architecture driven performance approach (adpa)

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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B

C

* 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

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

Google

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


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


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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