Value streams and IT Strategy
In previous newsletters we’ve talked about various techniques that we can employ to help improve our understanding of the organisation so we can create a great IT Strategy, we’ve covered for example, Business environment analysis, business model canvas, wardley maps, demand statements etc. In this Newsletter we’ll talk about Value Streams, Value Streams are an extremely useful technique we should have in our arsenal that can really help inform our understanding of our business and therefore inform our IT Strategy.
What is a Value Stream?
The terms Value Stream and Value Chain are often used interchangeably in many different overlapping contexts with slightly different and/or overlapping meanings. When i think and talk about Value Streams i’m thinking in terms of value streams as defined within the Business Architecture Book of Knowledge (BIZBOK),
“A value stream is a visual depiction of how an organisation achieves value for a given stakeholder or stakeholders within the context of a given set of business activities. It consists of value stages that are performed within the organisation in order to create customer value.”
A generic example of a Value Stream for a Cafe might be:
Value streams are useful for a number of reasons:
- They provide another layer of analysis in addition to our analysis of the business context and business model e.g. through techniques like business environment modelling/PESTLE etc and Business Model Canvas
- Using Value streams (ideally off the back of having defined your key Value Propositions) is a great way of starting to break down your analysis of the business and focus on what truly matters, which is delivery of value to stakeholders, without getting distracted by other organisational constructs such as org structures and hierarchies. Why is that useful? because an IT Strategy should focus on maximising the value flowing through a Value Stream and not focus on serving individual organisational structures
- Value Streams are easy and relatively quick to create and when done well easily resonate with stakeholders
- Value Streams as a technique and concept tessellate very nicely with other techniques that are really useful when defining an IT Strategy, including Value Propositions, Business Capability Models and Wardley Maps
- Value Streams help indicate which Business Capabilities are required to deliver customer value, which then helps inform our Business Capability Model, which then helps us think strategically about how IT helps deliver those capabilities in order to help deliver the Value Stream. The diagram below provides an example of mapping a loan acquisition Value Stream and then using it to identify the key Business Capabilities that support each value stream step
- Value Streams provide a great canvas on which to overlay our understanding of IT Applications that support the value streams and identify areas for improvement and investment e.g. maybe there are key steps in a Value Stream that aren’t supported/enabled by IT Applications
In my upcoming How to IT Strategy Course we will go into more detail about how to create Value Streams and how to combine them with other techniques to inform your IT Strategy, you can sign up here for early access to the course when it launches and an early bird discount.
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If you want to learn more about how to create great IT Strategies then please sign up at howtoitstrategy.com for early access to my upcoming course.