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Value Stream Mapping : An Enterprise IT Guide to Increasing Customer Value

by | June 19, 2018

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Value Stream Mapping : An Enterprise IT Guide to Increasing Customer Value

Value stream mapping has become a critical enterprise resource in the age of digital transformation.

 

Today, the digital enterprise focuses on providing value rather than product. With Continuous Integration and Continuous Delivery (CI/CD), businesses can offer value to customers through the delivery process. Implemented correctly, the development process, software releases, and feature updates become a competitive market advantage.

 

Many companies are struggling to unlock value in the delivery process. Organizational silos prevent collaboration between project teams. There is no project visibility. Without collaboration and communication, the company can’t aggregate data from product and service lines. For these companies, enterprise agility, continuous delivery, and digital transformation are conceptual, not practical. It becomes difficult for companies, especially large enterprises, to adapt to meet customer needs or rapidly deploy customer value through the delivery and release process.

 

Information Technology (IT) success is no longer product-driven. Success is measured through value and great experiences for external and internal customers. Value stream mapping unlocks and measures business value in the project delivery lifecycle. It provides project visibility and improves collaboration by supporting cross-functional teams. A value stream map even provides the foundation of enterprise agility, ushering in digital transformation.

 

Through this guide, IT teams and CIOs will learn how value stream mapping can be used to achieve a model of continuous delivery. Organizations will see how lean management techniques can help teams become agile. By the end of the guide, IT leaders will understand how value stream mapping is used to optimize and measure the contribution of IT resources toward business goals.

What Is Value Stream Mapping?

Value stream mapping is a lean management technique. Understanding value stream mapping requires understanding the history and principles of lean.

 

Lean Management and Value Stream Mapping

The principles of lean management fueled the success of the Toyota Company after World War II. Japanese automakers borrowed concepts such as manufacturing strategies from Henry Ford and statistical quality control from Edward Deming to develop the Toyota Production System (TPS). The principles of TPS are now known as lean management.

 

The goal of lean management is continuous incremental improvement. By eliminating factors that waste time, money and effort, quality and efficiency increase. This provides competitive advantages for the business.

 

Value stream mapping is one method in lean management. It is used to visually analyze the stages of the value chain. The goal of value stream mapping is to reduce process times, identify waste, and support process improvement.

 

What Is the Value Chain?

The value chain is a visual representation of the flow of activities and information that lead to a customer experience – the product or service. It starts with the initial concept or a request from a customer and runs to the end of the delivery lifecycle. It involves the entire system, including people, tools, materials, suppliers, and information.

 

Each activity, or event, and all the information required to build or deliver the product or service is part of the value chain.

 

Value Chain Mapping Definition

Value stream mapping documents and analyzes the flow of activities, materials and information during the product lifecycle.

 

Value stream mapping offers a deeper analysis of the factors and activities involved in delivering value than a standard process map. It collects a wide range of information across the system and looks at processes from a much higher level. With this end-to-end system map, companies can better focus on future projects. Leaders can identify opportunities for process improvement that may not be apparent from a process map.

 

Value Stream Mapping Symbols

Value stream mapping symbols are used to visually represent activities, materials or events in the value chain. Symbols used in value stream mapping include:

  • Process: Often representing the collaborative work of a group
  • Inventory: An exchange of material, sometimes a handoff of work
  • Supplier and customer: Usually the first and last steps of a process
  • Electronic flow: The flow of information and data exchanges, which is often the root cause of waste
  • Go see: Indicates visual confirmation of information or an activity during a process
  • Quality: A problem with quality, like a bug, which can occur anywhere during the value chain
  • Kaizen burst: An activity that solves a problem with urgency

 

Value-added activities are drawn in the center of the map, while non-value-added activities are drawn with vertical lines at right angles to the value stream.

 

For the purposes of this guide, a value stream focuses on strategic enhancements, innovations, maintenance, and fixes that add value to a product or service.

 

The Benefits of Value Stream Mapping

With a value stream map, you can quickly identify waste, impediments, bottlenecks, and unnecessary steps to increase the pace of work and maximize value. Value stream mapping fosters continual improvement in the organization. It encourages collaboration, better communication, and a focus on team effort rather than individual contribution.

The goal of lean methodology is a smooth flow of work toward creating value for the customer. Value stream mapping provides a clear picture of how work moves through the organization. It can also track and monitor the organizational resources required to deliver a feature, product, or service.

