At the recent Forrester Technology & Innovation Global Summit, René Te-Strote—Senior Project Lead of the BMW IT Group—spoke with our CEO and founder, Dr. Mik Kersten, about BMW’s ongoing transformation in the Age of Software. Expanding on the significant role that virtual product development plays in modern automotive manufacturing, René and Mik discussed how value stream management (VSM) has enabled BMW to successfully expand its presence in the Chinese market. Specifically, they focused on the company’s investment in virtual simulation and its optimization of product flow between its sites in Germany and China as part of BMW’s The RnD-CHINA.NEXT Simulation Project.
Value Stream Networks
As detailed in Mik’s bestselling book Projekt till produkt, in 2017 Mik was invited by René to BMW’s state-of-the-art Leipzig plant in Germany. Mik’s aim was to learn more about modern product development and the future of enterprise IT and software delivery. Key to BMW’s success is its ability to seamlessly integrate production lines with the software lifecycle to transform in the digital-first world.
“Understanding how to create and connect a Value Stream Network, we must first understand the ground truth of enterprise IT tool networks. In a car plant, finding the ground truth is easy, as we see the cars flowing along the production line. In software delivery, we are dealing with knowledge work, which is considered invisible,” writes Mik in Project to Product1. To bring the same visibility to software delivery, he emphasizes that we must understand software delivery at the level of business value flow.
BMW has been able to successfully adapt by making its physical and digital Value Stream Networks visible, enabling the company to improve the flow of customer value in a safe, governable and controllable way. In order for enterprise IT to adopt this approach, this means shifting focus away from traditional project management metrics and plans towards a lean product development mindset. In the talk, Mik highlights the core lean principles that BMW focus on:
- Precisely specify value by product (the benefit to the customer)
- Identify the value stream for each product (across the whole supply chain, e.g., Germany to China)
- Making value flow without interruptions (ensuring everything is connected to seamlessly flow physical assets like a car or intangible assets like software)
- Let customer pull value from the producer
One of Mik’s core lessons at the Leipzig plant was the key differences between traditional manufacturing and enterprise IT:
Mik underlines the need for:
- Integrated production lines that span both physical and digital assets (such as software delivery and simulation)
- Managing product better to deliver faster time-to-value to the customer (instead of focusing on internal project metrics)
- Architecting around the flow of information, knowledge and value (instead of obsessing with tech layers and tool stacks)
- Optimizing end-to-end across value stream to find bottlenecks (such as BMW’s need to flow simulation data between Germany and China)
- Measuring business results (such as innovation velocity, faster time-to-market and establishing whether simulation removed time-consuming physical steps)
Measuring the Flow of Value
When you consider that cars (such as the BMW i8) are made of millions of lines of code, that simulation is playing an increasingly vital role in innovation, and that the autonomous market is a key part of the future of transport, you can quickly understand the need to measure and improve the flow of value across the software delivery process. Improving flow requires an understanding of what flows across the software delivery value stream. Unlike physical production lines, where you can see cars moving from start to finish, digital assets are intangible and need to be defined and made visible.
The Flow Framework® has helped the BMW IT Group to define this value through the four Flow items:
- Funktioner: that create net business value (like a simulation feature, new software on a dashboard or mobility app)
- Defekt: that impact product quality and the user experience (complex systems rely on fast response and resolution to issues. The mean time to resolution (MTTR) needs to be iteratively improved to keep up with faster time-to-market)
- Risk: that ensures software is always safe, reliable and governed (that’s why risk items —like security, privacy and other vulnerabilities—must be treated as a first-class citizen)
- Debt: that impacts future delivery (as we take shortcuts for faster time-to-market, debt accumulates in both software and physical products. A plan for effectively reducing debt must be implemented to preserve existing and future performance)
BMW also understands that these Flow items are MECE (mutually exclusive and collectively exhaustive) i.e., doing more of one thing means less work on another. Therefore keeping an eye on all these Flow items and striking a balance on work distribution is crucial for a healthy product portfolio.
BMW has been able to measure and optimize this flow at scale through a deeper understanding of their Value Stream Networks to swiftly find and fix bottlenecks at a faster clip. It’s through lean thinking and techniques that René and his team are able to apply Agile and DevOps principles at an enterprise level.
The RnD-CHINA.NEXT Simulation Project
The incredible benefits of a VSM approach were illustrated perfectly by BMW and its RnD-CHINA.NEXT Simulation Project. Because companies selling to the Chinese market are obligated to build products in the country, the IT Group was tasked with making a direct copy of its production site, including its simulation environment, in China.
BMW commissioned its Chinese partner, BMW Brilliance Automotive (BBA), to develop new models in the Asian country. BBA required its own site for development, including simulation for crash testing and other scenarios. The main challenge was being able to replicate the Munich production environment in Shenyang, a sophisticated and complex environment that had grown organically over time. This was no small task, given the obstacles they faced such as:
- The lack of infrastructure, specialized skills and workforce in China
- Adhering to Chinese regulations to pass local audits
- Overcoming the culture barrier to foster trust and collaboration
- Navigating the impact of the 2020 pandemic
- Lack of a central point of contact to bridge the two organizations
Despite the many obstacles, BMW and BBA were able to work together to build a high collaboration model. A key underpinning of his success was BMW’s ability to connect its Value Stream Network to safely flow data for simulation, enabling 50 percent of development to be carried out in each continent. The first two models were built successfully, laying down the foundation to build two more models in 2021. By next year, BBA aims to increase simulation capabilities by 100 percent.
Notable benefits realized through the project include:
- Better distribution of simulation workload
- Close collaboration between both teams to be truly agile
- New jobs and infrastructure in China
The success of collaboration has fostered a culture of trust that minimized the impact of the pandemic and remote work, enabling BMW to continue to thrive in the face of intensified digital disruption. You can see the full presentation below:
Connect your Value Stream Network
Like BMW, Tasktop’s marketing-leading Value Stream Management platform can help you to harness the Flow Framework and optimize your Value Stream Networks for the flow of customer value in software delivery.
You can hear more from Mik and René in their recent discussion on the Mik + One: Project to Product podcast.
If you haven’t read Projekt till produkt yet, you can download five free excerpts to get a taste of the movement and Mik and René’s journey.
1 Mik Kersten, Project to Product: How to Survive and Thrive in the Age of Digital Disruption with the Flow Framework (Portland, OR: IT Revolution, 2018), p151
