cmmi & bs - tutorial v1.3.1
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Building your Business Strategy for a SustainableProcess Improvement ProgrammeCMMI® & Balanced Scorecard
Giuseppe Magnani Business Strategy Director
SCAMPI Lead Appraiser for CMMISEI authorized CMMI Instructor
www.businesstrategy.com
Agenda Introduction Strategy CMMI®
Balanced Scorecard Integrated Approach Case-Study
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INTRODUCTION
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“In God we trust, all others bring data.”
W. Edwards Deming
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Summary Over the past two decades, the way an organization
drives a process improvement initiative has beenshown to have a significant impact on its businessresults and trends.
CMMI is a powerful tool to help transforming anenterprise vision into business results.– In this regards a measurement & analysis framework is a
prerequisite to set quantitative goals for processperformance and product/service quality.
The many different stakeholder interpretations of theorganizational vision require an integrated CMMIand Balanced Scorecard approach to link thecompany strategy with its key processes.
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ROI - Return on Investment
Cost/Benefit Analysis
CMU/SEI-2003-SR-009
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ROI
CMU/SEI-2003-SR-009
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Question Is CMMI a business management
tool?
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Tutorial’s Objective
Adopting CMMIas a
Business Management tool
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STRATEGY
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STRATEGY
Strategy– is a term that comes from the Greek
strategia, meaning "generalship"
Meanings
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“Corporate Strategy is– the pattern of decisions in a company that
determines and reveals its objectives, purposes,or goals, produces the principal policies andplans for achieving those goals, and
– defines the range of business the company is topursue, the kind of economic and humanorganization it is or intends to be, and
– the nature of the economic and non-economiccontribution it intends to make to itsshareholders, employees, customers, andcommunities” - Kenneth Andrews
Meanings
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Why a Strategy?
Chinese proverb:If you don’t know where you
are going, any road will do.
W. Humphrey proverb:If you don’t know where
you are, a map won’t help.STRATEGY
W.H.
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Corporate Vision is– anticipating the future– predicting further business and
corporate results– where we want to go– …
Meanings
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COMMUNICATION TOOLS
VISION, STRATEGY
Processunpredictable, poorlycontrolled andreactive
Processcharacterized forprojects and is oftenreactive
Process characterized forthe organization and isproactive
Process measuredand controlled
Focus on processimprovement
Optimizing
QuantitativelyManaged
Defined
Performed
Managed
Optimizing
Defined
1
2
3
4
5
CMMI
BusinessPlan
CMMI BSC EFQM
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The EFQM Excellence Model
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Cause-Effect (T. Conti)
RESULTSRESULTS
LEADERSHIPKEYPERFORMANCERESULTS
PEOPLE PEOPLERESULTS
POLICY & STRATEGY
CUSTOMERRESULTS
PARTNERSHIPS &RESOURCES
SOCIETYRESULTS
KEYKEYPROCESSPROCESS(CMM-I)(CMM-I)
DIAGNOSIS
ACTION
DRIVERSDRIVERS
EFQM Excellence ModelEFQM Excellence Model
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IDEALsm ModelCMU/SEI-96-HB-001
Strategy for Process Improvement
Processunpredictable,poorlycontrolled andreactive
Processcharacterizedfor projectsand is oftenreactive
Processcharacterized forthe organizationand is proactive
Processmeasuredandcontrolled
Focus onprocessimprovement
Optimizing
QuantitativelyManaged
Defined
Performed
Managed
Optimizing
Defined
1
2
3
4
5
CMMI
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IDEALsm ModelCMU/SEI-96-HB-001
Strategy for Business Improvement
Processunpredictable,poorlycontrolled andreactive
Processcharacterizedfor projectsand is oftenreactive
Processcharacterized forthe organizationand is proactive
Processmeasuredandcontrolled
Focus onprocessimprovement
Optimizing
QuantitativelyManaged
Defined
Performed
Managed
Optimizing
Defined
1
2
3
4
5
CMMI
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Strategy for BusinessImprovement ROI Analysis
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IDEALsm ModelCMU/SEI-96-HB-001
Strategy for Business Improvement
Processunpredictable,poorlycontrolled andreactive
Processcharacterizedfor projectsand is oftenreactive
Processcharacterized forthe organizationand is proactive
Processmeasuredandcontrolled
Focus onprocessimprovement
Optimizing
QuantitativelyManaged
Defined
Performed
Managed
Optimizing
