Tag: Digital Transformation

Unlocking Success: The Vital Role of Digital Transformation Consulting in Today’s Challenging Climate | Blog

As enterprises face mounting challenges in adopting complex digital solutions, digital transformation consulting continues to grow. But economic pressures, heightened digital intricacies, and new opportunities in sustainability will impact the industry’s future. To thrive in this rapidly evolving environment, consulting firms must offer tailored solutions that deliver measurable outcomes. For more insights, read this blog.     

Reach out to us directly to learn more.

Digital transformation consulting has gained market prominence in recent years due to the demand for experts who can help organizations effectively embrace technology-driven processes and strategies. With enterprises’ constant demand for digital relevance continuing, the sector is expected to grow 8.5 to 9.5% through 2025.

Consultants have a critical role in helping guide enterprises through the why, what, and how of digital business transformation. The success of digital transformation initiatives hinges largely on identifying the right objective, determining the best strategies, and properly planning digital initiatives, which is where consultants can provide invaluable guidance and expertise.

Service providers also have opportunities to display market-leading thought leadership, influence technology decisions by becoming strategic partners, and build long-term senior stakeholder relationships through consulting. These factors make digital transformation consulting one of the most important segments of the IT industry. Analyzing this industry’s movements helps decode the overall direction of digital change.

Macro-economic conditions are pushing enterprise priorities toward operational benefits

With the increasing economic pressures, cost optimization and productivity improvement have become top-of-mind priorities for enterprises in 2023. Companies are looking to optimize operations, streamline processes, and reduce expenses. In response, consulting firms should rebalance their priorities on operational segments such as supply chain management, production, finance, Human Resources, or sales and marketing.

This shift towards operational benefits will likely impact consulting service delivery. Clients increasingly are seeking outcome-based pricing models that tie consulting fees to specific cost savings or productivity gains. To meet this demand, consultants must demonstrate a deep understanding of their client’s business processes and operations and develop customized solutions that deliver measurable results. Many large consulting houses have also leveraged lower-cost locations to address their delivery cost uptick.

Digital pragmatism is leading enterprises to eye scope and vendor consolidation

Many enterprises are struggling to see the expected returns on their digital investments and are looking to optimize their value. This has led to a surge in demand for consulting services that can help businesses rationalize their digital scope and streamline their vendor portfolios. In 2023, the number of enterprises seeking to critically rebalance or rationalize their service provider portfolio increased by 35%.

To meet this wave of digital pragmatism, professional services firms need to provide end-to-end services that can guide clients throughout the process of IT portfolio rationalization. This includes identifying areas for consolidation, developing an implementation roadmap, and providing ongoing support to ensure successful execution. By taking a more strategic approach to IT investments and vendor selection, enterprises can optimize their value and drive better business outcomes.

This also highlights why digital consulting providers have been attempting to expand their footprint across overlapping opportunities among peer groups. For quite some time, the Big Three consulting firms have targeted downstream revenue with products and solutions for enterprise decision-making. Meanwhile, traditional IT services vendors are leaning on the importance of digital to engage top-brass executives and expand into upstream revenue more strategically. This all comes alongside the Big Four accounting firm’s efforts to exert dominance across end-to-end services capabilities.

DT Consulting Blog Infographic sf

This razor focus on value also forces consulting service providers to repair delivery inefficiencies. Everest Group’s Digital Transformation Consulting Services PEAK Matrix® Assessment found that costly engagements with large management consulting houses are not perceived as delivering sufficient value by most stakeholders, and organizations are receptive to working with IT service providers that have a stronger technical focus.

However, IT service providers who excel in technology expertise may fall short in delivering domain or industry expertise. The study showed clients were 10 percent less satisfied with providers’ domain/industry expertise than their technical expertise.

Winning in the “Value Market” will require consulting service providers to deliver well-rounded engagements supported by forward-thinking talent at effective price points that bring technical and domain prowess.

Sustainability will be the next game-changer in consulting

As businesses become more conscious of their environmental impact, many seek consulting services to help them develop and implement sustainable practices. Everest Group research found four out of every 10 Environmental, Social, and Governance (ESG) engagements are focused purely on consulting elements. As this trend is expected to accelerate in the coming years, sustainability will likely become a key driver for growth in the consulting industry.

Consultants are uniquely positioned to help clients navigate the complex sustainability ecosystem, working with diverse partner segments such as rating agencies, global standards organizations, data and reporting vendors, as well as independent software vendors (ISVs) and original equipment manufacturers (OEMs.) To capitalize on this trend, consulting firms need to invest in creating industry and function-focused expertise on sustainability. This includes building teams with deep domain knowledge in areas such as carbon accounting, circular economy, and ESG reporting.

Looking ahead, the consulting industry is expected to continue to undergo significant change, driven by macroeconomic conditions, digital predicaments, and sustainability. Consulting firms today must have a deep understanding of their client’s business processes, operations, and priorities. Providing customized solutions that produce measurable results will be crucial to thrive in this rapidly evolving environment.

To discuss digital transformation consulting and digital strategies, contact [email protected], [email protected], and [email protected].  Stay tuned for our perspectives on generative Artificial Intelligence’s impact on the digital transformation consulting market.

Don’t miss our webinar, Welcoming the AI Summer: How Generative AI is Transforming Experiences, to learn how enterprises can leverage Generative AI to unlock business value and about current use cases.

Capabilities Necessary For Evolving Operational Platforms | Blog

Today, most companies are in the process of assembling digital operations platforms or are in the process of evolving them. Software-defined operations platforms enable companies to integrate technology and services so they can operate differently and better compete in the marketplace. These platforms become differentiators and create new value.

They also create a more intimate, dynamic relationship between the tech stack and business operations. I blogged often in the past few months (here, for instance) about operations platforms. The platforms’ constantly evolving nature requires continual investment in maintaining the platform components as they evolve. Operations platforms also have huge requirements for engineering and IT talent.

Read more in my blog on Forbes

Building Web 3.0 Business for Clients: Opportunities for Strategy, Technology, and Consulting Providers | Blog

The next-generation exponential technology of Web 3.0 holds promising opportunities for brand, technology, marketing, and business strategy providers to partner with enterprises in five key service areas. To learn more about the opportunities in this emerging market, read on.  

Multiple consumer and business brands have taken the first steps in experimenting with Web 3.0 business by building non-fungible tokens (NFTs), purchasing virtual lands in metaverse platforms, organizing virtual events, and creating enabling platforms.

But building a Web 3.0 business goes beyond just creating NFTs for a company and requires embracing the concepts of Web 3.0 business, the creator economy, decentralization, social commerce, immersive experience, trust, and sustainability.

As enterprises like Ferrari, Starbucks, JP Morgan, McDonald’s, Samsung, NBA, Walmart, Disney, Google, Nike, Oracle, EY, and Stripe begin to see traction in this space, they will seek to partner with brand, technology, marketing, and business strategy providers who understand this ecosystem to scale initiatives and drive newer ones.

Let’s explore the following five key demand areas where providers can offer their expertise.

Business strategy services: Web 3.0 business needs to be conceptualized and aligned with the enterprise strategy. Beyond that, service partners should also be bold enough to push clients to adopt Web 3.0 business models that may not be entirely related to their existing businesses. This has already started to happen and has blurred the boundaries between industries and company classifications.

Normally enterprises start with building NFT offerings for their brand to engage consumers. NFT design and implementation can create short-term demand and may eventually become a small part of overall Web 3.0 initiatives. Many enterprises use celebrities, while others use crowd contributions, technology, and various other models to build NFTs. Professional service partners need to understand this complex landscape and advise clients accordingly. With an estimated 15,000 Web 3.0 start-ups, making the correct selection is important.

At the beginning of a Web 3.0 journey, clients will seek services tailored to their specific industry, such as an automotive company creating a virtual showroom in metaverse; an apparel company using NFTs to trade for physical goods; a bank building a Web 3.0-enabled payment system; or an energy company incentivizing customers to sustainably consume power with crypto assets. In addition, many clients may want finance, procurement, and Human Resources to leverage Web 3.0 principles. Service providers who support such enterprise functions need to be at the forefront to serve this demand or risk near-term losses.

