Business Architecture Visualising Value Delivery

http://brettarthur.hubpages.com/hub/Business-Architecture-Visualising-Value-Delivery

Capabilities

A business capability is an abstraction of a business function that describeswhat is being done by the business to achieve a specific purpose or outcome.

Conceptually, a capability is a “black box” view of a business function^[2], and each capability encapsulates the people, processes and IT platforms that are needed to realise the desired outcome, and accomplish the stated purpose.

By observing the capability as a black box we can evaluate the performance in terms of known inputs and expected outputs, and we can make an assessment of how effective the capability is in terms of its stated purpose.

The description of a business function, or capability, brought into view by examining its externally visible behaviour, is tremendously stable. In contrast, observing how a business function is delivered, seen by taking an internal view of the enterprise reveals the heady pace of change in most businesses today.

The analysis of business function, leading to the identification of capability, must ensure that each identified capability is unique. Discovering similar capabilities is a signal for further investigation. Quite likely, your analysis has uncovered duplication and redundancy.

Leveraging the stability of capabilities, we organise the capabilities our analysis has revealed into a change-resilient model of the enterprise; our enterprise blueprint. When necessary, further analysis to decompose complex capabilities into simpler, smaller, and more purpose-specific capabilities can be performed. Only decompose when necessary, and no sooner.

Using the model we can also investigate how the identified capabilities relate to each other. The connections between capabilities are defined by the relationships that the capabilities have with one and other. Capabilities that are heavily interconnected with other capabilities may prove difficult to change, and the business architect can use this to highlight areas that pose a high risk in the face of change.

The Business Architect uses the capability model as their blueprint for understanding the business-at-rest.

Using the Capability Model

The diagram below presents a generic, level-1 capability model that the Business Architecture Body of Knowledge^[4] uses as an example to support its discussion on capabilities. The capabilities have been organised into three categories according to the intent of the capability. These categories are:

• Strategic or Direction Setting;
• Core or Customer Facing;
• Supporting.

By stratifying the capabilities according to their intent we are better able to communicate with our stakeholders. The concepts we wish to convey using the model are simply stated, and require little additional explanation. Meaningful discussions can be initiated quickly.

During our analysis, while we are building the model, we will decompose these level-1 capabilities into their constituent elements. We will only decompose capabilities as necessary, and when necessary. There is a danger of getting bogged down with unnecessary over-analysing.

Figure 1: Example Level-1 Business Capability Model

Once we have built our capability model we can mine it for information using heat mapping, and other techniques. These methods allow us to clearly identify and better prioritise IT initiatives (and will be the subject of a subsequent article). Breaking free of the how-trap^[5] takes practitioners beyond mere process improvement and refinement, and the what-centric view encourages decision-makers to focus resources on those areas of their business that create the most value.

For example, analysis can highlight capabilities that hold high-value, but are performing poorly. These underperformers will naturally attract resources and investment over better performing, or less valuable capabilities.

In this way the capability model becomes pivotal to achieving strong alignment between Business and IT.

Value Streams

James Martin^[6] defines the value stream as:

A value stream is an end-to-end collection of activities that create a result for a “customer” who may be the ultimate customer or an internal “end user” of the value stream. The value stream has a clear goal: to satisfy (or, better, to delight) the customer.

Where the capability model provides a view of the enterprise at rest, the value stream demonstrates how business capabilities are orchestrated to deliver customer value, and value streams^[7] allow you to visualise your business in motion^[8].

Customers have three basic requirements: on-time delivery of a product or service at the right price to the expected level of quality. Value streams span the enterprise, and take a cross-functional, birds-eye, process-centric view of how the enterprise acts to deliver on the customer requirement. A value stream can even include external participants such as suppliers and channel partners.

Each value-stream must align with at least one business goal, and its associated business objectives. In this way, the business value of each stream to be objectively assessed and prioritised during planning, and returns on the investment can be measured once the project has delivered an IT asset.

A value stream stage is enabled by a set of capabilities. Each unique capability can be used multiple times when doing value stream mapping, and capabilities are reused across any number of value stream stages and appear on multiple value stream maps.

The value stream therefore acts to tie what an enterprise does to create customer value (and by extension to grow shareholder profits) to how the enterprise actually delivers this value.

The diagram below simplistically describes a hypothetical value stream for processing a permit application.

Figure 2: Example Value Stream

Conclusion

Building the business architecture consists of constructing strategic views of both the current and the desired future state across all aspects of the enterprise for the purpose of planning the transition to the desired future state.

Because the architecture models are sufficiently abstract, there is a natural inclination to focus on the ‘big picture’, and discussions do not become mired in tactical details during the planning sessions.

The business architecture underpins a common language for sharing strategy, and communication amongst team members is unambiguous. There is tremendous opportunity to drive this common language down to line managers and team leads to ensure a consistent view of the enterprise at all operational levels.

A transparency will emerge that encourages collaboration and cooperation. The business architecture will highlight duplication and redundancy, brings sharp focus to improvement areas, and informs the tactical decisions necessary to improve co-operation and cohesion across all business units.

Effectively executed, the business architecture will directly lead to enterprise agility and cost reduction.