Performance Management Solution Offering

From MIKE2 Methodology

This Solution Offering currently receives Major Coverage in the MIKE2.0 Methodology. Most required activities are provided through the Overall Implementation Guide and SAFE Architecture, but some Activities are still missing and there are only a few Supporting Assets. In summary, aspects of the Solution Offering can be used but it cannot be used as a whole.

A Creation Guide exists that can be used to help complete this article. Contributors should reference this guide to help complete the article.

Contents 1 Introduction 1.1 Overview 1.2 Both Corporate and Public Sector Issues Drive the Need for Performance Management 1.3 PM Benefits and Value Proposition 1.4 Overall Framework 1.5 Solution Offering Purpose 1.6 Solution Offering Relationship Overview 2 Relationship to Solution Capabilities 2.1 Relationship to Enterprise Views 2.2 Mapping to the Information Governance Framework 2.3 Mapping to the SAFE Architecture Framework 2.4 Mapping to the Overall Implementation Guide 2.4.1 Business Assessment and Strategy Definition Blueprint (Phase 1) 2.4.2 Technology Assessment and Selection Blueprint (Phase 2) 2.4.3 Roadmap and Foundation Activities (Phase 3) 2.4.3.1 Enterprise Information Architecture 2.4.3.2 Business Intelligence Initial Design and Prototype 2.4.4 Design Increment (Phase 4) 2.4.5 Incremental Development, Testing, Deployment and Improvement (Phase 5) 2.5 Mapping to Supporting Assets 2.5.1 Logical Architecture, Design and Development Best Practices 2.5.2 Product-Specific Implementation Techniques 2.5.3 Product Selection Criteria 3 Relationships to other Solution Offerings 4 Extending the Open Methodology through Solution Offerings

Introduction

The Performance Management Solution Offering represents a framework that can help an organization determine how to align strategic and business planning with operational execution - both ongoing operations and special initiatives. The components provide a necessary foundation for helping organizations measure and monitor performance while integrating their resources along the way, in order to ensure both organization and initiative success.

Overview

Today, many organizations are facing increased scrutiny and a higher level of overall performance expectation from internal and external stakeholders. Both business and public sector leaders must provide greater external and internal transparancy to their activities, ensure accounting data faces up to compliance challenges, and extract the return and competitive advantage out of their customer, operational and performance information: Managers, investors and regulators have a new perspective on performance and compliance, which include:

• No tolerance of any gap in financial controls
• Increased personal accountability for the accuracy of results
• Focus on fair representation and performance over accounting standards
• Increased need to understand the drivers of both financial and operational results

Senior executives across industry agree that achieving growth and performance objectives requires improved analytics, defining and implementing a process to track, monitor and measure innovation and performance, and making available more timely, accurate information for decision-making. The Performance Management offering is fundamental to helping organizations achieve these critical objectives.

Both Corporate and Public Sector Issues Drive the Need for Performance Management

As many performance decisions are driven based on real-time, accurate information, there are a plethora of issues that can be solved when an organization has an enterprise performance management program in place which makes available the necessary information in the right analytical state at the time of need. Key challenges that an organization can solve for using the PM component offerings include:

• Controlling consistency
  • Line of Business (LOB) and enterprise views of performance data are often inconsistent
  • Methodologies and definitions are not coherent across the enterprise
  • Plan, forecast and actual results are from disparate systems and not effectively linked
  • Focus is primarily on financial metrics and other key indicators are ignored
• Doing more with less
  • Data delays do not provide an accurate picture of the current state
  • Information not available to managers until 10+ business days after end of period
  • Need to reduce multiple reconciliation and control points and limit manual data aggregation to reduce costs
• Leverage existing technologies and architecture
  • Multiple systems and databases are maintained at a high cost and provide low quality information
  • Even when the right information exists, it is inaccessible by those who need it
  • Organizations attempting to utilize legacy transaction processing systems for decision support

An performance management program can also help industry level executives respond to key issues such as:

Industry	Key Issues and Challenges
Manufacturing	How do we address the fact that core processes are not being executed successfully, thus inhibiting high value capabilities? How do we maintain supply chain and manufacturing processes when a large portion of time, money and resources are spent on financial systems integration, SOX and risk management activities? How do we address disjointed systems and processes resulting from merger integration?
Commercial Services	How do we improve the cost to serve area? How do we reach the retail buyers, who are on the supply side mostly and not the CFO shop? What is the best approach for optimizing labor management? What does demand driven supply mean to the CFO office?
Life Sciences	How do we confidently decide when to invest in new products? How do we contain cost of drug development? How to improve ROI? How to kill a bad project/plant investment in time? How do we monitor spend on HC providers and meet regulatory reporting requirements? How do we manage advertising spend and ROI? How can the pipeline for new production ideas be improved? How can finance support the development of new production ideas through technical infrastructure and business processes?
Energy and Chemicals	How do we sustain growth? How do we integrate with newly acquired companies and gain efficiencies? How do we leverage technology to close the books more efficiently so we can have more time for analysis and messaging to Wall Street? How can finance support the critical supply chain process (i.e., procure to pay, supply chain)? How do we track risks and capital investments related to energy trading?
Financial Services	How to increase retention of the most valuable customers and achieve the expected integration efficiencies? What processes and tools are required to create integrated and consistent data in order to implement enterprise-wide performance management measures? Beyond offshoring, how else to benefit from globalization (e.g., in production, organization and regulation)? How to transform diverse legacy systems into a modern platform that enables faster product development, better customer service, higher productivity, and greater operational efficiency?
Public Services	How can public sector organizations achieve alignment across program performance and budgeting/resource allocation? What are best practices in merging financial management systems? How can budget, accounting and reporting, cost management, asset management, acquisitions and grant data be integrated to give program managers more timely and accurate information? How can the public sector insure accurate, consistent and reliable sharing of information across other public and private sector agencies (G2G & G2B)? How can public sector agencies/organizations achieve enterprise-wide, integrated views of processes, assets and people in support of mission?

PM Benefits and Value Proposition

With an implemented PM program, an organization can achieve significant business value and benefit, including

• Linkage of Strategic and Operational Planning: Formulate strategy, determine business drivers and KPIs, set targets, and develop business plans, which are aligned and integrated. This approach insures that strategic objectives drive planned results
• Planned Execution: Execute operational, human resource, information technology, capital and financial plans built to achieve strategic targets
• Performance Monitoring for Decision Support: Close and consolidate the GL, set performance measurement tools and evaluate financial and operational results, assessing, diagnosing and reporting performance
• Respond to Business Environment: Revise metrics, refine business plans or stay the course as quickly as possible
• Align the Organizational: Manage human capital planning, recruitment and retention, develop performance oriented culture, workforce analytics and goal setting
• Maintain Streamlined and Transparent Processes and Analytics: Streamline processes, increase visibility into an organization’s projects, and identify collaborative opportunities in order to optimize organizational objectives. Enhance knowledge sharing to reduce overlapping efforts and stimulate innovation across programs
• Establish Accountability: Manage and report on effectiveness and conformance to policy/regulatory requirements and thus reward successful efforts, and redirect ineffective investments

Overall Framework

The foundation of the Performance Management solution is a simple business framework – Plan, Do, Check and Act. </left> This framework represents a lifecycle of activities an organization would undertake as it sets strategy, builds forecasts, plans and budgets, executes programs and operations to achieve the strategy, prepares reporting and analysis to evaluate its progress, and change course as needed.

Within this framework, there are component offerings that can be leveraged either independently or simultaneously, in order to put in place the infrastructure for effectively managing performance.

