In this article, you will learn what Value Stream Management (VSM) is, why you should apply it to software delivery, how to measure the value stream of your digital products, and how to start using Value Stream Management in your projects.
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The importance of software within an organization
Software delivery is key in an increasingly digital environment. Organizations, in any sector, need to deliver higher quality products at faster speeds to their users if they want to remain competitive. Software development has become a business priority, and executive management has come to play a critical role in transforming the way development teams work.
It has become fundamental for organizations to align software delivery with their business goals. In recent years, they have worked on optimizing their processes using practices such as Agile and DevOps.. But the time has come to take things a step further. To accelerate software development and continuously deliver value to their customers, organizations should focus on managing their value streams.
Currently, we find ourselves in a position where:
- IT Managers are still unable to know if the practices being implementedto improve software delivery are actually effective.
- Product Owners continue struggling to determine how to measure and manage software creation, due to the difficulty of tracking an entire process (becoming even more complex) in which contribution comes from diverse teams, tools, and applications.
- The job of the CIO is evaluated by their capacity to deliver products that users love and that generate benefits for the business.
To reach their business goals, organizations need to adopt an approach based on the user, on the value the product provides them. For that to happen, it is crucial to have a start-to-finish view of the flow of value to the customer, making it possible to prioritize actions that maximize value and optimize costs. This is where Value Stream Management comes in.
What is Value Stream Management?
Value Stream Management (VSM) is a combination of techniques and practices that analyze and improve the flow of value throughout the entire software development process, from ideation to user delivery. This approach helps organizations to be more competitive in their markets and to obtain better business results by reducing delivery times, increasing performance, and improving the quality of their digital products.
VSM platforms allow for the visualization and understanding of the flow of value to the user by integrating the information from diverse, independent business tools, development tools, and operations tools involved in the lifecycle of a digital resource. This centralized view, at a system level, allows organizations to measure and optimize the delivery of their products, independent of the scale of the project or the tools used.
Value Stream Management helps organizations break down silos by connecting the distinct tools involved in multi-team processes. This integrated approach allows them to optimize their DevOps processes and provide Product Owners, IT Directors, and executives with real-time visibility of the delivery stream.
According to Gartner, Value Stream Management platforms are one of the ways in which DevOps toolchains are evolving (and they will continue to do so in the coming years). Gartner predicts that in 2023, 70% of businesses will be using VSM to improve the flow of value in their DevOps pipeline, leading to faster delivery of value to the customer.
Why apply Value Stream Management to software delivery?
In order for the delivery of digital products to customers to flow in the same direction as an organization’s business strategy, the process of software development and delivery must be understood as one value stream. Left behind are the traditional approaches of activities compartmentalized in silos that do not sufficiently prioritize the value delivered to the customer and that have led to lackluster results.
Organizations need to invest in a system-level perspective of the value stream. To improve the delivery and quality of their products, the value provided, and the business results, they have to know if value is being efficiently delivered to their customers and how they can better optimize this process.
For this, Value Stream Management is fundamental. VSM allows an organization to understand the flow of value throughout the entire software delivery process (SDLC), from ideation to production, and detect bottlenecks and other inefficiencies. With this information, instead of making local improvements, they can systematically optimize the delivery of digital products, maximizing value, saving costs, and favoring innovation.
With the help of VSM, product teams can focus on actions that provide value to the users instead of operational tasks. Furthermore, Value Stream Management platforms provide valuable information that allows different decision-makers to evaluate business risks, delivery frequency, responsiveness to change, and collaboration between teams.
These platforms also offer a consolidated view of the state of governance, security, and compliance in all product lines. And by using advanced indicators and predictive analysis, they provide a means for organizations to gain a competitive advantage and rapidly adapt their strategy toward customer-centric results.
Ultimately, Value Stream Management provides different stakeholders in the organization with information and key metrics to pinpoint, measure, and guide their actions. This knowledge helps them improve product delivery and increase the value provided to the customer.
Benefits provided by VSM
Thus, with Value Stream Management, businesses can::
- Align software delivery with their business goals.
- Have a comprehensive view of the value stream throughout the entire software delivery process.
- Deliver quality software to users in less time by identifying inefficiencies and eliminating waste.
- Improve team productivity and reduce costs and errors in software development and delivery.
- Visualize, in real time, the velocity and quality of their digital products.
