Performance Measures

Report
Unmasking Transparency: Gaining Greater
Operational Insight Through Financial Metrics
Presenting Organizations:
Navy Reserve Force
Defense Information Systems Agency (DISA)
Deloitte Consulting LLP
A Combat Support Agency
DCS 400458
June 4, 2010
Introductions
Christopher Rose
Paul Branum
Principal
Comptroller, Navy Reserve Forces
Chris is a lead Principal in the delivery of
Finance Transformation and Service
Delivery Transformation engagements for
DoD clients.
Paul leads the finance organization for the
$1.7B Navy Reserve Operations and
Personnel Budget.
 Fifteen years of federal financial management
experience at HQ level activities
 17 years of financial management experience spanning
all dimensions – people, process, systems, & technology
 24 years as a Navy Surface Warfare Officer
 Former Presidential Management Intern (PMI) for the
Department of the Army
 Master’s Degrees in Business Administration and
Public Policy
Nathan Maenle
Business Systems Executive, Defense
Information Systems Agency
Nathan leads the integration and
evolution of Agency business systems.
 Works directly with the CIO to shape business policy
and manage business information and data
 Supported integration of worldwide DISA Directorate’s
processes and systems driving $13M capital investment
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DCS 400458
 Twenty years as Information Systems Specialist
Session Overview
 Objectives
– Introduce the foundational concepts of performance management
– Define and explain common performance management terms providing relevant examples
– Explain the four critical components of performance management
– Explain how management can align people’s behavior with their corporate strategy through
operational goals
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DCS 400458
– Present case studies that illustrate the concepts in action
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DCS 400458
DoD future years budget projections present a concerning situation for
every organization in the Department
In addition to fiscal concerns, DoD financial management organizations are
experiencing competing challenges across various areas
Execution
Challenges
Efficiency
Challenges
Risk/Control
Challenges
■ How can I manage my responsibilities to focus on the activities that create real value for the
organization and make a quick, noticeable impact?
■ How do I ensure that the data the organization relies on provides the most useful information?
■ How do I create a common language that empowers management to see itself the way
outside stakeholders do?
■ How should I organize my team and interact with business leaders to embed financial
disciplines and support value-creation activities?
■ How do I attract, develop, and retain the talent required to execute our mission efficiently?
■ How do I drive innovation and improved performance in my operation?
■ How do I ensure that the reporting data the organization relies on is accurate so that the
organization delivers a reliable dial tone (information)?
■ How do I remain compliant without increasing the workload burden on my organization?
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DCS 400458
Performance
Challenges
In response to these challenges, DoD financial management needs to
accelerate evolution from value preservation to value creation
A “Moment of Truth” for DoD Financial Management…
 Value preservation has been achieved primarily through Finance’s focus on
stewardship and budget development capabilities.
The Shift From
Value
Preservation...
 Financial management office responsibilities were to ensure that the people, processes,
controls and technology existed to ensure accurate documentation of all
transactions and support budget justification.
 Financial management personnel collected, consolidated, and verified data.
 Today, financial management offices can take advantage of new technologies to shift
their focus to becoming a more valued business partner.
 Providing deeper and more consistent analytical insight into the operations of the
business and how to improve them.
 Financial management organizations are expanding their responsibilities to contribute to
determination of strategic business direction and stimulate the right behaviors across
the organization in pursuit of corporate objectives through performance management.
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DCS 400458
...to Value
Creation
One such method to accelerate “value creation” is to improve the
effectiveness of performance management in our organizations
Performance management is characterized by many names in the Federal marketplace and several
slightly different definitions
Business Performance Management
Business Intelligence
Corporate Performance Management
Balanced Scorecard
Performance Management
Business Enterprise Planning
Value Based Management
Scorecarding and dashboards
Strategic Enterprise Planning
Strategic Cost Management
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DCS 400458
Performance management consists of a set of management and analytic processes,
supported by technology, that enable organizations to define strategic goals and
then measure and manage performance against those goals.
Effective performance management translate strategic objectives into
operational results through a lens focused on “value creation”
The objective of any performance management process is to bridge strategy and
execution by linking corporate strategy with people’s behavior through operational goals
and rewards
What is the
value?
How is it done?




