In today's digitally-driven world, the technological paradigm has shifted from merely supporting and influencing business strategy to executing the said strategy itself. Information technology has significantly helped customers receive products they ordered online the next day, read newspapers on tablets while traveling and even receive hassle-free invoices for the services. This has pushed the IT sector to strive more to bridge the ever-increasing gap between strategy and execution which has become quite a challenge in recent years.
This wide gap is quite often a result of organizations where various people who speak various languages and use technical jargon stipulated particular areas of work such as strategies, aims, processes as well as projects. For instance, the CEO may speak about prioritizing mobile-first, whereas in marketing I speak about sharing increment of wallet with millennials, and on the other hand, IT may speak of balancing the load in the Linux server cluster. To comprehend these languages business capability mapping is used. Business capability maps act as a common language in every area of business. It was developed by The Open group which is a global consortium aimed at making businesses achieve their objectives. As per the standards set by the TOGAF business capability model, this framework is widely used by Enterprises to improve overall efficiency.
If you want to learn in detail about how to qualify for the TOGAF exam, you will need a detailed TOGAF exam preparation course to guide you through. You will learn in detail about several topics related to business capabilities including business capability examples, business capability maturity model, business capability map template, business capability map example and the like.
What is Business Capability Modeling and Mapping?
If you are looking for a suitable answer to the question “what is a business capability model?” we have explained it in detail here. Business capability models are complete sets of stable business capabilities that cover the entire organizational unit. The result of the business capability modelling process is a business capability map that offers a blueprint for a visual depiction of every single business capability. It is portrayed at a suitable level of decomposition and is reasonably grouped into various perspectives for sections to accommodate an efficient analysis and planning. Upon definition, a business capability model can provide a complete view of the business that does not depend on the portfolio of its organizational structure, process, IT system, application, product or service. However, the mapping of business capabilities back to their organizational units, IT architecture, value streams, as well as operational and strategic plans essentially provides graded instinct into the optimization of every domain mentioned.
Business capability mapping enables companies to review the business operations that help their objectives. Business capability modelling on the other hand is an integral view suited for IT leaders. Needless to say that the IT architecture of a business is shaped keeping the business needs in mind.
Some of the key characteristics of business capabilities along with a business capability model example have been elucidated below:-
- Business capabilities are quite stable and only changed when there is a major business model change. Stability is integral to the utilization in the strategy development of the business as well as enterprise designing.
- The business capability framework consists of tangible (technology, processes, materials, infrastructure, location and information) and intangible (behaviors, values, experience, skills and knowledge) resources.
- There are two fundamental types of business capability; operational and organizational. The operational type directly enables the physical delivery of services and products, whereas, the organizational type refers to the capabilities that support organizational success and are applied in general. These include psychological safety, business adaptability and agility, particular management style and customer focus.
- Business Capabilities can also be classified as ordinary or general capabilities as well as “Core Competencies”. These Core Competencies, both in combination or individually offer the organization an appropriate competitive advantage that is crucial for the success of the organization. Therefore, it is an essential part of the DNA of the organization.
- Another type of capability is referred to as dynamic capabilities which have come into being in recent years. With organizations being constantly driven by the urgency of innovation, dynamic capabilities have been inculcated into their systems to avoid stagnation. Dynamic capabilities help enterprises to build resources profitably as well as we knew and reconfigured them as per the noise level of innovation needed.
- Business capabilities are not stipulated to any organizational structure or function be it physical or logical.
- Business capabilities can be potentially decomposed into capabilities that are of lower levels to completely comprehend the nature of the capability as well as the required resources.
- Business capabilities occur only once in a model irrespective of the level. They can also occur in numerous areas of business and can also be potentially combined into one single capability. One such business capability model example is project management.
Creating Business Capabilities Models – Steps
1. Understand the Needs
It is important to know where your company is headed and the areas in which you will need help from the IT Department. If the IT departments lack any knowledge regarding where the business is headed, they will be unable to make any supportive decisions. Therefore, comprehending and reviewing the goal of your company as well as involving professionals who can define the strategy (corporate development department) is an essential need.
2. Define your Business Capabilities
You will need to consider the major capabilities that your business might need to operate. Level 1 involves only a few of the critical ones. Study shows that around 7 to 10 capabilities are used on the highest level buy businesses. While building them think from two perspectives. What the company wants to achieve and what people and processes are in place.
3. Assess your Capabilities
Business capabilities may vary depending on financial impact as well as customer value. Not all capabilities are equally important. Make sure that you evaluate the abilities as per their defined criteria based on future planning and analysis.
4. Link Capabilities to applications
It is a well-known fact the connection between applications and business capabilities bridges the gap between IT and business. That is the final step you need to link your applications to your capabilities. Unlike its components, applications are linkable to certain business purposes. Hence these applications are the perfect connection between technological architecture and business architecture.
As a student or a professional in this field, it is imperative to know the nitty-gritty of business capabilities including business capability model levels, business architecture capability model, business capability mapping tools and the like. A reliable IT Service Management courses online can be a great place to start if you are looking for an opportunity to upgrade your knowledge about this subject.
An Example of Business Capabilities-Centric Enterprise Architecture
A team that is entirely business-capability-centric is one whose work is long-term aligned to a stipulated section of the business. The existence of the team is as long as the business capability exists and stays relevant in the business. It is similar to project teams only last till the project scope is delivered.