 

Value Stream Mapping and Agile

Lean and agile are not the same.

 

The goal of agile is execute work over shorter intervals of time. Changes can be made quickly and with more customer involvement.

 

The goal of lean is to reduce waste, remove unnecessary costs, and improve efficiency. Lean identifies and eliminates unnecessary activities in the creation of value for the customer.

 

Lean is often seen as a top-down approach to management. It focuses on end-to-end delivery. Agile is focused on the bottom up with rapid, short deliveries and continual iterations. In fact, agile was first developed as a rebellion to the top-down, end-to-end approach to development.

 

The Connection Between Lean and Agile

Despite the different delivery methods, lean and agile are complementary – working together so the company can deliver increased value to customers. The connections between lean and agile are much deeper than the differences.

 

Both lean and agile are focused on increasing quality, continuous improvement, and empowering people to continually add value. Both are focused on customer satisfaction. They look at the value being added rather than the work being done. Where agile promotes an adaptive and iterative process for a team to deliver value, lean looks at the system processes to identify ways to increase value.

 

Because of the complementary nature of lean and agile, teams will often use the principles together.

 

Use Case: Value Stream Mapping in Development

A software development company recently conducted a value stream mapping exercise.

 

The company struggled to deliver customer-requested features on time. Several release dates had slipped, and customers were concerned with future releases. The goal of the initiative was to reduce lead time for project and feature delivery.

 

The development team, operations, and senior management gathered for the event, which took place over two days. Using paper, pencil, stickie notes, and a board, the team first created a reverse phase schedule, another lean methodology tool, of project delivery.

 

Next, a value stream map was created. Critical metrics, like process times for individual activities and scheduled lead times, were identified.

 

After the meeting, the team could see their processes at a very high level. Roadblocks and activities that wasted resources were identified. Plans were made to eliminate the non-value-added activities negatively impacting the schedule. Repeat work and handoff times between operations and development were targeted as critical opportunities for process improvement.

 

As a first step, the company has combined the project handoff with developer meetings before sprint planning. This has already improved the accuracy of project estimates and reduced lead time as much as 10%.

Improving Lifecycle Management with Value Stream Mapping

Value stream mapping is the first step for an organization to unlock value in project delivery. It identifies and analyzes the flow of activities and information that leads to customer value.

 

Value stream management (VSM) ensures the strategic alignment of IT resources to the overall business goals. VSM uses the data provided by value stream mapping to manage and evaluate IT work to ensure the highest value for the customer and business.

The Difference Between Manufacturing and Development

The focus of VSM is visualizing, measuring, and then managing demand across multiple product or service lifecycles.

 

Value stream mapping was first developed to eliminate waste and maximize value in manufacturing and production. VSM takes the practical lessons of value stream mapping and applies them to measure and increase value in IT and software development.

 

There are critical differences between the manufacturing and software development. For one, the manufacturing cycle tends to be linear. A customer request is collected and then sent to the shop floor. Work is strictly planned, scheduled, and monitored before the product is released to the customer. The goal of lean management in manufacturing is to eliminate variability and ensure each task is repeatable.

 

Agile development is iterative. It embraces variability and adaptive processes. Variability must be managed rather than eliminated. Managing multiple demand lines for different products often leads to haphazard delivery and uncertain priorities, which can cause frustration with IT. The tools provided by lean and VSM must be adapted for IT.

 

What Is Value Stream Management?

Value stream mapping provides an organization actionable data on software development and process delivery. The value stream map identifies the factors, such as the tools, time, people, and resources required for a feature, product or service. With this data, the company can map the results of their effort to the value delivered to the customer.

 

Using the data, the company and IT managers evaluate work and create data-driven decisions on applying IT resources. Think of it like managing your investment in IT. New features can be evaluated using a cost analysis. Is the IT resource investment worth the expected benefit or value of the feature?

 

VSM assigns economic value for the business to technical outcomes delivered by IT. By assigning value, you better manage the complex system that thrives on and requires variability. In agile, values can be assigned to an epic, user story or work item. It can also be assigned to a customer demand or feature enhancement. By comparing values, work can be prioritized across multiple delivery pipelines.

 

The Connection Between Value Stream Mapping and VSM

VSM works as an iterative value stream mapping process for the organization. Once the value stream mapping exercise is completed, VSM aligns the goals of the company using the results of the exercise. More value is assigned to priorities that align with and support business objectives. It focuses internal resources on customer satisfaction. It increases collaboration and communication. VSM supports the process improvements identified by value stream mapping.

