How Senior Management Can Use Business Capability Maps To Make Better Investment Decisions
Oct 12, 2021
Today we live in a rapidly changing world. Senior management is faced with various change initiatives to improve the different functions of an enterprise. All of these change initiatives are backed by well-informed arguments and compete for budgets. Although strategic management has access to a vast amount of information and tools to support strategic, tactical, and operational decision-making, they often lack a holistic view on budget allocation to track how investments are creating value for the enterprise.
Using a Business Capability Map as framework for investment decisions and change designs received increased traction over the last decade. With a ‘Business Capability Map’, senior management has the ability to analyze an enterprise by looking at it holistically, through a business perspective lens.
A Business Capability Map describes what the enterprise may have the ability to do, independent from how those things are done, by people, processes, technology, information, or physical resources. Senior management can now make more effective investment decisions while also empowering enterprise and business architects to support them more efficiently.
In this blog post, we show how C-Level and Business Leaders can make effective investments decisions by using Business Capability Maps. Additionally, how architects can increase the efficiency of future operating model designs, and analyze business capability improvements.
Who are the primary enterprise stakeholders benefiting from a Business Capability Map? A stakeholder is an individual or organization that has substantive impact on the business of an enterprise and can be internal (for example an employee) or external (for example a customer or a partner). Stakeholders typically utilize capability maps for decision making while architects support them in this function. Therefore, the primary stakeholders for a Business Capability Map are C-level executive management and their direct reports, and senior business leadership with titles such as Vice President or Director. They sponsor the design and use of capability maps as a tool for improving the business.
However, there may be many other individuals working “within” this framework (for example strategists, business analysts, managers/ owners of the processes, technology, information, and resources) that also benefit from utilizing a Business Capability Map. Designing a holistic and sound capability map usually is the responsibility of enterprise and/ or business architects. Capability maps communicate in business terms what a company is capable of, regardless of how it is currently doing it.
Effective Investment Decision-Making
A top priority for senior management is to make better decisions while ensuring that budgets for investments are allocated effectively. Digital businesses today are becoming a source of competitive advantage. The ability to quickly steer the organization towards its strategic goals and adapt faster and more effectively to changes in this competitive landscape, is becoming a critical success factor for enterprise leadership. A capability map provides executives with an enterprise-wide perspective of the impact of their investments, and most importantly, indicates which capabilities will be improved.
Indicating the capabilities that will be improved is crucial when assessing competing demands for investment budgets on a “level playing field,” independent of the specific details of each demand. In other words, it provides a way of comparing “apples with apples” when evaluating the benefits of multiple initiatives, in terms of which capabilities are improved, and by how much. This enables visibility and transparency of alignment with strategic priorities ensuring that there aren’t gaps in the investment portfolio where key capabilities aren’t addressed.
A Business Capability Map also supports senior management to determine whether their investments are moving in a strategic direction. This is done by assessing business capabilities for strategic relevance. As an example, see the map below, which shows how BiZZdesign supports customers to make effective investment decisions by connecting business capabilities with strategic relevance. The map shows in which areas there is a gap between planned investments and the strategic direction of the enterprise.
While business capability maps provide stakeholders with the ability to make effective decisions, the next step is to realize the change. A capability touches many aspects in an enterprise and typically includes people, processes, technology, information, and physical resources. How can senior management ensure that everyone and everything operate in the context of a business capability? Additionally, analyzing the ‘as-is’ state and designing the future operation model of a capability is often complex.
ArchiMate and other standards provide a common language that helps architects and business analysts address the complexity and raise the efficiency of the analysis and future design. ArchiMate provides high-level overviews for heat mapping, as well as detailed designs of processes, application, technology, data, and security architectures.
Feedback from BiZZdesign’s customers indicate that by utilizing ArchiMate they were able to decrease the time it takes to create and analyze future designs by 20-30%. However, it’s more than just drawing a diagram. When a common language is used, communication and collaboration between stakeholders improve when they design the future of the enterprise. The view below shows an example of a target operating model design. It highlights the changes in green.
Another important benefit, apart from enabling assessment of the strategic relevance of capabilities, is that Business Capability Maps enable stakeholders to assess and track the maturity of capabilities. A map provides insights on where senior management needs to improve the capabilities of their enterprise. However, can they measure the maturity of current and future business capabilities?
The diagram below indicates how senior management can use spider charts to visualize a capability assessment. For the “Claim management” capability, six dimensions are defined, and it shows how the process dimension is broken down into more details. The baseline analysis for this capability results in values for the different dimensions, which are linked using the red line. The required maturity, broken down into values for the individual dimensions, is indicated with a green line.
BiZZdesign Horizzon is a complete enterprise architecture SaaS platform for all the stakeholders in the enterprise, supporting them to essentially bring forward the benefits of strategic transformation by months, or even years.
If you’re interested in learning more about how Business Capability Maps support the strategic change an enterprise requires, please contact us.
Look out for our next post in our Blog Series: Business Capabilities and Capability-Based Planning, where we’ll show you how a Business Capability Map impacts the wider business architecture context. Stay tuned!
