Evaluating Project Value Streams

Evaluating Project Value Streams

Christopher L. JohnsonConsulting DirectorSeptember 12, 2006

• Introduction

• Lean Office, Value Stream Mapping (VSM) - What is it?

• The Role of Lean Office, and VSM in IT

– Agency Value

– The Value Stream Mapping Process

– Where is the waste?

• From ‘Outcomes to Initiatives’: VSM and IT Project Portfolio Management

Agenda

What is Lean Office, What is Value Stream Mapping?

Lean Office and VSM are a set of activities that help establish a culture of continuous improvement at the agency, where the value of an agencies work

streams are understood, optimized, and waste is minimized.

How does this relate to IT?

Once undertaken, and the continuum of improvement is established, the value of an agencies’ IT projects and their departmental touch-points should be clearly

understood.

How does this help?If an agencies work streams or project’s values are not clearly understood, then the work streams or projects should be reevaluated or eliminated, allowing the agency

to deploy it’s valuable resources and budget allocation elsewhere

Introduction to Lean Office, Value Stream Mapping

• Lean Office and Value Stream Mapping (VSM) are tools commonly used in the manufacturing community in order to identify and eliminate waste during the development of products and services

• One of the major benefits of VSM/Lean is that it enables an organization to view itself holistically – it is a “top down” exercise

• This presentation will provide a view of how these tools can be used:

– To develop a better understanding of an organization’s core business processes management, and techniques to identify areas for improvement

– Create a value system which will be used for prioritizing projects

– Establish of an optimized project portfolio, and program management strategy


Where does Lean Office come from?

IT practitioners can learn improvement techniques in areas that may not be as immediately obvious, e.g. manufacturers can see their processes

In the Agencies’ IT department, VSM and Lean manufacturing principles can be adopted to help identify issues more readily apparent on the manufacturing floor:

– Where are the bottlenecks?

– Is the project on schedule?

– Is anything missing?


Why look to other industries?

The of Era Lean Production – 1955 to ???

• Employees aligned with a system-wide view of how value is created• Employees assigned responsibility for cross-functional teams • Decentralized control with measurements established centrally• Specialized tools to increase productivity• Standards govern people, processes, tools

Craftsman Mass Production Lean

1908 1955


Principles

• Its not the people – it’s the flow of work

– Most people are ready to do a good job

– It’s the flow of work that:

• Separates people from understanding their customer’s needs

• Inhibits people from better meeting customer needs

• It’s not the job functions – it’s the flow of information

– With sufficient skills and education, job functions can be performed

– Good information flow:

• Provides sufficient facts necessary to perform the function

• Is timed to coincide with execution readiness

The Role of Lean Office and VSM in IT

• Operations (order processing, customer service, etc.)

– Focused on the flow of information

– Step by step execution

– Well defined roles & responsibilities

• Innovation (marketing, information technology, etc.)

– Focused on the flow of ideas

– Ad-hoc activities as needed

– Roles & responsibilities vary by project

Lean Office (VSM) activities are primarily focused in two areas:

The Role of Lean Office and VSM in IT

Value Stream Mapping and Business Process Management (BPM) - What’s the difference?

• Lean / VSM focuses on information flows and the value created by the organization

– Identify customer’s value today and how to increase it

– Look for ways to better leverage the use of information

– The end state is optimized customer value creation

• BPM focuses on the activities performed and decisions made by the organization

– Look for solutions to problems

– Look for ways to reduce functional overlaps

– The end state is optimized decision making and efficient processes

The Role of Lean Office in IT

The “Top Down” Lean Office Approach

Customer Value

Value Stream Mapping

Where’s the Waste?

Continuous Improvement Techniques, andProject Portfolio Management

The Role of Lean Office in IT

The Customer Value Equation: Value Received = Created Value - Created Waste

Where:

• Value Received = The perceived value of products or services (defined by the customer)

• Created Value = The perceived value of product or services produced(defined by the organization)

• Created Waste = 1) Anything produced by an organization that a customer does not value

2) Anything produced by an organization that reduces created value

The Role of Lean Office in IT: Customer Value

What do your Customers Value?

Value Statements:

– Self-Service – customer transactions through an automated interface

– Profitability – maintain a high return on equity

– Predictability – consistently meet customer expectations

– Integrity – conduct all activities with honesty and candor

– Responsiveness – Able to rapidly respond to customer requests


Value Across the Organization: Aligned in Priority

What’s the value of the quoting process?

A. Establish a price?

B. Create an innovative solution to the customer's problem?

C. Establish the timeframe for performing the work?

D. Asses the risk of performing the work as specified?

Is everyone aligned with the same value priorities?


VSM Basics:

• Tasks are assigned vertically within each department

• Work processes flow horizontally from one department to the next

• Lean maximizes value by managing the cross-flow of tasks and work

DeptDept Dept Dept

Work

Tasks

Tasks

Tasks

Tasks

Process

The Role of Lean Office in IT: VSM

Dept.Dept. Dept. Dept.

WorkFlow

Role

RoleFlow

Role RoleRole

Role

Establish RolesEach unique touch point or hand-off in the process

Roles can be part-time or require 10 full-time people

Establish FlowsThe movement of information from touch point to touch point

Flows can be of one or many sources & types


RoleInformationSystem Flow

PaperFile

Off-PageConnector

Sample Value Stream Map - Shapes

C1-1PrepOrder

A

Financial System

Entered Order

New Orders

C1-1PrepOrder Financial

System

New Order

New OrdersPrep’d Order

OrderInfo

Entered Order

OrderValidation

Completed Order

CatalogProduct

Info

C1-2Data Entry

Order

C1-3Validate

Order EntryCorrections

PrintedOrder

A


Value Stream Mapping Rules

• There is no wrong map – but strive to keep it simple

• There is no going back – the value stream always move forward; but it can restart at an earlier location if there is an error or customer change

• Roles are not people – they are touch points along the value stream

• Roles are black boxes – what occurs inside does not impact the map (this is a BPM activity)

• Capture all inputs/outputs to a role – the information flows in and out of a role define the role; once all are captured, then name the role

• Name roles after actions, flows after content – roles define what is done; flows define what is sent or received

• Every output leads to an input – if you have an output trace it forward to an input; and visa versa

• Start the map anywhere – tracing all the inputs and outputs from roles will create the value stream map regardless of which role which is used to start


Actual VSM Example

CustomerCall

Q1Received Customer

Request

R1-1Process

Call(CSR)

R1-2CustomerCompletesRequest

Forms toCustomer

CompletedRequest or Info

R1-3Record

Customer Info(Admin)

Customer Request or Info

Q2Recorded Customer

App

RecordedRequest or Info

R1-4Check for

Completeness(Service)

RecordedApp Info

S1Project

Tracking

Request /Info

RequestNumber

MissingCustomer

Info

InfoRequest

RequestInfo

R1-5CustomerProvides

Info

ReadyAction Packet

(All Docs)

Info for Coaching

InfoRequest

If MissingInfo

S2FinancialSystemCust Info /

Payment Received

CompletedRequest or

Info

A

S1Project

Tracking

B

Request /Info

Request /Info

S1Project

Tracking

RequestStatus

R1-6AccountSetup

(Finance)

Q3Pending File

ActiveFile

Start

End


VSM can be used not only to define the current state, but also show an optimized ‘future state’

Current State

Future State

C1-1PrepOrder

Financial System

New Order

New Orders

Easy Order Order

Info

Entered Order

CompletedOrderCatalogProduct

Info

C1-2Easy Data

Entry

C1-4Validate

Order Entry

OrderValidation

PrintedOrder

S

E

C1-3Complex

Data Entry

Complex Order

Entered Order

OrderInfo

C1-1PrepOrder

Financial SystemNew Order

New Orders

Complex Order

Completed Order

Catalog

ProductInfo

C1-3Data Entery

Team B

C1-2Data Entry

Team A

Complex

EasyEasy Order

Complex Order

Easy Order

OrderInfo

Complex Order Order

Info

Completed Order

Easy Order E

S


Value Stream Measurements

WorkRole

Role Role

Role Role RoleFlow

TouchesThe number of times work is handed off

Touches

Cycle Time

Cycle TimeThe wall-clock time from start to finish

Work TimeThe actual labor time to complete the role

Work Time

Work-in-Process (WIP)The unfinished workin the process

WIP


Value Stream Map with Measurements

C1-1PrepOrder

Financial System

New Order

New Orders

Easy Order Order

Info

Entered Order

CompletedOrderCatalogProduct

Info

C1-2Easy Data

Entry

C1-4Validate

Order Entry

OrderValidation

PrintedOrder

S

E

Work Time = 10mCycle Time = 2hWIP = 50



Cycle Time = 6hWIP = 150

Total Work Time = 50mTotal Cycle Time = 16hTotal WIP = 400 Orders

C1-3Complex

Data Entry

Complex Order

Entered Order

OrderInfo



VALUE EQUATION REMINDER – “Waste is the Opposite of Value”

The value equation is: Received Value = Created Value - Created Waste

Therefore,

– VALUE in the ‘value equation’ is determined by the ‘customer’

– WASTE is anything the receiving customers do not value

The Role of Lean Office in IT: Where is the Waste?

