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Everything you need to know about business capabilities

At a time when the digitization of the business has accelerated, when every business project is an IT project, there’s pressure on IT to enable and support business transformation. By defining what the organization does, business capabilities are a key concept that allows business and IT teams to speak the same language.

A Business capability is defined as a representation of an organization's need

Business capabilities are the representation of an organization's need and what it does and can do. They depict the core functions of the business and break down the business into building blocks that are laid out into business capability maps. If needed, they can be broken down into sub-capabilities.

Their regular assessment will help enterprise architects or business architects to identify and prioritize the corresponding IT initiatives with business needs. Of course, as the depiction of an organization, business capabilities are not static and evolve, some might even become irrelevant and been replaced or consolidated into another capability. They can be assessed based on various parameters including efficiency, priority, and complexity.

What is a business capability example?

Take a car rental company for example, in this case, a good example of business capability might be an "online booking" capability. This competence is supported by one or multiple applications, like the car rental mobile app. Another example would be a "mortgage loan" capability for a bank supported by an in-house application that computes loans.

The example below shows the capability map of an airport, including applications. Each application has been assessed using color-coded icons to better understand how business capabilities are supported by applications.

Business capability map with applications

Business capability mapping helps IT leaders shape the IT architecture to business needs

Business capabilities are an essential concept that enables enterprise architects to link IT operations to the business. Through business capability planning, organizations can figure out how to outline strategic plans with IT investments and prioritize projects. Business Capability mapping allows companies to see what is being done to reach their objectives.

To help shape the map of an organization, there is a list of concepts that "business people" connect to:

- Business objectives

From the business side, capabilities connect objectives as defined by the business. By doing so, enterprise architects ensure that the company’s objectives are well supported by capabilities, and reciprocally that a business capability is not unreliable to the needs of the organization.

- Customer Experience

One can identify the business capabilities necessary to support the desired customer experience. Customer journey maps describe the customer experience, designing the buying cycle (research, evaluate, purchase), and the various channels available to a customer such as a company website, a mobile app, or a store. During their journey, customers follow various touchpoints to interact with the organization. Each touchpoint is linked to business capabilities providing an outside-in perspective regarding the business capabilities needed to support the customer experience.

Map customer experience in customer journey maps

- Value Streams

In today’s world, especially in Agile environments, a customer-centric approach is critical to ensure that released products deliver value and match what the customers want. By describing the stages needed to deliver value to customers, value streams translate to IT customers' needs thanks to business capabilities. Each stage is enabled by business capabilities so that enterprise architects can identify the required capabilities as well as the missing ones, and plan the related IT projects.

Value stream with supporting business capabilities

To map an organization, here is a list of concepts that the "IT side" can link to business capabilities:

- Applications

As we mentioned previously in our examples, business capabilities are supported by one or multiple applications. The link between applications and business capabilities enables enterprise architects to understand the business value of applications and whether an application supports a critical capability.

- Projects

To transform or create new business capabilities, organizations need to build the corresponding strategic projects and link them to business capabilities. By doing so, enterprise architects understand how projects impact business capabilities and their related applications

Business capabilities along with projects displayed in a business capability map

- Business Processes

At last, the organizational view with business process mapping brings the perspective on the different tasks that people in the organization must perform to support business capabilities.

The importance of business capabilities and business capability mapping

Strategic planning

Business capabilities are the foundation for strategic planning. The strategic plan of an organization provides long-term visibility on a company's direction and includes action plans and resources to achieve these goals. By associating strategy with capabilities, an enterprise architect will be able to view the impact of business projects on their application and the IT landscape. It will help them plan the future architectures required to support these business capabilities

Strategic roadmap with supporting business capabilities

Customer experience in Agile developments.

Agile enterprises are organized around the customer. Even though product owners translate business requirements into user stories and hence software developments, they don’t necessarily have the full picture of the value delivered to the customer or the customer experience. Through the use of value streams, enterprise architects can formalize the delivered value. They also use customer journey maps to describe the desired customer experience. By then connecting touchpoints and stages of the value streams to business capabilities, enterprise architects plan the required business capabilities. But most importantly, they can link these business capabilities to Epics and user stories, so that software developments are directly tied to customer experience!

Application Rationalization

Very often, organizations have accumulated many applications and other IT assets due to company growth or past mergers and acquisitions. Many IT organizations often fail to rationalize their application portfolio because they only have a cost perspective. Indeed, organizations won't eliminate a business-critical application simply because it costs too much!

By linking applications to business capabilities, IT organizations have a clear view of how an application supports the business, whether the application supports a critical business capability or on the contrary a minor capability. The use of business capabilities also helps identify redundant applications especially in the case of mergers and acquisitions where the new company gained applications from the acquired company.

Technology Risk Management

In EA repositories, underlying technology components supporting applications, such as databases or software frameworks, are linked to applications that are themselves linked to business capabilities and business objectives. By monitoring the end-of-life of these technology components, enterprise architects can easily understand the impact of an obsolete technology component to strategic objectives. This is also the case for an application that would use a technology that has been prohibited, as set by the company policy. Reciprocally, enterprise architects can monitor critical business capabilities and view if they are not being put at risk due to obsolete or prohibited technology.

Benefits of business capabilities

Increased visibility of the business value of an IT asset

Capabilities are a great way to organize IT assets from a business standpoint. CMDBs are of course an important component when managing IT assets, but they are often difficult to maintain and do not provide visibility into the business value of IT assets. Business capabilities give an immediate understanding of the value for the business by linking IT assets to capabilities. They enable IT departments to focus on critical assets. It is also a communication tool that offers a common language between the business and IT.

Reduce IT Costs

By mapping applications to business capabilities, redundancies are easier to analyze to reduce costs. If two applications support the same business capability, strong chances are that these applications provide the same functionalities or functional overlaps exist. The addition of other information such as application cost, application end-of-life, or technology obsolescence also helps improve decision-making to remove or modernize an application.

Greater flexibility

When managing IT projects, IT departments are often swamped with existing projects or assets. They don’t have a clear view of how new projects or applications fit into their existing IT systems - What will be the impact of the new project on the IT landscape? Is it redundant with another project or application? Thanks to business capabilities, IT departments increase their ability to embrace new projects by streamlining the IT landscape. They can also focus their resources on the projects that are critical to the business and work on what matters the most.

Improved IT investments

Business capabilities are key to link strategy to execution. Business capabilities are indeed planned in time, with strategic objectives forming the strategic roadmap. Based on this roadmap, IT leaders determine the related IT projects, the applications, and the impacted architecture. By aligning projects with business needs, IT departments ensure that resources are spent on the right projects and that investments are better planned through greater visibility into upcoming projects. It is also easier to reprioritize projects as strategic objectives change especially in agile environments.

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(See the full article here: MEGA)


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