SettingStrategyintoActionJuly10,2003PerformanceManagementProposalFluxys-June2003-CGEYwilluseitsBalancedScorecardApproachtorefineandImplementAPerformanceManagementFrameworkProvideaglobalstructureorganizingperformanceindicatorsinmultiplelevels

(toplevelbeingITdepartment,lowestlevelbeingoperationalindicators);ReviewofthedefinedperformanceindicatorsproposedforITManagementprocesses,inthelightofthisstructure.

(Specificconsiderations:usefulnessinmanagingthedepartment/teams,peridiocityofmeasurement,detectionofholes/tricksthatmightimpacttheuseoftheindicatororteoperationalprocesses,feasibilityofimplementingtheprocessforobtainingandmaintainingtheindicator,numberofindicatorsperteamleader);RetainacomprehensivesetofperformanceindicatorstoformtheITPerformanceManagementSystemandprepareitsimplementationbydefiningthenecessarytoolsandprocesses;SupportafirstcalculationofthecurrentvalueoftheretainedperformanceindicatorsOptional:1)comparisonindifferentindustriesforrelevantgenericindicatorsand2)comparisonwithinthesameindustryforspecificindicators;CGE&YApproachProjectUnderstanding,assumptionsandImplementationApproachCGE&YwilluseitsprovenBalancedScorecardImplementationApproachOfferingaprovenmethodologyandtrackrecordforfastandefficientdelivery;Adaptedthetaskstobuildonandvalidateexistingperformanceindicators;Withanimplementationplanprovidingthenecessarytoolsandprocesses,includingsupportinthefirstuseofthebalancedscorecard,enablingasoundtransition;Withanexternalperformanceindicatorbenchmarkingwheneverpossibleand/orrelevant;PerformanceManagementProposalFluxys-June2003-TheBalancedScorecard(BSC)approachwhichmakesthevision&strategyclear,traceableandtangiblethroughouttheentireFluxysITdepartmentTheBalancedScorecardprovidestheglobalstructuretomeasureandmanagetheperformanceoftheentireFluxysITdepartmentagainstthevisionandstrategyasexpressedbytheFluxystopmanagement.FluxysITStrategyVision&StrategyClearStrategyTangibleStrategyStrategicobjectivesValuedriversKeyPerformanceIndicatorsTargetsInitiatives“Howwillwelooktoourclients?”“Howwillourorganisationlearn?”“Howwillweoperatebusinessprocesses?”“Howwillwecontributetobusiness?”ClientsValueContributionInternalProcessesLearningandInnovationStrategy&VisionTraceableStrategyValueContributionInternalProcessesLearningandInnovationClientsBSC-PerspectiveStrategicObjectivesValueDriversKPI

BalancedScorecardApproachElementsoftheExecutiveBSC

ImplementationMetricsCheck

ProcessDesignCascading&

CommunicationReportingTools&

SystemSupportVision/

StrategyValueDriversKPI’sTargetsInitiativesStrategicObjectivesBSCDefinitionprocess+CGEYOverallBalancedScorecardApproachPerformanceManagementProposalFluxys-June2003-

Manycompaniestodayhaveacorporatemissionthatfocusesonthecustomer.“Tobenumberoneindeliveringvaluetocustomers”forexample,isatypicalmissionstatement.Turningsuchstatementsintopracticalrealitycanbeverydifficult.TheBalancedScorecardtechniqueisapowerfulmechanismthathelpscompaniestotranslatestrategicstatementsintomeaningfulandmeasurableobjectivesthatareunderstandableatalllevelsandcanbecascadeddowntothelowestlevels.Italsohelpsabusinessfocusonthoseattributesofitsbusinesswhicharecoretoitssuccessandsetsitapartfromitscompetitors.Traditionalmanagementreportingsystemstendtofocusonfinancialinformationwhichdoesnotnecessarilyreflectthefullpictureofperformance.Itdoesthisbycapturingbusinessperformanceintofourdimensionsorperspectivesandhelpsabusinesstoviewitsperformancethougheachlens.Bysodoingabalancedsetofmeasures,bothfinancialandnon-financial,areconstructedwhichshouldaccuratelyreflectthecriticalaspectsofthebusinesswhichwillcontributetoitssuccess.FinancialThesearemeasureswhichtracktheabilityoftheorganisationtoincreaseshareholdervalueandachievelong-termfinancialgoals.Themeasuresfocusontheunderlyingdriversoffinancialperformancesuchasgrowthandprofitability.CustomerMeasuresofcustomersatisfactionandmarketshare.Thesemayincludebothinternalandexternalmeasuressuchasmediacoverage,customerpenetrationandretentionrates,servicedeliveryratings,or

