Performance Management Solutions for Government: Strategies ...

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Performance Management Solutions for Government: Strategies ...

  1. 1. Performance Management in Government Performance Management Solutions for Government: Strategies and Approaches By Michael Owellen Copyright © 2006 Claraview, Inc. All Rights Reserved. Page 1
  2. 2. Performance Management in Government Contents 1. Executive Summary .................................................................................................... 2 2. Why Performance Management Is Needed ................................................................ 2 3. Examples of a Performance Management Solution in Action.................................... 4 4. Obstacles to EPM Success .......................................................................................... 6 5. Developing an Effective EPM Strategy...................................................................... 6 6. Conclusion .................................................................................................................. 8 About Claraview ................................................................................................................. 8 1. Executive Summary As government agencies experience increased pressure to demonstrate transparency and accountability in their operations, it is critical that they be able to measure their performance against predefined goals and take timely action to address performance issues. Enterprise Performance Management (EPM) solutions help agencies move beyond simply reacting to performance problems after the fact; by focusing on performance drivers rather than outcomes, EPM enables management and individuals to take proactive steps to head off problems before they occur. Although EPM is enabled by technology, the success of an EPM implementation depends as much on the development of an effective performance management strategy as it does on technology implementation. To be successful, an EPM solution requires clarification of the agency's strategy and goals, detailed understanding of business processes, and change management to help people adapt to the solution. A well-crafted EPM solution that addresses all of these areas will help an organization align its activities and initiatives with its strategy, manage performance proactively, and ensure compliance with legislative mandates. 2. Why Performance Management Is Needed Government agencies are under increasing pressure to demonstrate that they are making effective use of taxpayer dollars. At the Federal level, compliance with legislation such as the Government Performance and Results Act (GPRA) and the Clinger-Cohen Act as well as mandates set by the Office of Management and Budget requires agencies to track their performance against predefined goals, report this performance to outside entities including Congress, and take timely action to ensure that performance meets expectations. In addressing this need, agencies face several challenges: • Information is not actionable. Information is most useful when it enables strategic and operational decision-making in time to make a material impact on results. Existing systems typically track lagging indicators, such as financial performance, rather than leading indicators that drive financial or operational results. Furthermore, under existing business processes and procedures, the requested information is often outdated by the time it is rolled up and reported to Copyright © 2006 Claraview, Inc. All Rights Reserved. Page 2
  3. 3. Performance Management in Government management. Thus, management at all levels may become aware of problems after it is too late to head them off. • Information is widely dispersed. Information is often scattered across many stovepipe systems, making it difficult or impossible for management to assemble a "big picture" view of how the agency is doing. Assembling this information manually is very resource-intensive and error prone –and can delay delivery of information until it is too late to identify and correct time-critical issues. • Business definitions are inconsistent. There is often no "single version of the truth" to show whether a program is succeeding or in need of assistance. Different departments within the same agency may have different definitions of key terms or measures. The end result: inconsistent and sometimes conflicting assessments of the agency's performance, which in turn can cause employees or departments to pursue conflicting goals. An Enterprise Performance Management (EPM) solution can help organizations overcome these challenges by addressing the needs of decision-makers at all levels of the agency. An EPM solution can: • Help management identify potential problems early by measuring performance drivers as well as outcomes. A solution that provides a timely view of both leading and lagging indicators can help management take proactive action before a problem becomes a crisis. • Ensure that decision-makers have access to the most current information. A director may need a weekly update on the agency's overall performance, but a manager needs a daily or intra-daily update on specific issues. A performance management solution can provide "right-time" updates to meet the multifaceted needs of the business. • Facilitate sharing of information across departmental lines and organizational levels. A performance management solution that provides collaboration capabilities can help bridge the gap between simply monitoring performance and taking action to improve it. • Integrate information seamlessly. A performance management solution integrates data from many sources within or even outside the agency into a single consolidated view of the agency's performance, allowing analysts to use their time more effectively. • Introduce consistency between business objectives and measures of success. An effective EPM solution aligns measures of success with the agency's business objectives to help ensure that the entire agency is moving toward a common set of goals. • Provide users with the information that is most relevant to their needs. A robust EPM solution provides each user with his/her own unique, customizable view of performance. This means that agency employees who need to examine detailed information can perform guided analysis without getting lost in a confusing interface, while managers can easily access summarized information without relying on analysts to assemble this information for them. An EPM Copyright © 2006 Claraview, Inc. All Rights Reserved. Page 3
