ITSM Value Streams: Transform opportunity into outcome

By David Billouz, Akshay Anand, Rajiv Dua and Mark Smalley

ITSM Value Streams is a comprehensive guide to organizations on how to effectively utilise IT services to achieve business outcomes. It emphasizes the importance of understanding the value streams that flow through an organization and how IT services can be configured and applied to co-create value between IT service providers and consumers.

The book provides practical insights on how to identify and eliminate anti-patterns, while introducing ways of working that reduce waste and frustration. By focusing on the bigger picture and providing fast feedback, teams are able to improve their work and contribute to the overall success of the organization.

This is an essential resource for people in IT service management, IT managers, IT service managers, consultants and offers the chance to learn how to apply value stream thinking to achieve their IT service management objectives and also to get familiar with value management concepts.

• Language: English
• Publisher: BCS, The Chartered Institute for IT
• Release date: Jun 22, 2023
• ISBN: 9781780176093

Book preview

1WHY AND HOW SHOULD I READ THIS BOOK?

After reading this chapter, you should:

know what book is about and who it is for;

know the topics that are covered;

understand the narrative across the chapters;

believe that value stream thinking is a good thing;

feel in the right place;

feel interested in reading further;

be able to read the book effectively.

Chapter 2 describes five areas in which information technology (IT) contributes to business concerns. Chapter 3 describes good practices (patterns and effective process conditions) that contribute to performance in these areas. Chapter 4 describes impediments (antipatterns and ineffective process conditions) that detract from performance in these areas. Chapter 5 describes how organising work in value streams helps to address these impediments and achieve effective process conditions. Chapter 6 explains how to build ITSM value streams step-by-step.

This chapter describes the contribution of value streams to the organisation of work in general, and how IT value streams help IT management to achieve their objectives.

MANAGEMENT DILEMMA

Unless an organisation is very small and ‘everybody does everything’, a management dilemma arises for how to divide labour. Common ways are:

by product: for example, a company may have separate departments for different product lines;

by geography: for example, by region, country or city;

by customer: for example, a company may have a separate department for servicing large business clients versus small retail clients;

by function: for example, a company may have a marketing department, a sales department and a customer service department;

as a matrix: for example, where employees report to both a functional manager and a product manager.

This not only applies to the highest levels of organisations but also to how operational teams are structured. For instance, within a particular digital product line there may be functions for product management, application development and IT operations, where work is passed from function to function.

ORGANISATIONAL FUNCTIONS

There is usually a need to create some functions where employees are specialised in a particular area. This leads to higher efficiency and productivity, as employees can focus on a specific set of tasks and develop their specific skills. This works best when these functions have a clear set of tasks to be performed.

There are downsides to function-based organisation. Silos can emerge, where teams operate in isolation from each other and may not communicate or collaborate effectively. When employees are focused on a specific function or task, they may have a narrow perspective and may not be able to understand how their work fits into the overall goals of the organisation. It can also be difficult to assign clear accountability for work that is performed by several teams.

CROSS-FUNCTIONAL TEAMS

When the workload is not too big for a single team, work may be organised in a cross-functional team that is relatively self-supporting. Fully self-supporting teams are seldom feasible. Teams often make sporadic use of specialised functions such as database administration. They do so because this cannot be justified within the team. There is usually not enough work within the cross-functional team to develop and maintain the right depth of expertise (Reinertsen & Betz, 2021). If other teams have the same problem, a solution can be a functional team that provides this specialised skill as a shared service.

So, despite some management consultants’ advice to break down silos, for most organisations silos are not only a fact of life, but sometimes the least unattractive option.

To quote Henry Mintzberg (2015): ‘We need silos for the sake of specialisation in our organisations, just not ones with impenetrable walls. To use another metaphor, it’s not seamlessness we need in our organisations but good seams: tailored connections between the silos.’

SHARED SERVICES

In the case of shared services such as the database administration example, the shared service team should tailor its connection with the served teams by:

ensuring enough capacity to respond to support requests;

tracking and optimising performance based on response time, flexibility, ease of onboarding (local context) and technical expertise.