valuejudgments.InternalProcessFocusingoninternalbusinessprocesseswhichthecompanymustexcelatinordertomeetitsfinancialgoalsandcustomerexpectations.Measuressuchascycletime,quality,resourceutilisationprovidethefocus.LearningandGrowthMeasuresthecompany’sabilitytolearnfromexperienceandtocreatelongterminitiativeswhichwilldevelopandgrowthebusiness.Forexample,measuringtheprocessofmakingacquisitions.TheBalancedScorecardConcept:TranslatingstrategyintoactionTheFourPerspectivesoftheBalancedScorecardThisprojectwilldevelopan

ITBalancedScorecardforFluxysasawholeandassesshowthetechniquecouldbeusedasanon-goingperformancemanagementtool.AtechniquetodevelopaperformancemanagementframeworkthattranslatesstrategyintoactionFinancialPerspectiveDeliverRevenueStrategyDeliverProductivityStrategyReturnonInvestmentCustomerPerspectivePriceQualityTimeFunctionImageRelationInternalProcessPerspectiveMakeSaleSetupServiceServiceCustomerLearningandGrowthPerspectiveStaffCompetenciesTechnologyInfrastructureClimate

forActionPerformanceManagementBuildBrandProposalFluxys-June2003-TheBSCdefinitionprocesswillenableFluxystolinkitsITdepartementalstrategytoobjectivesandactionbyfocus,motivation&measurementMotivationDefinitionofactionplansDefinitionofclearresponsibilitiesPlanningandsettingoftargetsFocusCommonstrategicgoalsPreciseprioritiesValueBasedPrinciplesPerformanceMeasurementMeasurementandreportingoftargetachievementCause-and-effectanalysisandconceptionofpotentialimprovementsMutuallearningFeedbackonprogressofachievingstrategicgoals132StrategyPerspektivenVisionObjectivesObjectivesCustomerObjectivesFinancialObjectivesActivitiesMeasuresMeasuresMeasuresMeasuresTargetsTargetsTargetsTargetsWF/InnovationOrg./

ProcessFocusMotivateMeasurePerformanceManagementVision/

StrategyValueDriversKey

Performance

IndicatorsTargetsInitiativesStrategicObjectivesKPI’smeasuretheperformanceofthevaluedriversTargetsareaimedtocloseidentifiedperformancegapsoreachvaluedriverandKPIIncaseofperformancegapsinitiativeshavetobelaunchedandmonitoredagainstthetargetBasedontheFluxysITvisionandstrategyprecisestrategicobjectivesareagreeduponandgroupedintodifferentperspectivesValuedriverstranslatestrategicobjectivesintoactivitiesandcapabilitiesneededinordertoachievethesegoalsFocus,MotivateandMeasureBSCDefinitionProcessProposalFluxys-June2003-ThepreparationoftheBSCimplementationwilldeliverthenecessarytoolsandprocessestohaveanintegratedperformancemanagementprocessMeasurementRoadmapMeasurement......ImplementationPlanningMakingtheIT

