Online financial courses - The best source of advice comes from the Short Courses


Online Financial Courses - Process Improvement

Provided by : Matt H. Evans
Adress: 6903 29th St N ; Arlington, VA 22213
Phone number : 1-877-689-4097
Email: matt@exinfm.com

Course 5: Process Improvement

Chapter 3: Capability Maturity Model (CMM)

For larger organizations, it might be useful to view all processes from a single organizational context. One of the best frameworks for doing this is called the Capability Maturity Model or CMM. The concept of CMM was developed through the Software Engineering Institute or SEI. SEI was created by the Department of Defense to reduce failures with software application projects. Therefore, CMM is rooted in software development processes. However, the concepts associated with CMM can be useful for all types of process improvement projects since CMM provides a framework regarding process maturity.

One of the great advantages of using the CMM approach is that it "positions" the organization for process improvement on an enterprise-wide basis. This can be important since you ultimately want all parts of the organization working together or at least progressing to the same level of maturity. For example, an organization may not be ready for major change or transformation of its processes. By applying CMM, you superimpose an overall discipline across the entire organization - similar to physical workouts for a sports team where everyone runs through the same drills. This gets the entire team in shape so that everyone can execute on the field.
sitemap | top

Five Levels of Maturity

CMM looks at the maturity of your business processes in terms of five levels:

Level 1 - Initial: For organizations just starting out, processes are not well established and defined. There is deep fragmentation across the organization - one area does it one way and another unit is following a different process for getting the same thing done. There is poor integration and alignment across functional areas by process. Things get done through individual effort as opposed to a standard process.

Level 2 - Repeatable: A basic level of process management where you can apply a process to various units within the organization. You start to plan as opposed to react by using certain management controls.

Level 3 - Define: Now that you have processes that you can repeat across the organization, you can define them and apply them across the organization using standards of performance.

Level 4 - Manage: Given standard performance baselines, you can now measure, benchmark and evaluate your performance.

Level 5 - Optimize: This is the final phase where you get your processes lean and operating at peak performance. The organization is now ready for applying Six Sigma since the workload data required to use Six Sigma has been established in Level 4.

As organizations move from a lower level to an upper level within CMM, process capabilities increase and this in turn improves process performance. The initial observation by pioneers of CMM, such as Watts Humphrey of IBM, was that the quality of software products was very much related to the quality of processes. Additionally, the ability to predict results goes up with increased maturity and when you increase your predictability, you lower your risks.

Under CMM, all organizations default to Level 1 where there is inconsistent management of processes. For larger type organization, the management approach tends to change with each successive level:

Level 2 - Managing projects to get things done
Level 3 - Managing processes to get things done
Level 4 - Managing capabilities to grow the organization
Level 5 - Managing change to continuously improve
sitemap | top

Key Process Areas - Improvement Domains for CMM

In order to move past Level 1 under CMM, you will need to define Key Process Areas. Key Process Areas (KPA) represent a cluster of activities that when grouped together share a common final outcome critical to organizational success. Once you define each KPA, you need to establish performance goals or objectives for each KPA. CMM typically assigns two to four goals per KPA. Understanding the intent of a KPA is usually a good basis for defining a performance goal; i.e. is the organization effective (such as customer satisfaction) and efficient (such as cycle times) at meeting the goal of the KPA?

Since each CMM Level has its own KPA’s, the challenge is to meet the two to four performance goals of each KPA in your current level. Therefore, you need to have well established KPA’s in one level before you get to the next level. One the best ways to build this KPA maturity structure is to think in terms of managing for defined outcomes along the way. For example, suppose you just opened a pizza restaurant. To produce pizza’s, you need key process areas (KPA’s) that make pizza dough, add fresh ingredients, and bake the pizza. These are the basic "repeatable" key process areas or issues you must have for level 2 of your pizza restaurant. Now let’s move up to level 3 - Clearly defined processes may involve more mature processes, such as getting the right kind of ingredients and mix to make good consistent dough. At level 3, we might have a KPA related to making sure our cooks follow a standard recipe each time they prepare the pizza dough. Our processes are now better defined after meeting certain KPA’s for Level 3. We can now "manage" the processes at Level 4 - things like faster delivery of pizza’s or giving our customers more choices of how they want their pizzas. We now start to do a lot more measuring of final desired outcomes - customers like our pizza’s and our processes are now mature enough that we can expand opening another pizza restaurant. At level 4, our processes are highly predictable using best practices and we know exactly how to make great pizza’s every time. At level 5, we work to tweak and optimize how we make our pizzas. Perhaps each time a pizza is baked in the oven, the crust comes out slightly different. Level 5 looks for defects using very analytical tools and attempts to remove these defects from our processes. For example, maybe we can use a special texture probe to test our pizzas for inconsistent crust. Next we look at the variables that create inconsistent crust. This might include baking times, oven conditions, and the mix of ingredients. We need to analyze what’s causing the inconsistent pizza crust. Once we identify the cause, we will change this input variable and see how it impacts our pizza crust. Level 5 is continuous - analyzing defects, identifying sources and using this knowledge to prevent defects in all of our processes across the entire organization.
sitemap | top

The Baseline for Improvement Begins at Level 2

Since key process areas at Level 1 are not defined, getting to level 2 is often the big hurdle in moving through CMM. To get to Level 2, an organization needs to have processes that begin to experience repeatable success and likewise, you begin to remove your failures. Processes are not expected to be highly efficient and effective at Level 2, but you do want to have a series of processes to produce outputs (such as pizzas in our pizza restaurant). Level 2 represents the baseline of core processes and from this baseline we can begin to improve how we do things. It is at level 2 where the organization becomes aware of the need to improve and thus, level 2 is sometimes called the "learning level" of CMM. This is where process improvement begins to kick-in and this is why getting to level 2 is so important.

