Shortest sustainable lead time with the best possible quality and value to people and society.

—House of Lean

Value Streams

Value Streams represent the series of steps that an organization uses to build Solutions that provide a continuous flow of value to a Customer. SAFe value streams are used to define and realize Portfolio-level business objectives and organize Agile Release Trains (ARTs) to deliver value more rapidly.

The primary role of a SAFe portfolio is to fund and nurture a set of development value streams. These value streams either deliver end-user value directly or support internal business processes.

Organizing around value offers substantial benefits to the organization, including faster learning, shorter time-to-market, higher quality, higher productivity, and leaner budgeting mechanisms. It results in value streams that are a better fit for the intended purpose. In SAFe, organizing around value is accomplished by first understanding value streams and then launching ARTs to fulfill them. Realizing value streams via ARTs is the ‘art’ and science of SAFe.

Furthermore, value stream mapping can be used to identify and address delays and non-value-added activities in a value stream to accomplish the Lean-Agile goal: shortest sustainable lead time.

Details

Lean-Agile methods both focus intensely on continuous value delivery, where the value is only achieved when the end user, customer, or internal business process receives the business benefit of some new solution or Capability. In Lean, identifying and understanding the various flows of value is the most critical step—indeed, the starting point—for improving overall Enterprise performance. After all, if the enterprise doesn’t have a clear picture of what it delivers and how, is it possible to improve? This brief background gives SAFe its primary incentive to organize development portfolios around flows of value called value streams.  

A value stream is a long-lived series of steps used to deliver value, from concept or customer order to delivery of a tangible result for the customer.  Figure 1 illustrates the anatomy of a value stream.

Figure 1. Anatomy of a Value Stream

A significant event triggers the flow of value, perhaps a customer purchase order or new Feature request. It ends when some value has been delivered—a shipment, customer purchase, or solution deployment. The steps in the middle are the activities the enterprise uses to accomplish this feat. A value stream contains the people who do the work, the systems they develop or operate, and the flow of information and materials. The time from the trigger to the value delivery is the lead time. Shortening the lead time reduces the time-to-market. That is the focus.

Types of Value Streams

In the context of SAFe, there are often two types of value streams present in the enterprise, as shown in Figure 2:

Operational value streams – The steps used to provide goods or services to a customer, be they internal or external. [2] This is how the company makes its money.

Development value streams – The steps used to develop new products, systems, or services capabilities.

Figure 2. Development Value Streams build the systems that operational value streams use to deliver value

Sometimes the operational and development streams are the same, as when a solution provider develops a product for sale and feeds distribution directly (ex., a small SaaS company). In that case, there is only one value stream—as the development and operational value stream are the same.

However, particularly in the context of the big IT shop, understanding both types of value streams is critical, as the development value stream feeds the operational value stream, as is illustrated in Figure 2.

While the primary purpose of SAFe is guiding the people who build the systems, it’s essential first to understand the overall flow of value, so that teams can develop and optimize solutions to accelerate the business result. Further, many of the critical requirements for the development value streams are not just functionality, but also solution and enterprise architecture, which are driven directly by the operational value streams.

To this end, identifying value streams and ARTs is one of the first steps in implementing SAFe and is described in the Identifying Value Streams and ARTs article.

Lean Budgeting for Development Value Streams

Identifying the value streams and understanding the flow through the organization is an essential step in improving value delivery. It also unlocks the opportunity to implement Lean Budgets, which can substantially reduce overhead and friction and further accelerate flow.

In support of this, each portfolio in SAFe contains a set of development value streams, each of which has a budget. Lean Portfolio Management (LPM)  helps manage the budget for each value stream following Lean-Agile budgeting principles. Over time, LPM adjusts budgets for each value stream, based on changing business conditions. The Lean Budgets article describes dynamic budgets. Figure 3 shows the independent budgets for different development value streams.

Figure 3. LPM allocates a budget to each development value stream

Value Stream KPIs

A Lean budgeting process can substantially simplify financial governance, empower decentralized decision-making, and increase the flow of value through the enterprise. It’s a bold move to go from funding projects to allocating budgets to value streams. Naturally, this new approach raises the question, how does the enterprise know it’s achieving an appropriate return on that substantial investment?

To that end, each value stream defines a set of criteria, or key performance indicators (KPIs), which can be used to evaluate the ongoing investment. The type of value stream drives under consideration drives the KPIs that the business will need, for example:

  • Some value streams produce revenue, or end-user value directly, in which case revenue may be an appropriate measure. Other metrics such as market share or solution usage may provide additional insight.
  • Other value streams, or elements of a value stream, are creating emergent new offerings. In this case, potential return on investment (ROI) is a lagging economic measure. Instead, using nonfinancial, innovation accounting KPIs to get fast feedback may be a better choice.
  • Some development value streams are merely cost centers, which serve internal operational value streams and are not independently monetized. In this case, measures such as customer satisfaction, net promoter score, team/ART self-assessment, and feature cycle time may be more relevant.
  • In the most significant scale, a value stream may establish an even broader set of measures, such as those represented by the sample Lean-Agile portfolio Metrics.

Value Stream Coordination

There are typically two types of coordination activities required with value streams:

  • Coordinating multiple value streams within a portfolio – Value streams, by design, should be as independent as possible. However, there is likely to be some coordination required to ensure that the enterprise moves forward with each value stream in lockstep with the enterprise objectives. Value stream coordination is the topic of the Coordination article.
  • Coordinating multiple ARTs within a value stream – Typically, in most large value streams there are some dependencies among the ARTs. How does the enterprise coordinate these activities to create a single, holistic solution set? This can require an extensive degree of cooperation. For example:

Coordinating multiple ARTs within a value stream is one of the primary challenges of the more significant Lean-Agile enterprise and is the entire subject of the Solution Train article, which is part of the Large Solution Level.

Reducing Time-to-Market with Value Stream Mapping

Finally, there is another significant benefit to identifying the value streams and organizing release trains around them. Each value stream provides an identifiable and measurable flow of value to a customer. As such, it can be systematically improved using value stream mapping [2] to increase delivery velocity and quality. Value stream mapping is further described in the Sustain and Improve article.


Learn More

[1] Ward, Allen. Lean Product and Process Development. Lean Enterprise Institute, 2014.

[2] Martin, Karen, and Mike Osterling. Value Stream Mapping. McGraw Hill, 2014.

[3] Poppendieck, Mary, and Tom. Implementing Lean Software Development: From Concept to Cash. Addison-Wesley, 2007.

Last update: 2 November 2017