Introduction
We have been driving SAFe (Scaled Agile Framework) inspired agile transformation at one of our customer’s place and after launching multiple ARTs (Agile Release Trains) and setting up the LACE (Lean Agile Center of Excellence), we have reached at a maturity level to set up VMO or Value Management Office. This name, VMO, can conjure images of endless spreadsheets, rigid processes, and a general disconnect from the actual work being done. But a truly effective VMO isn’t about creating bureaucratic hurdles.
Value Management Office (VMO), as mentioned in Scaled Agile Framework (SAFe) is an essential function that drives strategic transformation in an organization by implementing Lean Portfolio Management (LPM), driving operational excellence and fostering lean governance. It is about building a strategic engine that drives real, measurable value for your organization.
At ART level, the direction is provided by Business Owners, Product Management Group & Solution Architects, where they build the program backlog and at each Planning Interval or PI, we pull up the work in PI planning and deliver incremental solutions throughout the cadence. When there are multiple ARTs, LACE is sufficient for operational excellence and setting up the lean governance, but there comes a time when the organization finds a need to bring utmost harmony and elevate themselves to Portfolio or Organizational agility.
At that stage, it becomes necessary to identify or observe the Operational Value Streams and determine the strategic themes which will inspire the solutions that are built by Development Value Streams. To function seamlessly at the Portfolio layer, the approach we use is called Lean Portfolio Management or LPM. The governance beyond single ART needs close monitoring as we need to seek insights at Strategic level, Portfolio level & not just at program & team level. It also requires operational excellence to ensure maximum value is delivered, continuously and all the stakeholders are collaborating with a sole purpose, to succeed. VMO, which has change-agents who have maturity to drive such strategic interventions, does this.
What is a Value Management Office (VMO)?
In a traditional organization, PMO is responsible for successful delivery of projects by creating practices and policies to track and coordinate the stages of project or programs,
VMO, on the other hand, comes with different sets of values, mindset and practices. To move away from certain aspects of traditional project management, we need to focus on flow based value delivery, and moving away from project mindset to product mindset.
Starting from mapping the value stream and understanding the strategic themes of an organization, the VMO partners with the leaders in identifying organizational OKRs (Objectives & Key Results) that will become the basis for doing any level of intervention further.
All the epics that will be identified will be approved, budgeted and planned based on its impact to the strategic goals. Bringing such traits is instrumental to VMO’s responsibility. Shifting away from the mindset of big-bang budgeting to Lean Budgeting is one of the key contributions of VMO. Centralising such a decision is key but questioning the repercussion of it by imbibing Participatory Budgeting practice brings constructive disagreements and helps leaders in better decision making.
Value Management Office members are seasoned in facilitating:
- Strategic interventions
- Managing conflicts
- Fact based influencing
- Promoting change leadership
They closely work with executive sponsors, business owners and enterprise architects to drive different dimensions of LPM. They also partner with LACE, Solution Trains representations, Community of Practices (COPs) and other critical stakeholders to bring operational excellence and establish lean governance. Helping leaders in making data-driven decisions is one of their key responsibilities.
Why Do Organizations Need a VMO?
Organizations need VMO to primarily shift their focus from project & program management to value management, moving away from departmental divisions to one-team mindset. Instead of budgeting of projects, VMO promotes budgeting value streams. Also, the organization wants to be lean in managing their platforms or product solutions, by keeping the fat-free relevant set of features and retiring those whose shelf life is over.
Value Management Office helps in stitching strategy to execution by creating transparency in terms of vision, purpose, objectives, key milestones, long term strategy, Portfolio & Technology roadmap and other aspects which in traditional organizations are not visible to people who are in execution level.
How a Value Management Office Operates?
Value Management Office (VMO) works as an agile team. Similar to any agile team, they also use the visual board to manage their transformation backlog, work in sprints when required, set their objectives, chase milestones and frequently pivot to deliver continuous value to their stakeholders.
Key aspects of a Successful VMO
For a successful VMO, it is important that they are empowered to drive the transformation. They should be in a position to influence leaders about the true value which could be clouded by personal ambitions or politics. Following aspects will help the VMO to succeed:
- Having an impactful ‘Governance Framework’, which harmonises initiatives like OKR setting & tracking, reviewing new initiatives (Epics), participatory budgeting and others. It is also required that we track the implementation of shortlisted initiatives partnering with various stakeholders from Solution Train, Agile Release Train & groups like LACE, COPs etc.
- Value Measurement Metrics is key. If we do not identify the meaning of value in our context then we may end up chasing something which is vague or misleading. Organizations need to clearly specify the ‘value’ in their context and justify it with measuring the right metrics and VMO helps them in doing so
- Tools and Technology also play an important role in managing the operations of VMO and automating certain processes will help with quick insights to drive and monitor changes.
- Skilled members of the VMO are instrumental in driving the success. Usually it is recommended that the members should be SPC or SAFe Practice Consultant who have hands-on experience in working with leaders and understand strategic interventions along with streamlining them
- Continuous Improvement is the essential trait to bring agility, this holds true for VMO as it is an empirical approach to explore the next best step for an organization and partner with stakeholders in identifying the same and creating impactful outcomes
How does a Value Management Office Operates in Agile?
The Agile Value Management Office primarily focuses on supporting the leaders in managing portfolios by staying aligned to the strategic objectives, identifying appropriate key results that should be fulfilled by initiatives which will be delivered by the ARTs (Agile Release Train) supporting respective value streams.
This approach is systematically deployed by VMO:
1. Strategic Alignment & Portfolio Vision:
- The VMO works closely with portfolio stakeholders (e.g., Portfolio Management, Enterprise Architects) to understand the organization’s strategic objectives.
- It helps define the portfolio vision, ensuring it reflects strategic themes and aligns with the organization’s overall goals.
- The VMO facilitates the creation and maintenance of the Portfolio Kanban, a visual system for managing portfolio epics.
2. Portfolio Kanban Management:
- The VMO assists in the analysis and prioritization of portfolio epics, ensuring they contribute to the portfolio vision.
- It helps manage the flow of epics through the Portfolio Kanban, ensuring they move through the various states (Funnel, Analyzing, Portfolio Backlog, Implementing, Done).
- The VMO facilitates the Portfolio Kanban meetings, ensuring that epics are regularly reviewed and updated.
3. Lean Budgeting & Funding:
- The VMO supports the implementation of Lean budgeting, allocating funds to Value Streams based on strategic priorities.
- It helps establish guardrails for spending, ensuring that funds are used effectively and efficiently.
- The VMO monitors budget utilization and provides reports on spending and value delivery.
4. Value Stream Coordination:
- The VMO facilitates communication and collaboration between Value Streams, ensuring alignment and coordination.
- It helps identify and address dependencies between Value Streams.
- The VMO supports the sharing of best practices and lessons learned across Value Streams.
5. Metrics & Reporting:
- The VMO defines and tracks key metrics that measure value delivery and portfolio performance.
- It develops and maintains reporting dashboards that provide insights into portfolio progress and performance.
- The VMO provides regular reports to stakeholders, ensuring transparency and accountability.
6. Governance & Compliance
- The VMO helps establish and enforce governance policies and procedures.
- It ensures that projects and initiatives comply with relevant regulations and standards.
- The VMO supports risk management and compliance activities.
7. Continuous Improvement:
- The VMO fosters a culture of continuous improvement, encouraging teams to experiment and learn.
- It facilitates retrospectives and other feedback mechanisms to identify areas for improvement.
- The Agile Value Management Office helps implement changes to processes and practices based on feedback and lessons learned.
