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Architecture Driven Performance Approach (ADPA)
Hassan (Hash) Qureshi, Partner, MNP LLP Chris Stephan, Market Lead Public Sector Ottawa Date of Conference: September 14 , 2017
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What number (s) do you see?
All 10 digits, from “0” to “9” are present depending on how you connect the dots!
Our aim is to answer the following: 1. Is there a generalized approach to developing a performance framework that is defensible,
can be developed in a structured and flexible manner, and can add meaning by helping to understand who the organization serves, what services the organization provides and what performance to track (KPIs), while managing risk and through specific indicators?
2. How can we use such a generalized approach to make operational decisions? (add colour, while connecting the “right” the dots)
3. How can we construct integrated reporting, aligning strategy to operations, and operations to outcomes while managing complexity?
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A defensible, scalable, change resilient, service oriented performance framework that includes tools and enablers allowing you to deliver integrated reporting beyond financial results and allows you to work horizontally, vertically and even across multiple entities.
It should also be free to use, extend and share between levels of public sector service and not tied to a specific firm
Outline of our discussion Background
Your story!
Architecture-driven performance approach
The Framework – Performance Vs Risk
Methodology
Case studies
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Extending the conversation Prior to lunch we heard about “integrated reporting”, which: ► Provides a way not only to communicate organizational performance, but also to create more connectivity across different
parts of the organization and it is to drive sustainable organizations and measure performance against long term goals; and ► Helps achieve better stakeholder dialog, encapsulate organizational intelligence for better decision making and adds
defensibility, traceability from “dollars to decision” and more transparency – connects “value” to “”financial performance
Key concepts we’d like to discuss touch from Jim’s presentation about “Local Government Performance Management”: ► Performance management that is “forced” can lead to unintended consequence, gaming and undesired results –
performance management should ideally help internal and external stakeholders to align efforts, objectives, and work towards common outcomes
► Trust and communication are vital to getting people aligned and working together ► Communication relies on people to understand what they are working towards (outcomes) and the services that help to
achieve those outcomes
Key concepts we will discuss from Dawn’s presentation about “Municipal Benchmarking”: ► Using a performance management framework to demonstrating how services provided to citizens deliver value ► How do you position 750 measures to tell the right story – the key idea is “metrics and meaning”
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Background
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What is enterprise performance management (EPM)?
3. Better and more certain decisions – In the financial world, performance management is the process of identification, analysis and acceptance or mitigation of uncertainty in investment decisions. Essentially, performance management occurs any time an investor or fund manager analyzes and attempts to quantify the potential for opportunity based on an investment and then takes the appropriate action (or inaction) given his investment objectives and risk tolerance.
1. Tracking to business goals – Performance management is the identification, assessment, and prioritization of how business objectives are being achieved and the economical application of resources to minimize, monitor, and control the probability and/or impact of events to maximize the realization of opportunities.
2. A discipline for financial planning – A field of business performance management which considers the visibility of operations in a closed-loop model across all facets of the enterprise. Specific to financial activities in the office of the chief financial officer, EPM also supports financial planning and analysis (FP&A).
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What is organizational effectiveness?
4. All of the above
1. Stakeholder needs – For an organization to achieve effectiveness, its management has to know who will be judging effectiveness, and the criteria on which this judgment will be based. The stakeholder needs, and the power bases from which they derive these needs, are useful inputs to the strategic planning process
2. Internal and external perspectives to drive value:
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External Internal
Obtain high quality inputs of raw materials and employees Increase market share and increase stock price Gain support of stakeholders such as government or
environmentalist goals Evaluate the organization’s ability to secure , manage and
control scarce and valued skills and resources
Cut decision making time Increase rate of product innovation Increase coordination and
motivation of employees and reduce conflict Reduce time to market ability to be innovative and how
effectively it functions and uses resources. More effective Internal coordination
3. Linking organizational resources to goals - Organizational performance management is the process of making sure that your organizational resources are being properly used in pursuit of corporate goals.