BalancedScorecardOperationalUsingtheITBalancedScorecardasaStrategicManagementToolPlanningWorkshopTeamAccountabilityImplementationTaskImplementationTaskAccountableAccountable44IntegrateInitiativeManagementintoBalancedScorecardEstablishmanagementteamaccountabilityforobjectives,measures,targetsandinitiativesImplementmissingmeasuresprogramSettargetsforeachmeasureCommunicateBalancedScorecardandtransformationpathtotherestoftheorganizationImplementandownreportingprocessDevelopamanagementreviewprocessIntegrateBalancedScorecardintoBusinessPlanningCascadeBalancedScorecardthroughouttheorganizationStart-UpTimelineBalancedScorecardImplementationPlanningImplementationPlanningWorkshopVM&McBalancedScorecardImplementationMissingMeasureProgramandTargetSettingImplementManagementProcessandReportingTBDbAction‘A’a714212841118251815221815222951219263101724317142128Dec98Jan99Feb99Mar99Apr99May99Jun99CommunicationDevelopFinalCommunicationPlanDevelopCommunicationMaterialsCommunicatetoEmployeesTBDbInitiativePlanningIntegrateandPlanInitiativesInitiativeTrackingandReportingTBDbBalancedScorecardCascadeDesignPlanningDepartmentScorecardsImplementCascadedScorecardsTBDbx-masOngoingOngoingintoQ499Cascadingthe

BalancedScorecardTargetSettingCommunicationProgramManagementProcessIntegrationBalancedScorecardReportingValueValueContributionContributionCustomerCustomerPerspectivePerspectiveInternalInternalProcessesProcessesLearning&Learning&InnovationInnovationXXStatusHighlights?___________________?___________________?_________?_______________?_______________________?_____________________________ValueValueContributionContributionCustomerCustomerPerspectivePerspectiveInterneInterneDimensionDimensionInnovations-Innovations-DimensionDimensionAchievementperKPINextStepsTask?____________________________?_________?_______________?_______________?_____________________________ACCDeadlineObjectivesAchievementin%Action“XXScorecardNews”...“XXScorecardNews”...XXXBSCObjective(Relatedbutmorespecific)Measures(Relatedbutmorespecific)TargetsInitiatives(SpecificActionPrograms)XXVisionXXBSCObjectiveMeasureTargetsInitiatives(BroadActionPrograms)WhatHowWhatHowHowWhatFocusonStrategicObjectivesAlignmentofInitiativesInitialBalancedScorecardDevelopmentCascade&LinkageStrategicPlanningPharmaPharmaLevelLevelXXXXLevelLevelDepartmentDepartmentLevelLevelPharmaStrategyandObjectivesXXPlanning:BSC:?Objectives?Measures/Targets?StrategicInitiativesReviewandApprovalDepartmentPlanning:BSC:?Objectives?Measures/Targets?StrategicInitiativesReviewandApprovalFinalizeCorporateBusinessPlanXX?EstablishBudgets?AllocateResources?CommunicateMonitor/FeedbackDepartment?EstablishBudgets?AllocateResources?CommunicateMonitor/FeedbackPlanningTargetsPharma?EstablishBudgets?AllocateResources?CommunicateMonitor/FeedbackStrategicUpdateInitiativeManagementInitiativesInitiativesInitiativesPerspectivesPerspectivesPerspectivesValueContributionValueContributionObjectivesObjectives?Increasecostefficiancyatquality?Increasecostefficiancyatquality?Increaseend-userandbusinessproductivity?Increaseend-userandbusinessproductivity?Contributetobusinessinnovation?ContributetobusinessinnovationCustomerPerspectiveCustomerPerspective?Improveend-userandbusinesssatisfaction?Improveend-userandbusinesssatisfaction?Offerappropriateservicequality?Offerappropriateservicequality?Consultingonandprovidingnewsolutions?ConsultingonandprovidingnewsolutionsInternalProcessesInternalProcesses?Improveprocessquality?Improveprocessquality?IntegrateITservices?IntegrateITservicesLearning&InnovationLearning&Innovation?Motivatepeople?Motivatepeople?OptimizeITskillsandcompetencies?OptimizeITskillsandcompetenciesABCDEFGHPerformanceManagementComponentsoftheimplementationProposalFluxys-June2003-Themaintasksinoursuggestedapproachareoutlinedbelow.DuringStep1,wewilltailorthisapproachtosuityourpreciseneeds.OutputsKeyActivitiesConductaseriesofinterviewswiththeselectedkeypeople,utilisingperformancemanagementdiagnosticquestionsto:UnderstandbusinessstrategyEstablishbusinessgoals,currentandfutureIdentifycurrentbusinessperformanceissuesIdentifycurrentmanagementinformationissuesAgreekeydimensionsofperformanceforFluxysCommunicatenextstepsandworkshoppre-workKeyperformancedimensionsBusinessgoalsandissuesAdraftFluxysITBalancedScorecardCSFperformancegapanalysisConductworkshops,utilisingleadingpracticeexamples,withtheselectedkeypeopleto:AgreebusinessstrategicgoalsDefinetheCriticalSuccessFactors(CSF’s)toachievethesegoalsIdentifytheKeyPerformanceIndicatorsthatrelatetotheCSF’sIdentifyanygapsincurrentperformance,capabilitiesandprocessesagainsttheagreedCSF’sRefined,agreedFluxysITBalancedScorecardWorkwithFluxysseniorITmanagementtodefineprojectscopethroughaprojectcharter:GoalsandobjectivesfortheprojectAgreeinterviewees:seniormanagers,businessunitleadersandnon-executivedirectorsAgreeappropriatecombinationofinterviewsandworkshopsConfirmourapproachandresourcesRefinetimescales&budgetsIdentifyprojectrisks&assumptionsPresenttheProjectCharterandtheBalancedScorecardconceptstothekeyparticipantsProjectCharterBalanceScorecardconceptspresentationTimingsElapsedtimeHalf