The Seven Wastes

1. Defects – Any error or rework or workaround that occurs

2. Work-in-Process – Work in the system that has not yet completed

3. Overproduction – Producing more work than immediately needed

4. Transportation – Movement or motion from one place to another

5. Waiting – Someone or something waiting with nothing to do

6. Unnecessary Processes – Activities performed but no longer needed

7. Variation – Multiple methods or tools for performing the same activity


The Waste of Defects – Sometimes schedules do not allow sufficient time or money to do things right the first time

• Defects:

– Reduce the value of the product or service

– Tend to be discovered at the worst time – when the job is almost done

• Examples of defects:

– A mistake in how a process is designed

– An incomplete requirement specification

– Incorrectly entered customer data


The Waste of Work-in-Process – It seems like having queues or extra materials around helps to balance the workload, and insure there is always plenty to do

• Work-in-process:

– Does not create value while it is waiting to be processed – although it does have a cost to the balance sheet

– Defects are not found until later when they are more difficult to fix

• Examples of work-in-process:

– Duplicate forms to do the same thing

– Any queue or pile of paper that builds up between work steps

– A backlog of work that no one has time to do


The Waste of Overproduction – Sometimes it appears it is better to get ahead on something,

to avoid being behind later

• Overproduction:

– Produces work that can turn out later to longer be of value

– Produces excess work-in-process

• Examples of overproduction:

– Making enough copies of a form to last for several days

– Completing a request 2 days before it is needed

– Doing anything – just in case


The Waste of Transportation – Sometimes it is necessary to walk the length of the building to

give information to someone who needs it

• Transportation:

– Time does not contribute to customer value

– Items or information can be lost during transport

• Examples of transportation waste:

– Central filling cabinets that contain work-in-progress

– People in different locations requiring constant communication

– Handing off and then receiving the same work many times


The Waste of Waiting – Sometimes it seems impossible to schedule many interrelated tasks without causing someone to wait

• Waiting:

– Is a lost opportunity to create customer value

– Can lead to overproduction when doing something just to stay busy

• Examples of waiting waste:

– Waiting for a meeting to start or end

– Waiting for instructions on how to proceed

– Any waiting – this is easy to spot


The Waste of Unnecessary Processes – Sometimes it seems better to perform an extra task every time,

because once-in-awhile it avoids creating a defect

• Unnecessary processes:

– Add complexity, cost, and quality issues without corresponding benefit

– Never seem to go away, but keep building up on top of each other

– Linger on because “This is the way we have always done it!”

• Examples of unnecessary process waste:

– Creating a report that is no longer read

– Measuring something to 1% degree of accuracy when 10% will do

– Processes in place to avoid a rarely occurring defect that is easy to fix


The Waste of Variation – Sometimes it seems better to allow people to do a task

“their way” so they can each exercise creativity

• Variation:

– Causes defects to be easier to make and harder to find

– Reduces predictability – increasing operational overhead

– Is sometimes caused by creativity run amuck

• Examples of Variation Waste:

– Multiple forms for the same information

– The same activity performed different ways by different people

– The inability to predict when a process will complete


C1-2Receive

Call(CSR)

CallS

Account Mgt System

AccountUpdate

C1-3Process Billing(BR)

BillingRequest

Financial System

BillingUpdate

C1-4ProcessRequest(CSR)

ComplexRequests

Mail orEmail

BillingRequest

AccountUpdate

C1-5Respond to Questions

(CSS)

Question

Response

AccountInfo

Account Mgt System

AccountUpdate

C1-1Customer Request

(Customer)

E

QuestionResponse

So - Where’s the Waste?

WIP

Waiting

OverproductionVariation Unnecessary process

Transportation


From Outcomes to Initiatives

1. What outcomes are necessary to drive the efficiency & effectiveness of the organization

2. What capabilities are needed to deliver the outcomes? 3. Which process areas rely on those capabilities?4. What are the issues/impacts that create quality barriers within the

process areas?5. What are the initiatives to reduce or eliminate the issues/impacts?