Architecture and platform services: Recently, leading cloud vendors such as Google and AWS launched blockchain node services. In addition, start-ups are focusing on Web 3.0 infrastructure services to enable out-of-the-box offerings. Start-ups such as InfStones, ChainSafe, and Alchemy collectively raised US$300 million to enhance their blockchain infrastructure offerings.

Service providers need to work with these vendors to build enabling infrastructure for clients’ Web 3.0 journey. Even for seemingly simpler initiatives such as building NFTs, clients have multiple platform decisions to make, such as NFT marketplaces, wallets, and underlying blockchain. Not only do service providers need to understand these complex technologies and work with an extended ecosystem, but these firms also need to be thought partners to guide clients in the right direction and drive initiatives.

In addition, the core offerings for edge, network, and pervasive computing must be delivered. Unlike cloud-based workloads, the Web 3.0 ecosystem will heavily rely on edge processing. Materially high network bandwidth and resiliency will be required. Therefore, ongoing hyper-automated technology operations services will need to be amplified using next-gen observability, resiliency, and predictive maintenance. Service partners will have to focus on the right messaging infrastructure, decide between off/on-chain computing, build digital simulations, and create the underlying Web 3.0 core for their clients, much like they did for cloud services.

Brand and experience services: At the core of Web 3.0 businesses is the experience it can create for end consumers. Branding and experience service providers such as Dentsu and Publicis are already investing in the Web 3.0 ecosystem. Moreover, technology providers such as Adobe and Salesforce have also launched offerings to address this client need. Although “user centricity” has gained pace in recent years, Web 3.0 businesses need to take this even further. Brands such as Adidas have already experimented with token-gated communities and provide exclusive access to assets.

The enabling technologies, platforms, and environments now available to build such experience offerings are powerful but complex. Socially distributed networks, creator platforms, crypto payments, generative Artificial Intelligence (AI), enhanced reality, and various other solutions have the power to create previously unimagined customer experiences. Chief Marketing Officers (CMOs) have to become extremely tech-savvy to explore the potential Web 3.0 business has for their brand strategies.

Software and integration services: Web 3.0 business requires thousands of software to work together. Enterprises will build many of these internally to drive differentiation. However, many back-end software will be SaaS-based and bought through vendors that will need integration. In addition, numerous Application Programming Interfaces (APIs) will be built and purchased that will need to work in unison.

This will not just be the software we see today but will have AI/Machine Learning (ML) and other advanced data technologies as their core. These context-aware software will need to leverage advanced auto-development, auto-tuning, and auto-management concepts to be more efficient and sustainable. Rather than being cloud-first, these software will have to be edge-first and compatible across various hardware, unlike browser-based systems. Building lightweight yet rich workloads will be a complex engineering problem to solve for.

Governance, risk, and cyber security services: The legalities of Web 3.0 businesses are unknown, and clients need significant help from service partners to navigate this complex new pioneer. Enterprises will need assistance deciphering contractual obligations, data privacy, personal identity, cyber security, and interpreting platform terms and conditions.

The recent collapse of crypto exchange FTX is a good example. Some law firms have found the terms and conditions of popular Metaverse platforms extremely one-sided. If these platforms shut down their business, the consumer would lose all their virtual assets. Service partners need to work with clients to help them understand the risks and build recovery solutions. Providers also will need to deliver cyber security, content moderation, trust, and related security and risk services so clients feel secure that customers will trust their Web 3.0 business initiatives.

In addition, given Web 3.0 enabling technologies are under scrutiny for their environmental impact, clients will look for service partners who have sustainability as a primary offering. Environmental sustainability will take near-term priority for such initiatives.

Moreover, massive opportunities will emerge to build technology workloads by adopting Web 3.0 concepts. In the same way clients adopted Web 2.0 social media and digital commerce to enhance their businesses, they will want to adopt business-contextualized Web 3.0 technologies. The key difference is that Web 3.0 will propel enterprises to engage with stakeholders in previously unknown ways, learn about newer architectures and monetization models, and embrace the creator economy – all pushing them beyond what they are now and realizing the art of the possible.

For more on Everest Group’s research in this area, see our reports on the following topics: NFTs, Decentralized Finance, Metaverse, crypto assets, Blockchain, and trust. If you are a brand management, technology, or strategy consulting provider, please reach out to [email protected] to share your experience in building Web 3.0 business for clients.