Improved decision making
Improved performance
Aligned organizational behaviors
Enabling the organization mission
Combining the power of information, people, process and technology through all stages
of the management cycle
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DCS 400458
What is the
objective?
A foundational step is to understand an organization’s information and its
hierarchical nature
The types of information required for decision making depends on:
 The level of the organization it is generated for (Employee, Management, or Executive),
 The type of decision it is intended for (Operational, Tactical, or Strategic)
 The end user (External Customer or Internal Consumer)
Integrated, Relevant Information
Internal
Consumers
Information
Hierarchy
Component
Leadership
Decision
Types
External
Consumers
External
Stakeholders –
OMB, Congress,
Organization
Levels
Level 1
Executive
Committees
Level 3 Middle
Managers
Other Middle
Managers and
Supervisors
Tactical
Decisions
Operational
Decisions
Strategic
Information
Management
Information
Transactional
Information
Individual
Contributors
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The Regulators –
OSD
Executive
Level
Management
Level
Employee
Level
Partners
Customers
Suppliers
Partners
Customers
Suppliers
DCS 400458
Strategic
Decisions
Level 2 Senior
Managers
Information is evaluated using measures, metrics, or indicators, each of
which has a different implication on decision making
Measure
Metric
Indicator
Definition
A measure is a single
value measurement
A metric is a
comparison of two or
more measures
An indicator compares
a metric with a baseline
or expected result
Example
The cost per travel
voucher is $10 per
voucher
The cost per voucher
has been $10 voucher
during the past 12
months
The cost per voucher
for this month is $10
which is above the
government average of
$5 per voucher.
A stable stream of
costs probably
suggests a “Do
Nothing” strategy
The organization
should decide on an
initiative to increase
decrease cost or
understanding the
need for a higher than
High
average cost.
Does $10/voucher
mean costs are low or
Implication
too high? What should
on decision we do?
making
Low
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DCS 400458
Value of information to decision making
Measures, Metrics, and Indicators can be of different types - financial or
operational, and leading or lagging
Financial
Definition
Example
Operational
Is a by product
of the financial
reporting
process and
usually historical
Measures the
outcome of an
activity or
operating
process
• Cost per
Voucher
• Vouchers
processed per
month
• Total Cost of
Voucher
Processing
Leading
Lagging
Indicates what
will happen in
the future
Tells you what
happened in the
past
• Number of
travel orders
issued is an
indication of
• Lines of
future
Accounting per
workload
Voucher
• Cost indicates
how much the
organization
expended
over a given
period of time
• There could be a plethora of measures, metrics, and indicators in an organization
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DCS 400458
• The measures, metrics, and indicators to be considered are the ones that quantify the impact of
decisions or actions in alignment with value creation and corporate strategy.
A more balanced performance measurement model uses measures, metrics,
and indicators defined from different perspectives in the organization
 Most strategies focus first on stakeholder value (using financial metrics for performance measurement)
and then on the value to other stakeholders such as customers, suppliers, and employees
 A robust performance measurement approach balances these views
Financial
Employee
Lagging metrics
Leading metrics
Cost per Voucher
Total Cost of Voucher
Processing
Fulfillment cost
Customer service cost
Number of travel
orders issued
Operational
Absenteeism
Morale
Growth
Learning
Turnover
Customer
Satisfaction
Retention
Total Customer Experience (TCE)
Vouchers Processed
Per Month
Line of Accounting
Per Voucher
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DCS 400458
*The Balanced Score Card: Measures that drive performance HBR, July 2005
Performance Measures: Rules of the Road

Relevant: Directly linked to critical objectives and strategies

Reliable: Verifiable and free from subjective judgment or bias

Valuable: Able to help management make decisions and take actions

Timely: Available before it loses its capacity to influence decisions

Cost Effective: Benefits of using measure outweigh the costs of collecting and reporting
the information

