Evaluating Project Value Streams

1. Evaluating Project Value Streams Christopher L. Johnson Consulting Director September 12, 2006

2. Agenda • 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  

3. Introduction to Lean Office, Value Stream Mapping 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

4. Introduction to Lean Office, Value Stream Mapping Where does Lean Office come from? • 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

5. Introduction to Lean Office, Value Stream Mapping IT practitioners can learn improvement techniques in areas that may not be as immediately obvious, e.g. manufacturers can see their processes Why look to other industries? 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?

6. Introduction to Lean Office, Value Stream Mapping The of Era Lean Production – 1955 to ??? Craftsman Mass Production Lean • 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 1908 1955

7. The Role of Lean Office and VSM in IT 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

8. The Role of Lean Office and VSM in IT Lean Office (VSM) activities are primarily focused in two areas: • 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

9. The Role of Lean Office 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

10. 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, and Project Portfolio Management

11. The Role of Lean Office in IT: Customer Value 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

12. 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

13. The Role of Lean Office in IT: Customer Value Value Across the Organization: Aligned in Priority What’s the value of the quoting process? • Establish a price? • Create an innovative solution to the customer's problem? • Establish the timeframe for performing the work? • Asses the risk of performing the work as specified? Is everyone aligned with the same value priorities?

14. The Role of Lean Office in IT: VSM 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 Dept Dept Dept Dept Tasks Tasks Tasks Tasks Process Work

15. Establish Roles Each unique touch point or hand-off in the process Establish Flows The movement of information from touch point to touch point Flow Flows can be of one or many sources & types Roles can be part-time or require 10 full-time people The Role of Lean Office in IT: VSM Dept. Dept. Dept. Dept. Role Flow Role Work Role Role Role Role

16. The Role of Lean Office in IT: VSM Sample Value Stream Map - Shapes

17. The Role of Lean Office in IT: VSM 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

18. The Role of Lean Office in IT: VSM Actual VSM Example

19. The Role of Lean Office in IT: VSM VSM can be used not only to define the current state, but also show an optimized ‘future state’ Current State Future State

20. Touches The number of times work is handed off Work Time The actual labor time to complete the role Touches Work Time Role Role Flow Role Role Work Role Role WIP Cycle Time Work-in-Process (WIP) The unfinished workin the process Cycle Time The wall-clock time from start to finish The Role of Lean Office in IT: VSM Value Stream Measurements

21. The Role of Lean Office in IT: VSM Value Stream Map with Measurements

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

23. The Role of Lean Office in IT: Where is the Waste? The Seven Wastes • Defects – Any error or rework or workaround that occurs • Work-in-Process – Work in the system that has not yet completed • Overproduction – Producing more work than immediately needed • Transportation – Movement or motion from one place to another • Waiting – Someone or something waiting with nothing to do • Unnecessary Processes – Activities performed but no longer needed • Variation – Multiple methods or tools for performing the same activity

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

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

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

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

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

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

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

31. The Role of Lean Office in IT: Where is the Waste? So - Where’s the Waste? Overproduction Variation Unnecessary process Transportation Waiting WIP

32. VSM and IT Project Portfolio Management From Outcomes to Initiatives • What outcomes are necessary to drive the efficiency & effectiveness of the organization • What capabilities are needed to deliver the outcomes? • Which process areas rely on those capabilities? • What are the issues/impacts that create quality barriers within the process areas? • What are the initiatives to reduce or eliminate the issues/impacts?

33. VSM and IT Project Portfolio Management Start with the outcomes and drive to the initiatives…Execute the initiatives to deliver the outcomes… Outcomes Capabilities Issues/Impacts Process Areas Initiatives

34. VSM and IT Project Portfolio Management • What outcomes are necessary to drive the efficiency & effectiveness of the organization Outcomes Result: Prioritizing the most important Outcomes

35. VSM and IT Project Portfolio Management 2. What capabilities are needed to deliver the outcomes? Outcomes Impact Capabilities Result: Prioritizing the most important Capabilities

36. VSM and IT Project Portfolio Management 3. Which process areas rely on those capabilities? Process Areas Capabilities Impact Result: Prioritizing the most important Process Areas

37. VSM and IT Project Portfolio Management 4. What are the issues/impacts that create quality barriers within the process areas? Process Areas Issues/Impacts Impact Result: Prioritizing the most important Issues/Impacts

38. VSM and IT Project Portfolio Management 5. What are the initiatives to reduce or eliminate the issues/impacts? Initiatives Issues/Impacts Impact Result: Prioritizing the most important Initiatives

39. TBD

40. General Lean Results Percentage Improvement Achieved over a Three Year Period 0 25 50 75 100 Cycle Time Reduction Productivity Increase Work-in-Process Reduction Quality Improvement 3 Year Return-on-Investment Customer Satisfaction

41. BPM toolset Placeholder • List SIQ BPM Practice description and material here.

42. PMO - Agile • Put Agile Methodology description here.