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For Enterprise Architecture Professionals

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For Enterprise Architecture Professionals January 14, 2010 The Anatomy Of A Capability Map by Jeff scott

January 14, 2010

The Anatomy Of A Capability Map

by Jeff scott with Alex Cullen and Mimi An

ExECUTIvE SUMMARy

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 haven’t 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 organization’s 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:

The Anatomy Of A Capability Map

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· Organizational structure. Small to medium-sized companies as well as larger companies with a simple organizational structure find organizing around the company’s 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 Government’s 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 Concept to product Request to to service customer Supplier to stock Manufacturing to distribution
Prospect
Concept to product
Request
to
to service
customer
Supplier to stock
Manufacturing to distribution
Order to cash

Corporate management

55972

Source: Forrester Research, Inc.

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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 won’t 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 Prospect Request Idea Rapid Packaging Channel to Engineering to service sourcing prototyping
Concept to product
Prospect
Request
Idea
Rapid
Packaging
Channel
to
Engineering
to service
sourcing
prototyping
design
placement
customer
Relation-
Supplier to stock
ship
Market
B-to-B
Quality
Materials
mgmt.
analytics
integration
control
mgmt.
Incident
mgmt.
Manufacturing to distribution
Market
shaping
Applied
Line
Inventory
Distribution
Scheduling Fabrication
Product
robotics
mgmt.
control
logistics
education
Order to cash
Sales
Repair
Order
Order
services
Payments
Billing
mgmt.
fulfillment
Corporate management
Human
Facilities
Contract
Strategic
Finance
IT
resources
mgmt.
mgmt.
planning

55972

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):

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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 company’s overall marketing and sales approach.

Supporting human resources:

High-level processes:

Supporting technologies:

• Market strategists

• Market segmentation

• Market survey tools

• Market analysts

• Market targeting

• Analytical tools

• Statisticians

• Competitive analysis

• Social media

• Creative content developers

• Brand management

Traditional media

• Media buyers

• Contract management

Supporting information:

Operational metrics:

• External market research data

• New customer acquisition rates

• Current client profiles

Percent of wallet growth

• Consumer trend reports

• Current customer loss rates

• Competitor data

55972

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.

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· 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 ECOMME n DATIO 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 isn’t working, don’t 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. Don’t 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 isn’t generating interest, change it. Remember, no interest equals no value.

· build vertical slices iteratively. Don’t 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”).

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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.

2 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.

3 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.