dayExecutivetime1weekConductdiscussionswithotherkeypeopleto:AgreeandenhancetheKeyPerformanceIndicatorsthatrelatetotheCSF’sAgreeKPIdefinitionsIdentifyKPIownersEstablishestimateofcurrentperformanceandpotentialstretchtargetsCommunicateagreedbusinessstrategicgoalsandtheCSF’stoachievethesegoalsConfirmandIdentifyanygapsincurrentperformance,capabilitiesandprocessesagainsttheagreedCSF’sIdentifydatasourcesforagreedKPI’sincluding:IdentifycurrentlyavailableKPI’sIdentifyinformationgapsAgreeprioritiesforgapfillingIdentifypossiblesubstituteKPI’sfortheinterimEstablishscorecardreleasesandassociatedKPI’sIdentifylinkagestoothermanagementprocesses(e.g.planning,communication,trainingetc.)CommunicateagreedITBalancedScorecardFinalreportincluding:ITBalancedScorecardandimplementationplanElapsedtimeHalf

dayExecutivetime2weekElapsedtimeOne

dayExecutivetime4weeksElapsedtimeHalf

dayExecutivetime5weekElapsedtimeHalf

dayExecutivetime7weeksStep2EstablishcurrentperformancemanagementissuesStep1Step3Step4Step5ProjectScopingFinalise&planthewayforwardCreateStrategicScorecardValidateStrategicScorecardKeyPerformanceIndicatorsPerformanceManagementOursuggestedapproach:keyactivities,outputsandtimingProposalFluxys-June2003-CGEYBelgiumhasdevelopedaperformancemanagementframeworkfortheITdepartmentofaworldwideleadingimagingcompany(2003)BackgroundCGEYwasaskedbyaworldwideleaderoftheimagingindustrytodevelopaperformancemanagementframeworkfortheirITdepartmentwhichlinksthetoplevelstrategyto