For Enterprise Architecture Professionals

January 14, 2010

The Anatomy Of A Capability Map

by Jeff scott with Alex Cullen and Mimi An

ExECUT I v E S U M MA Ry
Capability maps provide the backbone of most business architecture models. On the surface, capability maps seem straightforward and uncomplicated, but in fact much thought goes into creating a model that is both simple in design and meaningful to its users. Though many organizations are creating capability maps, they are still a relatively new tool. Standard practices havent even begun to emerge. Organizations see the value of using capability maps to improve business and IT alignment and are quickly moving ahead, experimenting with different models to find the style that works best for them. Capability Map standards are still evolving Capability maps are quickly becoming the core component of business architecture initiatives, yet there are no industry standard models or frameworks to guide business architects in capability map development. Consulting groups, government agencies, and others have developed capability models that work within their own specific contexts for their specific purposes, but these often do not translate well in different environments. Most business architects are currently synthesizing what they know about these models to form something that works for them. The bad news is that it will be quite some time before standard practices emerge. The good news is that there is a lot of experimentation going on, and new ideas are surfacing every day. organizational Capabilities Can be desCribed in a tHree-level Model Forrester has talked with dozens of consulting companies and client business architects about how they construct and use capability maps. From those discussions, we have developed a three-level capability map model that clearly articulates an organizations capabilities. Organizations can add more detail if necessary, but, in general, simple models work better for communicating with the business than do more complex ones. The high-level organizing model anchors the core capability map on one side, and the detailed attribute descriptors anchor it on the other. Use one of three approaches to organize your Capability Map Business architects and consultants in complex organizations often define a hundred or more business capabilities. Less-complex organizations might identify a few dozen. In both cases, it is important to have some organizing model that helps to simplify the overall picture and provide a high-level focal point for future conversations. Architects often begin their capability map development by using their organizing model as a way to decompose the effort into smaller chunks that make it easier to identify the capabilities. The most common organizing models are:
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The Anatomy Of A Capability Map

For Enterprise Architecture Professionals

Organizational structure. Small to medium-sized companies as well as larger companies with a

simple organizational structure find organizing around the companys functional organizational chart to be the most straightforward approach. For example, a manufacturing company might organize its capabilities into materials management, manufacturing, marketing and sales, customer service, and corporate management. This approach also works well when developing a capability map for a single business unit such as IT.

Value streams. Companies with complex organizational structure or operating models, such as

ones with multiple business units, find organizing around value streams to be the best approach (see Figure 1). This approach also works well in less-complex organizations that are highly process focused. Value streams vary by industry, but some of the more common value streams are prospect to customer, order to cash, request to service, concept to product, and recruitment to retirement.

Services to clients. Government agencies and nonprofits as well as some service companies

organize capabilities around their framework of service delivery. The US Governments Business Reference Architecture is a good example of this approach.1 This model uses four categories: service type, mode of delivery, support services, and resource management. The services to clients model may be a good choice in situations when there is a relatively uniform target customer base, with multiple organizational entities delivering products and services to this customer base.

Figure 1 value Streams Provide A Logical Organization Of Business Capabilities

Prospect to customer

Concept to product

Request to service

Supplier to stock

Manufacturing to distribution

Order to cash

Corporate management

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Source: Forrester Research, Inc.

January 14, 2010

2010, Forrester Research, Inc. Reproduction Prohibited

The Anatomy Of A Capability Map

For Enterprise Architecture Professionals

the Core Capability Map Granularity is the key factor when developing the core capability map. There is no right answer. The major challenge is identifying capabilities that resonate with business leaders across the organization. If the map holds too little detail, stakeholders wont be able to see their connection to the model; if it holds too much detail, stakeholders will only understand the part that pertains to them. The capability map puts individual capabilities in relationship with each other, enabling business leaders and IT to see the larger context for these capabilities for example, the relationship between a materials management capability and an inventory control one. Good capability maps adhere to five basic tenets: They represent stable business functions, they identify unique business functions, they are abstracted from organizational and process models, they allow extension to specific implementations, and they capture the business interest.2 Once identified, capabilities populate the organizing model (see Figure 2).
Figure 2 Capabilities Flesh Out The Model
Concept to product Rapid Idea Engineering Packaging design sourcing prototyping Supplier to stock B-to-B integration Quality control

Prospect to customer Market analytics Market shaping Sales

Channel placement Materials mgmt.

Request to service Relationship mgmt. Incident mgmt. Product education Repair services

Manufacturing to distribution Scheduling Fabrication Applied Line Inventory Distribution robotics mgmt. control logistics Order to cash Order mgmt. Order fulllment

Payments

Billing

Corporate management Human Finance resources

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Facilities mgmt.

Contract mgmt.

Strategic planning

IT

Source: Forrester Research, Inc.

attribute descriptors provide Capability Map details Once an organization has identified and organized capabilities, it can describe them in more detail through a common set of attributes that provide a high-level view of how the capability operates.3 The most common attributes are people, process, and technology. Forrester recommends extending the descriptor attributes to include information and operational metrics. A complete capability description should include (see Figure 3):

January 14, 2010

2010, Forrester Research, Inc. Reproduction Prohibited

The Anatomy Of A Capability Map

For Enterprise Architecture Professionals

Figure 3 Capability Details Enhance Understanding

Marketing Description: The marketing capability includes all aspects of identifying new markets to enter, sales approaches, competitive positioning, and brand management. It also includes the development and management of the companys overall marketing and sales approach. Supporting human resources: Market strategists Market analysts Statisticians Creative content developers Media buyers Supporting information: External market research data Current client proles Consumer trend reports Competitor data
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High-level processes: Market segmentation Market targeting Competitive analysis Brand management Contract management

Supporting technologies: Market survey tools Analytical tools Social media Traditional media

Operational metrics: New customer acquisition rates Percent of wallet growth Current customer loss rates

Source: Forrester Research, Inc.

