SAFe advocates this funding model: ‘Fund Value Streams, not Projects’.
Let’s step back… to get a better perspective… a big picture of this matter.
According to SAFe, ‘Value Streams represent the series of steps that an organization uses to build Solutions that provide a continuous flow of value to a customer.’
There are two types of Value Streams: 1) Operational Value Stream; 2) Development Value Stream.
Here are how things are
Operational Value Stream is where you see people operate/use the system.
Development Value Stream is behind the Operational Value Stream… or, some would say, Development Value Stream sits on top of the Operational Value Stream… Operational Value Stream being its foundation.
Agile Release Train (ART) — which is a team of cross-functional agile teams (people who build the system) — sits on top of the Development Value Stream.
Funding the Development Value Stream funds the ART that sits on it…and the teams comprising the ART…and its collaborators. This is collectively called the ‘capacity’. Capacity is set (fixed), bought, and paid for… ready to be loaded up with prioritized work (this is variable) … and will deliver business value at a certain / known / fixed cadence (delivery has heartbeat/rhythm).
A good example or application of this approach is the shipping container lines industry — think of the Maersk shipping line. Business Owners (Maersk’s clients) pay for containers… they are empowered to fill it up with whatever item they want as long as it is legal and it fits the bought and paid for fixed capacity. The business owners are aware of the cadence of delivery … delivery dates are published ahead by Maersk to set expectations and so that the business owners can plan and prioritize items — i.e. which item ships first — accordingly.
This process continues on ad-infinitum. Forever… infinitely… until the business is terminated or stops operating. The flow of work and delivery of value is continuous.
There is no ‘start and stop’ scenario. There is no concept of Projects (a project, as you know, has a certain start and stop — very finite).
In this light, with continuous lean flow of work and continuous delivery of business values, SAFe’s Funding Model makes perfect sense: ‘Fund Value Stream, not Projects’. This means: fund the ART that sits on the Development Value Stream. This means: buy the capacity … albeit fixed. This means: with fixed capacity, constant prioritization of work is paramount. This means: with prioritized work, the right thing is built (effective/agile)… and the thing is built right (efficient/lean). Hence we have Lean-Agile mindset…focused on efficiency and effectiveness of delivering value.
A very powerful mindset … but only if people change to this mindset… and really and fully embrace it… full mindset shift is required!
But it is not easy…this SAFe funding model is not as ‘easy as pie’ to make a reality. If leadership — the powers that be — do not want to change, then there is no way for this funding model to be a reality. They will always think, plan and fund in terms projects… NOT in terms of funding fixed capacity that delivers continuous flow of business values. This means having project-based ailments such as: 1) ‘Start and Stop’ of work; 2) fluctuation of resources ( we bring the people to work instead of bringing work to the people), ART is not a long lived team of agile teams; 3) since everything is temporary — yes, a project is a temporary endeavor — developing a true cross-functional team (this takes time) is almost impossible — people come and go based on projects… worst, teams get dissolved because of lack of funding. Not cool.
Leadership must change… and that, also, is not as easy as pie!
Let me leave you with this visual… the waterfall iron triangle flipped upside down — reflecting the mindset (paradigm) shift that is needed to realize a full lean agile transformation.