Business Villain—Digital Transformation Chaos—Meet Hero: Value Stream Mapping
Overview: Struggling to make progress in your digital business transformation? Learn how value stream mapping can give you a clearer sense of where to go and what you need to do.
How do we navigate the digital transformation chaos that often prevails from having to focus on optimizing shareholder value, innovating delivery capability and innovating customer value in today’s complex IT environments?
That is, how do we both delight our customers with ever-improving digital engagement, while making it cheaper to do so, and sustain that ability over time to reward shareholder investment? The complexity of our IT systems and processes often leaves us in a highly stressful, reactive posture, rather than being able to manage ahead of our challenges and turn anticipation into competitive advantage.
Every organization is under tremendous pressure to reduce IT costs, and rightly so. At a recent DevOps event I attended, an executive thought leader from a client cited that their current IT efficiency was an abysmal 10 percent, meaning that for every $1 of IT spend, 10 cents of revenue was generated. This ratio is entirely unsustainable.
Across the economy, we see increasing demand for rapid response application and application change delivery capability to keep up with the pace of customer experience innovation and disruption risk. Organizations need to dramatically improve the effectiveness of their IT operations not only for the sake of profitability but to prevent being blindsided by more innovative digital customer channels that might be delivered elsewhere in the market.
This is why today’s large enterprises are clamoring to figure out how to implement the Agile promise of DevOps.
Most organizations struggle with how or where to begin a DevOps transformation. Reactive, isolated tactical decisions by siloed IT practices often result in more wasteful spend and longer-term architecture challenges that impede agility and commonly drive up non-performing IT spend over time.
Add to this, many organizations are outsourcing significant portions of their infrastructure and operations activities, which are framed by lowering current Opex, but have disconnected SLAs that serve to protect the hosting organization’s profits instead of responding to software development and deployment efficiency. It is no surprise then, that DevOps pursuits become a mine field of probable failures.
You Need Value Stream Mapping
In my personal experience as a senior operations executive for a process manufacturing organization, I couldn’t start any business improvement journey until I knew every contributing factor to how we executed our business today. As the adage goes, what you don’t measure, you can’t manage.
The nature of our business demanded that I knew, to the penny, what every contributing variable was that impacted the gross profit of our business processes, such as how long it took to process a quote from the time a request was made; how long it took to acquire materials from the time an order was placed; and the time it took to convert those materials into finished product and ship them from our loading dock.
By having this information, I was able to make decisions on where, how and why to improve my overall business performance and profitability. It exposed to me where we needed to better collaborate with sales and suppliers to optimize our customer experience and where I needed to focus my management efforts to ensure our activities optimized shareholder value.
Value stream mapping allowed our organization to reduce our lead time to half the industry standard and drive a 60-percent reduction in non-performing waste expense. This combined with our faster time to billing due to the quicker ship times to shrink days sales outstanding, which then accelerated our cash turns to deliver a 73-percent growth in EBIDTA. I couldn’t have accomplished any of this without the indispensable decision guidance tool of value stream mapping.
So, I write this blog today to urgently encourage you to apply value stream mapping for your software delivery lifecycle and all development, testing, deployment and ops support activities. No other method provides deeper, more truthful, data-driven insights that allow you to eliminate operations chaos (and wasteful spend) and optimize your process investment value, as value stream mapping.
Compuware Customers and Value Stream Mapping: To Use or Not to Use
An example of successful use of value stream mapping is manifested by one of Compuware’s most agile and profitable DevOps-enabled customers.
By analyzing and documenting the activities, constraints and costs of executing their former software development lifecycle processes, they were able to reduce their testing cycles to one day, where previously it had taken 14 days. It’s important to know that most organizations’ testing overhead is 40 to 50 percent of their overall software development lifecycle cost. This one-day testing cycle enables teams to promote changes (or potentially fail) very quickly in response to customer-facing digital engagement innovations that drive customer loyalty and additional topline revenue.
Conversely, a company who is by industry designation a direct competitor, but has yet to exploit value stream mapping and analysis of their SDLC, has a testing cycle that exceeds 60 days. The impact on the carrying cost of IT labor for that slow SDLC process and cash turn efficiency of the organization that takes more than 60 days to complete tests is competitively debilitating and a serious threat to their future sustainability.
This is why value stream mapping is your North Star for DevOps transformation. Value stream mapping exposes your current process constraints and quality inflection points that create wasteful spend, and captures your costs for each activity center and supporting infrastructure.
If you seek a quantifiable, data-driven business transformation through which you can safely make decisions that will improve your business outcomes, value stream mapping is your hero. The value stream visually and quickly reveals with deep granular clarity, what, why and how you need to improve a particular cost and efficiency constraint so that you can make the best decisions on how to optimize.
Start your DevOps journey with a solid value stream assessment of your current state SDLC and the success you generate from your transformation efforts to implement DevOps will be dramatically improved. Dozens of optimization opportunities will be revealed that offer recovery of tens of millions of dollars in annual unnecessary spend from your current application delivery and ownership costs.
We’ll be reviewing value stream mapping more in future posts. For education and resources, contact your Compuware representative or me directly at [email protected]
Additional self- learning resources can be found here: