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Capabilities-based Enterprise Transformation Better business definition leads to optimal technology solutions Private & Confidential

Business capability mapping and business architecture

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Business architecture and capabilities mapping captures and encapsulates the essence of a business. Using capabilities enterprises can model their current and desired business capabilities with rich semantics and leverage these as Lego blocks to compose products/ initiatives, overlay them with value streams and processes, and capture requirements to evolve capabilities. Business capability mapping helps companies establish a common language, fosters business/IT alignment, helps reduce redundancy and rework, and aligns execution with strategy.

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Page 1: Business capability mapping and business architecture

Capabilities-based Enterprise Transformation

Better business definition leads to optimal technology solutions

Private & Confidential

Page 2: Business capability mapping and business architecture

We need to go to market in two quarters. Why

does a small feature take so long to deliver?

How much detail does IT need? We’ve already

provided volumes of documents

I can’t wait for other groups in the firm to

agree to a path forward. Why not build for us

and then add on stuff for others?

Have you heard this before?

© 2013 CAPSTERA. All rights reserved. 2

Business

IT

Why does this button cost a million dollars

to build?

80% of what we do is rework because

business keeps changing the requirements

Each BU wants different changes to the same

thing at different times

Business is incapable of thinking through the

implications of their “small tweaks”

All business needs are urgent – we are

drowning in unnecessary technical debt

Page 3: Business capability mapping and business architecture

The track record of technology enablement is not

stellar

How do IT & Business Executives

feel about IT project success?1

% of IT projects

1) Survey of 600 business & IT executives by Geneca

2) McKinsey-Oxford study on reference-class forecasting for IT projects (2010 dollars)

Doomed

from the

start 75%

25% Rest

Not surprising when we look at large IT project (>$15M) outcomes2

Every additional year spent

on the project increases

cost overruns by an

average of 15%

17% of large IT projects

go >200% over budget,

threatening the very

existence of the company

Average cost overrun

% of budget

Average schedule

overrun

% of project timeline

Average benefits

% of expectations

Underlying causes of IT project failures2

>$15M IT projects

29%

20% 13%

25%

13%

Focus

Unclear

objectives/

business focus

Other

Content

Shifting

requirements, tech

complexity

Skills

Unaligned team,

lack of skills

Execution

Unrealistic schedule,

reactive planning

% of respondents

80% Spend over half of

their time on rework

78% Feel business and IT

are not aligned

>80%

Feel requirements do

not reflect business

needs

45 $ 56%

$$$ 45% 100% 7% 100% 100%

Page 4: Business capability mapping and business architecture

The current operating model of how IT projects are

spawned and managed is not sustainable

© 2013 CAPSTERA. All rights reserved. 4

Different language spoken by business and IT teams makes alignment impossible

Lack of a big picture view, especially when using the project approach

Frequent changes to business models/strategies lead to requirements churn &

obsolete solutions by launch

Lack of traceability of requirements leads to replication

Ambiguity of requirements creates unnecessary churn

Redundancy of capabilities leads to complexity of the IT landscape & rework

Lack of reuse increases complexity, makes costs spiral out of control, and wastes

resources

Business P

rod

uc

ts / B

Us

Programs / Initiatives IT Projects

Requirements

IT

Page 5: Business capability mapping and business architecture

Capabilities help by decomposing “what” a business

does

© 2013 CAPSTERA. All rights reserved. 5

Capability maps are:

Stable and intuitive

Hierarchical and logical

Non-redundant yet comprehensive (MECE)

Illustrative Example of a Capability Map

Business Capabilities are the “What” of a business. They are stable and long-term.

Business processes are the “How” of a business. They are considered volatile and ephemeral.

Product development

Manufacturing

Marketing

Sales

Customer Service

General & Administrative

L1: Value Chain

Sales planning & forecasting

Territory mgmt.

Lead & opportunity mgmt.

Client relationship mgmt. (CRM)

Quotes, contracts & negotiations

Order mgmt.

Pricing

L2: Sales

Client segmentation

Client contact details mgmt.

Interaction mgmt. & history

Customer analytics

Activity planning & meetings mgmt.

L3: CRM

Opportunity-based segmentation

Demographic segmentation

Psychographic segmentation

L4: Client

segmentation

Profitability analysis

Opportunity mapping

Cross-sell and up-sell planning

Lifetime revenue assessment

L5: Opportunity-

based segment-

ation

Page 6: Business capability mapping and business architecture

Capability mapping defines platforms as a combination

of capabilities and helps quickly identify overlaps

© 2013 CAPSTERA. All rights reserved. 6

Capabilities are like bricks – They

are used to “build” businesses

Platforms are a

combination of

capabilities and

their evolution

Helps identify &

manage overlaps

Avoids redundancy

Fosters reuse

Capabilities establish a common

language between business and IT

Clear and unambiguous

Organized/easy to navigate

Product 1 Project 8

Platforms can be products, services, projects, or initiatives. All of these business

entities are a set of activities the company does either to serve customers or to better

the business itself.

Business IT

Program 4

Page 7: Business capability mapping and business architecture

Data

• Capture & classify business terms

• Inform the CDM, LDM, and PDM

• Map data to capabilities, value

streams, processes & requirements

6 Processes

• Define the value chain

• Model value streams/stakeholders

• Associate process diagrams

• Mark up processes

• Uses lenses/heatmaps to analyze

5

Platforms

• Use capabilities to define platforms

• Align capability and platform goals

• Easily identify & manage overlaps

3

Strategy

• Capture & communicate BuRST

• Translate the strategy into capability-

specific goals w/ resource allocation

• Identify gaps & benchmark

competitive position

Capability architecture is the glue between the

business strategy, platforms, data and processes

Platforms (Products/Services,

Projects/Programs/Initiatives)

Strategy

Capabilities

Requirements

Data

P

roc

es

se

s

Capabilities

• Easy to use capability management

• Rich semantics

• Performance tracking

• Capture current functionality

• Develop roadmap

2 1

Requirements

• Efficiently capture platform requirements

• Quickly rationalize & prioritize by capability

• Translate into capability roadmaps with

traceability

4

XML interface with

related applications

Page 8: Business capability mapping and business architecture

Capstera enables better business definition to help deliver optimal

technology solutions and provides benefits for various stakeholders

© 2013 CAPSTERA. All rights reserved. 8

Executive Perspective

• Aligned organization

• Execution linked to strategy

• Stable view of business

• Helps assess strengths & weaknesses to inform the strategy

• Manages overlaps/synergies

IT Perspective

• Reduces IT complexity

• Fosters reuse of assets

• Aligns IT with business strategy and goals

• Reduces churn due to common, MECE and simple language

Financial Perspective

• Lower friction and less complexity reduces costs

• Agility and responsiveness increases enterprise value

• Long-term value of project funding easier to see, set, and measure

Product Perspective

• Building once and reusing often speeds time-to-market

• Product segmentation and proliferation eminently feasible

Page 9: Business capability mapping and business architecture

Let’s Get Started

© 2013 CAPSTERA. All rights reserved. 9