Why Business Capabilities are key in Business Architecture
Aug 4, 2021
Editor’s Note: Business Capabilities are a cornerstone of Business Architecture, and understanding how to implement them is key to success. To guide you through Capability-Based Planning, we’ve created an ultimate eBook, filled with expert insights, strategies, and practical advice to ensure you’re on the right track. This blog post is an excerpt from that eBook.
Many organizations struggle to make optimal strategic decisions because they do not understand their enterprise’s ‘big picture’. They often face challenges like difficulty in assessing global performance rather than the performance of local businesses and applications. Businesses often find it difficult to get an enterprise-wide perspective on business performance. An enterprise comprises people, processes, information, and technology (IT and operational), but it is often unclear how these assets contribute to business goals. This lack of alignment makes it difficult to assess the organization’s performance against the business’s strategic goals at a global level.
Budgets are also not unlimited, and multiple initiatives compete for those budgets. Prioritizing investments is a complex task. Portfolios are often crowded with initiatives competing for limited budgets, so how do we decide which initiatives will contribute the most to strategic goals? All too often, portfolio management is ‘decibel-driven,’ where those with the loudest voices will get their projects approved.
Additionally, individual project outcomes don’t always support common business goals. Many change initiatives are taking place simultaneously, often executed using agile approaches, mostly in a fairly independent way. How do we ensure these initiatives stay aligned with the business’s goals?
As an architect or designer, you will, of course, know that any good design starts with the why, the purpose, and the desired effects of what you design. In designing enterprises, this purpose is captured in things like a mission statement and a business model, in terms of, e.g., the customers it serves and the value it offers them.
Next, you look at what your enterprise can or must do to achieve those effects. And only then will you design how you are going to do that. You don’t want to get bogged down in organizational or technical details when trying to understand what an enterprise does for its customers.
Designing this ‘what’ of enterprises is where the discipline of business architecture comes in. Business architecture has several important contributions to make:
As mentioned, you need to understand and design what an enterprise can do to fulfill its mission before diving into the organization structure, business processes, IT systems, and other implementation aspects. This provides the ‘big picture’ needed to deal with the challenges above: First, get away from organizational politics and technical limitations and look at the essence of what is needed.
This is where the concept of business capability comes in. Business capabilities describe an enterprise’s abilities, i.e., what it is able to do, independent from implementation. For example, a bank does pretty much the same things today as it did 100 years ago. So you could say that the set of business capabilities is pretty much still the same. But how they do it is very different today, especially in the last few decades, driven by technological advances.
Moreover, Business Capabilities can be used to describe what the enterprise does today and assist in designing the capabilities it needs to have tomorrow. You might even discover new capabilities you didn’t even know your enterprise had. Maturing existing or even building new capabilities is where the concept of Capability-based Planning comes in. It provides a structured and balanced approach to supporting an organization’s strategic planning cycle.
This differentiates business capabilities from concepts like ‘business function’ which is more focused on day-to-day operations, on what the enterprise does rather than what the enterprise can do (or can do better); what it can do of course includes what it does today, but it also describes its potential. This is what makes it especially relevant in strategic discussions.
Business Capabilities aren’t tied to specific organizational departments, functions, or roles. Rather, what gives you a capability is the combination of various people, processes, technology, information, and other resources from across the entire enterprise.
This also makes it a notion that is very much focused on collaboration. Together, different parts of the organization provide your enterprise with its capabilities, and this collaboration may even stretch beyond the organization’s borders, including partners in its ecosystem.
If you want any further information on Capability-based Planning, please don’t hesitate to contact us.
Managing Consultant & Chief Technology Evangelist at Bizzdesign
Marc contributes to Bizzdesign’s vision, market development, consulting, and coaching on digital business design and enterprise architecture. He also spread the word about the Open Group’s ArchiMate® standard for enterprise architecture modeling, which he has been managing the development of. His expertise and interests range from enterprise and IT architecture to business process management.
Pre-Sales Consultant at Bizzdesign
Sven has experience in Enterprise Architecture, Business Process Modelling, and other business engineering disciplines. He has worked with various international organizations on use cases, including Capability-based Planning, Risk and Security, and IT architecture, in various projects. He has extensive knowledge of structured methods and tools, including ArchiMate, BPMN, TOGAF, etc.
