Value Stream Management: Connecting Software Delivery to Business Value
By Satyan Prakash
March 2021 (Originally published December 2020)
Why is value stream gaining so much popularity? Agile and DevOps helped organizations completely transform their software delivery processes but there were still missing links to correlate the software delivery closely with business value. Value Stream Management, borrowing from lean manufacturing principles, creates this missing link and helps organisations connect software delivery more closely to business value and eliminate waste at the same time.
What is Value Stream, Value Stream Mapping, and Value Stream Management?
Let us first understand all the terms related to value stream. A value stream, as defined on www.isixsigma.com, is all the steps (both value-added and non-value added) in a process that the customer is willing to pay for in order to bring a product or service through the main flows essential to producing that product or service.
Further, value stream mapping, as defined on www.isixsigma.com, is a lean manufacturing or lean enterprise technique used to document, analyze and improve the flow of information or materials required to produce a product or service for a customer.
Lastly, value stream management, as defined by Forrester, is a combination of people, process, and technology that maps, optimizes, visualizes, measures, and governs business value flow (including epics, stories, and work items) through heterogeneous enterprise software delivery pipelines.
Value Stream Mapping
Value Stream Mapping is a very powerful technique that enables us to see where the actual value is being added in the process, allowing us to improve on the overall efficiency associated with the delivery of an operational system or a software product.
When you map and manage both the operational and software delivery value streams it really helps us identify what the customer is asking for, what they value, what they need and how to best achieve in the most efficient manner possible. More importantly, it is a great tool to provide business leaders, operational stakeholders and even software teams with visibility adapted to their needs.
The improvements in processes and understanding shifts the focus from fire-fighting to fire prevention. As a result, it’s much easier to accurately plan and manage product delivery. A better-quality product is delivered faster and is better aligned to the needs and expectations of the customer. What more can you ask? 😊
Insights from the industry
In my attempt to collect industry input, on VSM I managed to stumble upon the Forrester Consulting thought paper which was commissioned by CollabNet VersionOne (now Digital.ai). The findings documented as part of this report are quite an eye-opener. You can download the complete report here, but I will summarize a few points:
- Optimal software development and delivery is characterized by a focus on continuous improvement, alignment with business objectives, agility, visibility and collaboration – all with a common goal of delivering value for the end customer. Up to 53% of respondents in this paper considered these capabilities important though less than 40% say that their organisations excel in these areas.
- Collaboration challenges: Business leaders increasingly need to align strategy, objectives, and portfolios, and to do that they need information on the state of application development and delivery (AD&D)) on one hand and production systems on the other hand. At the same time AD&D need views in the upstream (to set priorities) and in the downstream (to understand where software is in the pipeline). 89% of the respondents cited collaboration challenges between their business and AD&D teams attributable mainly to different reporting structures, metrics, and tools.
- Fragmented visibility: In large enterprises, software development depends on multiple, parallel workstreams and each may have their own technology, methodology and plans. Roughly a third or less of the respondents say that an aggregate enterprise-level visibility all the way down to the user-story level is a luxury because they don’t have a unified way to track work in progress with varying degrees of granularity. As a result, these organisations are more susceptible to getting lost in a sea of competing priorities, causing them to lose sight of the big picture and drift away from the understanding, and delivering on, their customers’ needs.
- VSM gaining traction to resolve the above challenges: VSM, when elevated with the right technical solution supports
- Ongoing measurement of metrics and value streams to identify business value and minimise waste
- Integrations via a common data model, link up DevOps tools up and down the pipeline
- Role-based views in the same data and toolchain, enabling real-time insights to roles at a different level and domain
- Early VSM adopters reaping benefits: Over 75% of the early VSM adopters say their VSM initiative has been effective at supporting capabilities important to their software development and delivery success. 90% credit their VSM initiative for helping them create value for the end customer. VSM has helped these early adopters via superior visibility, agility and governance across the software lifecycle. VSM users are far better positioned to identify and resolve disconnects and redundancies in the end-to-end stream from the business making a request and IT delivering it into production; give different users views into where value is generated or lost; and fine-tune the planning and management of products; human and digital resources, work items and releases.
- Importance of using the right metrics – Output Vs Outcome: Software organizations must use process metrics (Output Metrics) to gain an understanding of where roadblocks lie in their value stream(s) in order to make any meaningful improvements. Metrics such as cycle-time, release velocity, escaped defects and quality in production are useful to evaluate and manage process improvements. Useful to drive further process automation and identify areas ripe for automation. Business and executive stakeholders need a clear picture of how investments made in Agile/DevOps transformation are helping the business grow. Adopting outcome metrics based on value – VSM helps in aligning teams.
Value stream management – the right way
Value streams typically fall into two broad categories: operational and development.
Operational value streams represent the continuous flow of business and delivery value to the end customer.
Development value streams on the other hand support operational value streams e.g. they pertain to systems and capabilities that enable operational value. Please check the example given in the diagram below to understand the linkage between these two types of value streams.
Now let us try to understand how work is planned and progress made visible in value streams at different levels which eventually ensures alignment between business objectives and software delivery. I will try to explain this with the help of the diagram below which is a very simplified and generic view of an organisation.
I have assumed three levels here: portfolio level which typically aligned to business units, program level pertaining to various programs within a business unit and team level which pertains to multiple software delivery teams pertaining to a program.
In a medium-sized organisation there may be multiple portfolios each having multiple programs and teams. Or there may be more levels of planning and work tracking. Multiple teams may use different technologies and methodologies, some teams may pertain to vendors and some may consist of in-house resources.
Each of these portfolios, programs and teams may use different planning/tracking tools or they may be using a complete end-to-end VSM product. It does not really matter. Business leaders need an aggregate enterprise level visibility of all the work in progress irrespective of the permutations and combinations mentioned above. As you can see, we have backlogs of work at different levels of granularity at each level, feedback loops going back to higher-level at each level and Kanban boards giving nice visibility to the work progress at the right level of granularity at each level.
It does not matter what framework or tool you use, if you are able to map and manage your value streams as suggested below, you will be able to deliver a better-quality product faster and better aligned to the needs and expectations of the customer.