Optimize Your Execution by Aligning Business and IT

Thought Paper by Capstera.com

Satya S. Iluri Founder and CEO www.Capstera.com

“I know half my IT Budget is wasted, I just don't know which half.”

(Modified from the famous saying about advertising) Enterprises the world over spend billions of dollars on technology enablement of business functions. A

significant portion of those dollars end up creating suboptimal solutions. Most IT project problems are

rooted in ambiguous business definition, churn in requirements gathering, scope creep beyond a

minimum marketable feature set, wild cost guestimations, not planning for interdependencies, and a

lack of strong governance.

Everyone agrees that a sizeable portion of IT projects fail to meet or under deliver on expectations. However, while there is agreement that most technology projects end up in trouble, the business and technology teams’ disagree on why IT projects fail. Several research studies have shown that the larger the budget and the longer the timelines, the greater

the cost and schedule overruns, and the poorer the outcomes for IT projects. Business and IT

professionals, in fact, believe that 75% of IT projects are doomed from the start (Figure 1).

Figure 1. The Perception and Reality of IT projects

Dissonance and Divergence - The Business / IT interface

A key aspect of this gloomy landscape is the disconnect between business and IT. These teams of smart

and talented people lack a common framework and language to communicate with one another often

leading to missed expectations, frustration, and unnecessary churn.

For every CIO who hears the common refrain: “IT takes forever and does not deliver what we want” and for every business leader who hears: “If only business provided a big picture with a detailed actionable roadmap”, this thought paper strives to address these issues and offers a framework to solve them (Figure 2). Figure 2. Does this Dialog sound familiar?

Why does this button

cost a million dollars to

build?

We need to go

to market in two

quarters. Why

does a small

feature take so

long to deliver?

How much

detail do you

need to build

something?

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?

Business is

incapable of

thinking through

the implications

of their “small

tweaks”

All business

needs are

urgent – we

are drowning in

unnecessary

technical debt

Each BU wants

different changes

to the same thing

at different times

80% of what we do is

rework because

business keeps shifting

requirements on us

Business IT

Things that can go wrong and those that shouldn’t go wrong, always do!

Depending on the maturity of a firm’s people and processes, large transformation projects and

programs may suffer from many of the following issues.

Challenges

Project and organizational goals unclear

Scope not well understood

Lack of clarity in business requirements

Constantly evolving needs and requirements

Multiple projects needing/building similar overlapping capabilities

Overlapping capabilities create a complex web of interdependencies

Time to market considerations trump all others

Thinking is encumbered by current system constraints rather than capability-based future evolution, especially given the complex interdependencies that are hard to “untangle”

Focus on User Interface rather than user experience (UXD)

Skill and role mismatch

Lack of balance between content and coordination

What happens if some or all of the challenges afflict your enterprise projects and programs?

Implications

Disjointed strategy, organizational goals, and execution

Scope creep due to ambiguity of deliverables

Increased complexity and cost due to lack of reuse resulting in unnecessary redundancy of capabilities

Enablement of convoluted processes rather than reengineering of processes for the future

Accumulation of technical debt due to unnecessary expediency and lack of rigor in architecture and design

Regular cost overruns and project delays

Suboptimal solution delivery and stakeholder dissatisfaction

How do we get out of this morass?

1. Understand the business motivation

o It all should start with understanding the why. The business motivation is the

fountainhead decision that leads to strategy, goals and objectives. There are many

models in the industry to help enterprises capture the business motivation - at Capstera,

we use a model called “BuRST” (Business Rationale, Strategy and Tactics).

2. Distill the strategy into a succinct target operating model

o If the firm’s strategy resides in an ivory tower, it does not help the programs or projects

downstream. It is essential to translate the high level business motivation into a target

operating model. The target operating model creates a blue print of the future state and

allows business to make the right strategic choices to improve the way the organization,

business processes, IT and governance are structured and managed.

3. Focus on the “What” first – focus on the capabilities

o Business capabilities are the foundational layer of an enterprise. Business capability

modeling represents a stable description of what a business does (capabilities) to reach

its objectives, instead of a dynamic description of how it does it (processes). A capability

map or model decomposes what a business does into a granular, hierarchical structure.

o A capability model that is decomposed to a level one or two captures a 30,000 foot view

and mostly works as wall art. It is essential that capabilities are defined to be granular

(typically level 4-6), mutually exclusive, collectively exhaustive and individually a whole

at each level of granularity.

o Also it is paramount to capture rich content and context for these capabilities. The

capability semantics will help define the business services, which in turn will inform and

influence the coarseness and modularity of the IT services. The MODAF (Ministry of

Defense Architecture Framework) SOV (Service Oriented Views) provides a great

exposition on how to transition from Capabilities to IT services.