Availability: Data to support the performance measure is available
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DCS 400458
All performance measures should meet a number of key criteria:
Successful performance models consist of four components: Information,
Processes, People and Organization, and Tools and Technology
• The specific
information set that
facilitates
coordinated
actions,
understanding of
business
performance and
better decisions
• Processes establish
a methodology to
define, develop,
communicate, and
act on information
Information
Process
Performance
Management
Strategic
Objectives
• Incentives and
corrective actions
align people’s
behavior with
corporate strategy
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• Tools and
technology enable
the storage,
analysis,
maintenance, and
reporting of
information
DCS 400458
Tools and
Technology
People
A developed performance management landscape follows the guiding
principles of focus, alignment, integration, and behavior
Alignment
“Doing what matters”



Shared
understanding of
value creation
across the
organization
Identified key value
drivers linked to
strategic directive
Planning, execution,
and measurement of
what matters
“Pulling in the same
direction”



Clear management
control and
accountability
Project portfolio and
initiatives linked to
value drivers
Targets cascaded
throughout the
organization
Integration
Behavior
“Talking the same language”
“With everybody on
board”



Planning, measuring,
and intervention
processes interlinked
Incentives and rewards
for organizations and
people embedded in the
performance
management system
Comprehensive
information strategy and
supporting technology
architecture
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


