Performance based digital transformation
Jean Vieille, Industrial systems control
ARC EUROPEAN INDUSTRY FORUM
Industry in transition: smart, secure, safe and sustainable manufacturing March 2-3, 2016Mercure hotel Amsterdam City, the Netherlands
J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016 2
Agenda
IT transformationEnterprise controlPerformance managementUse case
3
Context
Hyper-connected World◦ Increasing complexity, opportunities
Enterprises keep morphing to adapt to the changing environment
IT keeps progressing, pushing new technologies and hypes to support them
Industrial IT is aging, intricate◦ Need to improve IT support to business, ◦ Need to leverage opportunities and technologies◦ Without compromising operations, limiting risks
J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016
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Questions
How to handle IT transformation ?◦To serve business◦While leveraging technology
How to link IT improvement to enterprise bottom line ?◦Budget for IT operations◦Budget for projects◦Priorities
J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016
5J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016
IT at the heart of enterpriseEnergy Matter
Information
ProductY
Energy Information
Pre-industry Human, animal
Human
Meccanization
Machine Human
Automation Machine Computer IoTBigDataMobility
Networks
Electro-mechanicsPneumatics Electronics
Informatics
Smart Industry
Industrie 4.0Industrie du
Futur
J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016 6
IT transformation Challenges
Requirement management◦ Business Values, Priorities; Leverage new technologies
IT planning◦ Large projects, continuous incremental delivery
Deal with heterogeneity◦ Legacy new technologies, partial migration,
interoperability, MDM, Promote standardization or leverage local
initiatives◦ IT efficiency or creative diversity
Up to date representation of◦ Industrial system, IT asset
IT delivery performance management◦ Link IT operations to enterprise success◦ Set priorities, budgets
J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016 7
Operations
Policy+ Global transformation
IT Transformation
Local transformation (system recursion)
Local realizations
Strategy, Goal Resource allocation
Transformation activities
Deployment
PlanningMonitoring
Development
Technology - platform
OperationsSupported by IT
IndustrialSystem model
IT asset and configurations
Corrective Maintenance
Requirement management
Technology awareness
Business requirements
Performance
J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016 8
Agenda
IT transformationEnterprise controlPerformance managementUse case
9J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016
ComplexityVery
complex Complex
Environment
Suppliers, Customers, Contractors, PartnersIRS , RegulationsNatural, Social environmentMarket, Politics, MacroeconomicsEmployees, shareholdersBankers, Insurers
Enterprise
HR, Marketing, R&D, Engineering, ITSales, SourcingFinance, CommunicationPlanning, Production, Logistics
???
Make money
Goal
10J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016
C2/C3
C3/C2
C1/C2
C2/C1
Complexity control
Environment
Operations
Management
en.wikipedia.org/wiki/Complexityen.wikipedia.org/wiki/Variety_(cybernetics)
Law of Requisite Variety (W.R. Ashby) :Variety of the controlling system >= Variety of the controlled systemVariety = number of possible states = f(complexity)
C1
C2
C3
Amplifier
Filter
C1 >> C2 >> C3
11J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016
Take a Country
12J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016
How to control such a complex system?
Direct controlOrganizeDecide
Enforce…
Behaviour controlInfluence
EncourageExite….
Performance management is one way for controlling behaviour beside:• Competition• Advertisement,
Propaganda, Brainwashing
• Threat, False flag• Concealment• Leaked secrets• Corruption• …
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Increase complexity, collective intelligence
C4 > C3 > C2 > C1
Direct control
Environment
Management
OrganizeDecideEnforceDeterministic
Goal
C2
C4
C1
Operations
C3
Elevate Operations complexity
C5 > C3Operations
+ C3’
Effective action
Behaviourcontrol
MindsOpportunistic
C2’
C5
InfluenceEncourageExcite
C’2 C2
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2.Coordination1.Operations
Enterprise control representation5.Policy
3.Delivery & monitoring
4.Transformation
HR, EngineeringIT, Contracts, R&D
FinancesOrganization
MarketingCommunication
…Environment
en.wikipedia.org/wiki/Viable_system_model
Strategic directivesResource Allocation and arbitration
RequirementProjects
Direct control
Behaviour control
Sales Design Source
Make Deliver
Recursion
J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016 15
Agenda
IT transformationEnterprise controlPerformance managementUse case
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SS12 SS21
SS1 SS2
SS0
SS22SS11
Complex system control
Behaviourcontrol
Directcontrol
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Local aspects: Behaviour propagation in sub-systems
J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016
SS1
Excitation Reaction
Excitation Reaction
SS11
SS0
SS2
KPIs
KPIs
Reach performance target with available means
Delivery & monitoring
Operations &
coordinationFast loop
Induce others’ transformation to improve local performance
Slow loop
Transform itself to
improve local performance
