Saturday, November 23, 2013

Business Capability vs. Business Process

Business capabilities enable strategic communication & execution; it's part of art and part of science.

A process management is to separate knowing from flowing; A capability management is to manage 'capacity +ability.'

A "Business process" evokes the notion of inputs, manage known from flowing: The sequence within which functional activities and decision points are conducted. The process brings clarity around the rhyme and reason for activities being performed in a predetermined order, illustrating dependencies, and the effect if certain activities are not done. The process may show how capabilities are related.

A good definition for a capability is the ability of the business to consistently deliver an expected result to the marketplace. A "Business capability" describes what is a business entity in the organization, what is their purpose and output to the enterprise. That output is generated by applying their internal business processes, and can also be combined at the macro level to construct the wider, cross-entity business processes.

The business capability is, therefore, at a higher level than a business process and is in the conceptual layer. It represents a conceptual service that a group of processes and people, supported by the relevant application, information and underlying technology, will perform. The capability represents the WHAT, whereas the process and people represent the how. The business process management provides a foundation that brings visibility, enablement, compliance, reduces errors and avoids cost, all important elements to the survival of an enterprise.

Business capability is the ability to do something. In this case, an ability the corporation or company has to do a specific set of functional activities. Having demonstrated the ability to perform those activities, it now has that capability to do them again. Business processes are then a succession of activities that defines and support business capabilities. For example, if you take "customer acquisition" as a business capability, it evolves many business processes, like "lead-to-customer", that support the "capability." At the same time, this ‘customer acquisition’ capability might also make part of wider business processes at the organization.

Business Capability concept enables strategic level communication. The problem is many business people are practical, pragmatic,  process-driven or results focused, and they have difficulty in understanding abstract discussions, whereas EA is at abstract level; the idea of business capabilities to business is a useful way to talk at a higher, conceptual or more abstract level about what the business can or wants to be able to do, and it enforces strategic level communication. Also, organizations can look at both process and capability maps and decided that capabilities are much more accessible and thus aid the conversations between IT and its stakeholders

Defining your enterprise business capability is part art and part science. Working with your business and leveraging industry reference models is the most effective way. A capability is comprised of people, process, technology, and assets. This is a holistic and strategic definition and balances the various components of the capability. Business processes are enabled by technology and people within the framework of a capability. Capabilities can be an enormous help in understanding and prioritizing the changing business/IT are attempting to create.

Business processes underpin business capabilities, and business capabilities underpin business strategy execution, therefore, they are both important to decide business competency and growth potential.


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