4. Foster the discipline of composition and capability reuse

o More often than not, projects and product functionality are developed in silos. Instead,

in the new paradigm, a product or platform owner can compose a new product or

project by leveraging the underlying capabilities as Lego blocks. Since capability maps

are cumulatively exhaustive, it should be possible to describe each project and product

fully using the underlying capabilities and how these capabilities are expected to be

used.

o Since the underlying capability map is mutually exclusive, mapping projects and

products helps quickly identify overlaps across them, fostering reuse, minimizing

replication, lowering cost, engendering agility, and speeding time to market (Figure 3).

Figure 3. Capabilities help quickly identify overlaps and fosters reuse

5. Define requirements as a way to evolve capabilities over the long haul

o Some of the constant challenges in requirements gathering and analysis are lack of

consistent granularity and detail, and disparateness of requirements with hard to

decipher interdependencies across projects. By gathering capability-specific instead of

project-specific requirements, interdependencies can be easily spotted and the

granularity and required detail becomes immediately obvious. This small change can go

a long way in streamlining roadmaps and eliminating churn.

ITBusiness

Products/services,

projects/initiatives are

a conglomeration of

capabilities and their

evolution

Overlap can be easily

identified and managed,

avoiding unecessary

redundancy and fostering

reuse

Capabilities establish a common

language between business and IT

Product 1

Program 4

Project 8

6. Link funding to multi-year capability maturity, not silo’ed projects

o Demanding change at the execution layer will only yield minimal dividends if it is not

driven by the top and linked to tangible budgets and resources. Funding capability

refinements and evolution over piecemeal projects can help ensure that strategy drives

execution with complete short, medium and long-term view of expected outcomes.

7. Rationalize the application portfolio

o Rationalizing the application portfolio can significantly reduce IT complexity. The best

approach to do this is using lenses to evaluate the application footprint across

capabilities and quickly identify overlaps. Lenses can also help assess each application

across key dimensions such as business value, customer affinity, maintenance and

support costs, and architecture compatibility.

8. Layer in process and data

o Once the capabilities are defined and the landscape mapped and simplified, it is

important to understand how things work or should work. At the highest level, one can

start with Michael Porter’s value chain concept to understand the key demand and

supply drivers and flows. Stakeholder centric value streams, process models and

customer journey maps can further help communicate the business processes and

workflows.

9. Monitor and measure against KPIs

o “Some is not a number, soon is not a time”. It is essential to set up, monitor and

measure granular success metrics and performance indicators across cost, timeliness

and quality of each area you want to make progress against. KPIs have to be granular

enough to quickly identify and address any problems. If possible, key metrics should be

benchmarked against peers to help provide a point of comparison and highlight areas of

opportunity.

10. Establish a capability-centric organization design

o The pinnacle of this approach is structuring the organization around capabilities,

supported by communities of practice and centers of excellence. While it is easier said

than done, at least for core capabilities a notional capability-centric organization model

can effectively complement the rest of the traditional structure.

Summary It is possible to align business and IT around a common framework and language, link execution to strategy, and optimize the IT landscape. It takes leadership, a holistic framework, and a disciplined implementation plan to make the transformation endeavor a success. A capabilities-based approach can provide the much needed bridge between business and IT. Here’s how you can get started:

Secure executive buy-in and support – Unless the top level support to a better way is not strong, the changes will be peripheral and impact will be minimal.

Showcase small wins prior to firm-wide roll out – Avoid boiling the ocean. Pick a highly visible project and celebrate the win. After refining the approach with the lessons learnt, move forward cautiously.

This is an evolution, not a revolution - The capabilities-based framework is not a rip and replace method. It is an evolution of various past frameworks and approaches. You can mix it and match it with different ideas – for example, lean manufacturing, extreme programming etc.

Get training and change management right – Executive fiat does not generally work in fostering inherent and lasting change. Provide adequate training and support throughout the process.

If you are able to encourage your team to adopt the capabilities-based framework to enterprise transformation, you will see:

A common language between business and technology

Better alignment and shared vision

Reduced requirements churn

Capability evolution, rather than project focus

Significantly lower IT complexity

Focus on composition and reuse

Lower cost structure and faster time to market

Reduced complexity by avoiding application proliferation

Global optimization rather than local optimization in silos

What is Capstera and how can it help? Capstera is a framework and software fusing elements of business architecture, capability mapping and requirements management to help enterprises create and manage effective business definitions and roadmaps, driving optimal IT enablement and system development. The Capstera framework eliminates many of the problems with IT development because “what” a company does (the capabilities) provides a stable, strategy-driven and MECE (mutually exclusive and cumulatively exhaustive) picture of the business, helping identify and manage project and product overlaps and conflicts quickly. On the other hand, the current approach of focusing on “how” a company does these (the processes) tends to be a more fluid footing with frequent cross-capability touch points that lead to conflicts and complexity, requirements churn, and potential points of failure.

To make your Enterprise Agile and Optimize your IT,

get started with CAPSTERA today.

Contact: Satya S. Iluri, Founder and CEO Capstera www.capstera.com Twitter: @Capstera Email: Satya.iluri@capstera.com