Component	Link to Framework	Definition	Capabilities
Strategy Formulation, Articulation and Integration	Plan	Establish the necessary linkage between information needs and enterprise strategy to achieve maximum business value	Strategy formulation Strategy articulation External baseline and benchmark development
Performance Architecture and Measure/Metric Design	Plan	Establishes the processes and tools to measure enterprise performance against the strategy	Business driver planning/analysis Identification of performance drivers – current and desired state Performance measurement/KPI development/ metric design Target setting PM technology selection and implementation
Planning, Budgeting and Forecasting	Plan, Check	Establishes the necessary linkage between planning work activity and enterprise strategy	Business planning Operational planning Financial budgeting Rolling/period forecasting
Financial Close and Consolidation	Check	Establishes the financial baseline necessary to evaluate current and historic business activity against enterprise strategy	Performance assessment including variance analysis Process optimization
Management Reporting	Check	Establishes the vehicle and tools to record business performance	Reporting requirements Report design System review, selection, implementation
Analysis, Decision Support, Decision Sciences	Check	Establishes the analytical, predictive and simulation tools to understand the root cause of issues and enable users of information to make optimal decisions,	Requirements (customer, product, pricing, operations, programs Data modeling and simulations Predictive modeling Segmentation Scenario planning and analysis Demand planning Revenue optimization Investment optimization System review, selection, implementation
Operational Execution	Do, Act	Establishes the data monitoring needed to track operational performance against strategy and plan to assist in identifying the action steps needed to stay on target	Business/ operating process reviews, improvement, reengineering across operational and administrative processes (sales, marketing, supply chain, finance, HR, information management, etc) Strategic change management (assessment of organizational risk and readiness; cultural alignment; organizational communications; learning and training strategy development and execution; workforce management and transition) Talent management audit Articulating remediation to integrate new performance goals and metrics into processes and activities

Solution Offering Purpose

This is a Core Solution Offering. Core Solution Offerings bring together all assets in MIKE2.0 relevant to solving a specific business and technology problem. Many of these assets may already exist and as the suite is built out over time, assets can be progressively added to an Offering.

A Core Solution Offering contains all the elements required to define and deliver a go-to-market offering. It can use a combination of open, shared and private assets.

Solution Offering Relationship Overview

MIKE2.0 Solution Offerings provide a detailed and holistic way of addressing specific problems. MIKE2.0 Solution Offerings can be mapped directly to the Phases and Activities of the MIKE2.0 Overall Implementation Guide, providing additional content to help understand the overall approach. The MIKE2.0 Overall Implementation Guide explains the relationships between the Phases, Activities and Tasks of the overall methodology as well as how the Supporting Assets tie to the overall methodology and MIKE2.0 Solutions. Users of the MIKE2.0 Methodology should always start with the Overall Implementation Guide and the MIKE2.0 Usage Model as a starting point for projects.

Relationship to Solution Capabilities

This Solution Offering maps into the Solution Capabilities of MIKE2.0 as described below.

Relationship to Enterprise Views

The MIKE2.0 Solution for Enterprise Performance Management cuts across strategy and organization, people, process and technology. Enterprise Performance Management centers on linking strategy to execution and typically involves articulating strategy through action plans, changing processes, identifying and developing tracking systems for key measures and metrics, developing reporting that is real-time and flexible, designing compensation plans that link to the metrics and hold individuals accountable for action, etc. These aspects cut across functional, organizational and technical boundaries, making PM a truly integrated program.

Mapping to the Information Governance Framework

The Information Governance Solution Offering is required across all Solution Offerings. For Enterprise Performance Management, governance over the information and data elements used to assess and track performance is essential. A common data model, consistent data definitions and how decisions are made to build the consistency is a key element to successfully managing performance.

MIKE2.0 provides a comprehensive approach for Information Governance that is defined in the Information Governance Solution Offering and refers to this overall approach as "Information Development". Information Governance must be evaluated during a PM initiative to determine if the data and information can be relied upon. If not, the scope of the work effort related to Information Governance should be expanded to consider these elements.

Mapping to the SAFE Architecture Framework

Mapping to the Overall Implementation Guide

The need for accurate information in real time to support decision-making is an enabler of Enterprise Performance Management. Without the necessary information, executives and decision-makers can not perform their duties. The phases, activities and tasks with the overall IM methodology incorporate those activities and tasks that should be performed as part of a PM program. The details below highlight those activities and tasks that would be particularly important to perform when conducting a PM related initiative.

