What is a ‘Business Capability’ … And Can It Be Part of a Business Architecture Methodology?Suppose you wanted to make ‘business capabilities’ the centerpiece of a business architecture methodology. Could you go out into the business and find existing ‘business capabilities’ in some form? Would a focus on business capabilities help you better design the business as a whole? My answer is at this point in time is … well … I dunno. I’m looking forward to the new Business Architecture Summit (http://www.buildingbusinesscapability.com/bas/) at the BBC2011 Conference (http://www.buildingbusinesscapability.com/) the first week of November to shed some light on the matter. There’s going to be some real excitement at the Conference this year on that topic! Here’s our current thinking on the term ‘business capability’ … An IT project always delivers a system and/or database and/or rulebase. But let’s say you want to take a business-oriented approach to solving some problem in business operations. The solution will probably involve significant (re-)automation – but not necessarily. The main focus is finding a winning business solution. What would you call what you deliver as an end-result from such an initiative? Unfortunately, there’s no generally accepted business name for such end-results. In our new book coming out this month – Building Business Solutions: Business Analysis with Business Rules (http://www.brsolutions.com/b_building_business_solutions.php) – we call them simply ‘business capabilities’. Any given business capability is likely to include business processes, business rules, business vocabulary, business roles and more. And it should also feature key performance indicators to measure continuing alignment with business goals. So my bottom line is this: I know it when I’ve created a business capability, but I’m not sure I would know one beforehand. I’ll let you know if anything I hear from this post or at the Conference changes my mind. Please jump in!
Tags: business analysis, business architecture, business capability, Capability, enterprise architecture
I have always thought all projects are Business Projects, with or without an IT component. … just that not many projects are without IT anymore. … but they are still Business projects.
Ronald G. Ross
@David – If all projects were business projects, even without IT, then why aren’t IT requirements methodologies used for non-IT projects? You don’t see that very much(!). We believe the same business analysis approach should be used for all business projects. And it should always involve creation of a business strategy at whatever scale appropriate. (Don’t see that very much in IT projects either.) So I guess I disagree … unless you were saying that all projects *should* be treated as business projects(?) … as indeed they should.
As part of business design and business modelling, I often been asked to clarify what I mean by business capability and to differentiate business capabilities and business processes. I have developed the following view based experience, exposure and readings. As with most knowledge in this domain, there is no approved solution, but I find the following helps clarify it for me.
The underlying definition of a capability is the ability for an organization to execute a repeatable pattern of actions (ref: Business Model Ontology, Alexander Osterwalder, 2004). The organization has to have at its disposition a number of capabilities key to delivering its value proposition. A capability is delivered by an organizational structure, through processes and using assets.The assets may be business assets (e.g. patents, expertise, templates) or IT assets or a combination thereof.
Ronald G. Ross
@Michael – Not a bad definition. I assume under ‘assets’ or ‘expertise’ you might find business rules?! Another (but related) nit would be that very few businesses (if any) can operate without reference to contracts, agreements, deals, service level agreements, MOUs, etc., etc. Along with laws, statutes, regulations … and business policies … these things shape end-results as much or more than anything else. And while we’re ‘nitting’, I don’t see anything about business goals in the definition … which means there is no basis for measuring on-going success. So I guess I’ll have to take back some of those nice things I said.
Don’t be too quick to withdraw.
Reference to operating contracts, agreements…
These are included in the business assets. In the same way, networks, soft & hardware are included in the IT assets.
Reference laws and statutes:
Depending on the context of the review they would either be external environmental factors, or if looking at their implementation, I would equate them with highest level of business rules (what I refer to as governance class of business rules, as opposed to operating rules or automated rules).
Context of capabilities, rules, goals, measuring.
Each of these items exists within perspectives of how the business is designed. Business capabilities exist within the context of the business model (the rationale of how an organization creates and delivers value to its customers, and captures a return value). Business rules and business processes exist within the context of business operations (the ‘how’ of the organization design). Goals strategies and targets for performance exist at the business strategy of the organization (the ‘why’ of organization design). The measurement of performance is a function of ‘how’ the organization is doing, thus measurement belongs in the operational perspective.
The items you raise are all components of business design, but don’t exist at the same level of abstraction when analysing the business. They are all integrated and changes at any level can have cascading effects within the business. So, it’s shouldn’t be surprising that you don’t see rules, goals, measurement mentioned when I am discussing the capabilities a business needs to deliver its value propositions to customers / clients.
But then again this is just my opinion, I may be in my own world. Cheers
Ronald G. Ross
@Michael – O.K., withdrawal withdrawn, pending further consideration.
Business processes are put in place to support a certain organizational operating model. These processes are in turn supported by people and technology. Any business capability will be the sum of the efficiency and effectiveness of the combination of process, people and technology. Any weakness in the three aspects will lead to a weakened capability.
These deficiencies will lead to the company being unable to support product sales, and if these inefficiencies are prevelant across the operating model could lead to the demise of the organization. The identification of capability deficiencies should be at the core of any Business Architecture activities.
Ronald G. Ross
@Robert – Let me play devil’s advocate . I would expect to see something about business strategy and business policies in the answer. Does ‘capability’ start below that level? Also, the line of reasoning seems a little circular. What is a ‘capability’. Find a weakness in the sum of process, people and technology. That represents a ‘weakened capability’. A ‘weakened capability’ implies a capability. So what did ‘capability add?