Value Stream Optimization – A Complete Guide

January 7, 2021

Value Stream Optimization

Value stream optimization (VSO) is an inherently complicated and challenging process of enhancing the efficiency of your business’s value stream mapping. You can brief yourself on the basics of software value streams here, but essentially, VSO enables businesses and brands to streamline their product flow from the supplier to their customer base by improving operational efficiencies.

Gartner recently shared their view on Value Streams determining the success of DevOps, a prediction that underpins precisely why optimizing your value stream is important:

By 2023, 70% of organizations will use value stream management to improve flow in the DevOps pipeline, leading to faster delivery of customer value.” 

Most Frequent Challenges of Value Stream Optimization

Once you have created a fundamental value stream map, the next logical step is to further optimize and improve it by taking unique business requirements, customer feedback, internal reviews, and data analytics into consideration. That being said, regardless of how obvious value stream optimization may occur, it poses a number of challenges that make it much more difficult than it sounds. Some of the most frequent challenges include the following:

Cross-organizational Transparency

Defining your value streams aims to create transparency across the entire value chain. While the goal is noble, the process can also be a very sensitive exercise to perform.

Departments that earlier seemed like high performers may appear as bottlenecks, lacking competencies or worst case not really adding value to the product. For that obvious reason, political agendas and individual ambitions may challenge value stream optimization.

While the goal of creating a better flow, organizations face the problem of only covering parts of the value stream. Worst case results in sub-optimization and degraded performance and best case in non-detrimental changes.

Failing to Understand the Bigger Picture

Often, IT organizations are front runners on the agile agenda that has grown over the last decade. It builds on LEAN Production which is a very well-known concept within production. But the Agile Manifesto developed in 1992 is now the most well-known attempt to transfer the principles to software development and IT, and eventually other parts of the business.

Implementing value streams in a company is not a business-only IT activity. While agile and similar iterative methodologies are second nature in IT, building the necessary understanding and acceptance in other parts of the business may be a challenge.

VSM involves documentation and analysis of the flow of information and data through a chain of multiple internal and external stakeholders including vendor, shipper, procurement, quality assurance, development, sales, delivery, and more which makes it quite challenging to bring everyone on the same page.

Not only is there a diverse variety of internal procedures, but also conflicting goals and objectives of different departments, making further optimization an uphill battle.

Security Concerns and Vulnerabilities

Once again, the obvious way to streamline and optimize value streams would appear to be ensuring a transparent and effortless flow of information between different stakeholders and teams. However, that introduces the challenge of maintaining the security of information as software vulnerabilities can lead to data breaches, loss of time, and other types of cyber-attacks.

This is why value stream optimization requires every team to address as many security concerns as they possibly can. 

Defective or Inefficient Software

Optimization can only be successful and yield desired results when software functionality and features enable the brand to do so. Any type of software that fails to consistently test and enforce compliance for each release cycle will also fail to deliver value even if you have mapped it in your process.

Whether it is your internal stakeholders like departmental employees or external ones such as customers, defective or poor quality software often leads to the failure of the value stream optimization process since it gets rejected by everyone.

Silos Are Inevitable

When we talk about organizational structures, one of the key DevOps principles is to eliminate silos to ensure free and transparent flow of information which in turn allows easy and highly efficient value stream mapping. Having said that, there is always some extent of independence demonstrated by all three teams including dev, test, and ops.

Although there is continuous testing that attempts to ensure the enhanced flow of information, silos remain inevitable. That’s why instead of interspersion, organizations are now moving towards integration to ensure the highest quality software delivery. 

How to Optimize a Value Stream

Here are a few key steps designed to help you achieve a higher level of efficiency.

