangible Performance Strategy and assets business Communication
    • Summary The study presents a novel model for assessing the maturity of PM further extend PM research by providing a deeper understanding of the underlying components of PM attempts to strengthen the existing theoretical framework in this field increases the understanding of what is a relatively new area of PM research In the model the identified nine components are used to describe the key areas of PM the five maturity levels identify the key characteristics of each development stage In contrast to existing models, in which PM is usually seen only in conjunction with strategic management, this model examines PM particularly from an information and knowledge management point of view
    • For more information, please visit www.pm-index.com What is Your PMI? http://your.pm-index.com (available in the autumn 2012)Good at Finnish? Check out my dissertation http://bit.ly/PMDissertation