Creating business value with Business Capabilities

Guest post by our partner LeanIX

Last year at the LeanIX EA Connect Day 2017, ITARICON moderated the world café station “Integration Architecture”. One of the main discussions we notified where that integration challenges are taking focus on creating concrete business value and that Enterprise Architects need to think more in a solution oriented way in order to make the business value factor. At LeanIX, we have seen this trend not only regarding integration architecture, but in general in IT management.

For an Enterprise Architect to ensure business value, one of the primary concepts he should address are Business Capabilities.
A Business Capability is the expression or the articulation of the capacity, materials, and expertise an organization needs in order to perform core functions. Enterprise Architects use Business Capabilities to illustrate the over-arching needs of the business in order to better strategize IT solutions that meet those business needs.

How business capabilities can help create business value

Business Capabilities establish a common language, providing an actionable framework for business and IT. From the overview of the Business Capabilities, IT and business leaders are able to communicate across the organization tasks that should be fulfilled, devoid of business and technical lingo.

Business Capabilities can help to uncover redundancies – saving potentials often range from 15 to 20%. Capability-driven thinking helps organizations to understand and mitigate technology risks better, saving an upwards of hundreds of thousands of euros – which is the is the cost of a single IT incident.

In this digital age, progressive companies are looking for ways to manage risk, not to avoid it altogether. Enterprise Architecture can directly contribute to a beneficial IT roadmap by managing the risks through defining relevant business capabilities; defining the scope of retirements and new applications; ensuring the proper interoperability of applications; driving and tracking transformation progress in projects, eliminating security risks; and establishing relevant data for future business decisions.

With the help of business capabilities and Enterprise Architecture, EAs are able to:

  • Identify conflicts in requirements between different projects regarding the same applications
  • Plan and track application transformation (phase-ins of new applications and retirements of legacy applications)
  • Build future scenarios for the application landscape
  • Evaluate technology risk for applications and business capabilities based on the underlying IT components
  • Identify the IT components to be replaced in order to mitigate security risks.

To be able to do this, Enterprise Architects should create a business capability map, which provides the basis for creating a clear business and IT alignment. Business capability maps help to define a list of priorities for application support, draw a common language between business and IT, and relate requirements to existing business capabilities.

How to create a business capability map

To create a busines capability map, one must understand business needs. In many enterprises, IT is not aligned with business, and if IT does not know where business is heading, then it is impossible to support them in an efficient way. This is why the first step should be getting involved with colleagues who define the company’s strategy, go to corporate development meetings and review any goal documents available.

As a second step, one must define the business capabilities. For this, LeanIX has created a template to map business capabilities along with some best practices to do this.

Figure 1: LeanIX view of a Business Capability Map

After having mapped your business capabilities, one must assess them because not all business capabilities are equal in terms of value for the customer and financial impact. Remember to define a criterion for this assessment. That way, you can use the same criteria for later analysis and planning.

The final step comes after you have done this. It is time to link business capabilities to applications. Every application in your company should have a specific business purpose, and thus, must be linkable to a business capability. This is also why applications are the perfect link between IT and business.

Once this has been created, you will now have a clean view of how business and IT work together. Now is the time to take this to business stakeholders and identify where there is potential for improvement and where redundancies might be found. Some good viewpoints to share are for example:

A view of the technology risk of applications: In the example below the Business Capability „Customer Relationship Management,“ is being supported by 14 applications. We see that an overwhelming majority of the underlying technologies are at risk. This may be the reason why the customer success team is currently having so many problems lately and business has been challenging.

Figure 2: LeanIX view of the technology risk of applications supporting a certain Business Capability.

Another interesting view is the functional fit of all applications supporting your Business Capabilities. Below we see that many of the applications being used are unreasonable for the company. We can see that in the “Bonus Card,” application is not reasonable at all. Why is customer relationship management then even using it? Is it perhaps time to update the application? Or rather, replace it with the “Bonus Card Watch,” application?

Figure 3: LeanIX view of the application matrix.

These are just a few viewpoints that one can show stakeholders to align business and IT. For more information, don’t hesitate to contact us at LeanIX or ITARICON.

Sebastian Gottwald

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