Start planning for the future of your organization. Join our upcoming webinar, Key Issues for 2023: Rise Above Economic Uncertainty and Succeed.

Are SaaS and Software-defined Operating Platforms Compatible? | Blog

I’ve discussed in several recent blogs software-defined operating platforms, which cause a dynamic, much more intimate relationship between a company’s tech stack and operations. The new world of these platforms is different from the old tech and operations relationships with ERP systems. In fact, this new dynamic relationship challenges the fundamental view of technology components. Question: Is the whole tech stack changing, or are companies just adding layer after layer on top of the tech stack’s existing foundation? In this blog, I explain why it is important to understand the answer to this question.

Read more in my blog on Forbes

CIOs Meeting ESG Commitments Must Go Beyond Reducing Carbon Footprint | Blog

Environmental, Social, and Governance (ESG) initiatives and investments are growing in importance and starting to significantly influence the marketplace, particularly for services and products. Almost every large company in the world now has an ESG agenda, comprising CEO and leadership team formal commitments to their boards and other stakeholders. Those commitments now are moving down in the organization to the different functional heads, including the CIO, for IT’s share of the responsibility for meeting the company’s commitments.

Read more in my blog on Forbes

How to Clear Up Industry Cloud Confusion and Choose the Right Solution

With so many industry cloud platforms available from different technology players, selecting the right solution for your enterprise is not simple. Learn the important characteristics to look for from providers in this latest blog in our industry cloud series.

As cloud technology matures, industry-specific solutions are emerging as a leading preference over generic options to deliver efficiency, experience, innovation, and business-enabled growth. According to Everest Group’s latest survey, a staggering 87% of enterprises rate industry cloud as one of their top three investment priorities.

The supply landscape is heating up with technology providers leading with an industry cloud-focused go-to-market narrative, investing in multiple offerings for target verticals, initiating industry cloud-dedicated partner launch programs, and announcing large enterprise engagements.

Many technology providers operating in different spaces are approaching this market in their own ways. In our last two blogs on this topic, Demystifying Industry Cloud and The Battle for Supremacy in Industry-specific Cloud Has Begun, we discussed the evolving industry cloud solution provider landscape and go-to-market strategies adopted by key ecosystem players.

Read on for a deep dive into suppliers’ industry cloud offerings and our recommendations to equip enterprises to select the best-suited industry cloud solution for them.

The industry cloud solution marketplace is proliferating

The following three broad categories of industry-specific cloud solutions are emerging in the market:

  • Cloud infrastructure providers such as Microsoft Cloud for Manufacturing, AWS for Health, and Google Cloud for Telecommunications focus on providing an industrialized set of cloud solutions and services tailor-made for specific industries. Industry-specific configurations, interfaces, use cases, and blueprints are embedded into existing functionalities and bundled with partner solutions
  • Enterprise platform providers such as Salesforce Financial Services Cloud, SAP Digital Manufacturing Cloud, and Oracle Retail Cloud embed industry-specific processes, solutions, and frameworks into their horizontal applications and functions to enable industry specificity
  • Business solution providers such as Veeva Systems Life Sciences Cloud, Temenos Banking Cloud, and Guidewire Cloud for Insurance deliver true and heavily nuanced vertical solutions by providing niche industry-specific functionalities covering the breadth and depth of the value chain, targeting industry pain points

Though the objectives appear similar, technology providers take different routes for portfolio development based on their heritage and core strengths and provide varying degrees of industry specificity, adaptability, and improvisation.

For instance, cloud infrastructure providers offer flexible and ecosystem-driven industry cloud, while business solution providers have a more exhaustive use case coverage.

How to select the right industry cloud for your firm?

Enterprises need to make informed decisions when selecting providers of choice and carefully consider their business objectives, existing technology landscape, level of industry-specificity and enterprise-contextualization required, and preferred consumption model (off-the-shelf solution versus customized offerings).

Below, we detail the key characteristics of each solution type to assist enterprises in selection.

  • Industry cloud solutions by cloud infrastructure providers

Cloud infrastructure players provide a basic level of industry-specific functionalities and configurations powered by advanced cloud computing and next-generation technology capabilities in data analytics, Artificial Intelligence and Machine Learning (AI/ML), and the Internet of Things (IoT).

These most benefit existing consumers of cloud infrastructure providers’ technology stack that intend to digitize their platforms and services by co-creating or co-developing solutions with ecosystem players, instead of preferring directly consumable end-to-end industry cloud offerings.

Level of industry-specificity: Low-medium

Degree of customization: High

  • Industry cloud solutions by enterprise platform providers

Enterprise consumers of Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), and other horizontal applications focused on achieving unified customer relationships, and employee experience can leverage industry cloud solutions by these providers.

Enterprise platform providers provide out-of-the-box industry solution workflows, built on core horizontal enterprise platform functionalities consisting of purpose-built functionalities, pre-built data models, and automation and AI/ML capabilities for particular industries.

Their focus is on digitizing vertical systems across the front, middle, and back offices, powered by customer data-related insights and integration between the sales and operations teams. These offerings have a limited level of customization and are usually available as different editions of off-the-shelf offerings.

Level of industry-specificity: Medium

Degree of customization: Medium

  • Industry cloud solutions by business solution providers

Enterprises requiring extensive value chain coverage and high-grade industry-specific cloud solutions that are looking to digitize their industry platforms can consider offerings by business solution providers.

These solutions are delivered in a pre-packaged and composable format. Enterprises can consume these solutions and services in a modular form and augment functionalities by developing vertical-specific solutions and services on top of these platforms.

Level of industry-specificity: High

Degree of customization: Low

  • Interdependence of technology providers and the role of System Integrators (SIs)

These providers cannot independently provide end-to-end expertise across all layers of an industry cloud stack – infrastructure and platform layer, application layer, differentiation layer, and customization layer.

While these players bring their own strengths to the table, they rely on each other to fill in the missing pieces.

Both cloud infrastructure players and enterprise platform providers depend on business solution providers for domain expertise and vertical-specific contextualization. Meanwhile, enterprise platform and business solution providers rely on cloud infrastructure providers for underlying compute and next-generation technology capabilities.

In this ecosystem-led play, SIs play the key role of ecosystem enablers. For an effective industry cloud implementation, enterprises should engage with SIs for enterprise contextualization, industry knowledge, implementation capabilities, and system integration expertise.

Industry cloud offerings in banking and financial services

To illustrate, we compare different industry cloud solutions in the banking and financial services space by these provider categories below:

Picture1 3

The industry cloud outlook

Though this space is witnessing heightened investments and significant interest among enterprises, the market is still primitive, and the road to success is not straightforward.

To ensure optimum value from industry cloud adoption, enterprises need to clearly define their industry-specific cloud requirements, identify target use cases, choose the appropriate sourcing strategy, analyze available solutions, align the partner ecosystem, factor in technology-related dependencies, and consider industry-specific compliance regulations.

To share your thoughts and discuss industry cloud, contact [email protected] and [email protected].

Also, learn how enterprises can measure the value of cloud and how to unlock its full potential to maximize efficiency in our webinar, How to Unlock the Full Value of Cloud.

3 Tips for Managing Perpetual Change from Software-defined Operating Platforms

Over the past seven years, almost all large companies made substantial progress in implementing digital transformation across a wide variety of functions. At the core of those enormous investments and efforts was building software-defined operating platforms, which put companies on a trajectory to fundamentally change how they operate their business. However, studies show many companies (70%) failed or underperformed against their digital transformation objectives. In this blog, I’ll discuss three tips for how to avoid that outcome and, instead, reap the significant benefits of software-defined operating platforms.

Read on in Forbes

Why Metaverse Growth Will Put Trust and Safety (T&S) Center Stage

With Metaverse growth expected to surge to US$679 billion by 2030, its influence and possibilities seem endless. But with great power comes great responsibility. Read on to learn why and how organizations must ensure Trust and Safety (T&S) for metaverse to realize its potential.

The metaverse’s arrival is inevitable and will, for better or worse, be part of our future lives. The metaverse could rival massive shifts in history like the telephone and the internet and, in the next few decades, bring together people in ways we never imagined.