  4. 4. Performance Management in Government solution can also limit access to sensitive data and restricted capabilities to address security and privacy requirements. A solution that provides these benefits can give a government agency the tools needed to monitor its performance, analyze past performance data to identify trends or troubleshoot specific performance issues, and take action to ensure that future performance meets the goals put forth by the agency. 3. Examples of a Performance Management Solution in Action The following scenarios present two situations in which a performance management system helps a government agency identify potential problems and take corrective action before it is too late. As each scenario unfolds, users at different levels in the agency use the solution to monitor key performance indicators (KPIs), analyze the root causes of any problems, collaborate with others, and determine an appropriate course of action. Scenario 1: A deputy director identifies a negative trend and takes action to pinpoint the root cause A deputy director of a military logistics agency opens her dashboard Monday morning to see how her portfolio of programs is performing. The dashboard, which she easily configured herself to place her most important KPIs at the top of the screen, displays a yellow indicator next to one of her largest programs. This indicator tells her that the program is likely to miss a critical schedule milestone, causing its schedule variance to trend sharply upward. Another KPI tells her that the project's actual cost is still within budget. She concludes that although the program is currently operating within its budget, the overall cost of the program may soon begin to exceed estimates. She decides to investigate. Clicking on the yellow indicator, the deputy director opens a new window that provides her with detailed information on the program's schedule performance. The dashboard displays graphs showing past performance of the program, projections based on current trends, and other pertinent information about the program. This window also shows the contact information for the manager responsible for keeping the program on schedule. The deputy director decides to contact the program manager to find out more about the problem and discuss plans for resolving it. Scenario 2: A program manager collaborates with project management to head off a potential delay The same morning, the program manager, who has access to his own personalized view of the performance management system, has already received an alert on his mobile device about the negative schedule variance trend. When he receives the deputy director's call, the program manager informs the deputy director that he is already aware of the problem and is working to resolve it. Copyright © 2006 Claraview, Inc. All Rights Reserved. Page 4
  5. 5. Performance Management in Government Where the deputy director saw a yellow indicator, the program manager – who is directly responsible for resolving the schedule variance issue – sees a red indicator in his own personalized dashboard view. He clicks on this indicator to drill down to more detailed information about the program's underlying projects. This brings up a schedule report with one row shown in red to indicate that a key component has not been delivered on time. The program manager can see that the delay was caused by an unusually high failure rate during the component's live-fire test. He decides to share this report with the project manager in charge of the delayed project. The program manager enters an annotation, which he attaches to the schedule report and submits to the project manager. The system sends this note to the project manager as an alert on his mobile device. When the project manager opens his dashboard, the note from the program manager appears at the top of his dashboard display along with a link to the schedule report. The project manager enters a reply to the program manager's remarks, viewable by both the program manager and the deputy director, stating that the problem was caused by a shipment of defective parts from a supplier. The project manager resolves the issue by working with the supplier to get a rush shipment of working parts. Because of the timely action taken by each of the players before the missed deadline becomes a crisis, the program's ultimate delivery date is not affected. Capabilities Illustrated in the Scenarios In the above scenarios, agency personnel use a solution that provides a number of capabilities for monitoring program performance, analyzing root causes of performance problems, and resolving them proactively. The following table lists the capabilities of such a performance management solution, as well as the benefit that each capability would provide. Capability Benefit Provided Easy-to-use Users at all levels of an agency have access to dashboard views tailored to their consolidated unique needs. The solution's look and feel has been designed to be easy to interpret overview of and free of visual clutter. Data from many different systems is consistent and performance seamlessly integrated. Guided access to Starting from their high-level overview, users have the ability to access more detailed more detailed information to analyze the root causes of exception conditions. Management can information obtain critical information without becoming bogged down in a complex reporting interface, while business analysts and power users can take advantage of sophisticated analytical capabilities. Customizable Users can customize their displays as needed, placing their most important KPIs at interface the top of the display for easy access. Proactive alerting Users who wish to be notified of exception conditions via email can set up customized proactive alerts. "Right time" data Information in the performance dashboard is updated on a frequent basis, providing updates users with a timely assessment of performance. Copyright © 2006 Claraview, Inc. All Rights Reserved. Page 5
  6. 6. Performance Management in Government 4. Obstacles to EPM Success Many organizations take the leap to implement EPM, but the results of these initiatives are not always fruitful. Several obstacles stand in the way of those who wish to use EPM to monitor and improve organizational performance. These obstacles include: • Difficulty in reaching consensus on business definitions and measures of success. In any organization, different departments or even individual employees may use their own business definitions and methods of measuring performance. Consequently, the performance measures used by one department may be inconsistent or even in conflict with the measures used elsewhere in the organization. Aligning business definitions and discarding those that do not promote the agency's overall strategy is a difficult process that requires inter-departmental communication and compromise. • Difficulty in identifying actionable indicators of future performance. To provide individuals with the opportunity to take timely action to influence outcomes, performance measures should be leading indicators whenever possible. They should also be actionable, so employees know what activities they can undertake to improve performance. Identifying leading indicators of performance is a challenge that can only be overcome by developing a deep understanding of the agency's business processes and drivers of performance. • Difficulty in integrating data sources. The data needed to support an EPM solution may be scattered among many different stovepipe systems or spreadsheets throughout the agency. In some cases, the data may not be available at all from existing systems. Integrating existing data and suggesting ways to obtain currently unavailable data are challenges that require a deep understanding of the business as well as the technologies that enable data integration. • Difficulty in making sure the EPM solution keeps up with the business. An EPM solution has to evolve with the changing needs of the business. If KPIs are not reviewed periodically, they can lose their impact or relevance over time. Many EPM solutions ultimately fail because they become stagnant due to lack of ongoing assessment and improvement. • Difficulty in getting employees to accept and use the EPM solution. EPM is most powerful when employees at every level of the agency use it to align their actions with the organization's strategy and goals. If employees do not see the value of the EPM solution, they may resist using the solution. An EPM solution can only succeed if employees become comfortable with it and use it on a regular basis. Overcoming these obstacles is not a trivial undertaking. Only by establishing an effective performance management strategy from the outset of an EPM initiative can an agency hope to implement a successful solution. 