- Provide the different stakeholders with information and KPIs to guide their actions.
- Be more predictable and able to plan their projects in a more realistic, precise, and objective manner.
According to the predictions published by Gartner, factors such as the increase in demand for software delivery dashboards customized for different stakeholders, the desire to correlate financial data with product delivery metrics, and the increase in requirements in governance, security, and compliance will drive the adoption of VSM in the coming years.
Measure the value stream in software
The software value stream includes every activity necessary for the delivery of a digital product to the users, from ideation to when it is in production. The value of a product is determined by the customer. So, to improve returns and get users excited about their software products, organizations should increase the value provided to their customers in each layer of the value stream.
However, the complexity of software development and delivery in large organizations makes it difficult to track the value stream from start to finish. Hence, the importance of VSM platforms like SENTRIO, which centralize the information from the different tools involved in the entire process and provide a comprehensive view of the value stream so that better decisions can be made.
The application of Value Stream Management to software development draws from Lean principles. By managing software delivery as one value stream, organizations can identify which steps provide value and which produce waste (delays, errors, etc.) to optimize the workflow throughout the value stream.
The first step to treating software delivery as a value stream is to carry out Value Stream Mapping (VSM). A Value Stream Map is a diagram that gathers every one of the steps that are involved in putting the software product into production.
Once this map is created, an organization can begin to work on the complete workflow. At this time, whatever their goals may be (improve product quality, improve time-to-market, etc.), it will be necessary to optimize the value stream to achieve them. This effort begins by learning the exact current state of the organization and by identifying which aspects can be improved. But to do that, it is required to have a view of the entire value stream. This is precisely what Value Stream Management provides.
VSM platforms help organizations understand and improve the value stream of software products through DevOps, quality, and flow metrics.
DevOps Metrics
DevOps metrics provide data on the performance and stability of value creation and are good indicators of the health of our stream and its evolution. The principal metrics are known as the DORA Four Key Metrics:
- Deployment Frequency: reflects the frequency with which a team releases software to production environments, as well as test environments.
- Lead Time for Changes: indicates the amount of time it takes for a team to deliver changes to the users.
- Change Failure Rate: measures the percentage of deployments into production that were carried out with errors and required some type of update (rollback, bug-fixing, etc.).
- Time to Restore Service: is the meantime necessary to restore a service when there is an error in production.
The information that these DevOps metrics provide empower organizations to:
- Detect bottlenecks in the lifecycle of their developments
- Evaluate the appropriate size of their teams.
- Better plan their projects.
- Compare the impact of the changes made in any tool or process involved in the business creation stream.
- Measure the quality of their deliveries, such as the business value that each one provides (error fixes, development of new functionality, performance optimization, etc.)
Software quality metrics
These metrics provide information on the quality, complexity, and security of our software. Worth noting is the technical debt metric, which evaluates the number of hours necessary to correct a project’s technical debt.
Value flow metrics
Flow metrics provide insight into how value flows throughout the development of a product. These metrics are based on the concept of the Flow Item, each unit of work that is relevant to the business. All activity related to software delivery is classified in one of these 4 types of flow items:
- Flow Velocity: is the number of flow items completed in a concrete time period. Also known as throughput.
- Flow Time: measures the time it takes to complete flow items from the moment work begins on them, considering both active and waiting times. This makes it possible to identify when Cycle Time goes over.
- Flow Efficiency: is the relationship between active time and wait time throughout the entire flow period. It helps identify when there is an increase or a decrease in waste.
- Flow Load: measures the amount of work currently in progress in a value stream. It monitors overutilization and underutilization of the value stream, which can lead to a loss of productivity.
- Flow Distribution: measures the ratio of the four flow items completed over a period of time. It is incredibly useful for prioritizing the most optimal type of work for achieving the desired business results.
SENTRIO: Start applying Value Stream Management
As we have seen, Value Stream Management sits in the center of software development and pushes Agile and DevOps methodologies even further, to convert an organization’s digital initiatives into business value.
Would you like to start using VSM in your projects? It’s easy. Start with Value Stream Mapping and implement the Value Stream Management platform that will help you get the most out of your software products: SENTRIO.
Our solution is designed to easily integrate with your systems so that you can start using it in the least amount of time possible. Request a demo and start optimizing your software delivery with Value Stream Management!