Metaverse growth is expected to increase internet data use by 20 times from sharing personal and financial data, social interactions enhanced by Augmented Reality (AR)/Virtual Reality (VR), and the evolution of video and live streaming content.

But jumping on the metaverse bandwagon won’t be the difficult part – how to keep it secure will be.

Why now is the time to think through the risks of metaverse growth

Organizations that use or provide metaverse services will need to think hard about the implications and work to align with T&S policies, laws, and regulations in parallel to metaverse initiatives to inspire a safe, privacy-sensitive, and regulated environment.

The metaverse promises opportunities for innovation and growth. It could allow companies to reinvent the user experience through an immersive environment and create deeper engagement.

But, if the metaverse is a place where users are meant to communicate, collaborate, co-create, and share ideas, then shouldn’t we expect it to be safe? However, there are incidences already emerging of users being put at risk of security breaches, increased abuse, exposure to the proliferation of objectionable content, and financial fraud.

It will take a village to regulate the metaverse

Organizations will need to align with T&S providers and stakeholders, such as governments, academia, civil society, and possibly others, to identify loopholes and take measures to address gaps before any wrongdoing occurs. Organizations will have to put T&S policies, technologies, and processes in place and think through how they will moderate the metaverse at scale and how it can be done in real time to keep up with the complex forms of interactive live streaming. They will also need to consider how to ensure the well-being of their human moderators, who can be exposed to egregious content over long periods of time. This could mean initiating full teams that work in parallel to the development, deployment, and enrichment of metaverse.

What does this mean for the T&S services industry?

Enterprises across industries are already relying on third-party T&S services to make their current engagement platforms safe for their users. Over the next decade, the demand for T&S services to help maintain metaverse growth and safety will be immense and likely produce an ecosystem of T&S providers and partnerships from various entities. Utilizing T&S service providers, and even specialized service providers, is one-way enterprises can access expertise in risk mitigation and gain guidance and resources for safer metaverse deployments.

The T&S services market is already growing at a blinding speed of 35-38% and is estimated to reach US$15-20 billion by 2024. However, it can see additional 25-30% growth as metaverse scales.

See the exhibit below.

Picture1 1

Learn more about the current market surrounding the metaverse and how partnering with third parties can keep the public safe and aligned with legal and regulatory T&S requirements in our report, Taming the Hydra: Trust and Safety (T&S) in the Metaverse. And discover how organizations are addressing the possibilities and challenges of metaverse growth in our upcoming LinkedIn Live session, Trust and Safety (T&S) in the Metaverse – With Great Power Comes Great Responsibility.

Value Stream Management: A Progression to Agile and DevOps | Blog

During the digital transformation journey, a Global 2000 enterprise uses more than 150 software solutions and tools on average to support its product or services delivery. Despite the huge investment, the value realized from this technology is still unclear to most enterprises. Read on to understand the importance of measuring the value delivered by software applications or products with value stream management (VSM) and our 4D framework to implement it.

More than 90% of enterprises have adopted agile development methods in some shape or form, and DevOps adoption is on the rise. But surprisingly, less than 20% consider themselves highly mature agile enterprises. These few have adopted a Scaled Agile Framework (SAFe) to implement agile and DevOps practices across the enterprise with some having DevSecOps and BizDevOps processes for product development. Even then, enterprises are unable to track and measure the organizational-wide technology value. Most of the remaining 80% have agile and DevOps adoption in pockets, making it tougher to align outcomes and realize meaningful benefits.

With the increasing investment overload and absence of tangible outcomes, the critical importance of delivering and realizing value is gaining enterprise attention. Concerted efforts for defining, measuring, and enabling value are needed.

Agile and DevOps adoption is considered by many as the ultimate step toward digital transformation. However, enterprises must realize it is just a starting stage for continuously tracking, measuring, realigning, and improving digital solutions’ outcomes and value. This is where the concept of value stream management (VSM) becomes pertinent.

Before we delve deeper into what VSM is, let’s understand what VSM is NOT.

People often use value stream management and Value Stream Mapping interchangeability, which is thoroughly misleading. The two are related but not the same.

