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Business capability mapping and business architecture

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SatyaIluri

Business architecture and capabilities mapping captures and encapsulates the essence of a business. Using capabilities enterprises can model their current and desired business capabilities with rich semantics and leverage these as Lego blocks to compose products/ initiatives, overlay them with value streams and processes, and capture requirements to evolve capabilities. Business capability mapping helps companies establish a common language, fosters business/IT alignment, helps reduce redundancy and rework, and aligns execution with strategy.

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Capabilities-based Enterprise Transformation Better business definition leads to optimal technology solutions Private & Confidential
Have you heard this before? Business 80% of what we do is rework because business keeps changing the requirements Each BU wants different changes to the same thing at different times Business is incapable of thinking through the implications of their “small tweaks” All business needs are urgent – we are drowning in unnecessary technical debt Why does this button cost a million dollars to build? We need to go to market in two quarters. Why does a small feature take so long to deliver? How much detail does IT need? We’ve already provided volumes of documents I can’t wait for other groups in the firm to agree to a path forward. Why not build for us and then add on stuff for others? IT © 2013 CAPSTERA. All rights reserved. 2
The track record of technology enablement is not stellar How do IT & Business Executives feel about IT project success?1 % of IT projects Rest 25% 75% Doomed from the start Not surprising when we look at large IT project (>$15M) outcomes2 Average cost overrun Average schedule % of budget overrun % of project timeline 100% 45 45% $ 17% of large IT projects go >200% over budget, threatening the very existence of the company % of respondents 80% Spend over half of their time on rework 78% Feel business and IT are not aligned >80% Feel requirements do not reflect business needs 100% 7% Average benefits % of expectations  100% Every additional year spent on the project increases cost overruns by an average of 15% Underlying causes of IT project failures2 >$15M IT projects Other 13% Execution Unrealistic schedule, 25% reactive planning 13% Skills Unaligned team, lack of skills 29% 20% 1) Survey of 600 business & IT executives by Geneca 2) McKinsey-Oxford study on reference-class forecasting for IT projects (2010 dollars) $$$ 56% Focus Unclear objectives/ business focus Content Shifting requirements, tech complexity
The current operating model of how IT projects are spawned and managed is not sustainable Requirements IT Products / BUs Business Programs / Initiatives IT Projects  Different language spoken by business and IT teams makes alignment impossible  Lack of a big picture view, especially when using the project approach  Frequent changes to business models/strategies lead to requirements churn & obsolete solutions by launch  Lack of traceability of requirements leads to replication  Ambiguity of requirements creates unnecessary churn  Redundancy of capabilities leads to complexity of the IT landscape & rework  Lack of reuse increases complexity, makes costs spiral out of control, and wastes resources © 2013 CAPSTERA. All rights reserved. 4