Enterprise Architecture As of 2012, no official definition exists; rather, various organizations (public and private) promote their understanding of the term.
Consequently, the enterprise architecture literature offers many definitions for the term enterprise architecture; some of which are complementary, others are nuances, and others yet are in opposition.
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What does enterprise architecture do ? Here are four different answers…
1. The “Link” – The enterprise architect links the business mission, strategy, and processes of an organization to its IT strategy, and documents this using multiple architectural models or views that show how the current and future needs of an organization will be met in an efficient, sustainable, agile, and adaptable manner
2. Response to disruption – Enterprise architecture (EA) is a discipline for proactively and holistically leading enterprise responses to disruptive forces by identifying and analyzing the execution of change toward desired business vision and outcomes
3. Disciplined approach to strategy – EA is "a well-defined practice for conducting enterprise analysis, design, planning, and implementation, using a comprehensive approach at all times, for the successful development and execution of strategy. Enterprise architecture applies architecture principles and practices to guide organizations through the business, information, process, and technology changes necessary to execute their strategies. These practices utilize the various aspects of an enterprise to identify, motivate, and achieve these changes."
4. Analysis of business structure – Practitioners of enterprise architecture, enterprise architects, are responsible for performing the analysis of business structure and processes and are often called upon to draw conclusions from the information collected to address the goals of enterprise architecture: effectiveness, efficiency, agility, and durability.
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Your Story!
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Lets assume you have done everything right… What would you do next?
A successful enterprise performance management framework: Captures your environmental and business context today
Unites disciplines of both performance and risk management by leveraging the organization’s risk taxonomy and establishing a common vocabulary and can scale
Has methods for identifying what matters, and tools for cross functional and business line analysis, evaluation and treatment of both performance and risk, while managing “progress to outcomes”
Is integrated with services, activities, process, assets and outcomes
Generates tangible insight, helps decision making and is relevant today
Common Challenges: Change resilience (agility, reacting to change)
Performance and Risk coherence
Definition and cohesiveness KPIs and KRIs
Communicating across stakeholder groups
What are your gaps, next steps and key focal points you want to achieve?
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Other considerations Performance gaps and risks resulting from changing business, technology and organizational norms are
very hard to predict
External environment is changing at a faster rate with new/revised legalisation, regulations, etc.
Performance tracking across project delivery and transformation (including culture, community specific changes and benefit realization)
Measuring results across multiple levels of organizational activities, tasks, projects and programs and technology enablement means that your measurement framework needs to be adaptable or it will not be sustainable
Risks resulting from new incidents that change public perception and priorities – need to manage social networks, linked networks, and corporate entity networks
Risks associated with governance across the shared project between stakeholders (partner risk and project governance risk)
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Typical program, functional and project performance tracking Vary hard to report across containers of measurement information! How do we get completeness?
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Performance
Architecture Driven Performance Approach
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Architecture Driven Performance Approach o Based on business architecture (TOGAF)
o Employment of value-chains – track performance and risk based on activities
o Board and audit committee ready
o Outline services, activities, objectives and allows meaningful (contextual) representation of performance and risk across the organization
o Toolsets, enabler and some unique technology
o Natural next step in linking, sequencing and contextualizing performance and risk
o “Enterprise Architecture by stealth”