Capability name. Each capability needs a short name that most capability map users

will understand easily. Accuracy is not as important as recognition. For example vendor management might be more commonly understood than the actual name of the vendor management function: contract management. The capability name is what shows up on the capability map.

Short description. Each capability also needs a short description that provides just enough

detail to differentiate the capability from all others. Descriptions are typically one or two sentences and are rarely longer than a paragraph. Many organizations have a hundred or more capabilities. Overly detailed descriptions can quickly turn off busy business managers.

Supporting human resources. Some capabilities can easily be defined by the organizations that

support them. This is often the case with corporate functions such as human resources, finance, legal, etc. However, many capabilities are abstracted away from the organizational structure; in these cases, the capabilities supporting human resources must be described by skill or function. For example, statisticians, epidemiologists, and process development experts all have a role in the quality control capability.

High-level processes. Some processes are contained within the scope of a single capability

and are easy to identify and define. Others span multiple capabilities and are harder to specify. Processes are described at a high level in business terms for example, market analysis. Many organizations have only expressed their processes definitions at the detailed workflow level, making it difficult to connect processes to capabilities.
2010, Forrester Research, Inc. Reproduction Prohibited

January 14, 2010

The Anatomy Of A Capability Map

For Enterprise Architecture Professionals

Supporting technology. Many capabilities are supported by more than information technology.
For example, robotics supports manufacturing lines, heavy equipment supports construction, and transportation technology is typically one of logistics requirements. Capability maps describe information technologies at a functional level, such as business intelligence or wireless devices. Application-level descriptors are too low level for this level of discussion.

Supporting information. Information is described by type of data employed, not the actual

sources of the data. For example, the sales capability might use competitive intelligence, market trends, and market segmentation information. The actual data stores, such as the customer information file that houses much of the information used, would not be included here, although they may be discussed in appendices.

Operational metrics. Capability metrics are the indicators that the capability is functioning at

the necessary level. For example, a materials management capability might have operational metrics reflecting just-in-time manufacturing processes. Capability metrics are often indicators rather than direct measures, as they reflect the effectiveness of processes that span multiple capabilities. Metrics may or may not be currently measured.

R E C O M M E n D AT I O n S

start witH a siMple Capability Map, and develop it as yoU learn

It is difficult to get a capability map right without significant input from senior business leaders. Go for the gold if you have a strong team of business leaders. Otherwise, take your time. Build your map thoughtfully through a number of iterations, and schedule time for reflection and business validation between iterations. If it isnt working, dont be hesitant to scrap your work and start over. Much of the value of capability maps is gained via the thought process you go through while creating them. While building your model, ensure that you:

separate capability map descriptions from the analysis. Describing capability maps and
using them are different activities. Dont confuse the two. The description should not include value-based statements, such as capability maturity, or items that change over short periods of time, such as costs.

build a model that resonates with the intended audience. If your model isnt generating
interest, change it. Remember, no interest equals no value.

build vertical slices iteratively. Dont use a waterfall approach. Take one value stream or
organizational function, and create all three views for that slice. validate these with your audience, revise, and then build the next slice.

Keep it simple. You can enhance and expand basic capability maps in many ways. Keep the
basic model clean and simple. Too much detail leads to stakeholder frustration and apathy, while too little detail leads to stakeholder curiosity and interest (show me more).
January 14, 2010 2010, Forrester Research, Inc. Reproduction Prohibited

The Anatomy Of A Capability Map

For Enterprise Architecture Professionals

endnotes
1

The Business Reference Model provides an organized, hierarchical construct for describing the day-to-day business operations of the federal government. While many models exist for describing organizations org charts, location maps, etc. this model presents the business using a functionally driven approach. Source: www.whitehouse.gov/omb/assets/fea_docs/FEA_CRM_v23_Final_Oct_2007_Revised.pdf. Capability models provide a stable overarching view of what is important to business leaders that can be tied to business and IT initiatives. These relatively simple views of the business provide the foundation for complex discussions about strategy and resource allocation. See the July 6, 2009, Business Capabilities Provide The Rosetta Stone For Business-IT Alignment report. Create capability details the business cares about. Define each capability with details that clarify its purpose and help differentiate it from other capabilities. Only add details that add business value. Capabilities can be linked to more-specific IT information to create the details IT leaders want to see. See the July 6, 2009, Business Capabilities Provide The Rosetta Stone For Business-IT Alignment report.

Forrester Research, Inc. (Nasdaq: FORR) is an independent research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. Forrester works with professionals in 20 key roles at major companies providing proprietary research, customer insight, consulting, events, and peer-to-peer executive programs. For more than 26 years, Forrester has been making IT, marketing, and technology industry leaders successful every day. For more information, visit www.forrester.com. 2010, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. To purchase reprints of this document, please email clientsupport@forrester.com. For additional information, go to www.forrester.com. 55972