Friday, June 21, 2013

How to Map IT Capabilities to Business Capabilities in One Page

Capability definition is: "The ability and capacity to realize a measurable result in a specific operational context of conditions.” 

Business capabilities are a hierarchical decomposition of ‘what’ the enterprise does. Business capabilities do nothing by themselves, all the work is actually done by business processes which are the ‘how’ part of the question. All resources, business applications, etc. belong to business processes. While at age of information, all key business processes are enabled by enterprise IT capabilities. Therefore, the crucial question needs to be asked: How to map IT capabilities to business capabilities in one page?



1.Why it is important to Map IT Capabilities to Business Capabilities

Go back to your IT promises and see whether capabilities or processes provide answers to some of the questions you want answered and if there is value then go ahead and provide these views. Some have question the validity of the capability matrix because they see IT as a support function but the reality is that IT is a business enabler. This implies business is driven by technology. As it is an IT capability in most cases would be enabling one or more business capability. Such IT Capabilities to Business Capabilities Mapping is trying to assess and define how interconnected the IT organization is to the business, and trying to determine the return on investment (ROI) for their technical architecture (delivery - services costing) that is mapped to a businesses' capabilities.

  • Creating a one pager view of this relationship helps an organization to identify IT capabilities that are critical for running business. Organizations may also use this matrix to identify business capabilities that are neglected by IT and these usually appear as business capabilities that do not have any IT enablers. Business could also go one step further to identify business capabilities that are over enabled by IT and these usually appear as a business capability with so many IT capabilities mapped to it. It is the ability to use such a matrix to identify over extended IT capabilities and duplicate IT capabilities and solutions. 
  • Such a matrix is useful when planning or defining an IT Strategy that aligns to business needs and strategy. It is important to first define what an IT capability is as this determines whether all the above apply, identifying over extended IT capabilities would imply such an IT capability best represents an IT application. The relationship between business and IT capability is that of enabling. If you want to map business applications to business capabilities, you can do this by mapping all the applications associated with business processes to the business capabilities which use the processes. 
  • Both capabilities and processes are decomposable - decomposing capabilities is the start point for documenting functional requirements that are usually automated by applications (this is the language of IT professions) while decomposing processes provides a deep understanding about how these granular functionalities connect to deliver the final business outcome (this is the language of Business professions). Capabilities give additional views that are seldom available in processes, etc. components that are common and reusable across the enterprise (business units are silo organs and they do not give a lot of attention as to whether what they do is also replicated elsewhere). All this depends on business drivers though.

2.    How to Map IT Capabilities to Business Capabilities

From a strategy perspective, the business capability analysis is based on current definition of functions instead of an organization structure, as organizational structure is quite dynamic and frequent changes, which may create a chaotic process model, use the value chain or the supply/demand governance model to map the business capability.

  • A pragmatic approach is to look at this from a 'value streams' perspective:
    1) Identify major business value streams (end-to-end processes that deliver customer value).
    2). Map information technology related services that support these or are missing (untapped capability).
    3). Estimate the 'capability leverage', preferably in dollars, provided, or potentially so, by of each of these IT services to each value stream (greater agility etc).
    4). Estimate the business capability (preferably normalized to dollars) represented by each value stream 
  • Map IT capabilities to either:
    1) What the business does - Capabilities or
    2) How the business does it - Processes\Functions
    3) Processes are best if you are working at a tactical level
    4) Capabilities are best for strategic work
    Either will help identify business/IT alignment issues  

  • One Page IT Capability Mapping: It is quite interesting if everything can be put in one page. It depends on the nature of the enterprise (diversified), size, and the age of the enterprise as well. So single page would include fundamental to any business enterprise are the questions of ‘what do we do’, and ‘how do we do it’. :
    1) Vision
    2) Requirements to deliver
    3) IT capability
    4) The resources, metrics, application, and information associated with capabilities are the aggregation of all the resources, metrics, etc. belonging to the business processes that 'work for' the capabilities.
The approach could be to draw an enterprise value chain and expose all the business capabilities beneath those functions and highlight the activities & identify the overlaps and gaps;  then, take to next level (with lots of details) in multiple pages. For all the capabilities, then calculate cost in three categories like strategic, operational and governance. For all the foundational capabilities like HR, finance and others, then draw that at the bottom of the sheet across the whole enterprise value chain. 









3 comments:

An example of similar mapping, http://improving-bpm-systems.blogspot.com/2013/02/linking-business-strategy-and-it.html

Thanks,
AS

Great Article. Is there any literature regarding IT capabilities and mapping IT capabilities to business capabilities?

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