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Business Capability Mapping

Cutter: To Map Alignment, Get Your Business-Capability Ducks in a Row

One of the seemingly perpetual issues that we face is “business-IT alignment.” First, we might ask what that really means. Then, we can look for ways to specify and achieve the alignment. Cutter Senior Consultant and leading business architect William Ulrich defines alignment as, “The state in which business strategies, capabilities, semantics, processes, rules, and governance structures interact in harmony with automated systems and data.” I like this definition because it gets right to the point and lays out the complexity of the alignment problem. So, as an architect, I look for a model that will help handle that complexity, and a key to that model is the concept of a business capability.

Simply put, a business capability describes what an enterprise does, not how it does it. Capabilities provide an organization’s capacity to achieve a desired outcome. For example, an insurance company has many different capabilities, such as claims processing and payroll. Claims processing is core to the business and can add value or differentiate them from other insurers, so they may choose to implement claims processing with a set of business processes, supported by various automated systems. Payroll is a commodity capability that an insurance company may choose to outsource. Either way, the company must be able to provide both to achieve the desired outcome of profitable customer support.

Author Ulrich Homann provides a more formal definition:

A business capability is a particular ability or capacity that a business may possess or exchange to achieve a specific purpose or outcome. A capability describes what the business does (outcomes and service levels) that creates value for customers; for example, pay employee or ship product. A business capability abstracts and encapsulates the people, process/procedures, technology, and information into the essential building blocks needed to facilitate performance improvement and redesign analysis [1].

Capabilities are described in a capability model, which is a hierarchical description of what the business does. We usually talk about Level 1, Level 2, and Level 3 capabilities (or more levels, depending on the complexity of the business), where each level is a decomposition of one or more capabilities at a higher level. Going back to the previous example, claims processing would be Level 1, broken down into claim validation, research, approval, and payment at Level 2, where validation might be broken down into account validation, claimant validation, and coverage validation at Level 3.

At Level 1, I typically order these models according to three categories of capabilities: strategic, value add, and commodity.

Good capability models are relevant to the business and defined in business terms. The importance of a capability can be tied to specific outcomes and metrics. Capabilities models provide a fairly stable view of the business because the fundamental capabilities rarely change, though the processes, applications, or sourcing of them do change over time.

Business processes describe how the business performs, or implements, the given capability, or how capabilities connect to deliver a desired outcome. When we get down to Level 3, the capabilities often map fairly directly to business processes, which may be described by a sequence of tasks, implemented by service-oriented architecture (SOA) business services. So capabilities link to familiar concepts of analysis and design, but provide a level of abstraction that is helpful in managing the complexity of alignment.

Business capabilities provide the link between two complex, disparate environments: the business and IT architectures. The capability view of the business provides the high-level foundation for alignment between these two. Capability models don’t reduce the complexity; rather, they illustrate it in ways that provide new insight to the business. Capability maps link the capabilities up to the strategies, goals, objectives, products, and services they support — down to the process, applications, systems, and sourcing that implement them. Often, this mapping is a complex nest of many-to-many relationships.

A typical usage scenario for capability maps involves multiple systems that are replicated across different lines of business, each of which implements one or more of the same capabilities. The map provides a clear understanding of the redundancy and the business value of the capability that is implemented and allows an enterprise to devise a future state that eliminates the redundancy and implements the capability in alignment with business strategies, goals, and outcomes.

Capability models and mapping represent current best practices in the area of business architecture and are gaining widespread acceptance. Look for a much more in-depth description of them in a future Executive Report.

Source: http://www.cutter.com/content/architecture/fulltext/advisor/2010/ea101027.html

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