5. Developing an Effective EPM Strategy To avoid the hurdles discussed in the previous section, the first step in implementing a successful EPM solution is to develop a performance management strategy. Establishing Copyright © 2006 Claraview, Inc. All Rights Reserved. Page 6
  7. 7. Performance Management in Government a solid strategy at the outset of the initiative will help ensure that the agency's objectives are clearly defined and that the solution will ultimately help the organization meet these objectives. The performance management strategy: • Identifies the agency’s strategic goals and objectives. These goals serve as the basis of the EPM solution. Clarifying the agency's or department's goals at the very beginning of the initiative is an essential step in crafting a solution to address them. • Defines what the EPM solution is to accomplish. The objectives of a departmental EPM solution will be different from those of an agency-wide solution. It is important to establish a consensus among stakeholders about what these objectives are. The objectives of the EPM solution should map to the organizational goals and objectives identified above. Furthermore, because the business objectives are likely to change over time, it is important to review and evolve the performance management strategy to keep up with the changing needs of the business. • Aligns business definitions across the business. To ensure that individuals and groups within the agency are all taking actions that support the agency's goals, it is important to standardize business definitions and business rules used to calculate performance measures. Although this can be a difficult process requiring compromise and mutual agreement among different groups, the EPM solution can only be effective if it enables consistent measurement of performance across the entire department or organization. • Defines measures of factors that drive performance. An effective EPM solution measures how the agency is performing relative to its goals and helps users take corrective action when performance or trends fall below certain thresholds. When identifying the performance measures to be used, it is important to select indicators that measure both drivers of performance (leading indicators) as well as outcomes (lagging indicators). Indicators should be chosen to represent measures of both financial and non-financial performance, and should be actionable elements so it is clear to employees what actions they can take to help improve departmental or agency performance. • Identifies data sources and defines the data integration plan. A performance management solution is fueled by data. Some data may come from existing systems, while other information may not currently be available in any existing system. The performance management strategy must identify the sources for capturing and integrating the necessary data and, when information is not readily available, suggest initiatives that can be implemented to collect the needed information • Defines the implementation plan for developing the performance management solution. When developing the solution, it is important that the EPM team follow a repeatable development methodology based on proven best practices. The implementation plan should be iterative, allowing for periodic assessment of the solution after rollout. By observing usage patterns and testing the effectiveness of performance measures, the EPM team can continue to Copyright © 2006 Claraview, Inc. All Rights Reserved. Page 7
  8. 8. Performance Management in Government support, improve, and evolve the performance management solution to keep pace with the business. • Defines the plan to get buy-in from the user community. To make sure that employees ultimately use the solution, it is critical to build trust among the user community from the earliest stages of the initiative. A good EPM strategy enables end users to participate in the planning process, which in turn makes them stakeholders in the final product. Change management, training, and effective communication with the user community are essential to ensuring a positive employee perception of the EPM solution. Government agencies can help to ensure the success of EPM initiatives by taking an organized, methodical approach from the outset. For example, the Claraview Way, Claraview's methodology for implementing business intelligence and performance management solutions, outlines an iterative process along which EPM solutions can be envisioned, designed, built, and utilized. After the completion of each iteration, the project team cycles back to refine the solution based on a periodic assessment of how well the solution helps the agency meet its objectives. This iterative approach helps to divide the problem into manageable pieces and provides business value to the agency on a timely schedule. 6. Conclusion Performance management solutions help government agencies measure, visualize, analyze, and improve performance against predefined goals. A well-defined and executed EPM solution equips government employees with insight and access to right- time information for effective and efficient decision making and management of critical programs. By providing both a consolidated view of forward-looking measures and the capability to take action to address potential performance issues, EPM solutions help agencies meet their goals and stay in compliance with legislated mandates and OMB guidelines. About Claraview Claraview is a strategy and technology consultancy that helps government agencies use technology to manage organizational performance and achieve operational excellence. We provide support to organizations throughout the entire lifecycle of a performance management solution, including strategy, design, development, deployment, and periodic assessment. Our consultants combine business and domain experience with the technology expertise, including data integration and Business Intelligence (BI), to make EPM solutions work. Our clients realize measurable results: faster time-to-decision, improved information quality, and greater strategic insight. For more information on how Claraview can help your agency perform an EPM readiness assessment or get started with an EPM solution, contact us at info@claraview.com. Copyright © 2006 Claraview, Inc. All Rights Reserved. Page 8

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