 

Using VSM, the company can manage and monitor IT and developer resources. By prioritizing higher value work, company leadership can strategically align IT initiatives and resources to the overall business strategy. The value for each product release is maximized, with a clear and collaborative understanding of the work that went into the release.

 

Benefits of VSM to Product and Application Lifecycle Management

With a real-time, accurate view of the benefit and value of IT resources to the overall business strategy, the company can begin making data-driven decisions in the investment of resources. Product and application lifecycle management is optimized, ensuring maximum value to the customer experience with every feature and each new release.

 

Organizations utilizing VSM can accurately track the IT and development investment against the delivery of value to customers. This ensures strategic alignment between IT and corporate goals. Product features and deliverables can be mapped to corporate goals to optimize the return on the IT investment.

 

Use Case: Value Stream Mapping in Development

Due to rapidly changing government regulations, a manufacturing software company needed to move from a bi-annual release schedule to monthly releases for customers.

 

The first step for this company was value stream mapping their delivery process. By determining the resource investment for each activity in the value stream, company leadership could see opportunities to shorten the release time and increase the value of each release.

 

In the past, a regression test was conducted before each major release. The lengthy regression test was the primary reason for waiting to release new features in the software. Moving forward, the company began conducting regression tests for each sprint. This ensured a usable product was ready for release at the end of every sprint.

 

VSM allowed the company to better analyze the features included in each release. The product owner was able to prioritize work to ensure a customer-driven release was ready each month for customers.

 

Three months after value stream mapping, the company was able to reduce the scheduled product releases from six to eight months to eight weeks. The goal is to reduce the release time to four weeks in the next year.

Maximizing the ROI of IT Resources with VSM

VSM links IT to company-wide initiatives and business goals. The data collected from value stream mapping provides the foundation for data-driven IT management. As the company begins assessing feature and functionality delivery using VSM, IT becomes a critical resource in meeting corporate goals. This provides a direct link between IT investment and profit generation for the company.

 

Using VSM to Manage IT Investment  

Before value stream mapping, many companies couldn’t track the return from IT resources. This wasn’t from a lack of effort, but a lack of data.

 

Many businesses came to see IT as an expense rather than a resource. Without data, IT couldn’t align project effort to business goals. Good IT investment requires tracking costs against the expected returns, and IT had no way of accurately tracking or monitoring costs.

 

Value stream mapping provides this data. The map analyzes the project delivery process to determine where and how resources are used. Costs for each event can be accurately assessed. These costs are linked to a deliverable or work effort. The application of IT resources to a business deliverable can then be accurately tracked.

 

With this data, leadership can better manage IT investment.

 

VSM and Agile Sprint Planning 

Synchronizing VSM with agile sprint planning provides benefits to both.

 

In sprint planning, a sprint goal is identified. This goal is the final objective of the sprint and should be connected to a product feature or customer deliverable.

 

Using the data collected during the value stream mapping exercise, the business cost for the epic, user story, or work effort can be determined. By adding the combined cost of the backlog for a feature or service, you can determine the total cost in IT investment. Comparing this to the value of the feature or service to customer experience will determine the ROI for the business.

 

 

Prioritize Work Using VSM

Through agile and the VSM, the company now has an accurate view of the cost of IT deliverables. The team can confidently assign resources to work effort without risking cost overruns. Deadlines can be assigned using the expected return, with lower priority items being pushed later in the schedule. The company can also assess priorities in the backlog.

 

For the large enterprise, coordinating releases across multiple product lines adds complexity to IT management. VSM allows the company to make data-driven decisions on priorities for IT resources. Work that provides a greater return can be prioritized.

 

In the past, many companies saw IT and development as merely an expense. Feature requests and projects went into development and eventually a product came out with little visibility into the cost. Using VSM, the business can accurately evaluate IT investment against business goals.

 

Monitoring IT Investment with VSM

The goal of sprint planning in agile is to accurately plan and predict the work required for a deliverable. Agile empowers the development team with the freedom and flexibility they need to complete work efficiently.

 

Software development is a complex and challenging process. When it comes to planning, it is impossible to accurately predict every variable. Projects will slip.

 

VSM is an invaluable tool for monitoring and tracking progress during development. As change happens and resources shift to compensate, VSM allows leaders to track the change in cost. Before moving resources, the company can determine how the change will impact the expected return. This ensures continued optimization for IT investments, even when change occurs.