Various capabilities of businesses are stipulated to certain forms of enterprises. For instance, an eCommerce business capability pertains to capabilities like merchandising and buying, cataloging, order management, marketing, order fulfillment as well as customer service. Insurance businesses have capabilities like claims administration, policy administration, and new businesses. Telecom businesses have capabilities like service provisioning, network management, and assurance, revenue management and billing. They can be divided further into capabilities owned by smaller teams that can be managed efficiently.
Let us look at an example of an enterprise architecture capability model. Consider a standard application landscape mixed with updated and legacy systems, homegrown applications, certain SaaS applications, a few commercial-based off-the-shelf or COTS applications, a diversified API layer serviced by new-age microservices, and the like.
Every business-capability team stipulated to each of these areas would essentially be on a close-knit subset of the above that is essentially exclusive to its business area. However, some applications might be cross-cable as for their nature. For instance, the end-to-end customer journey in eCommerce applications might require an exclusive team. Some people, on the other hand, are concerned about having only one team manage numerous systems inside a business capability. But according to Conway's law, it is worth noting that allowing a single team to manage several systems at once allows high tenacity off component ownership and fewer associations between teams making up for better responsiveness.
Business Capability - Use Cases
Some of the best Business Capability use cases have been elucidated below for your reference:-
1. Mergers and Acquisitions
In the never-ending corporate landscape, acquisitions and mergers are happening daily. Many companies are purchased based on their portfolio which could potentially bridge the gaps of a buyer. To assess these assumptions business capability models come into place. With business capability models the analysis of the current IT landscape of a company can be seamlessly done along with the comparison of the gaps by focusing on evaluating the quality of smaller groups of systems. They also help prepare heatmaps to apply scoring to every capability and system and then assess the worth of the acquisition.
2. Reduce Software Redundancy in a Corporation
A common recurring problem amongst robust organizations is software redundancy. With the growth of a company, different departments slowly become different entities with their own governing bodies rules as well as budget. Therefore it is easier to develop new software systems instead of reaching out to two different people in different parts of the company to acquire similar software.
3. Future State Envisioning
The Business capability model is one of the greatest tools for planning out the target state of an enterprise upon discovering a business opportunity with the help of a business capability model, one can easily access if they are ready to launch a new value proposition from the IT landscape and the business perspective.
4. New Lingua Franca Between Business and Technology
Similar to BAs, domain experts, development teams and product owners who use an all-pervasive language in a domain-driven design to establish precise communication, software/enterprise/solution architects can also use a similar kind of ubiquitous language with business stakeholders and the C-Level.
Benefits of Business Capability Modeling
The importance of business capability models in driving operational efficiency in a business is unimaginable. It comes with several advantages. The benefits have been listed below:-
- It helps link execution to strategy by pinpointing which capabilities support the pillars of strategy, associating funding with core capabilities, and also by assigning evaluating and monitoring the KPIs.
- It helps focus more on core capabilities that can give your company a significant edge over competitors by helping you standardize the capabilities and context and outsource the capabilities related to commodities.
- It offers a Holistic view of the enterprise regarding business motivation, processes, capabilities, data and resources and enables you to comprehend the connections, synergies and overlaps.
- Business capabilities help establish a common language that offers an actionable framework suited for IT and business.
- Business capabilities help Enterprises achieve pointed architecture definitions. This is because they help provide a better business definition that offers efficient and operational technology Solutions. In an organization, IT assets can be reused and leveraged numerous times. This helps cut down on costs and reduces unnecessary purchases related to software and hardware.
- Business capabilities help break silos in both business and IT.
- Business capabilities also help mitigate technological risks and uncover redundancies.
- Business capabilities help make the strategy more tangible and are the most stable reference for planning.
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Using Business Capabilities to Drive the Definition of Your Enterprise Architecture
The capabilities originate directly from a corporate strategic plan. These plans are created by corporate strategic planners. Enterprise Architects are responsible for satisfying the enterprise goals, strategies and objectives. Most organizations might also have a yearly plan that defines how the organization wants to go forward to meet its preset strategic goals.
The figure illustrated below represents the most integral relationships between capability-based planning, project/portfolio management and Enterprise Architecture. On the left-hand side, you will see that the capability management goes in line with the Enterprise Architecture. The key takeaway is that every architecture needs to be expressed based on business value and outcomes rather than in terms of IT. This ensures IT alignment with the enterprise.
The main intention behind this corporate strategic direction is to drive the Architectural Vision in Phase A. It also drives the corporate organization upon which the creation of portfolios will be based. Certain capabilities that are aimed for completion will be the main focus of Phases B, C, and D which defines the Architecture Definition. They are based on the work packages that are identified individually.
Phase E projects are further going to be conceived. They define the capability increments that are going to be driving the Transition Architectures in Phase E and are responsible for structuring the increments of the project. The delivery is coordinated via migration and implementation plans in Phase F.
Business capabilities are an integral element when it comes to streamlining and developing a business or the architecture of an enterprise. Associating business capabilities to their components offers a business context for the various roles, information assets, processes and tools that amalgamate to deliver value to the business stakeholders. A business capability model is a way to organize different business capabilities into a singular model. It offers a stable view of the enterprise that is independent of the business structure to the stakeholders. Business capability mapping also further helps leaders to make informed and better decisions. A career in this field is a lucrative one and if you want to pursue it, you will need to sit for the TOGAF exam. The KnowledgeHut TOGAF exam preparation is a great course to take up if you are looking for a reliable exam guide to help you qualify it.