3. How do we provide these ?(Value-Chain)
4. How do we manage and control?
5. How do we adapt and evolve?
2. What products and services do we provide?
1. Who do we serve? 5 key questions?
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Identify Opportunities of Greatest value
Performance Assessment
Measurement & Management
Organizational Intelligence
Transformation & Transformation under development audits System under development audits Program, product, functional, system or organizational audits
Understand business, market and client/customer opportunities, risks and issues
Performance for the product, service and business lines of the organization
Understand the organizations value chain and the risks related to delivering consistent value
Risks related to the transformations (projects, programs and digital change initiatives
Enterprise Strategy &
Governance
Completeness of
Performance Coverage
Operational
Risk & Controls
Benefit of Changes & Related Outcomes
Identify issues within the change and transformation initiatives that impact the enterprise
Identify areas within the enterprise that are impacted by the change and what impacts management, measurement, monitoring and assurance over controls including strategy execution and governance
Identify impact of changes to op risk and
Measure Progress
Transformations
Projects, Programs and portfolio of change initiatives
The Enterprise
Production, Value delivery, Control by Corporate
Functions
The Value Chain
Delivering Value to Stakeholders
Production
Production of Goods and Service
Primary Stakeholders
Client, Customers and Regulators
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The Framework – Performance and Risk
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A summary of key attributes that are conducive to advancing further…
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1. Value chain
Defined value chain for organization to establish common orientation and vocabulary
2. Objectives
• Established perspectives from which to define objectives
• Engaged cross-functional stakeholders to incorporate necessary view points
• Defined control objectives in linked manner aligned to the value chain in business terms
3. Linkages
Defined interdependencies and linkages between objectives according to the hierarchical structure defined (objectives are nodes)
4. Risks
• Established relationship between risk events and control objectives
• Defined dimensions of impact and established likelihood definitions for risks of control objective failing
Define high-level “value chain” – what are we in the business of?
Build business architecture organized by “services”.
(Optional) Define common and horizontal objectives with metrics to track progress (KPIs) and monitor risk (KRIs)
Validate logic and completeness (e.g. PAA mapping, workshops).
Consolidate, assign baseline data elements to objectives (e.g. $, FTEs, risks, volatility)
Perform performance and risk profiling on a priority basis leveraging base data and consultation (workshops)
Develop performance and risk-based action plan and identify areas to provide greater vigilance over
Implement framework in GRC tool with BI/EIQ reporting
Establish performance and
risk framework (one-time): Populate performance data and assess risk (ongoing):
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* With ESDC, we also developed a new risk taxonomy for more meaningful risk assessments.
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Advancing further beyond traditional BI
Initiatives to advance the organization further:
1. Strengthening integration between performance, risk and operational planning (including the use of artificial intelligence
2. Optimizing information management using some new tools.
3. Evolving to dynamic, ongoing risk assessment with graph database.
Integrate data (e.g. incidents, financials, HR, HelpDesk) to perform adaptive and automated workflow management and continuous risk analysis in a dynamic risk environment (understanding your “risk universe”).
Case Study ADPA @ ESDC
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At the heart of the framework are cross-functional views of the Department’s business lines. With the new approach, these business lines are viewed in a holistic and comprehensive manner, either individually, in groupings or horizontally.
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Primary Stakeholders Client, Customers and
Regulators
Production Production of Goods
and Service
The Value Chain Delivering Value to
Stakeholders
The Enterprise Production, Value delivery, Control by
Corporate Functions
Transformations Projects, Programs and portfolio of
change initiatives
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An example from the federal government Employment and Social Development Canada (ESDC)
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Principle of inheritance applied to groupings Validates
groupings Enables effective
risk linking Modular approach
resilient to change
Top
-do
wn
design
Bo
ttom
-up
validatio
n
Decomposed, modular design for resilience to change and ease of use…