They should not make the common mistake of maximising utilisation of ‘resources’ – that results in long queues and frustration.

When defining the scope of shared service teams, consideration should be paid to how much knowledge of the local context of the served teams can be codified, and at what cost (Snowden, 2002). Unless the work in the served teams is highly standardised, their tacit knowledge cannot be converted into enough explicit knowledge for the shared service team to apply effectively. There will therefore often be a need for close collaboration at the point of handover (the ‘tailored connection’) between teams.

VALUE STREAMS

The concerns associated with function-based teams are addressed when organising work along the concept of value streams.

Work in a value stream is characterised by a focus on the flow of value through the organisation. This means that the work is organised around the steps required to create value for the customer, rather than around functional departments or silos.

In a value stream, work is typically organised into smaller, cross-functional teams that are responsible for enabling the customer to derive value from the products and services. These teams work collaboratively to identify and eliminate waste, streamline processes and continuously improve the flow of value through the value stream.

Other characteristics of work in a value stream may include:

A focus on end-to-end processes: work in a value stream is typically organised around the entire process of creating value for the customer, from beginning to end.

Continuous improvement: teams in a value stream are continuously looking for ways to eliminate waste, streamline processes and improve the flow of value through the value stream.

Collaboration and communication: teams in a value stream typically work collaboratively, with strong communication and coordination across functional areas.

Customer focus: work in a value stream is focused on creating value for the customer, with a strong emphasis on meeting customer needs and expectations.

BENEFITS OF VALUE STREAMS

Organising work in value streams can bring several benefits to an organisation, including:

Improved efficiency: by focusing on the flow of value through the organisation, value streams can help to eliminate waste and non-value-added activities, leading to improved efficiency and productivity.

Increased customer satisfaction: by identifying and addressing bottlenecks and other sources of delay in the value stream, organisations can reduce lead times and improve delivery speed, leading to increased customer satisfaction.

Greater transparency: by mapping out the entire value stream, organisations can gain a better understanding of how workflows work through their making and problem-solving.

Improved quality: by focusing on continuous improvement and eliminating waste, value streams can help organisations to improve the quality of their products and services.

Greater agility: by being able to quickly respond to changing customer needs and market conditions, organisations that use value streams can be more agile and adaptable.

There can be downsides to value stream-based work:

Complexity: organising work in value streams can be complex, as it requires a holistic view of the entire process of creating value for the customer. This can be challenging for organisations that are used to working in silos.

Change management: transitioning from a silo-based organisational structure to a value stream-based structure can be disruptive and may require significant change management efforts.

Specialisation: by focusing on end-to-end processes, value streams may require team members to have a broader range of skills and knowledge than they would in a silo-based structure, where they may be more specialised in a particular area.

In summary, organising work in value streams can help organisations to become more efficient, responsive and customer focused. However, it also requires a significant shift in how work is organised and managed. Whether it is the right approach for a particular organisation will depend on its specific needs and goals.

LEAN MANAGEMENT VALUE STREAMS

Value streams are an important concept in Lean management, which is a philosophy and set of principles for improving organisational efficiency and effectiveness. Lean is based on the idea of continuous improvement and the elimination of waste in all aspects of an organisation’s operations.

Value streams are an integral part of Lean thinking, as they provide a way to understand and improve the flow of value through an organisation. By mapping out the value stream and identifying bottlenecks and sources of waste, organisations can use Lean principles and tools to optimise the flow of value and improve efficiency.

Some of the key Lean principles and tools that are commonly used to improve value streams include:

Value stream mapping: this tool involves creating a visual representation of the flow of value through an organisation, highlighting the steps required to create value for the customer and identifying areas of waste or inefficiency.

Continuous flow: Lean principles emphasise the importance of continuously flowing work through the value stream, rather than batching it, to eliminate waste and improve efficiency.