VMO vs. Traditional Project Management Office (PMO)
| Traditional PMO | Value Management Office (VMO) |
| Focuses on project delivery, adherence to plan, cost control | Focuses on value realization, strategic alignment, business outcomes |
| Plan perfect approach -> often Waterfall, traditional project management | Outcome focused -> agile, Lean, value stream-oriented |
| Checklist governance, control, standardization of project processes | Meaningful facilitation, enablement, optimization of value delivery |
| Project-based funding, detailed cost estimation | Value stream funding, lean budgeting, flexible allocation |
| Project-centric measures (e.g., schedule variance, budget adherence) | Outcome-centric (e.g., customer value, business impact) |
| Compliance-focused, rigid control, process adherence | Adaptive, value-centric, collaborative governance |
| Project-centric, often siloed, hierarchical | Cross-functional, value stream-oriented, collaborative |
| Focuses on minimizing deviations from plan | Embraces change, focuses on value impact |
| Success is defined by project completion within constraints | Success is defined by business value and customer outcomes |
| Promotes upfront detailed planning based on scope | Promotes continuous planning, adaptive to changing needs and value prioritization |
| Reporting is on status reports, project progress, compliance | Reporting is outcome-based, value stream performance, actionable insights |
| Seeks to control and minimize change | Embraces change as an opportunity to maximize value |
| Key contributions towards project planning, execution, monitoring, control, reporting | Key contributions towards portfolio management, value stream optimization, strategic alignment, benefits realization |
| Primarily interacts with project managers and sponsors | Broad interaction across all levels, including executives and customers |
| Limited focus on innovation & experimentation, often risk-averse | Encourages innovation and experimentation to maximize value |
Conclusion
The VMO is an essential body that works on the fabric of an organization, strengthening thread by thread by shifting the focus from managing projects to maximizing value. By embracing a collaborative, outcome-driven approach, organizations can unlock unprecedented levels of strategic alignment and business impact.
With this, our blog on “Value Management Office (VMO): What It Is, How It Works, and Why Organizations Need It?” comes to an end. We sincerely hope this has helped our readers get some clarity around it. We would be glad to discuss your scaling or implementing scaled agile framework bottlenecks and support your journey. We have in-depth expertise in scaled agile framework consulting. Please write to us at “consult@benzne.com” for any further feedback or recommendations or in case you are looking for external coaching support.
Benzne is an outcome driven agile transformation consulting company with a proven track record of successful turnkey agile transformation across domains and industries. We provide custom, tailored approaches to solve organisation problems like execution certainty, siloed mode of working, transparency, lack of predictability, streamlining workflows and processes, scaling agile adoption, reduced time to market and increased customer satisfaction leveraging our indepth agile transformation experience and expert agile practitioners.
Frequently Asked Questions about Value Management Office (VMO)
1. How does a VMO support business value realization?
VMO partners with the business leaders in understanding their current ambitions, business bottlenecks and current ways of working and gradually brings focus towards value creation instead of generating outputs and departmental goals. It brings the sense of why, where we need to reach and what it will take to reach there. In terms of contributions, partnering with contributors on a value stream (both operational and development), determining and aligning with the strategic goals, setting up effective objectives, setting mechanisms (like OKR), lean budgeting and directing teams towards working together and understanding their shared responsibilities.
2. Who is responsible for setting up a VMO in an organization?
There are multiple parties who are consulted and involved in setting up the VMO within an organization and either of them could also be an initiator to their peers based on the impact they want to create like executive leadership team, portfolio management leaders, organization transformation team or values stream owners based on their findings. You can also reach out to an external partner like Benzne Agile consulting to get an outside-in perspective.
3. Does every company need a Value Management Office?
Yes. The customer of every company wants their problem solved either as product or services and that is referred to as value. The value management office is responsible for bringing alignment among all functional areas and building focus towards value delivery continuously to both customers and business.
4. How does a VMO ensure the organization is delivering value?
VMO works like any other agile team by identifying the stakeholders they need to work with, determining the core competencies within them, preparing the backlog of initiatives they are expected or want to take for the core purpose, follow the Kanban board and also iterate to build and deliver valuable contributions. They set up mechanisms to onboard people, define value at the various levels, ensuring KPIs to measure, setting up cadence to track progress and reporting timely to inform, pivot and improve, all the time.