Capabilities help by decomposing “what” a business does Business Capabilities are the “What” of a business. They are stable and long-term. Business processes are the “How” of a business. They are considered volatile and ephemeral. Illustrative Example of a Capability Map L1: Value Chain Product development Manufacturing Marketing Sales L2: Sales Sales planning & forecasting L3: CRM Territory mgmt. Client segmentation L4: Client segmentation Client contact details mgmt. Demographic segmentation Lead & opportunity mgmt. Client relationship mgmt. (CRM) Quotes, contracts & negotiations Customer Service Order mgmt. General & Administrative Pricing Interaction mgmt. & history L5: Opportunitybased segmentation Profitability analysis Psychographic segmentation Opportunity mapping Customer analytics Activity planning & meetings mgmt. Opportunity-based segmentation Capability maps are:  Stable and intuitive  Hierarchical and logical  Non-redundant yet comprehensive (MECE) © 2013 CAPSTERA. All rights reserved. 5 Cross-sell and up-sell planning Lifetime revenue assessment
Capability mapping defines platforms as a combination of capabilities and helps quickly identify overlaps Business Capabilities are like bricks – They are used to “build” businesses Product 1 IT Project 8 Platforms are a combination of capabilities and their evolution Helps identify & manage overlaps  Avoids redundancy  Fosters reuse Program 4 Capabilities establish a common language between business and IT  Clear and unambiguous  Organized/easy to navigate Platforms can be products, services, projects, or initiatives. All of these business entities are a set of activities the company does either to serve customers or to better the business itself. © 2013 CAPSTERA. All rights reserved. 6
Capability architecture is the glue between the business strategy, platforms, data and processes 2 Strategy 1 Capabilities • Easy to use capability management • Rich semantics • Performance tracking • Capture current functionality • Develop roadmap Data • Define the value chain • Model value streams/stakeholders • Associate process diagrams • Mark up processes • Uses lenses/heatmaps to analyze Strategy Capabilities Processes 5 Processes • Capture & communicate BuRST • Translate the strategy into capabilityspecific goals w/ resource allocation • Identify gaps & benchmark competitive position Requirements 6 Data • Capture & classify business terms • Inform the CDM, LDM, and PDM • Map data to capabilities, value streams, processes & requirements Platforms 3 Platforms (Products/Services, Projects/Programs/Initiatives) • Use capabilities to define platforms • Align capability and platform goals • Easily identify & manage overlaps 4 Requirements XML interface with related applications • Efficiently capture platform requirements • Quickly rationalize & prioritize by capability • Translate into capability roadmaps with traceability
Capstera enables better business definition to help deliver optimal technology solutions and provides benefits for various stakeholders Executive Perspective IT Perspective • • • • Aligned organization Execution linked to strategy Stable view of business Helps assess strengths & weaknesses to inform the strategy • Manages overlaps/synergies • Reduces IT complexity • Fosters reuse of assets • Aligns IT with business strategy and goals • Reduces churn due to common, MECE and simple language Financial Perspective Product Perspective • Lower friction and less complexity reduces costs • Agility and responsiveness increases enterprise value • Long-term value of project funding easier to see, set, and measure • Building once and reusing often speeds time-to-market • Product segmentation and proliferation eminently feasible © 2013 CAPSTERA. All rights reserved. 8
Let’s Get Started © 2013 CAPSTERA. All rights reserved. 9

