Performance Management for Shipping IT
A presentation related to performance management for shipping IT covering the following topics:
The role of shipping IT
Measurements and key performance indicators
The Balanced Scorecard Approach
The Shipping IT Balanced Scorecard
Integrating the IT targets with those of our Company
The role of the Maritime IT department
Information and communication technology is of prime importance for all shipping companies. The role of the maritime information and communication technology department has evolved over the last years from a simple support function of a complex task, to a valuable partner aligning available technology with business needs. Ultimately some shipping companies upgraded the role of information technology by inviting the chief information officer as a strategic partner in the top executive committee.
Observed from the point of view of end users/peers within the company the importance is sometimes dramatically mitigated to “those who take care of PC’s and email”. Indeed even from the point of view within the IT department the role is sometimes simplified to a list of tasks that should be performed every day, week or month.
This simplified approach for the complex and relatively new field of information and communication technology fails to capture and drive the role of a valuable support function.
Furthermore the job description or task list approach does not take into account successful management principles: Management by Objectives (MBO) is a process in which a manager and an employee agree upon a set of specific performance goals, or objectives, and jointly develop a plan for reaching them. The objectives must be clear and achievable, and the plan must include a time frame and evaluation criteria. An important factor in an MBO system is its emphasis on the results achieved by employees rather than the activities performed in their jobs.
What you measure is what you get
Recently in shipping we witnessed the wide deployment of TMSA (Tanker Management and Self Assessment) implementations. TMSA targets to provide to operators the means to improve and measure their own management systems. The TMSA guide includes a large number of key performance indicators (KPI’s) to monitor the implementation and improvement of shipping processes.
Key Performance Indicators (KPI’s) are financial and non-financial metrics used to quantify objectives to reflect strategic performance of an organization. Management science is using for a long time now goals and measures to drive performance.
The key idea is to create a system like the dials in an airplane cockpit that will give managers complex information at a glance.
There is a great benefit for Maritime IT to adopt a set of key performance indicators not only for measuring the progress and driving information technology operations but to communicate as well the role of the IT department within the company.
The Balanced Scorecard Framework
It would be rather easy for a financial person to point out several financial key performance indicators. Furthermore such indicators in shipping, an industry so closely related with the utilization of its assets are widely spread and closely followed by shipowners and shipmanagers. Current management systems were designed to manage tangible (financial) assets. Creating value form an intangible asset such as knowledge or IT, is different; these do not have a direct impact on financial results.
To provide an example: Information technology and training impacts service quality and safety which in turn impacts customer retention and revenues.
To translate company’s vision and strategy into operational terms we need something more than financial indicators.
In order to provide managers with a comprehensive view of the performance of the business we need to measure activities in terms of vision and strategies under the following perspectives:
Financial perspective: How do we define success from the shareholder point of view?
Customer Perspective: To achieve our vision, how should we appear to our customers?
Business Process perspective: To satisfy our shareholders and customers, what business processes must we excel at?
Learning and Growth Perspective: To achieve our vision, how will we develop/sustain our ability to change and improve?
Currently the Balanced Scorecard tool is widely used by many type of businesses all over the world and although not specifically designed for shipping IT this can serve as the basis to build a set of performance metrics that align focus to the essential targets of shipping business.
Target setting and objectives must meet some requirements to work for the benefit of the shipping company. The acronym S.M.A.R.T. is often used to summarize these main criteria:
In other words “Better ship to shore connections” is not a good target for a performance measurement system. Instead , “Ship to shore data connections must be successfully performed at least once and no more than 4 times per day” is specific, easily measurable, can be agreed with the related departments on whether this is feasible and what are the acceptable deviations, and time related since it specifies that ship to shore communications are performed daily as a minimum.
A key performance indicator may summarize multiple company objectives by focusing on the result and not the tasks to be performed. In the previous example the target not only describes the expected behavior from shore and ship personnel but also the effectiveness and availability of communication systems and providers, as well as the necessity of daily data communication and the element of cost control.
Objectives must be limited to a small number per perspective (i.e. 3-5) and not a meaningless wish list, focused on the area of influence of the IT department, prioritized in order of importance and impact to the shipping company, and linked to higher level objectives that align information technology outputs with the overall company objectives.
The Shipping IT Balanced Scorecard
How would a performance measurement system for shipping IT look like? The following sample may be used as a template to start building your own objectives, link these to key performance indicators and attach to each one of the KPI’s specific targets.
- Objectives: To expand the scope and efficiency of shipping IT services. To ensure that information and communication technology is delivered on time, within the budget and have visible benefits and value for the business.
- Key Performance Indicators: Total number of vessels and shore users. Cost per vessel. Improvements in cost efficiency and total cost of ownership. Delivery of IT value per employee.
- Objectives: Internal and external customer satisfaction.
- Key Performance Indicators: Level of service. Satisfaction of existing users. Improvements in the user experience. Number of new ways and channels to deliver service to users.
Business Process perspective
- Objectives: Bridge the ship to shore GAP. Increase the availability and reliability of information technology.
- Key Performance Indicators: Availability of systems & services. Developments on schedule & budget. Throughput & response times. Amount of errors and rework.
Learning and Growth Perspective
- Objectives: Have the right people and the right technologies available for the future of the company.
- Key Performance Indicators: Staff productivity & morale, # of staff trained in new techno/services, Value delivery per employee up, increased availability of knowledge systems.