Building the “Bigger picture”

Despite all the barriers, you need to identify a low first-time-right and potential waste ratio for each phase. Lean process management suggests that there can be 8 different types of waste when it comes to software delivery: 

  • Transport – Identifying unnecessary transfer of data
  • Inventory – Storing completed features in an inventory without release
  • Motion – Ensuring mobility of information through physical and digital means
  • Waiting – Being patient to receive a specific role, permission, build, test results, or deployment
  • Over Production – Creating features or flows that are likely to be used
  • Over Processing – Running more tests than necessary for software validation
  • Defects – Those errors and bugs that could’ve been identified earlier
  • Skills – Overuse or underuse of specific role(s)

Ensure that every process and the resources you have allocated for it are adding value for the customer or your internal procedures. For instance, seeking manual management approval takes time and doesn’t add any value to the internal process. So, you can choose to either eliminate it or go for automation.

Re-evaluate Your Value Stream Map

Once you have identified potential waste and weaknesses, you have the data to re-evaluate your VSM. Ask tough questions to ensure that the mapping complies with your business requirements and every step adds value to the process as a whole. Make sure there are no surprises or uncertainties as they can lead to waste of efforts, time, and financial resources along with impacting the software quality.

After you have gone through the process of evaluation, assess your VSM metrics and criteria. Start with the total time required to deliver an incremental product. In technical terms, this is called Cycle Time or CT.

  • Is it according to your expectation?
  • Or does it exceed your desired time limit? 

There is often a chance that you’d be surprised by the cycle time (CT) of your product so it acts as a motivating factor for optimization. The general metrics include:

  • Cycle Time (CT) – Time it takes to complete a particular phase
  • Valued Added CT – Time it takes to add actual value
  • Non-Value Added CT – Time that can be categorized as waste
  • First Time Right (FTR) – Ratio of times the particular is phase is successful at the first step

Use VSM Metrics for Value Stream Optimization

Having access to the metrics will enable you to analyze if your CT, FTR, and other values are within your expectations. For instance, if testing a particular feature of software shouldn’t take more than 1 hour but it is taking 1 hour and 45 minutes on average, you’d be able to determine that you either need to fix the process or the team or maybe both.

Make a comparison chart so you’re in a better position to see the difference between expected/ideal and actual metrics. Remember that the existence of a difference doesn’t necessarily mean that there is room for improvement. It could also indicate that your VSM metrics are over-ambitious or outright inaccurate. The optimization process will involve bringing each metric as close to the ideal value as possible while adjusting your own expectations about certain values.

For example, you may believe that a certain step should have a first-time-right percentage of 95% but on re-evaluation, it may be revealed that the efficiency of tools available and the complexity of the process make it unreasonable.

Flow and Resource Utilization

In order to improve the process further, you would also need to map the flow against resource utilization. It will indicate whether the flow or output you are getting is worth all the resources you are utilizing to get that output. You can create a chart or a matrix to plot the enhancements and improvements you have made against the efforts and resources you have spent.

Your implementation should begin from the optimizations that take the least amount of resources and while improving the flow substantially. Then you can gradually move on to the optimizations that do deliver higher flow but also require a lot of effort.

If you want more inspiration on The Resource Utilization Trap, then take 10 minutes to see this small video made by Henrik Kniberg.

Final Word

When it comes to value stream optimization, there is no easy way out. It comes with a wide range of challenges and you need to ensure that you are evaluating everything in detail to get the right results. Your processes should be elaborate and detail-oriented to make sure the software quality you produce is nothing but top-notch.

Søren Pedersen

Co-founder of Buildingbettersoftware and Agile Leadership Coach

Søren Pedersen is a strategic leadership consultant and international speaker. With more than fifteen years of software development experience at LEGO, Bang & Olufsen, and Systematic, Pedersen knows how to help clients meet their digital transformation goals by obtaining organizational efficiency, alignment, and quality assurance across organizational hierarchies and value chains. Using Agile methodologies, he specializes in value stream conversion, leadership coaching, and transformation project analysis and execution. He’s spoken at DevOps London, is a contributor for The DevOps Institute, and is a Certified Scrum Master and Product Owner.

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