Business Assessment and Strategy Definition Blueprint (Phase 1)

Many of the activities from the Business Blueprint phase of MIKE2.0 will be necessary to define the structure, scope and outputs of the PM efforts. In particular, the Overall Business Strategy for Information Development and Future State Vision for Information Management activities represent critical activities to understanding the gap between current and future state performance management requirements. As discussed earlier, the PM solution framework incorporates seven component level offerings which would typically be prioritized as part of the Phase 1 work effort. These components are:

• Strategy Formulation, Articulation and Integration
• Performance Management and Optimization
• Planning, Budgeting and Forecasting
• Financial Close and Consolidation
• Management Reporting
• Operational Analysis, Decision Support, Decision Sciences
• Operational Executiton

Equally important are Business Blueprint Completion and Programme Review activities and tasks. It is here that the business and performance requirements are defined and a plan is developed to close the gaps. This may involve process change, metric design, introduction of technology to improve tracking of results, or changing performance review protocols to improve accountability.

The strategy evaluation and scoping activity will help the enterprise center in on those issues that are most pressing, preventing the organization from achieving optimal performance. This effort will then prioritize which of the individual or grouped components should be addressed to solve for the performance related issues.

Technology Assessment and Selection Blueprint (Phase 2)

All PM projects involve evaluation of the existing technologies, as well as rigorous analysis and understanding of existing data and information sources. Many of these projects also involve the selection and implementation of new technologies, either for planning/ budgdeting, to support the monthly close and consolidation process, to understand customer behaviors, buying patterns, loyalties, or to strictly support data analysis through ad hoc reporting, dashboarding or to meet other analytical requirements.

Tasks that fall within the Strategic Requirements for BI Application Development , Strategic Non-Functional Requirements,Current-State Logical Architecture and Future-State Physical Architecture and Vendor Selection should be considered as part of the PM initiative.

Roadmap and Foundation Activities (Phase 3)

When new technology is introduced, or significant changes must be made to existing technologies or the overall technical infrastructure in order to close the gaps, the Roadmap and Foundational activities become critical. Information Management Roadmap Overview, Testing and Deployment Plan, Detailed Business Requirements, Enterprise Information Architecture Root Cause Analysis of Data Governance Issues and Data Governance Metrics are all necessary activities that should be part of the PM project plan. Some activities that warrant specific highlighting include:

Enterprise Information Architecture

The Enterprise Information Architecture is of particular importance to PM, as it deals directly with the common data model development, master data management and rules around the use of data. A successful performance management initiative is dependent on the use of agreed upon data standards and structure. Without it, the outputs are not useful.

Business Intelligence Initial Design and Prototype

In addition to what the data and information requirements are and where they are sourced, how information is presented to the decision-maker is a critical step of most PM initiatives. Standard reports, ad-hoc real-time data sourcing onto flexible dashboards - there are many options that have different development requirements and schedules. Creating, protyping and testing these options should be part of the over PM plan. These tasks can be found in the Business Intelligence Initial Design and Prototype activity.

Design Increment (Phase 4)

Aspects of the design phase that would be leveraged on an PM initiative include activities related to report design, user or decision-maker identification, database design, ETL design and overall testing. Specifically User Support & Operational Procedures Design, Business Intelligence Design and Test Design would be particularly significant. Many dependencies and variables exist including the number and nature of requirements and applications that are within scope of the initiative. All must be considering within the context of this phase.

Incremental Development, Testing, Deployment and Improvement (Phase 5)

Similar to Phase 4, work efforts relative to development, testing, deployment and improvement are dependent on the business requirements, as well as applications and technologies selected or included in the scope. Again, User Support & Operational Procedure Guides, as well as BI Application Development and the various testing activities are all particularly relevant, as are the Evaluation and Launch activities.

Mapping to Supporting Assets

Logical Architecture, Design and Development Best Practices

Product-Specific Implementation Techniques

Product Selection Criteria

Relationships to other Solution Offerings

Extending the Open Methodology through Solution Offerings