Increasingly, organizations are adopting a Value Stream approach to work to optimize value delivery and improve performance and agility. The key idea is to operate in a way that all activities focus on generating value through individual Value Streams and to eliminate activities that don’t directly contribute to value creation.
Let’s say you’ve gone down this path, prepared your teams, decentralized decision making and aligned your budgets to Value Streams. How do you evaluate your efforts to deliver improved results? You must use metrics that indicate how well your Value Streams provide value. Traditional project evaluations center on finishing work on time and under budget and associated performance metrics are often activity-focused with little connection to value delivered to customers. The metrics indicate how busy you are, but they don’t provide insight into how well your Value Streams deliver value.
Quantifiable Key Performance Indicators (KPIs) that can be used to evaluate performance should be defined for each Value Stream. SAFe® defines a KPI as “a specific and quantifiable measure of business results for the Value Streams within a portfolio.” KPIs can be specific to each Value Stream and depend heavily on the context of your organization and the nature of the solutions you deliver.
Value Stream KPIs should align with your organization’s strategic business objectives, creating a feedback loop that starts with organizational strategy and the lean budgeting process of funding the Value Stream and leads to measuring the business outcomes the investments in the Value Stream were intended to create. Below are four examples of simple, effective KPIs for measuring the performance of Value Streams.
Average Cycle Time
A measure of the average time from Product ideation to customer delivery. It’s a basic measure of the ability to deliver smaller increments of value more frequently. Shorter average cycle times indicate a more streamlined and efficient development process where longer average cycle times indicate inefficiencies or bottlenecks.
Actual Versus Projected Component Delivery
A core objective of the Value Stream is to produce value in small, fast and frequent deployments. This KPI is a measure of the baseline ability to develop and deliver components as frequently as expected.
Defects Released Versus Defects Found in Production
A simple but effective measure of overall delivery quality and the effectiveness of your Value Stream. Defects that make it through the Value Stream to customers diminish value. The number of issues found in production, before release to customers, is a good measure of customer satisfaction. Too many defects missed in production could indicate that delivery increments are too large or complicated.
Average Time to Resolve Security Vulnerabilities
Your team’s ability to quickly recognize and resolve security vulnerabilities is a critical measure of the overall security of the product.
The above KPIs are simple, but comprehensive, easy-to-understand and effective Value Stream measures for evaluating the ability to improve value delivery, meet expectations, maintain or increase quality and avoid security vulnerabilities. These KPIs can be used to evaluate the effectiveness of Value Streams in the context of the resources invested so leaders can make well-informed strategic decisions.