 

As the company plans new features and functionality, their value to the organization can be assessed and prioritized, maximizing the return for IT resources. This provides visibility. The business has an accurate view of planned IT work.

 

Please note, software tools such as enterprise agile delivery platforms will help in monitoring IT investment, even for companies utilizing VSM. The real-time input from the development team is crucial for managing the project. Tracking interaction and the handoff of work without a physical resource can be done in the software. Real-time monitoring of the status and risk of the deliverable is another benefit of the system.

 

VSM and Cross-Functional Teams

The VSM also supports the use of cross-functional teams.

 

Companies, large enterprises especially, struggle to support or utilize cross-functional teams. Developers and IT resources will focus on one domain in the value chain. As work is released, it naturally gravitates to a single domain and one resource team. Without a compelling reason, it is difficult to push team members away from their domain.

 

This creates disparate, siloed divisions in the organization. Collaboration and communication suffer between silos. Pockets of inefficiency, especially in the handoff of work, create waste.

 

Using VSM and the value stream mapping, synergies between IT resources can be identified. Looking at the goal of increasing customer experience system-wide allows IT leaders to apply not only the most convenient team members and resources, but the team members best positioned to deliver value.

 

VSM links development, delivery, business, and testing teams through the business strategy. The cross-functional team is focused on delivering value to the customer. With the overall strategy and goals in place, the team stays in sync. Any change is reflected in the VSM priorities, ensuring coordination with the team.

 

Connecting work to the overall business goals, rather than the domain priorities, gives reason for existence of a cross-functional team.

 

Through VSM, existing organizational silos are removed and organizational efficiency increases.

 

Stakeholder Investment and Value Stream Mapping

Increased collaboration and communication is a valuable benefit of value stream mapping and VSM.

 

As stakeholders and team members work on a project, they recognize the critical importance of their work toward the overall business goals. Suddenly, a single user story takes on much greater importance.

 

With better visibility into development, operations can see how the work of IT impacts their priorities. This will spark greater collaboration between development and operations, providing a connection between deliverable and delivery. This is the foundation of DevOps, a management technique that unifies software development and operations.

 

Use Case: Maximizing ROI for IT

A large enterprise company with significant investment in software and IT resources struggled with a backlog of work.

 

Managing the backlog was a battle between IT and operations. The backlog priorities for IT were very different than the backlog priorities for operations. Neither group could accurately determine the value for each priority when the work didn’t directly impact a specific customer.

 

After value stream mapping, the company could more accurately assess the cost for each item in the backlog. By linking the items in the backlog to the overall business goals, IT and operations could collaboratively prioritize work.

 

Using the values and the value stream map, IT could justify the need to prioritize backlog work against new features to company leadership. Resources could be shifted to complete work as quickly and efficiently as possible using VSM.

 

Before value stream mapping, the company estimated 18 months of work would be required to clear the backlog. Today, the company estimates the backlog will be cleared in eight months while IT continues to work on new features and releases.

VSM, Value Stream Mapping, and the Enterprise

Value stream mapping is more than a tool for IT. It is a valuable resource for the entire organization, becoming a differentiator in a competitive marketplace.

 

Value Stream Mapping and the Corporate Culture

Utilizing value stream mapping in the delivery process is a culture shift. Culture is the key to successful business transformation. Implementing VSM and value stream mapping starts top down and requires support from business leadership.

 

As a culture shift, the initiative is often met with reluctance or hostility. Some may see it as hassle, or just an IT project with no direct impact on their work. Allowing this attitude to continue without inviting other departments or team members to become involved in value stream mapping will only hurt the initiative.

 

Value stream mapping and lean management is not an IT and development project alone. Success requires direction and support at every level of the organization. Over time, as waste is eliminated, and the company becomes focused on generating value for customers, everyone will see the benefit of value stream mapping.

 

Initial direction for the value stream mapping initiative must come from company leadership. Selecting a champion or advocate on the leadership team will ensure the project remains a priority. The champion can ensure resources are applied to the project when they are needed and help remove roadblocks toward implementation.

 

Setting Goals in VSM

Company goals and business strategy should guide and influence value stream mapping. These must come from senior business leadership. The goals determine the priorities and set the values used in VSM.

 

Company leadership must clearly articulate the business strategy and goals to senior IT. Senior IT should collaborate with company leadership to understand the business strategy.