Defined
1
2
3
4
5
CMMI
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CMMI - CMM-Integration
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CMM-Integration® (CMMI)
4 Disciplines– Software Engineering– System Engineering– Integrated Process and Product
Development– Supplier Sourcing
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SW-CMM® v1.1 vs. CMMI®
Defect Prevention Causal Analysis and ResolutionTechnology Change Mgmt Organizational Innovation & DeploymentProcess Change Management
Quantitative Process Mgmt Organizational Process PerformanceSoftware Quality Mgmt Quantitative Project Management
Organization Process Focus Organization Process Focus Organization Process Definition Organization Process DefinitionTraining Program Organizational TrainingIntegrated Software Mgmt Integrated Project Management
Risk ManagementSoftware Product Eng. Requirements Development
Technical SolutionProduct Integration
Intergroup Coordination VerificationPeer Reviews Validation
Decision Analysis and Resolution
Requirements Management Requirements ManagementSoftware Project Planning Project PlanningSoftware Project Tracking & Oversight Project Monitoring and ControlSoftware Subcontract Mgmt Supplier Agreement ManagementSoftware Quality Assurance Product & Process Quality AssuranceSoftware Configuration Mgmt Configuration Management
Measurement and Analysis
LEVEL 5OPTIMIZING
LEVEL 4MANAGED
LEVEL 3DEFINED
LEVEL 2REPEATABLE
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Staged Representation Components
Commitmentto Perform
Maturity Levels
GenericPractices
GenericGoals
Process Area 2
Common Features
Process Area 1 Process Area n
Abilityto Perform
DirectingImplementation
VerifyingImplementation
SpecificGoals
SpecificPractices
GP 2.7 Identify & Involve Relevant Stakeholders
GP 2.10 Review Status with HL Management
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CMMI® Staged Representation
Process unpredictable,poorly controlled andreactive
Process characterizedfor projects and isoften reactive
Process characterized forthe organization and isproactive
Process measuredand controlled
Focus on processimprovement
Optimizing
QuantitativelyManaged
Defined
Performed
Managed
Optimizing
Defined
1
2
3
4
5
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CMMI® Continuous Representation
5 Optimizing4 Quantitatively Managed3 Defined2 Managed1 Performed0 Incomplete
0
0.5
1
1.5
2
2.5
3
3.5
4
RM PP M&A VE
CAPABILTY
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Decision Analysis and Resolution Requirements Development
System Product Deliveries
Project Planning
Supplier Agreement Management
Product Control
Products
Outcome & FeedbackProduct
Verification ValidationMeasurementand Analysis
Deficiencies
Directives, Constraints
Contracting Activity Planning
Requirements DefinitionBudgeting Priority
Assessment & Certification
Integrated ProjectManagement
Project Monitoringand Control
Risk Management
TechnicalSolution
ProductIntegration
RequirementsManagement
ConfigurationManagement
Quality Assurance
Program ManagementTechnical Execution
ProcessFocus
ProcessDefinition Training Quantitative
MgmtProcess
PerformanceInnovation and
Deployment
Process Maturation
Organizational Process Management
Mission Area Planning
ConcurrentFront-EndActivities
Causal Analysisand Resolution
CMMI-based Life Cycle Relationships
MissionShortfalls
Integrated SupplierManagement
Integrated Teaming
Environmentfor
Integration
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BALANCED SCORECARD
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Why BSC?
The balanced scorecard provides asystematic way to:– obtain measures and indicators
reflecting the performance of anorganization
– uses an organization’s vision andmission statements to identify andclarify strategic goals and sub-goals
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BSC Framework
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BSC vs. CMMI
CMMI PAMeasurement & Analysis
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BSC Representation - sample
Nils-Goran Olve and AnnaSostrand
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VISION &BUSINESS OBJECTIVES
VISION:To become the premiere providerof Custom-Solutions in EU by:
•Becoming the EU competencecenter recognized for software& system engineering practicesat CMMI Level 5
•Establishing a long-termpartnership with our sister-companies in ASIA-PAC
INITIATIVES BUSINESS RESULTS
2005 BUSINESSOBJECTIVESFINANCIAL
•Increase revenues of 3,5 %
CUSTOMER•Augment CustomerSatisfaction from 8,50 to9,00
•Achieve 100% retention ofkey customers
LEARNING• Deploy the 4-weekslearning program at EMEA
• Reduce turn-over down to15%
INTERNAL• Achieve CMMI Level 3 byQ3-2004
• Implement BSC atIndividual Level
Customer / Consumer
• Achieve customer satisfaction ratings ofaverage 8.5/10 for key departments
•Achieve Zero-defects for key-productsdelivery
•On-time delivery and quality goals across95% of projects
•………..•…..•……………………..