Raise awareness of
targets
Establish performance
incentives
Deploy and develop
talent
DCS 400458
Focus
A maturity matrix for performance management can help guide further
development
Process
Info
Tools and
Tech
Advanced
 Performance data is kept
among management team,
not communicated/provided
 Performance data is only
sporadically
communicated/provided to
stakeholders
 Performance data is
regularly
communicated/
provided to all
 Reports focused on
statutory requirements and
basic actual to budget
comparisons
 Statutory reports
complemented with multidimensional management
Reports provide actual,
budget, and forecast
results
• Statutory and multidimensional
management reports;
Comparisons of actual
cost to standard cost
actual, budget, and
forecast results
 Executives are held
accountable for financial
results only
 Measure owners are
identified but not
accountability below the
Executive level
 Managers are held
accountable for those
measures for which
they have control
 Reports developed through
export to spreadsheet
application
 Reports are developed
and produced directly
from the ERP system
 Data warehouse as
the foundation for
single version of the
truth
• Bullet points
• Bullet points
• Bullet points
People
Defined
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DCS 400458
Developing
Department of the Navy
Commander, Navy Reserve Force (CNRF)
Financial Metric Maturity Within the Navy Reserve
As a multi-echelon, geographically-dispersed organization, the Navy Reserve
provides a unique and challenging environment for driving change
Regional Component
Commands (RCC) (6)
Navy Operational
Support Centers (NOSC) (126)
Similar to many DoD organizations, CNRF was confronted with a number of
environmental factors driving a need for change in the way we do business
Relocation of CNRF HQ
operations have created
challenges for obtaining
visibility into organization
operations and retaining key
resources
Leadership/
Staff
Turnover
Defense
against
Budget
Marks
Demands for improved
financial performance
have been driven by
regulatory and
organizational oversight
Relocation
of HQ
Changing
Support
for Wars
Case for
Change
Strategic
Performance
Measurement
Greater
Scrutiny
of
Training
Funds
Wars in Iraq and Afghanistan
have increased scrutiny on
resource allocation and
utilization
Evolving demands began to require overall organizational focus to shift from
routine reporting to evaluation of funds management performance
•
ASN(FM&C) established financial performance metrics were cascaded throughout the
Department. Elements of the Financial Efficiency Index (FEI) were included in the Office of Chief
of Naval Reserve (OCNR) Strategic Plan.
• CNRF developed a Field Level FEI Scorecard to institute a more aggressive focus on financial
performance.
• Changing requirements, added demands, and fiscal constraints directly impacted the Military
Personnel budget - estimates have declined by $300 million between FY 2007 - 11. This trend
holds true for Reserve Personnel Navy (RPN) with budget estimates declining by $45.1M.
• FY07-10 Unexpended Congressional Marks to the RPN account were $54M.
Source: Pres. Bud. Book
Military Personnel
Budget Estimate
Reductions
ASN (FM&C) FEI
ASN(FM&C)
FEI
OCNR 2010
Strategic Plan
OCNR Strategic Plan
CNRF began to align with these changing priorities by making strategic decisions
about evaluating critical programs and measuring performance
•The
prospect of losing additional budgetary resources in future years drove the need for a more indepth look into the execution trends within the major Navy Reserve programs.
•Analysis of preliminary enterprise-level metrics led to the identification of key focus areas for improving
the financial performance of the overall organization.
CNRF FEI
Identified Focus Areas
Inputs: Obligations
Expenditure/
Disbursements
Lapsing Appropriation
Balance
1517 Violations
Funds Management
Financial
Accountability
Legacy Financial
Systems
Workforce
Skill Sets
Leadership Dashboard
34.1%
Further evaluation of enterprise-level financial metrics led to the identification of
specific improvement objectives within the identified focus areas
Improvement Objectives
Actions Taken
Benefits
•Drive accountability for
managing activities affecting
funds execution to the
process-level
•Developed semi-automated
tools to support process
specific financial
management activities
•Improved field-level visibility
into measurements of
financial management
performance
•Improve efficiency with
which legacy system
financial data can be
analyzed and reported
•More efficient use of Funds
•Increased timeliness in
identifying and resolving
required actions
RPN Travel Tool
Aviation Fuel Tool
•Improve alignment of job
requirements with identified
skills sets
•Began preliminary steps to
initiate workforce
competency assessment
•Increase workforce’s ability
to analyze and manage
financial data and associated
funds
•Advanced ability to
effectively reduce ineffective
use and management of
organization funds
•Greater reliance on
workforce to affect the
activities driving
organizational performance
metrics
Workforce Competency
Development
Timeliness
As visibility into CNRF processes and performance continues to mature, the
organization is taking a more integrated approach to performance measurement
Developing
•Manually developed enterpriselevel metric set
•Limited ability to identify
underlying metric drivers
•Financial data obtained from
multiple supporting systems for
analysis
Defined
•Web-based process specific
management dashboards
•Visibility into process specific data
•Semi-automated data integration
and analysis from disparate
systems
Advanced
•Comprehensive, multidimensional measurement of
financial data
•Customizable, near-real time
display of performance metrics
•Dynamic integration of financial
data from multiple sources
Next Steps: - Continue to integrate and automate performance measurement tools into CNRF operations
- Initiate workforce competency assessment to identify key financial management skill set requirements
Defense Information Systems Agency
A Combat Support Agency
DISA BI Evolution
Mr. Nathan Maenle
Business Systems Executive
Office of the CIO
June 2010
Defense Information Systems Agency
A Combat Support Agency
ACQUIRE
DELIVER
OPERATE
Planning
Resources
Spectrum
• Enterprise Infrastructure
Testing
• C2 & Information Sharing
People
• Operate and Assure
Acquisition
Contracting
Info & Knowledge Mgmt
Engineering
Leaders enabling information dominance
A Combat Support Agency
Evolution of Capability
Manual
Multiple Dashboards
Enterprise
Capability
Manually developed data
Limited to Excel & PowerPoint
Web-based capabilities
Data obtained from multiple
supporting systems with no
defined business rules
Time shifted from data
gathering to data analysis
Improved consistency, access,
and timeliness
Limited interoperability
Portal access; improved
integration with operational
data and multiple end users
• Leadership
• Managers/Action Officers
• Customers/Partners
DISA’s capabilities have matured over time. Advances in technology, evolution in
thought, and external drivers fuel the need & ability for continuous improvement.
25
3
A Combat Support Agency
Future DISA Business Systems
Environment
Customers
Order Entry/Order Mgt
Service Catalog
ePortal
Services
Data
Integration
Communication
Services
i Workplace
Mission
Partners
DISA OSS
Directory
Services
Employees
Security
Services
Collaboration
DISA Enterprise Procurement
System
Suppliers
26
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DCS 400458
Questions?

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