Maximizing IT Resources with Value Stream Mapping (VSM)

What is value stream mapping?

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

What You’ll Learn

• The fundamentals of value stream mapping (VSM) and its importance in IT.
• The principles of lean management and their connection to VSM.
• How VSM improves lifecycle management and aligns IT resources with business goals.
• The benefits of VSM in product and application lifecycle management.
• Best practices for maximizing the ROI of IT resources using VSM.

Many companies struggle 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. It becomes difficult for companies, especially large enterprises, to adapt and 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 user experience for external and internal customers. Value stream mapping software unlocks and measures business value in the project delivery lifecycle. It provides project visibility and improves collaboration by supporting cross-functional teams.

This guide will outline how:

•  a value stream map can be used to achieve a model of continuous delivery
• lean management techniques can help teams become agile
•  a value stream map is used to optimize and measure the contribution of IT resources toward business goals

Lean Management and Value Stream Mapping

The principles of lean management fueled the success of Toyota, 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). These principles are now known as lean management, the goal of which is continuous incremental improvement by eliminating factors that waste time, money, quality, and efficiency.

Value Chain Mapping Definition

Value stream mapping documents and analyzes activities, materials, and information flow during the product lifecycle. It 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 higher level. With this end-to-end system map, companies can better focus on future projects and management can identify opportunities for process improvement that may not be apparent from a process map.

Value Stream Mapping Symbols

Value stream mapping symbols visually represent the value chain’s activities, materials, or events. 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. 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, often the root cause of waste
• See: Indicates visual confirmation of information or activity during a process
• Quality: A quality issue, such as a bug, which can occur anywhere during the value chain
• Kaizen burst: An activity that solves an urgent problem

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.

Value Stream Mapping and Agile

Lean and agile are not the same. The goal of agile is to execute work over shorter intervals of time. Changes can be made quickly and with more customer involvement. The goal of lean is eliminating waste as much as possible, remove unnecessary costs, and improve efficiency. Lean identifies and eliminates unnecessary activities in creating value for the customer. Lean is often seen as a top-down approach to management. It focuses on end-to-end delivery. Agile, on the other hand,  focuses on the bottom up with rapid, short deliveries and continual iterations. 

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 similarities between the two are far greater than the differences. Both lean and agile focus on:

• increasing quality
• continuous improvement
• continually empowering people to add value
• customer satisfaction.

They look at the value 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. As a result of the complementary nature of lean and agile, teams will often use the principles together.

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 activities and information flow 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 software to manage and evaluate IT work to ensure the highest value for the customer and business.

The Difference Between Manufacturing and Development

VSM focuses on visualizing, measuring, and managing demand across multiple product or service lifecycles. Value stream mapping was first developed to eliminate waste and maximize value in manufacturing and the production process. 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 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.

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 company’s goals using the exercise results. 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.

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 delivering 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.

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. IT becomes a critical resource for meeting corporate goals as the company begins assessing the delivery of features and functionality using VSM. 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 efforts to business goals. Good IT investment requires tracking costs against the expected returns, and IT has 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. The business cost for the epic, user story, and work effort can be determined using the data collected during the value stream mapping exercise.

Prioritize Work Using VSM

Through agile and 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.. VSM allows the company to make data-driven decisions on priorities for IT resources. Work that provides a greater return can be prioritized.

Many companies previously 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 predict every variable accurately. 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.

Software tools such as enterprise agile delivery platforms will help monitor IT investment, even for companies utilizing VSM. The real-time input from the development team is crucial for managing the project. The software can track interaction and the handoff of work without a physical resource. 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. Urging team members away from their domain is difficult without a compelling reason.

This creates disparate, siloed divisions in the organization. Collaboration and communication suffer between silos. 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 the most convenient team members and resources and the best positioned team members 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. Through VSM, existing organizational silos are removed, and organizational efficiency increases.

Stakeholder Investment and Value Stream Mapping

Increased collaboration and communication are valuable benefits 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.

The Link Between Corporate Culture and the Value Stream Map

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. The initiative is often met with reluctance or hostility as a culture shift. Some may see it as a hassle or just an IT project without directly impacting their work. Allowing this attitude to continue without inviting other departments or team members to participate in value stream mapping will hurt the initiative.

Setting Goals in VSM

Company goals and business strategy should guide and influence value stream mapping. These must come from senior business leaders. 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 confuse implementation.

Once business leaders and senior IT agree on the business goals, the value determined for features and deliverables shouldn’t confuse the organization.

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 failed because they didn’t have widespread support in the organization. When only a few individuals and advocates lead the project can be found in only one area, support for the project will wither.  Continue collaborating 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 constant value for customers.

Value Stream Maps 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 will improve.

The Connection Between Enterprise Agility and Lifecycle Management

Enterprise agility for IT means CI/CD. With CI (continuous integration), developers continually test 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 customer value.

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. Managers can see the Return on Investment (ROI) received through IT and development resources by tracking the IT investment in a feature, project, or release. If concerns about a project, 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 provide 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 use value stream mapping and VSM to accelerate and optimize the delivery process and provide customers with 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 unlock enterprise agility and CI/CD for the business, ushering in digital transformation.

Key Takeaways

• Value stream mapping (VSM) provides a visual representation of activities, materials, and information flow, enabling the identification of waste and inefficiencies.
• Lean management principles focus on continuous improvement by eliminating waste and optimizing processes, which complement agile methodologies.
• VSM and agile methodologies together enhance collaboration, communication, and overall team effort, improving customer satisfaction.
• VSM helps align IT initiatives with business goals, allowing for data-driven decision-making and better management of IT investments.
• By integrating VSM with agile sprint planning, organizations can prioritize work, track IT investment, and ensure a higher return on investment, leading to improved product and application lifecycle management.

Frequently Asked Questions

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.