What is Value Stream Management?

What is value stream management? 

Value stream management (VSM) is an agile business practice that helps companies determine the actual value of their software development and delivery. When companies invest in value stream management software, they want to visualize the flow of value through the organization, which requires monitoring the end-to-end software delivery cycle to ensure no money is being wasted.

According to Forrester, value stream management is “A Combination of people, process, and technology that maps, optimizes, visualizes, and governs business value flow (including epics, stories, work items) through heterogeneous enterprise software delivery pipelines. Value stream management tools are the technology underpinnings of the VSM practice.”  To put it simply, VSM is all about ensuring that software products actually create value for customers. 

It turns out many enterprises struggle to determine the value that is being derived from massive IT investments, such as replacing a legacy platform. Rather than focusing on specific features, teams can put more energy on the features and products that actually make money. This makes it easier to avoid bad investments. After all, seeing returns on software investments requires companies to focus on business value and customer satisfaction, first and foremost.

This customer-centric product development cycle approach makes it easier to understand complex software development processes so that teams can change their roadmap before it’s too late. More importantly, VSM shows the software life cycle through the customer’s perspective, which makes it easier to align key performance indicators (KPIs) with the product’s backlog. VSM then helps organizations to understand how multiple value streams impact their digital portfolio.

The benefit? Teams align on priorities, combat data silos, increase product quality across digital channels, iterate faster, and, most importantly, provide a deeply satisfying customer experience. 

They use value stream management tools to leverage real-time metrics, automate workflows, and ensure that they are collecting the measurements & metrics with the largest impact on the business’s bottom line.

What are some value stream management (VSM) tools?

Tools like GitLab’s Value Stream Management “help businesses visualize their end-to-end DevOps workstream, identify and target waste & inefficiencies, and take action to optimize workflows to deliver the highest possible velocity of value.”

Other popular value stream management tools include:

Important components in Value Stream Management

Value Stream management is a complex process, so we have broken it down into digestible components to help you understand the steps and measurements involved. 

    • Deployment frequency measures how often teams deploy code in a specific value stream.
    • Lead time is how long it takes for code to start successfully running in production.
    • MTTR, or mean time to repair, measures how long it takes to address a problem and restore service when a bug or technical problem causes an unplanned outage.
    • There are 4 flow metrics: features, risks, debts, and defects
    • When measuring the number of flow items in each category that are completed over a specific time period, you’re calculating the flow velocity, or throughput
    • Flow distribution, on the other hand, measures the ratio of the four flow items over a window of time to help teams align on priorities.
    • The time it takes for a flow to go from start to complete is the flow time. This measurement includes active times as well as wait ones.
    • Flow efficiency is simply the ratio of active time vs wait time. 
    • Flow load is a measurement of how many Flow items are currently active or waiting in a particular value stream. This value helps pinpoint instances of over- and under-utilization.
    • When calculating the percentage of changes in product that lead to worse service (and thus require fixing), you’re talking about the change rail rate.

Who uses value stream management software?

Today’s CIOs are being pressured to generate high business value with fewer resources. 

The best CIOs recognize that the software development game is changing. Mapping value streams across an organization requires bringing stakeholders together from across the organization into one schema. 

UX design, customer experience (CX), and customer support have become an integral part of the development process, alongside DevOps, IT/Ops, and development. All benefit from using value stream management software tools.

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