Tuesday, October 15, 2013

Enterprise Capability vs. Capacity

Capability stands you out; Capacity scales your up! 


Capability is the ability to do something. Capacity is the throughput of something. An organization might have the capability to manufacture widgets and the capacity to manufacture 100 per hour. Adding Capacity provides you the opportunity to do more of what you are already doing. Adding Capability provides a differentiation and the more ability to do things that you weren’t able to do previously.

Dynamic capability is the firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments. The capacity can reflect the gap in capability - that might either be a throughput gap or it might be a resource/ process gap for the capability to deliver a different product; processes underpin enterprise capability, and processes streamline business capacity. 

Capability Gap is the lack of a capability. A capacity gap is a lack of 'the resources' needed by the processes -which operationalize a capability - to do a given amount of work. The resources could be CPU power or people; not having sufficient resources is a capacity problem, not a capability problem. Capacity implies 'quantity'- throughput is a quantity. A process which lacks sufficient resources to do a given amount of work is a lack of capacity. 

Enterprise Capability Management in essence consists of a portfolio or matrix of capabilities that are used in various combinations to achieve outcomes.Within that portfolio, a capability will be transient unless managed and maintained over time. Therefore, a typical capability lifecycle spans needs, requirements, acquisition, in-service and obsolescence/disposal phases.

Enterprise Capacity Management more refers to a process used to manage information technology (IT). Its primary goal is to ensure that IT capacity meets current and future business requirements in a cost-effective manner. One common interpretation of Capacity Management is described in the ITIL framework. ITIL version 3 views capacity management as comprising three sub-processes: business capacity management, service capacity management, and component capacity management

Indeed, organizations need to craft the effective strategy and efficient processes in pursuing such 3 "C"s: Capability, Capacity, which leads to Competency in catalyzing business growth and customer delight. 

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