 

Ask questions and determine the priorities. Look at how the strategy translates to the customer experience and project deliverables. Any confusion or miscommunication will negatively impact the value stream mapping, and result in confusion during implementation.

 

Once business leadership and senior IT agree on the business goals, the value determined for features and deliverables shouldn’t cause confusion across the organization.

 

Senior IT will then turn the business goals and strategy into IT initiatives. Many times, IT will develop a dashboard to visually track and monitor priorities set through VSM. This dashboard provides visibility to work and the IT priorities.

 

Sustainable Change for IT Initiatives

Many corporate projects are doomed to failure not because of a flaw in the initiative or a problem in the methodology. They fail because they didn’t have widespread support in the organization.

 

When the project is led by only a few individuals and advocates can be found in only one area, support for the project will wither.

 

Continue to collaborate with operations and business leadership as you roll out the value stream mapping initiative. Include leadership in VSM and let them monitor progress. Invite operations to work on the value stream map and let them see how VSM creates continuous value for customers.

 

Use Case: Implementing Value Stream Mapping

Senior IT leaders at a software company wanted to utilize value stream mapping and VSM to better manage the feature delivery schedule and releases.

 

Before starting the initiative, they identified key stakeholders in the organization and invited them to the planning committee. They included not only members of operations but also the CIO and an account manager. The committee members became advocates for value stream mapping.

 

Once the project started, IT had advocates in place across the company to help explain the importance and benefit of value stream mapping.

 

After rollout, support for value steam mapping has continued to grow in the company. The benefits of the initiative are recognized. Company leadership continues to look at opportunities for process improvement identified in the mapping.

Value Stream Mapping and Enterprise Agility

A critical goal of value stream mapping for IT is to improve the customer experience through the delivery process. Successful companies are getting their customer what they want, when they want it. These companies are responsive, delivering value faster, more accurately and efficiently.

 

If IT can provide more value by quickly responding to customer needs in the delivery process, the customer experience improves. Once the customer experience improves, revenue will grow.

 

Enterprise agile delivery, the basis of CI/CD (Continuous Integration/Continuous Deliver), is critical for meeting these goals.

 

What Is Enterprise Agility?

In the past, scale allowed large enterprises to deliver more value to customers. Today, companies need rapid execution and delivery to better respond to customer needs and expectations. This is enterprise agility.

 

Enterprise agility is a fundamental change in the way a company operates. Using shorter iterations for product delivery and incorporating continual customer feedback, enterprise agility makes the company more adaptable and more flexible. The business moves faster to better serve customers.

 

By eliminating siloed business units, breaking down corporate structures that stifle productivity, and empowering employees to be more responsive – all benefits of value stream mapping and VSM – the company can foster enterprise agility. This increases value for the customer.

 

The Connection Between Enterprise Agility and Lifecycle Management

 

Enterprise agility for IT means CI/CD. With CI (continuous integration), developers are continually testing to validate new code. In the past, testing was done at the end of a sprint. With CI, code is tested daily. Work is done collaboratively, and problems are found and corrected almost immediately.

 

With validated code, products are ready to be released at any time – CD (continuous delivery). This process allows the company to rapidly provide value to customers with new features and new functionality.

 

Using CI/CD and enterprise agility, IT and software companies can turn the product lifecycle from a static release schedule to one that provides continual value for customers.

 

The Role of IT in Enterprise Success

Value stream mapping and VSM guide and track the work of IT. VSM ensures IT investment aligns with business goals and the corporate strategy.

 

By tracking the IT investment in a feature, project, or release, managers can see the Return on Investment (ROI) received through IT and development resources. If there are concerns about a project or investment, or customer needs and expectations change, resources can be shifted to maximize the return. CI/CD ensures the IT team can manage rapid deployment, shifting work effort to projects that deliver a higher return. At any time, the company is ready to deliver a product release.

 

Rather than an expense for the business, IT becomes a critical resource for building value and generating profit. Managers can track the return on IT investment by the value IT delivers in the accelerated and rapid delivery process.

 

Today, smart companies are using value stream mapping and VSM to accelerate and optimize the delivery process and provide customers rapid, high-quality software releases. Companies can release more quickly, better respond to customer requests and marketplace pressure, and provide continuous value for customers. These lean methodologies are unlocking enterprise agility and CI/CD for the business, ushering in digital transformation.

 

Are you ready to learn more about value stream mapping, enterprise agility, and the role of digital transformation as a market differentiator? Contact Panaya to discover how Release Dynamix can unlock enterprise agility for you.

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