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Value stream management is the process of visualizing the stages through which work is performed (a value stream) and tracking metrics so you can plan improvements. Every process for creating value includes some activities that add value, other activities that do not add value, and other inefficiencies like waiting time. Understanding your processes in this way gives you the ability to target process improvements to remove wastes such as delay.
As an example, consider something like ordering food in a restaurant. When a customer arrives, they need to be seated. There may be a waiting period while staff clear and prepare a table. After being seated, the customer can order drinks, appetizers, and a main dish. Each request is sent to the kitchen. In the kitchen, one person may prepare raw ingredients, another may assemble and cook them, and yet another person may be responsible for plating them. The food is then delivered to the table, hopefully to the satisfaction of the customer. Customers eat, chat, and eventually leave. The staff can then clear the table and start again.
Every step in the process involves a hand-off between different people. Each step takes a certain amount of time, and the hand-offs need to be optimized to deliver the meal in a timely way, with high quality.
Collaboration, cost and complexity in a value stream
As this example shows, creating value requires materials to pass through the hands of many workers. Later steps in the process depend on earlier steps being completed successfully. And each step is necessary to deliver a final product. Added value – or more specifically – adding the most possible value – does not happen in a silo. It is an inherently collaborative effort.
There is an implied cost to each part of the process. Staff need to be paid, space and equipment need to be available and ready, and if the meal is delayed too long customers might become frustrated or leave. In a kitchen, the whole process is visible and unfolds over a short period of time.
Value stream management is becoming increasingly popular in software development to understand this complex process. But in creating software, most of the process is invisible, many tools or even teams are involved in the work, and delivery of a single working piece of software might take days, weeks, or even months.
Value stream maps are a tool to make this flow of work visible. They enable businesses to understand the flow of value to customers, and waste incurred across a process that may otherwise be hidden from view.
There is one important difference between the kitchen analogy and software development. Restaurants offer a set menu to ensure they have the right ingredients on hand and can create all the dishes with high quality. Since software can be replicated infinitely, recreating the same piece requires no effort. Anyone who needs a piece of software that has been written before can just purchase or duplicate a copy.
The challenge in software development is in creating something that has never been made before. Product development is a unique challenge every time. But the overarching process still follows predictable processes that can understood and monitored to increase the chances of success.
The Value Stream Management Imperative
When applied to software development, value stream mapping has the potential to drastically enhance productivity, quality, and time to market. Gartner predicts that 70% of organisations will use value stream management to manage their DevOps pipelines by 2023.
It is easy to understand the interest in value stream management when you consider how fragmented software development teams have traditionally been. As businesses become increasingly dependent on software creation, they increasingly seek to improve the effectiveness of technology teams, especially through facilitating collaboration within them (and with the rest of the business).
To increase the flow of value, businesses (especially enterprises) need to make it easier for development teams to deliver software, eliminate bottlenecks or delays, and cut waste.
Getting Started with Value Stream Management
The first step in value stream management is to create a map or visualization of the process. This can be done on paper, using digital whiteboard tools, or in software specifically designed for creating and managing value stream maps. The goal is to map every major phase or sub-process work must flow through before delivery.
Metrics such as lead time, cycle time, load, and percentage complete and accurate can then be layered onto every stage of the process to help indicate the speed and quality of these processes. Changes in these numbers over time indicate the evolution of the process and may show increasing or decreasing performance. This information is crucial for getting a holistic view of how your development team works together and identifying areas for improvement.
This quickly identifies not only the interactions that add most value, but also reveals opportunities for automation as well as bottlenecks to performance.
Why don’t businesses know this already?
In a world that is now dominated by digital, it is often surprising that businesses do not have this level of insight into their software development already. In a modern business context where software defines so many processes, issues at the ‘micro’ level of the development team are often amplified and impact the entire business. So how is it that businesses do not already assess software development at this level?
This information is often hidden because people are too busy doing their work to take time to observe and understand their processes. There are also gaps in domain knowledge, where the people most familiar with technical systems may lack knowledge about business process improvement or organisational design.
There can also be a lack of precise understanding of where inefficiencies lie. The team and managers may have a ‘rough idea’ of plans and progress but lack a tool that can accurately identify measures such as delay times, frequency of rework, and the labour required for each stage. There is often little perspective on the entire, end to end process. There can also be cultural challenges, where teams may blame others for difficulties or inefficiencies, or be reluctant to be inconvenienced by changes that would benefit the organization.
A series of critical issues, or an overwhelming pressure to improve can force teams to begin the work of understanding their own process and questioning their current understanding. Such challenges can provide opportunities for deep change.
Structural inefficiencies can be particularly acute for businesses with larger IT teams. Larger teams provide more opportunities for clumsy handoffs and are more challenging to fully understand.
Realistically, even just within a software development team a business cannot make improvements across all indicators at once. Identifying the single primary bottleneck in a system is key to showing you where to start your efforts.
In 2018, nearly $1.3 trillion was spent on digital transformation globally. Of that, more than $900 billion is estimated to have gone to waste. In this context, the need for value stream visibility is not a nice-to-have, it is a business necessity whether you are running a kitchen or leading a digital transformation.