Case Study Private Sector Insurance Company
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Value Chain 1: Individual and family services Inputs
Prospects, Insurance providers,
Bill receivables/
Discovery
Quote/ information
product/ multiple
products/ multiple markets/ research
Secure insurance provider
New application/
binding
Customer management
(billing info, personal info)
Policy Management
(changes, renewals,
cancellations, suspend/ re-
instate)
Billing Management
(invoice, refunds)
Incidents/ claims
management
Home insurance , Auto
insurance, “peace of mind”
risk management,
reporting
Advisory/ referral services
Outputs Activities
Organization Advantage
Employee Investment
Pain points
Technology systems
Risk rating
Key performance
indicators
Personal Information
Collected
Biggest risks
Get to know clients
personally at discovery
Product education,
multi-market relationships
Insulate client from insurers
Quality service - care calls,
flexible communication
Prequalifying prospects/risks
Processing/ capturing client
information
Cross-selling, renewals
Collections, non-pay
cancellations
Personal connection
SYSTEM, phones
ERP SYSTEM
CRM SYSTEM
CGI Comp Portals Snap CRM SYSTEM
• # of policies • Client
satisfaction • Referrals
PI collected PI collected 3rd party PI collected
Bad risk prequalification
Reliance on CEO, single system (SYSTEM), phones and internet coupled
claim handling - lawsuits, media
Employee errors, E+O, poor data quality
SYSTEM fields not
configurable/ required
ERP SYSTEM not working as
intended
$125 $15 $8 $21 $21 $10 $26 $15
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Value Chain 2: Commercial business Inputs
Prospects, Insurance providers,
Bill receivables
New submission
Secure insurance provider
Quote/ information
product/ market
response survey
Binding
Customer/ policy
management
Billing Management
(invoice, refunds)
Incidents/ claims
management
Corporate insurance,
manage business
network of relationships,
Corporate reporting
Outputs Activities
Organization Advantage
Employee Investment
Pain points
Technology systems
Risk rating
Key performance
indicators
Personal Information
Collected
Biggest risks
Personal touch Relationships
with U/W
Education, market
knowledge
Personal touch, “house calls”,
care calls
Update client, insulate from
insurer
Prequalifying prospects/risks
Turnaround time,
completing info
Client commitment/
authority
CRM SYSTEM CGI
Policy engine Comp Portals
Snap
Policy engine
Retention Claim-client satisfaction
# of policies
PI collected, 3rd party
PI collected
Bad risk prequalification
Reliance on CEO, single system (SYSTEM), phones and internet coupled
claim handling - lawsuits, media
Employee errors, E+O, data quality
3rd party PI collected
SYSTEM, phones
SYSTEM fields not
configurable/ required
$90 $8 $56 $23 $28 $16 $61
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Value Chain 3: Market relationship management Inputs
Customer volumes, external partners, external reports,
industry news
Build book of record
Market relations
Premium allocations
Mergers and
acquisitions – monitor industry
External impact – monitor
competition, market dilutions
Market relationshi
ps, best deal for
customers
Outputs Activities
Organization Advantage
Executive time investment
Pain points
Technology systems
Risk rating
Key performance
indicators
Biggest risks
Good relationships, progressive,
creative
Proactive monitoring of
the market
Consider best benefit for
client
No consolidated
view of market
Determining appetite, turn around time
Volume, retention, cancellations
SYSTEM External
reports (email) Internet, word
of mouth
Determine volumes that provide client
best deal
Companies/ customer direct
Reliance on CEO
Bad loss ratio Awareness of industry changes Regulation of premiums
CEO-only activity
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Case Study – Regulator
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Reportable incident
Receive & classify incident report
Confirm investigation reports are complete
Manage incident
investigation report
Maintain statistics
Follow up operator
corrective actions
Initiate enforcement actions where
applicable
Compliance improvement
Regulator value Expertise Regulatory
powers
Stakeholders COO, CSO
Operators, Public COO CSO
COO CSO
Responsible office Duty officer, Duty Notification list,
Safety, IT Safety Office Safety Office
Documents Used
Incident Notification Form, Duty Officer Log
Operator Investigation
Report
Technology systems
Pain areas
KPIs / KRIs KPIs/KRIs
Risks Risk of Delays Failure to identify
trends Delays in follow-up
Delays in incorporating
lessons learned
Email, phone
Safety Reporting Systems
Safety Incident DB Excel
•Audit and assessment programs •Identify risks, trends and vulnerabilities •Determine effect of change •Assessment of performance controls
Inputs Activities Outputs
• Incidents analysis • Hazard list
preventative measures
• Clarifying responsibilities?
• Cascading incidents
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Questions
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