Balanced Scorecard for CMMI Implementations - Eduardo Espinheira e Paula Gomes

Portugal
Balanced Scorecard (BSC) for CMMI
An Implementation Roadmap

Eduardo Espinheira
Process Improvement Manager

Paula Gomes
Project Manager / Consultant

2011-10-03

Balanced Scorecard for CMMI
Agenda

• Introduction

• CMMI Product Suite and MLs

• Balanced Scorecard Concept

• Implementation Strategy

• Results until this moment

• Conclusion

2

Introduction

The aims of this presentation is to present:

• The advantages of a BSC Implementation within a CMMI
Implementation.

• An implementation strategy.

3

CMMI Product Suite and MLs

4


5

Level Process Area
Organizational Innovation and Deployment OID
5 Optimizing
Causal Analysis and Resolution CAR
Organizational Process Performance OPP
4 Quantitatively Managed
Quantitative Project Management QPM
Requirements Development RD
Technical Solution TS
Product Integration PI
Verification VER
Validation VAL
3 Defined Organizational Process Focus OPF
Organizational Process Definition OPD
Organizational Training OT
Integrated Project Management for IPPD IPM
Risk Management RSKM
Decision Analysis and Resolution DAR
Requirement Management REQM
Project Planning PP
Project Monitoring and Control PMC
2 Managed Supplier Agreement and Management SAM
Measurement and Analysis MA
Process and Product Quality Assurance PPQA
Configuration Management CM

6

Balanced Scorecard Concept

• Economic and Financial Measures are not enought to run
your business!!

• You also need to manage:
It conditions
• The Target Markets; the economic
• Customer Relationship; and financial
• Business Processes; results.

• Human Resources Performance;
• Innovation and Technology evolution.

7

• BSC gives us a perception of Executive Lead
to change
the added value; mobilization.

• BSC allows you to measure Translate
Treat Strategy
strategy in
intangible actives; executable
as a
Continuous
terms
(Themes)
Balanced Process
Scorecard
• Focus on strategy; Vision and
Strategy
• Alignment between:
• Goals; Improve
organizational Treat Strategy
• Indicators; alignment and
create
as an everyday
task.
synergies.
• Targets;
• Action Plans.

8

The balanced scorecard (BSC) design process is built upon a set of
premises:

• Strategy is a hypothesis
it makes certain assumptions about outcomes that can be achieved

• Strategy can be described as a set of cause-and-effect
relationships
the causal chain can be made explicit and testable

• Strategy requires the definition of activities that are the drivers
(or lead indicators) of desired outcomes
the organization can influence the drivers to achieve outcomes of interest

9


The BSC is, among many things, a strategic performance
management tool.

It is a semi-standard structured report, supported by proven
design methods and automation tools, that can be used by
managers to keep track of the execution of activities by the
staff within their control and to monitor the consequences
arising from these actions.

It is divided in a minimum of 4 perspectives.

10

Goals
Indicators
Targets
Initiatives

Internal Processes

To satisfy our stakeholders
and customers, what
business processes must we
excel at?

Customer perspective Financial perspective
Goals Vision Goals
Indicators
Targets
To achieve our vision, how and To succeed financially, how Indicators
should we appear to our should we appear to our Targets
Initiatives costumers? Strategy stakeholders? Initiatives

Learning and Growth

To achieve our vision, how
will we sustain our ability to
change and improve?

Goals
Indicators
Targets
Initiatives
11

Barriers of BSC Implementation

• Vision: only 5% understands the company’s strategy;

• People: only 25% of the companies gives incentive due to
the strategy's achievement;

• Resources: only 40% of the companies add financial
resources to improve strategy;

• Management: 85% of the managers spend less than an
hour per month discussing the strategy.

12

Implementation Strategy
• Services oriented implementation strategy;

• Everyone has a client, so along all levels, even individually, we
have:
• Mission;
• Vision;
• Strategy;
• Goals;
• Metrics.

• Top – Bottom Definition Process;

• Bottom - Up Implementation Process.

13

Implementation Strategy
BSC Definition Process

BSC Implementation Process

14


1. Define Mission, Values, Vision and Strategy

2. Define Strategic themes (a way of organizing your
strategy)

3. Create strategic maps for each theme

4. Relate Strategic Themes (Goals and Indicators)

5. Identify the interest groups and relate them with the
different perspectives/themes.

15

1. Define Mission, Values, Vision and Strategy
Marketing

Sales Team 1
Development Team 2
HR (…)
Operational
Management
Company
Financial

Legal
Custumer
Services
Business Dev.
Company Area Department

Mission Mission Mission

Values Values Values

Vision Vision Vision

Strategy Strategy Strategy

16

2. Define Strategic Themes (ST)

A way to organize your strategy;

Strategic group with similar characteristics;

Examples:
• Department/Team:
• Project / Version.

17

3. Create Strategic Maps (ST)
Strategic Map

Describes company's strategy, through
the relation between objectives,
distributed by the four dimensions.
Strategic Indicator Target Initiative
Theme Objective
Financial How we measure Performance level Key action plans,
What should be and follow the or improvement. crucial to reach for
Objective
Objective
achieved and objective’s the objectives.
what’s critical to the achievement.
Customer theme success.

Objective Objective

Goal Indicator Target Initiative
Internal Processes
Objective

Learning and Growth RULES:
Objective
• Each goal should have more than one performance indicator;

• Goals and action plans should be related with indicators.
18

Balanced Scorecard for CMMI COMPANY

An Implementation Roadmap TEAM

3. Create Strategic Maps (ST) - Example
ST1 - Process Improvement
Financial
Increase Sales Develop new products.

Customer
Support customer needs.
Increase the Customer
Satisfaction.

Internal Processes
Increase quality of our Ensure the continuous
solutions. process improvement .

Identify solutions for problem
solving. Ensure the continuous process
improvement on our
Department.

Learning and Growth
Guarantee HR Ensure that HR skills are aligned
improvement with department’s needs.

19

3. Create Strategic Maps (ST) - Example

Perspective Goal Indicator Target Initiative
Number of new products 10
Financial Develop new products • I&D plan
% Sales that correspond to new products 10%

Average of request response time. 1 day Team member
Customer Support customer needs. dedicated to
Resolved Issues / Customer Requests 95% customer needs.
Identify solutions for
Nr. of improvement needs identified. 100 Improvement
problem solving.
Internal implementation
Processes Ensure the continuous procedure
process improvement on Improvements / Improvement Needs 80% definition.
our Department.
Internal Training
Ensure that HR skills are % Team with Blue Color. 100%
Learning Plan Monitoring
aligned with department’s
and Growth needs. Technical Training
Nr. of technical training actions. 5
plan.

20

4. Relate Strategic Themes (Goals and Indicators)

21

5. Identify the interest groups and relate them with the different
perspectives/themes
BSC Perspectives

Internal Learning
Financial Customer
Processes and Growth
SG1 SG2 SG1 SG2 SG1 SG2 SG1 SG2
Client
Interest Group

Supplier

Shareholder

Employee

Department X

Financial sector

Official Entities

22


THE EASIEST
PART IS NOW
COMPLETE…


23


THE HARDEST
PART STILL IN
PROGRESS…


24


1. Identify and Evaluate Data Sources;

2. Create additional data sources;

3. Link data sources, operational metrics and strategic
metrics;

4. Define refresh data procedures;

5. Define update responsibilities;

6. Create the different BSC views.

25

BSC Implementation Results
(Until Now)

Company Balanced Scorecard

is composed of a number of weighted
strategic KPIs for each perspective

there is a vision, mission statement, values
and strategy represented on the BSC

the construction of this scorecard consists of
the aggregation of several area/department
scorecards

26

(Until Now)

Area / Department Scorecard

are composed of a number of
weighted KPIs for each
perspective, linked to the company
BSC

the construction of this scorecard
consists of the aggregation of
several team/personal dashboards

each main functional area will
represent a strategic theme which
will be composed of a number of
department scorecards

27

(Until Now)

Team Dashboards

are composed of a
number of PIs for each
perspective, linked to
the area/department
scorecards

the construction of this
dashboard can be
done through the
aggregation of several
personal dashboards

28

(Until Now)

Personal
Dashboards

are composed of
a number of
personal PIs for
each perspective,
linked to the Team
dashboards

29

Balanced Scorecard Key Issues

30

Conclusion (1/2)

The balanced scorecard (BSC) allows us to link all the
measurement levels within the company.

The definition and implementation processes are good
strategic exercises:
• Who’s my client?
• What is the input and the output of my activities?
• How do I contribute to the companies' strategy?

It creates the best conditions for a company with a CMMI
maturity level to ML2 or ML3 to grow or maintain ML4.

31

Conclusion (2/2)

It can only be implemented in a company if:
• the strategy is defined;
• the tool adds value and is used;
• everyone can read and understand the BSC;
• the necessary metrics are set;
• the numbers are reliable and available;
• the numbers represent the scope to be monitored;
• there is commitment from everyone to the implementation;
• enough time has passed so that everything has been refined and
reviewed over and over again.

32

Bibliography

CMMI for Development v1.3, 2010
Software Engineering Institute (SEI)

The Balanced Scorecard – Measures that Drive Performance, 1992
Robert S. Kaplan, David P. Norton

Putting the Balanced Scorecard to Work, 1993

Using the Balanced Scorecard as a Strategic Management System, 1996

The Strategy-Focused Organization, 2001

Balanced Scorecard for Dummies, 2007
Chuck Hannabarger, Rick Buchman, Peter

33

Questions?

Eduardo Espinheira
eduardo.espinheira@gmail.com

Paula Gomes
pffgomes@gmail.com

34

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