Financials•Revenue: Euro 7,5 BLN•………………..
Human Resources
• Establish team chartering policies forpeople recognition
• 80% of staff attending the 4-weeks program• Allocate Euro 55,000.00 for process
improvement rewards• ……….
Strategic Planning• Review Business Plan monthly to align BSC with CMMI
initiatives• ………………• ………….
Leadership
•Communicate the new sharedvision, corporate mission,organizational values andperformance
•Conduct weekly charter teamsmeetings
•……………..
Process Management
•Allocate 12% of effort for processimprovement initiatives
•Develop CMMI level 5 Roadmap•………………………….
-------------------------• ----------• ----------------------• ----------
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BSC RATING
KPI
CFS
KPI KPI KPI
Perspective 1
KPI
CFS
KPI KPI KPI
BSC
100%
KPI
CFS
KPI KPI KPI
Perspective 2
KPI
CFS
KPI KPI KPI
100%
100%
100% 100%
score score score score
SCORE SCORE
SCORE
RATING SCORING
100% 100%
CSF: Critical Success FactorsKPI: Key Performance Indicators
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Developing Enterprise-wide Measures
CMU/SEI-2003-TN-024
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BSC Reporting
BSCInternalAssess.Report
QualityAssurance
Report
InternalSurvey
Management & Operational Reporting
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BSC Definition
A strategic, measurement-basedmanagement system, proposed by RobertKaplan and David Norton, which providesa method of aligning business activities tothe strategy, and monitoring performanceof strategic goals over time.
A balanced scorecard is a format forcommunication about activities consistingof four perspectives,– each of which should include a small number
of important metrics.
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BSC Life-Cycle
Deploying Initial BSC Deploying Dept./Proj./Indiv. BSC Measuring & Analyzing Diagnosis Action (initiatives) Planning & Monitoring Re-conciliation … Reviewing Initial BSC
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BSC Life-Cycle
Deploying Initial BSC– Prepare Actors– Running Executive Workshops– Set Top-level BSC– Roll-out TL-BSC– Determine which organizational level
should be covered by BSC• Up to individuals…
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Goal Questions
CMU/SEI-2003-TN-024
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How to illustrate BSCStrategy map – E-business Venture
Nils-Goran Olve and AnnaSostrand
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How to illustrate BSCStrategy map – University
Nils-Goran Olve and AnnaSostrand
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BSC Life-Cycle
Deploying Dept./Proj. BSC– Prepare Actors– Running Local Workshops– Set Local BSC– Roll-out L-BSC– BSC Bottom-up Review and Conciliation
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BSC Life-Cycle
Measuring & Analyzing– Collect Measures– Analyze Measures– Store Data & Results– Communicate Results– BSC Bottom-up Review and Re-
Conciliation
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BSC Rating
KPI
CFS
KPI KPI KPI
Perspective 1
KPI
CFS
KPI KPI KPI
BSC
100%
KPI
CFS
KPI KPI KPI
Perspective 2
KPI
CFS
KPI KPI KPI
100%
100%
100% 100%
score score score score
score
SCORING
RATING SCORING
100% 100%
CMMI
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CMMI-BSC INTEGRATED APPROACH-1MEASUREMENT & ANALYSIS
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M&A Purpose The purpose of Measurement and
Analysis is to:– develop and sustain a measurement
capability that is used to supportmanagement information needs
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CMMI - M&A PA The Measurement and Analysis Process
Area involves the following– Specifying the objectives of measurement and analysis
such that they are aligned with identified informationneeds and objectives
– Specifying the measures, data collection and storagemechanisms, analysis techniques, and reporting andfeedback mechanisms
– Implementing the collection, storage, analysis, andreporting of the data
– Providing objective results that can be used in makinginformed decisions, and taking appropriate correctiveactions
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Align Measurement &Analysis Activities
Establish MeasurementObjectives
Specify Measurement
Specify Data
Collection / Storageprocedures
Specify Analysisprocedures
