Balanced Scorecard for CMMI Implementations - Eduardo Espinheira e Paula Gomes

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Balanced Scorecard (BSC) for CMMI

An Implementation Roadmap

Eduardo Espinheira

Process Improvement Manager

Paula Gomes

Project Manager / Consultant

2011-10-03

Balanced Scorecard for CMMI

Agenda

• Introduction

• CMMI Product Suite and MLs

• Balanced Scorecard Concept

• Implementation Strategy

• Results until this moment

• Conclusion

Introduction

The aims of this presentation is to present:

• The advantages of a BSC Implementation within a CMMI

Implementation.

• An implementation strategy.

CMMI Product Suite and MLs

Process Area

5 Optimizing Organizational Innovation and Deployment OID

Causal Analysis and Resolution CAR

4 Quantitatively Managed Organizational Process Performance OPP

Quantitative Project Management QPM

3 Defined

Requirements Development RD

Technical Solution TS

Product Integration PI

Verification VER

Validation VAL

Organizational Process Focus OPF

Organizational Process Definition OPD

Organizational Training OT

Integrated Project Management for IPPD IPM

Risk Management RSKM

Decision Analysis and Resolution DAR

2 Managed

Requirement Management REQM

Project Planning PP

Project Monitoring and Control PMC

Supplier Agreement and Management SAM

Measurement and Analysis MA

Process and Product Quality Assurance PPQA

Configuration Management CM

• Economic and Financial Measures are not enought to run

your business!!

• You also need to manage:

• The Target Markets;

• Customer Relationship;

• Business Processes;

• Human Resources Performance;

• Innovation and Technology evolution.

Balanced Scorecard Concept

It conditions

the economic

and financial

results.

• BSC gives us a perception of

the added value;

• BSC allows you to measure

intangible actives;

• Focus on strategy;

• Alignment between:

• Goals;

• Indicators;

• Targets;

• Action Plans.

Balanced Scorecard Vision and

Strategy

Executive Lead to change

mobilization.

Treat Strategy as a

Continuous Process

Treat Strategy as an everyday

Improve organizational alignment and

create synergies.

Translate strategy in executable

terms (Themes)

The balanced scorecard (BSC) design process is built upon a set of

premises:

• Strategy is a hypothesis it makes certain assumptions about outcomes that can be achieved

• Strategy can be described as a set of cause-and-effect

relationships the causal chain can be made explicit and testable

• Strategy requires the definition of activities that are the drivers

(or lead indicators) of desired outcomes the organization can influence the drivers to achieve outcomes of interest

The BSC is, among many things, a strategic performance

management tool.

It is a semi-standard structured report, supported by proven

design methods and automation tools, that can be used by

managers to keep track of the execution of activities by the

staff within their control and to monitor the consequences

arising from these actions.

It is divided in a minimum of 4 perspectives.

Vision and

Strategy

Internal Processes

To satisfy our stakeholders and customers, what

business processes must we excel at?

Financial perspective

To succeed financially, how should we appear to our

stakeholders?

Learning and Growth

To achieve our vision, how will we sustain our ability to

change and improve?

Customer perspective

To achieve our vision, how should we appear to our

costumers?

Indicators

Targets

Initiatives

Indicators

Targets

Initiatives

Indicators

Targets

Initiatives

Indicators

Targets

Initiatives

Barriers of BSC Implementation

• Vision: only 5% understands the company’s strategy;

• People: only 25% of the companies gives incentive due to

the strategy's achievement;

• Resources: only 40% of the companies add financial

resources to improve strategy;

• Management: 85% of the managers spend less than an

hour per month discussing the strategy.

Implementation Strategy

• Services oriented implementation strategy;

• Everyone has a client, so along all levels, even individually, we

• Mission;

• Vision;

• Strategy;

• Goals;

• Metrics.

• Top – Bottom Definition Process;

• Bottom - Up Implementation Process.

Implementation Strategy

BSC Definition Process

BSC Implementation Process

1. Define Mission, Values, Vision and Strategy

2. Define Strategic themes (a way of organizing your

strategy)

3. Create strategic maps for each theme

4. Relate Strategic Themes (Goals and Indicators)

5. Identify the interest groups and relate them with the

different perspectives/themes.

BSC Definition Process 1. Define Mission, Values, Vision and Strategy

Company

Marketing

Development

Team 1

Team 2

(…) HR

Operational Management

Financial

Custumer Services

Business Dev.

Company

Mission

Values

Vision

Strategy

Mission

Values

Vision

Strategy

Department

Mission

Values

Vision

Strategy

BSC Definition Process 2. Define Strategic Themes (ST)

A way to organize your strategy;

Strategic group with similar characteristics;

Examples:

• Department/Team:

• Project / Version.

BSC Definition Process 3. Create Strategic Maps (ST)

Financial

Customer

Internal Processes

Learning and Growth

Goal Indicator Target Initiative

Strategic Map

Describes company's strategy, through

the relation between objectives,

distributed by the four dimensions.

Strategic

Objective

What should be

achieved and

what’s critical to the

theme success.

Indicator

How we measure

and follow the

objective’s

achievement.

Target

Performance level

or improvement.

Initiative

Key action plans,

crucial to reach for

the objectives. Objective Objective

Objective Objective

Objective

RULES:

• Each goal should have more than one performance indicator;

• Goals and action plans should be related with indicators.

BSC Definition Process 3. Create Strategic Maps (ST) - Example

ST1 - Process Improvement

Financial

Customer

Internal Processes

Learning and Growth

Ensure the continuous process improvement .

Increase Sales

Increase quality of our solutions.

Increase the Customer Satisfaction.

Guarantee HR improvement

Ensure the continuous process improvement on our

Department.

Develop new products.

Support customer needs.

Identify solutions for problem solving.

Ensure that HR skills are aligned with department’s needs.

COMPANY

BSC Definition Process 3. Create Strategic Maps (ST) - Example

Perspective Goal Indicator Target Initiative

Financial Develop new products Number of new products 10

• I&D plan % Sales that correspond to new products 10%

Customer Support customer needs. Average of request response time. 1 day Team member

dedicated to customer needs. Resolved Issues / Customer Requests 95%

Internal Processes

Identify solutions for problem solving.

Nr. of improvement needs identified. 100 Improvement implementation procedure definition.

Ensure the continuous process improvement on our Department.

Improvements / Improvement Needs 80%

Learning and Growth

Ensure that HR skills are aligned with department’s needs.

% Team with Blue Color. 100% Internal Training Plan Monitoring

Nr. of technical training actions. 5 Technical Training plan.

BSC Definition Process 4. Relate Strategic Themes (Goals and Indicators)

BSC Definition Process 5. Identify the interest groups and relate them with the different

perspectives/themes

BSC Perspectives

Financial Customer Internal

Processes Learning

and Growth

SG1 SG2 SG1 SG2 SG1 SG2 SG1 SG2

Client

Supplier

Shareholder

Employee

Department X

Financial sector

Official Entities

THE EASIEST

PART IS NOW

COMPLETE…

THE HARDEST

PART STILL IN

PROGRESS…

1. Identify and Evaluate Data Sources;

2. Create additional data sources;

3. Link data sources, operational metrics and strategic

metrics;

4. Define refresh data procedures;

5. Define update responsibilities;

6. Create the different BSC views.

BSC Implementation Results (Until Now)

Company Balanced Scorecard

is composed of a number of weighted

strategic KPIs for each perspective

there is a vision, mission statement, values

and strategy represented on the BSC

the construction of this scorecard consists of

the aggregation of several area/department

scorecards

Area / Department Scorecard

are composed of a number of

weighted KPIs for each

perspective, linked to the company

the construction of this scorecard

consists of the aggregation of

several team/personal dashboards

each main functional area will

represent a strategic theme which

will be composed of a number of

department scorecards

Team Dashboards

are composed of a

number of PIs for each

perspective, linked to

the area/department

scorecards

the construction of this

dashboard can be

done through the

aggregation of several

personal dashboards

Personal

Dashboards

are composed of

a number of

personal PIs for

each perspective,

linked to the Team

dashboards

Balanced Scorecard Key Issues

The balanced scorecard (BSC) allows us to link all the

measurement levels within the company.

The definition and implementation processes are good

strategic exercises:

• Who’s my client?

• What is the input and the output of my activities?

• How do I contribute to the companies' strategy?

It creates the best conditions for a company with a CMMI

maturity level to ML2 or ML3 to grow or maintain ML4.

Conclusion (1/2)

It can only be implemented in a company if: • the strategy is defined;

• the tool adds value and is used;

• everyone can read and understand the BSC;

• the necessary metrics are set;

• the numbers are reliable and available;

• the numbers represent the scope to be monitored;

• there is commitment from everyone to the implementation;

• enough time has passed so that everything has been refined and

reviewed over and over again.

Conclusion (2/2)

CMMI for Development v1.3, 2010 Software Engineering Institute (SEI)

The Balanced Scorecard – Measures that Drive Performance, 1992 Robert S. Kaplan, David P. Norton

Putting the Balanced Scorecard to Work, 1993 Robert S. Kaplan, David P. Norton

Using the Balanced Scorecard as a Strategic Management System, 1996 Robert S. Kaplan, David P. Norton

The Strategy-Focused Organization, 2001 Robert S. Kaplan, David P. Norton

Balanced Scorecard for Dummies, 2007 Chuck Hannabarger, Rick Buchman, Peter

Bibliography

Questions?

Eduardo Espinheira

eduardo.espinheira@gmail.com

Paula Gomes

pffgomes@gmail.com