Policy Transformation
Excitation
Reaction
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IT Transformation
Enterprise Policy
IT Delivery & monitoring
Transformation,Delivery & monitoring
Coordination Operations
Global aspects: Overall Interactional Effectiveness
S Q OVA OOER
Performance
Performance
Performance
Focus all enterprise functions on a global indicatorSeeking mission fulfilment
Sales Design Source Make Deliver
Change requests
Transformation
OIER * S * Q * OVA/OOE
Speed(Working Capital
Need)
Quality
Overall Value Added
Overall Operating Expenses
Social Responsibi
lity
Innovation
www.interaxys.fr
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Delivery & monitoring
CoordinationOperations
PolicyTransformation
Dynamic performance management
Actuality
Capability
Potentiality
Feasible performance target With the current resources
Current performance measure
The reachable, desirable target(transformation investment) Critical for long term survival
LatentPerformance
Long term strategic gapConditions survival
C/P
OrganizationalPerformance
A/P
en.wikipedia.org/wiki/Viable_system_model
Operational Performance
A/CShort term efficiency Ability to leverage available resources
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Example
We produce an average of 600 products a weekOur equipment has a full capacity of 20 products per hourWe operate 8 hours a day, 5 days a weekWe have 2 equivalent machines that cannot be operated simultaneously
ActualityCapabilityPotentialityOperational P. (A/C)Latent P. (C/P)Organ. P. (A/P)
600800 (20*8*5)
6720 (20*24*7*275%12%9%
J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016 21
IT budgeting
Many formulas for guesstimating IT ROI and functional / projects budgets◦IT in industry hardly delivers tangible
value, difficult to prove after implementation
OIE focuses IT on critical requirements
Potentiality = backlog of critical requirements
Capability = selected priority requirements for given resources
C/P = IT Latency for serving strategic objective◦ Informed financial arbitration
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Conflict resolution
Conflicts -> uneasiness, discomfort, complaints
PM as a likely cause, ◦Compromises effective contribution to
fulfil enterprise objectives◦Due to failed assumptions about local
performance relevanceNeed for continuous monitoring of
arising conflicts◦and KPIs’ relevance J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016
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Agenda
IT transformationEnterprise controlPerformance managementUse case
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Context
R&D department of a large company (2000 researchers)
Deployment of ELN softwareIssues
◦ Slow and costly delivery of complex experimentation templates
◦ Sensitive relationships Business / IT / Software provider
◦ Researchers goals (IP protection) conflicts with project goal (leveraging shared knowledge)
Example for a simplistic metrics showing the bottom-up chain of responsibilities and flawed assumptionsJ. Vieille - Performance based digital transformation - ARC European Industry Forum 2016
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ObjectiveIncrease
Overall Added ValueGroup Policy
R&D IT Policy & transformation
Leverage Information technology
Implement ELNContractor IT Delivery, coordination and operations
Group transformation Boost Innovation Numerous, effectiveinventions
Educatedguess…
Resourceallocation
Improve experimentation
productivity
Share knowledgeStandardize
experimentation
Improve research productivity
R&D Policy & transformation Educated
guess…
Resourceallocation
Fast, cost effectiveELN Deployment
Resourceallocation
Fast, cost effectiveELN Deployment
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R&D IT delivery & monitoring
User coverage KPI and responsibilities
J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016
Group Policy & transformation
R&D Policy & transformation
R&D IT Policy & transformation
Contractor operations(VSM recursion) Actuality 88
135Capability
Operational 65%
Potentiality
Latency
380
Organisational36% 23%
PotentialityLatency
2000
Organisational
19% 4%
Directives to R&DR&D budget
Directives to ITIT budget
ELN delivery budget
Poor performance.Will this target actually
help boosting innovation?Numerous, effective
inventions
Fast, cost effectiveELN Deployment
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ELN full deployment justification
Conflict resolution
Standardize experimentationShare knowledge
Promote research sharing
Numerous, effective
inventions
Improve experimenta
tion productivity
Data rather
process oriented
Researchers requirements
Protect individual IP
Experimentation freedom
Enable creativity
en.wikipedia.org/wiki/Evaporating_Cloud
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Conclusion
IT continuous transformation◦Support enterprise ongoing
transformation ◦Leverage new technologies
IT performance management is an essential component in this process ◦To focus efforts on enterprise goal /
objectives◦To set IT budgets
Better understanding through system approach◦Complexity management, Behaviour
control◦Overall Interactional Effectiveness◦Responsibility, Conflict resolution
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Questions?
J. Vieille - Performance based digital transformation - ARC European Industry Forum 2016
Transformation
Performance
Behaviour
OIE
SQ O
VA
OOER
Responsibility
Conflicts