Pull systems: Lean principles advocate for using pull systems, rather than push systems, to control the flow of work through the value stream. In a pull system, work is only initiated when there is a demand for it, rather than being produced in advance and pushed through the system.

Standardised work: Lean principles advocate for standardising work processes to eliminate variability and improve efficiency.

IT WORK

IT work (see Figure 1.1) is commonly divided into:

Application development, which can be limited to development of the initial version of the application as a project, but is increasingly product-based, including maintenance and further development during the whole lifecycle of the application.

Infrastructure engineering, which acquires, builds and configures the devices, networks, system software and software platforms on which applications run.

IT operations, which ensures that applications and infrastructure are available for use.

Figure 1.1 IT functions and their relationships with business functions

IT service management (ITSM), which affords the users access to the operational applications and infrastructure and supports them in their use of the applications and infrastructure.

There are also specialised areas of work such as IT architecture and information security management that may be organised as separate functions or as part of the above areas.

The main business–IT interfaces are between business management and application development for agreeing the requirements for IT services, and between business operations and IT service management for the use of the IT services.

There are various IT–IT interfaces to agree derived requirements for infrastructure platforms, IT operations and IT service management, and to hand over work from one function to another, for example, for application design, coding, testing, operations and support. Optimisation of the flow of this work and its value for the business is the focus of IT value streams.

IT MANAGEMENT OBJECTIVES

IT management is often tasked with achieving the following objectives (see Figure 1.2):

Potential value: applying IT most effectively, for example, automating the right business processes and developing the right digital products and services.

Timely delivery: ensuring that the IT services are available at the right time, considering the cost of delay.

Realised value: co-creation of value together with business operations, where IT operations provide digitalised data and business operations apply it effectively.

Figure 1.2 IT objectives and their relationships with IT functions and business functions

Undisrupted operations: ensuring that disruptions to IT services and the effects of these disruptions are kept to a minimum.

Cost and effort: minimising the financial cost and human effort associated with the IT systems and services.

Organising work in value streams addresses these objectives in varying ways, described in the following paragraphs.

The potential value of IT is primarily determined by business management in their choice of how they want to use it. IT functions can help business management decision-making by providing information about the possibilities and restrictions of IT.

IT functions should ensure that they not only understand the requirements but also the underlying business case so that they also understand the intent of the requirements. Value streams can contribute to providing information and understanding requirements by their emphasis on customer focus, and on collaboration and communication. This marks the start of the IT value stream, so there is little benefit from value streams’ focus on actual flow of work. There is benefit, however, from the agility associated with value streams: when requirements change, they can be accommodated without too much disruption.

Timely delivery is probably the area where value streams make their strongest contribution, with a focus on end-to-end processes and their continuous improvement. This is where the improved communication and collaboration between IT functions is beneficial.

Realised value marks the end of the IT value stream and the interface with business value streams where the digitalised data is used. This is where IT service interactions take place and value is co-created. IT service providers and IT service consumers both apply their skills and other resources for mutual benefit. Value streams’ emphasis on customer focus, collaboration and communication contribute to the actual realisation of value from the investments in IT.

Undisrupted operations can be enhanced by value streams in two ways. Improved communication and collaboration help to minimise IT disruption by a better understanding of the requirements so that the necessary measures can be taken. The focus on end-to-end processes and their continuous improvement helps to minimise the effects of IT disruptions.

Cost and effort associated with the IT systems and services is improved by working in value streams. This is where Lean principles help to identify and reduce bottlenecks and sources of waste.

REFERENCES

Mintzberg, H. (2015) Enough of silos? How about slabs? Henry Mintzberg. https://mintzberg.org/blog/slabs.

Reinertsen, D. and Betz, C. (2021) Expertise and the shared services problem: a conversation with Don Reinertsen. Forrester. https://forrester.com/blogs/expertise-and-the-shared-services-problem-a-conversation-with-don-reinertsen/.

Snowden, D. (2002) Complex acts of knowing: paradox and descriptive self-awareness. J. Knowledge Management, 6 (2), 100–111.