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Provide Measurement Results
CollectMeasurement Data
AnalyzeMeasurement Data
Store Data &Results
CommunicateResults
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BSC Life-Cycle
Diagnosis– During CMMI Assessment– During TQM Assessment– Ad-hoc BSC Assessment
• Independent vs. Internal Assessment Team
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BSC Life-Cycle
Action Planning & Monitoring– Analyze/Review
• Strategic Aims• Critical Success Factors• KPI Target and Actual
– Define/Review Actions– Re-conciliation
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… Break
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BALANCED SCORECARDNew trends
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BALANCED SCORECARD 2001
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Denise Lindsey Wells
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CMMI-BSC INTEGRATED APPROACH-2
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CMMI Enablers for BSC
Project Planning– SP 2.6-1 Plan Stakeholder Involvement
Project Monitoring & Control– SP 1.5-1 Monitor Stakeholder
Involvement Integrated Project Management
– SG2 Coordinate & Collaborate withrelevant Stakeholder
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CMMI Enablers for BSCcont …
Integrated Project Management forIPPD– SG3 Use the project’s shared vision
context
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Quantitative Understanding
KPI
CFS
KPI KPI KPI
Perspective 1
KPI
CFS
KPI KPI KPI
BSC
100%
KPI
CFS
KPI KPI KPI
Perspective 2
KPI
CFS
KPI KPI KPI
100%
100%
100% 100%
score score score score
score score
score
RATING SCORING
100% 100%
ORGANIZATIONAL PROCESS PERFORMANCEQUANTITATIVE PROJECT MANAGEMENT
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CMMI Enablers for BSCcont …
Organizational Process Performance– SP 1.3-1 Establish Quality and Process-
Performance Objectives• Based on organization’s business
objectives
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Quantitative Understanding
Senior Management
OPPProgress toward
achieving businessobjectives
OID
Quality and process performance objectives,
measures, baselines, models
Cost and benefitdata from pilotedimprovements
Quality and processperformance objectives,
measures, baselines, models
Process performanceand capability data
Basic Set of Process Managementprocess areas
Ability to developand deploy processand supporting assets
OrganizationImprovements
Common measures
Project Management,Support, and Engineering
process areas
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Decision Analysis and Resolution Requirements Development
System Product Deliveries
Project Planning
Supplier Agreement Management
Product Control
Products
Outcome & FeedbackProduct
Verification ValidationMeasurementand Analysis
Deficiencies
Directives, Constraints
Contracting Activity Planning
Requirements DefinitionBudgeting Priority
Assessment & Certification
Integrated ProjectManagement
Project Monitoringand Control
Risk Management
TechnicalSolution
ProductIntegration
RequirementsManagement
ConfigurationManagement
Quality Assurance
Program ManagementTechnical Execution
ProcessFocus
ProcessDefinition Training Quantitative
MgmtProcess
PerformanceInnovation and
Deployment
Process Maturation
Organizational Process Management
Mission Area Planning
ConcurrentFront-EndActivities
Causal Analysisand Resolution
CMMI-based Life Cycle Relationships
MissionShortfalls
Integrated SupplierManagement
Integrated Teaming
Environmentfor
Integration
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ICT BSC
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CMMI – Business Tool
CMMI
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Cause-Effect (T. Conti)
RESULTSRESULTS
LEADERSHIPKEYPERFORMANCERESULTS
PEOPLE PEOPLERESULTS
POLICY & STRATEGY
CUSTOMERRESULTS
PARTNERSHIPS &RESOURCES
SOCIETYRESULTS
KEYKEYPROCESSPROCESS(CMM-I)(CMM-I)
DIAGNOSIS
ACTION
DRIVERSDRIVERS
EFQM Excellence ModelEFQM Excellence Model
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M-L1M-L2M-L3
M-C1M-F1M-I1M-I2
METRICS
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1 - ENSURE KEY-COMPETENCIESFOR NEW SERVICEPORTFOLIODEVELOPMENT2 - PROVISION OF A NEWTECH INFRASTRUCTURE3 - ENSURE CONTINUOUSSERVICE PROVISION
CRITICALFACTORS OF
SUCCESS