Exhibit 1: Differences between value stream management and value stream mapping


As the graphic above illustrates, Value Stream Mapping is an activity or a subset of VSM. The value streams and processes are defined during Value Stream Mapping and act as an initial step for effective outcomes from value stream management. VSM focuses on a data-centric approach to decision making and promotes a culture of innovation and improvement through a continuous feedback loop and collaboration.

Now that we are clear on what VSM is not, let’s delve deeper into what VSM is, why enterprises need it, and how to adopt it.

Value stream management – the next step in the enterprise agile journey

In an enterprise setup, there are broadly two sets of value streams – operational and development.

Operational value streams or business value streams comprise the processes and people who deliver the value to the end user by leveraging systems or solutions created by the development value streams. Operational value streams are defined by the nature of the business and its business unit. Some examples of operational value streams are product manufacturing, software product sales and support, order fulfillment, and support functions.

Development value streams or IT value streams consist of the systems and software developers, product managers, and other IT practitioners who design, build, deploy, and maintain systems/solutions. These systems/solutions are used by either internal customers (members of the operational value stream) or external customers who are direct buyers and users. The definition of processes or steps in the development value stream is standardized and runs in parallel with the phases of the Software Development Lifecycle (SDLC) – plan, build, release, and operate.

For example, order fulfillment in a software product company is one operational value stream involving different teams and processes – from sales enablement, licensing, and provisioning to customer support and renewals. These teams require software systems like a Customer Relationship Management (CRM) portal, service management platform, license management systems, etc., to support their processes. The development value streams will be aligned to build and support each of these software systems, enabling the operational teams to deliver the product effectively.

The SAFe principles apply to the development value streams. However, enterprises currently focus SAFe implementation efforts on delivering good products or solutions with agility versus delivering customer value. To deliver value along with agility, adopting VSM in the development value streams should be the next step. This will act as a management layer enabling more data-driven decision making at the SDLC level. VSM also can be extended to operational value streams.

Today the focus for VSM has expanded to the enterprise level bringing the delivery and operational value streams closer.

Making the business case for value stream management adoption

Aligning development value streams to the objectives of operational value streams is key to delivering optimum value to the end customer. VSM platforms connect people, processes, and technology across the SDLC and can be extended to integrate heterogeneous value streams across the enterprise.

Some of the key benefits enterprises stand to achieve with a successful VSM approach are:

  • Identify value streams, organize people, and perform cost-benefit analysis during product discovery
  • Make data-driven investment decisions and prioritize product delivery based on end-to-end visibility
  • Improve the value delivery strategy based on real-time metrics

While we understand the need for VSM in enterprises, implementing it in a structured manner to gain maximum value delivery is equally important.

Implementing VSM effectively using the 4D framework

Below is a recommended starting approach:

Determine the current state of value flow and define value streams at an enterprise level, starting with identifying the operational value streams and the respective development value streams. Align the operational and development value streams to the final value to be delivered by the value stream. Identify current system behaviors and interdependencies.

Design value stream maps to achieve the future state of value flow right from ideation to the value delivery stage. Organize teams to value streams by bringing together the right stakeholders accountable for each value stream step for a mapping exercise to decide steps, handoffs, and metrics.

Deploy VSM tools to connect all value stream parts to measure the flow of value in real time using metrics that track the time, velocity, load, and workflow efficiency. Expand to integrate with other value streams as necessary. Providers like Digital.ai, ConnectALL, Micro Focus, Plutora, and Tasktop offer VSM tools to consider.

Demonstrate continuous improvement in value delivery by using real-time insights from flow metrics as feedback to realign the strategy to increase throughput, efficiency, and value stream productively. Continuously measuring flow metrics gives all stakeholders end-to-end visibility to make informed decisions on investments and prioritization.

This 4D framework is a starting point to implement VSM. Additional factors like talent, governance, organizational culture, etc., can further optimize the value delivery through VSM. Adopting a performance-oriented, highly cooperative, and risk-sharing-based environment will enable smooth VSM implementation.

With growing enterprise investments in agile and DevOps adoption for software development, it will be interesting to see how adding a VSM layer will change the value measurement and value delivery game in upcoming years. Stay tuned for our upcoming blog further exploring the enterprise VSM adoption roadmap.

To discuss value stream management, contact [email protected] and [email protected].

Read more of our blogs for more fact-based insights and transformative business process.

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