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Business capability mapping and business architecture

  • 1. Capabilities-based Enterprise Transformation Better business definition leads to optimal technology solutions Private & Confidential
  • 2. Have you heard this before? Business 80% of what we do is rework because business keeps changing the requirements Each BU wants different changes to the same thing at different times Business is incapable of thinking through the implications of their “small tweaks” All business needs are urgent – we are drowning in unnecessary technical debt Why does this button cost a million dollars to build? We need to go to market in two quarters. Why does a small feature take so long to deliver? How much detail does IT need? We’ve already provided volumes of documents I can’t wait for other groups in the firm to agree to a path forward. Why not build for us and then add on stuff for others? IT © 2013 CAPSTERA. All rights reserved. 2
  • 3. The track record of technology enablement is not stellar How do IT & Business Executives feel about IT project success?1 % of IT projects Rest 25% 75% Doomed from the start Not surprising when we look at large IT project (>$15M) outcomes2 Average cost overrun Average schedule % of budget overrun % of project timeline 100% 45 45% $ 17% of large IT projects go >200% over budget, threatening the very existence of the company % of respondents 80% Spend over half of their time on rework 78% Feel business and IT are not aligned >80% Feel requirements do not reflect business needs 100% 7% Average benefits % of expectations  100% Every additional year spent on the project increases cost overruns by an average of 15% Underlying causes of IT project failures2 >$15M IT projects Other 13% Execution Unrealistic schedule, 25% reactive planning 13% Skills Unaligned team, lack of skills 29% 20% 1) Survey of 600 business & IT executives by Geneca 2) McKinsey-Oxford study on reference-class forecasting for IT projects (2010 dollars) $$$ 56% Focus Unclear objectives/ business focus Content Shifting requirements, tech complexity
  • 4. The current operating model of how IT projects are spawned and managed is not sustainable Requirements IT Products / BUs Business Programs / Initiatives IT Projects  Different language spoken by business and IT teams makes alignment impossible  Lack of a big picture view, especially when using the project approach  Frequent changes to business models/strategies lead to requirements churn & obsolete solutions by launch  Lack of traceability of requirements leads to replication  Ambiguity of requirements creates unnecessary churn  Redundancy of capabilities leads to complexity of the IT landscape & rework  Lack of reuse increases complexity, makes costs spiral out of control, and wastes resources © 2013 CAPSTERA. All rights reserved. 4
  • 5. Capabilities help by decomposing “what” a business does Business Capabilities are the “What” of a business. They are stable and long-term. Business processes are the “How” of a business. They are considered volatile and ephemeral. Illustrative Example of a Capability Map L1: Value Chain Product development Manufacturing Marketing Sales L2: Sales Sales planning & forecasting L3: CRM Territory mgmt. Client segmentation L4: Client segmentation Client contact details mgmt. Demographic segmentation Lead & opportunity mgmt. Client relationship mgmt. (CRM) Quotes, contracts & negotiations Customer Service Order mgmt. General & Administrative Pricing Interaction mgmt. & history L5: Opportunitybased segmentation Profitability analysis Psychographic segmentation Opportunity mapping Customer analytics Activity planning & meetings mgmt. Opportunity-based segmentation Capability maps are:  Stable and intuitive  Hierarchical and logical  Non-redundant yet comprehensive (MECE) © 2013 CAPSTERA. All rights reserved. 5 Cross-sell and up-sell planning Lifetime revenue assessment
  • 6. Capability mapping defines platforms as a combination of capabilities and helps quickly identify overlaps Business Capabilities are like bricks – They are used to “build” businesses Product 1 IT Project 8 Platforms are a combination of capabilities and their evolution Helps identify & manage overlaps  Avoids redundancy  Fosters reuse Program 4 Capabilities establish a common language between business and IT  Clear and unambiguous  Organized/easy to navigate Platforms can be products, services, projects, or initiatives. All of these business entities are a set of activities the company does either to serve customers or to better the business itself. © 2013 CAPSTERA. All rights reserved. 6
  • 7. Capability architecture is the glue between the business strategy, platforms, data and processes 2 Strategy 1 Capabilities • Easy to use capability management • Rich semantics • Performance tracking • Capture current functionality • Develop roadmap Data • Define the value chain • Model value streams/stakeholders • Associate process diagrams • Mark up processes • Uses lenses/heatmaps to analyze Strategy Capabilities Processes 5 Processes • Capture & communicate BuRST • Translate the strategy into capabilityspecific goals w/ resource allocation • Identify gaps & benchmark competitive position Requirements 6 Data • Capture & classify business terms • Inform the CDM, LDM, and PDM • Map data to capabilities, value streams, processes & requirements Platforms 3 Platforms (Products/Services, Projects/Programs/Initiatives) • Use capabilities to define platforms • Align capability and platform goals • Easily identify & manage overlaps 4 Requirements XML interface with related applications • Efficiently capture platform requirements • Quickly rationalize & prioritize by capability • Translate into capability roadmaps with traceability
  • 8. Capstera enables better business definition to help deliver optimal technology solutions and provides benefits for various stakeholders Executive Perspective IT Perspective • • • • Aligned organization Execution linked to strategy Stable view of business Helps assess strengths & weaknesses to inform the strategy • Manages overlaps/synergies • Reduces IT complexity • Fosters reuse of assets • Aligns IT with business strategy and goals • Reduces churn due to common, MECE and simple language Financial Perspective Product Perspective • Lower friction and less complexity reduces costs • Agility and responsiveness increases enterprise value • Long-term value of project funding easier to see, set, and measure • Building once and reusing often speeds time-to-market • Product segmentation and proliferation eminently feasible © 2013 CAPSTERA. All rights reserved. 8
  • 9. Let’s Get Started © 2013 CAPSTERA. All rights reserved. 9