VSM and IT Project Portfolio Management

Start with the outcomes and drive to the initiatives…Execute the initiatives to deliver the outcomes…


Internal Focus (P&L)Outcome Description # Votes PriorityOutcome #1Outcome #2Outcome #3Outcome #4Outcome #5Outcome #6Outcome #7Outcome #8Outcome #9

Result: Prioritizing the most important Outcomes

1. What outcomes are necessary to drive the efficiency & effectiveness of the organization


Capability Segment Capability Process Area Outcome 1 Outcome 2 Outcome 3 Priority Project Project planning 3 9Management Measurement and analysis

Partner management 1 1Risk management 2 2Integrated teaming 1 2

Support Configuration managementResource allocation 3 1 7Product releaseIntellectual property management 3 9Maintenance 3 3Training

Process Organizational process definition 1 2Improvement Organizational process performance 2 6

Organizational innovation & deploymentCausal analysis and resolution 1 1 5

Business Requirements managementOperations Decision Analysis & Resolution

Offering Development (design & implementation) 1 3Verification & ValidationProduct integrationProcess & product quality assurance 2 4Offering ReleaseClient & Shopper Acquisition 2 2Client & Shopper Relationship Management 3 9

Outcome Weight: 2 3 1

Internal Focus (P&L)

Result: Prioritizing the most important Capabilities

Impact

2. What capabilities are needed to deliver the outcomes?


Segment

Quality Risk Area

Capability Process Area Cap

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Project Project planning 5 3 1Management Measurement and analysis 3 2 1

Partner management 1 1 2 3 2Risk management 2 2 1Integrated teaming 5 1 1 3

Support Configuration management 4 3 2 2Resource allocation 1 3 1 3 1 3 1Product release 1 1Intellectual property management 2 3 3 2Maintenance & Technical Support 1 2 3 1 3Training 4 2

Process Organizational process definition 3 1 3 1Improvement Organizational process performance 5 2 2 1

Organizational innovation & deployment 2 3 2 2Causal analysis and resolution 1 1 1 2 1

Business Requirements management 1 1Operations Decision Analysis & Resolution 3 2 2

Offering Development 2 1 1 1Verification & Validation 1 2 3Product integration 3 3 3Process & product quality assurance 3 2 1 3 1Offering Release 2 2Client & Shopper Acquisition 5 2 2 1 2Client & Shopper Relationship Management 1 3 3

20 49 21 21 59 41 41 57Risk Area Priority:

Result: Prioritizing the most important Process Areas

3. Which process areas rely on those capabilities?

Impact


Segment

Quality Risk Area

Capability Impacts/Issues Issu

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Resources Resource impact/Issue 14 3 1Resource impact/Issue 6 2 1Resource impact/Issue 18 1 2 3 2Resource impact/Issue 4 2 1Resource impact/Issue 18 1 1 3

Processes Process impact/Issue 27 3 2 2Process impact/Issue 25 3 1 3 1 3 1Process impact/Issue 2 1Process impact/Issue 23 3 3 2Process impact/Issue 4 2

Tools Tool impact/Issue 6 1 3 1Tool impact/Issue 19 2 2 1Tool impact/Issue 18 3 2 2Tool impact/Issue 9 1 1 2 1Tool impact/Issue 15 3 3

2 3 1 1 2 4 1 5Risk Area Weight:

Result: Prioritizing the most important Issues/Impacts

Impact

4. What are the issues/impacts that create quality barriers within the process areas?


Segment

Quality Initiatives

Capability Impacts/Issues Issu

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Resources Resource impact/Issue 1 3Resource impact/Issue 3 2 1Resource impact/Issue 2 1 2Resource impact/Issue 4 2 1Resource impact/Issue 3 1

Processes Process impact/Issue 3 3 2Process impact/Issue 3 3 1 3 1Process impact/Issue 2 1Process impact/Issue 1 3 3 2Process impact/Issue 3 2

Tools Tool impact/Issue 5 1 3Tool impact/Issue 4 2 2Tool impact/Issue 2 3Tool impact/Issue 2 1 1 2 1Tool impact/Issue 1 3 3

19 28 17 21 39 22Quality Initiative Priority:

Result: Prioritizing the most important Initiatives

Impact

5. What are the initiatives to reduce or eliminate the issues/impacts?


TBD

General Lean Results

Cycle Time Reduction

0 25 50 75100

Percentage Improvement Achieved over a Three Year Period

Productivity Increase

Work-in-Process Reduction

Quality Improvement

3 Year Return-on-Investment

Customer Satisfaction

BPM toolset Placeholder

• List SIQ BPM Practice description and material here.

PMO - Agile

• Put Agile Methodology description here.

Evaluating Project Value Streams

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