CONTINUOUSPROCESSIMPROVEMENT TOBETTER SATISFYIMPLICIT &EXPLICITCUSTOMER NEEDS
ENSURE RELIABLESERVICESACCORDINGTO BUSINESSREQUIREMENTS
EFFICIENT USEOF ICT -RESOURCES
AVAILABILITY OFADEQUATEICT PROCESS& TECHNOLOGY
STRATEGICOBJECTIVES
LEARNINGCUSTOMERFINANCIALINTERNALPERSPECTIVE
MISSION“To be the most reliable partner for added-value ITC solutions”
BSC – ICT Dept
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Flexible ICTOrganization:- Focus on TTM andProduct & ServiceQuality- Focus on core-competences
OBJECTIVE PROCESSES
ICT Governance
RelationshipManagement
KPI CATEGORY KPI
score
score
Capability management- Resources & Capacity Planning - Training Planning - -
Quality management - PPQA Performance - NC Close/Open
- Process compliance
ESP management
Strategic Planning - Plans completeness and accuracyi
Architecture management- % Planned/Implemented Evolutionary Architectural Innovations
Security management - Security Auditing level of compliance
Operational Planning - Early availability of Area Planning
Requirement Management - Requirement Volatitlity - % Accepted Business CRs
Effective Execution - Project Schedule Estimate Accuracy
Feasibility Effectiveness - % FS Complete / Business Plan Requests
- No. % 1st approval from customers
INTERNAL PERSPECTIVE
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CASE-STUDY
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Business Case
Build-up top-level BSC
Identify CSF through CMMI PAs
Lesson Learned
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Company The Building Solution Center Europe
(BSCE) (Maintal – Germany) is aHoneywell company and the mainengineering facility for the H&BC S&S– (Home & Building Control, Solutions & Services) business
and responsible for system design, softwareand solution development and systemintegration.
The BSCE employs around 80 people(Year 2000)
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Issues (Year 1995)
Many of the BSCE software releaseswere still late
Quality of delivery rather low Maintenance effort high Customers more or less dissatisfied.
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Improvement & AssessmentRoadmap
Dec. 96CBA IPILevel 2Assessment
Jul 96MiniAssessment
Oct. 98CBA IPILevel 3Assessment
Oct 97MiniAssessment
Jul 98MiniAssessment
Mar 98SelfAssessment
Mar 97SelfAssessment
1995: kick-off of Process Improvement Program andMeasurement of Cost of Quality
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Cost of software quality
Cost of Non Quality
Cost of Value
Cost of verification
Cost ofprevention
External costof defects
Internal costof defects
retestingreworkdefects management
customer supportproblems investigationupdatesdefects notification
quality assuranceinspectionsprocess definition/improv.metrics collection/analysis
testingproduct quality auditssoftware product qualification
Cost Management (Cost Breakdown Structure)
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The Improvement approach has ledBSCE on an average over the past 4years to25 – 30 % Revenue Increase10 – 12 % Productivity Improvement20 – 25 % Reduction in Cost of Quality30 – 35 % Software Quality ImprovementZero critical defects on field installationsOn time delivery of all Software ProductsExcellent feedback from customer audits
Business Results (Year 1999)
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Lesson Learned (I)
“Process Improvement Pays Back”
0,4
0,2
1,2
2,4
0
0,5
1
1,5
2
2,5
3
1995 1996 1997 1998
Target Defects/KSLOC
Defects per Number of Line of Codes
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Lesson Learned (II)
BSCE Cost of Software Quality
0.0
10.0
20.0
30.0
40.0
50.0
60.0
1995 1996 1997
Perc
en
t o
f D
evelo
pm
en
t C
osts
Prevention
Testing
Rework
Total
Cost of Software Quality
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Implementation Sample
Top-level BSC–
CMMI PAs Scenario–
THANKS!
Giuseppe Magnani Business Strategy Director
SCAMPI Lead Appraiser for CMMISEI authorized CMMI Instructor
Acknowledgements: We would like to thank Fernando Mandelli (ITALY) for his comments and contributions
Building your Business Strategy for a SustainableProcess Improvement ProgrammeCMMI® & Balanced Scorecard
Giuseppe Magnani Business Strategy Director
SCAMPI Lead Appraiser for CMMISEI authorized CMMI Instructor
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