According to Motorola, an organization that moves from CMM Level 2 to 5 will experience an eightfold reduction in defects, an eightfold improvement in cycle times, and a threefold increase in productivity.
sitemap | top

CMMI

One of the fastest growing maturity models is Capability Maturity Model Integration or CMMI. The issue of integration is a major hurdle in getting processes to work. Typically, processes are defined around functions or departments. The big issue is getting processes to work across all functions and departments. CMMI takes a "systems" view of things; i.e. organize and build around a system to integrate your processes and this will produce the best possible service or products for your customers.

The five levels of CMMI are very similar to the original CMM:

- 1: Performed - Process is unpredictable, poorly controlled, and reactive.
- 2: Managed - Process characterized for projects, and is often reactive
- 3: Defined - Process is characterized for the organization, and is proactive
- 4: Quantitatively Managed - Process is measured and controlled
- 5: Optimizing - Focus is on continuous process improvement

In order to take a systems approach, CMMI tends to focus on process infrastructure and most KPA’s are focused on five areas: Goals, Commitment, Ability, Measurement, and Verification. Finally, CMMI follows a life cycle approach to process improvement, known as IDEAL:

I - Initiate: Establish the groundwork for enabling process improvement. This includes making the business case for process improvement and securing key sponsorship to make process improvement happen.

D - Diagnose: Determine where you are relative to where you want to be. This sometimes takes the form of a concept paper, outlining the current organizational state, the desired future organizational state and recommendations for moving forward.

E - Establish: Quantify the specifics of how you will reach your destination, including a work plan for process improvement that includes which areas should get the highest priority.

A - Act: Doing the work per your process improvement plans, such as development of solutions, testing your solutions, and putting final solutions into production.

L - Learn: Improve your ability to manage the future based on what is taking place now and what was originally planned. This requires that you look back at your process improvement efforts and make adjustments going forward.

sitemap | top

CMM Reality Check

Organizations often seek formal certification of CMM Levels, somewhat similar to how Malcolm Baldrige and ISO 9000 work. As a result, CMM may encounter the same fallacy of Baldrige and ISO 9000 - organizations are too busy trying to satisfy the "certification" requirements, but in reality the organization has not improved its processes.

Like Baldrige and ISO 9000, CMM should be more about producing real measurable results and not satisfying pre-conceived requirements that may or may not fit the organization. Consequently, all organizations should look to CMM as a broad framework to assist with process improvement and not lose sight of what you are really trying to accomplish - things like higher customer satisfaction, increased productivity from end users, less time and costs to perform activities that comprise a process, and expanded organizational capabilities.
sitemap | top


Chapter 1: Some Good Starting Points
Chapter 2: Fundamental Tools of the Trade
Chapter 3: Capability Maturity Model (CMM)
Chapter 4: Six Sigma
Chapter 5: Lean Thinking
Chapter 3 points
Five Levels of Maturity
Key Process Areas
The Baseline for Improvement Begins at L.2
CMMI
CMM Reality Check


10 Upcoming learning videos : in all categories



Selected learning videos for today


learn video about : Explaination about the theory of plate techtonics in geologyExplaination about the theory of plate techtonics in geology
learn video about : Differentes types of rocks in geologyDifferentes types of rocks in geology
learn video about : Geology lecture titled Macro evolution in the deep sea by SeilacherGeology lecture titled Macro evolution in the deep sea by Seilacher
learn video about : Geological evidence of Darwin theory of evolution that still mattersGeological evidence of Darwin theory of evolution that still matters
learn video about : The meaning of Limestone and shale cycles in the upper ordovicianThe meaning of Limestone and shale cycles in the upper ordovician
learn video about : Geologic carbon sequestration and mitigating climate change by inection of CO2Geologic carbon sequestration and mitigating climate change by inection of CO2
learn video about : Geology and mineral resources of oclahoma by Ken JohnsonGeology and mineral resources of oclahoma by Ken Johnson
learn video about : How to calculate the budget line and prices if you know incomeHow to calculate the budget line and prices if you know income
learn video about : Ecuador geology and volcanology given by Dr throfilosEcuador geology and volcanology given by Dr throfilos
learn video about : This video is about Mexico volcanos and Mexico Geological phenomenonThis video is about Mexico volcanos and Mexico Geological phenomenon
learn video about : Explanation about the 3 type of rocks and the relationship between themExplanation about the 3 type of rocks and the relationship between them
learn video about : Learning english vocab for ESL - project managementLearning english vocab for ESL - project management
learn video about : How to pronunciate words starting with BHow to pronunciate words starting with B
  1. What happens when we pull on a pulley and the pulley is pulling on other things?


  2. Tension in an accelerating system and pie in the face


  3. A more complicated friction/inclin ed plane problem


  4. Calculating the acceleration of on object sliding down an inclined plane


  5. Phisics cours - Introduction to friction


  6. Physics explanation about Mass on Inclined Plane


  7. Learning physics - A slightly more difficult tension problem


  8. Learning physics-An introduction to tension


  9. Physics topic explaining Force with Vectors


  10. Explanation about Newton's Laws and vectors