Business Capabilities

Business capabilities are a concept, a part of the business architecture that is becoming more and more popular.

One can say that business capabilities are a view of the company, focusing on what the companies' business functions can and cannot deliver, by means of skills and capacity that is: is capable of doing.

In terms of a view, the Business Capabilities view describes the (maximum) performance of the business functions of an enterprise can deliver (skills + capacity).

Business Capabilities Definition

Dragon1 defines business capabilities as follows:

A business capability is the maximum performance a business function can deliver by means of acquired skills and capacity. Often a capability cannot be performed by not by itself, but only with the help or support of other organizations, systems, services and technology.

Dragon1 defines capability in relation to ability and disability.

For reasons of simplicity a business capability can be viewed as: what an organization is able to perform and leave out the notion of ability and disability. This is because today hardly anything can be done alone.

For instance, how can you run a company without making use of the internet or without making use of software from other companies.

But even then it is very important to create capability views that reveal the dependence of your organization towards other organizations, systems, services and technology. This will enable that you manage this dependency, for instance, to become less dependent on an old technology or more dependent on an internal system or services, like PayPal.

Dragon1 as method defines ability, capability and disability in the following way:

  • A business ability (being able) is what a business function of an organization deliver by means of acquired skills. For instance, face-to-face product selling locally. An ability is seen as something you can do by yourself. Every business function, like research, sales and service delivery, is, in fact, a or can be labeled as business ability.
  • A business capability is the performance a business function of an organization can deliver because of acquired skills plus capacity (or available resources). This often only with the help or support of other organizations, systems or changes. For instance, face-face product selling globally. Many business functions cannot be labeled capabilities because they do not express capacity.
  • A business disability is what the business functions of the organization can't deliver or do as an organization. The organization lacks skills (and capacity). For instance, the company is not able to do face-to-face product selling on Mars.

Let's look at online payment services. Currently, many banks do not provide online payment services at all because they don't have the skills, so it is a disability. But maybe, with regards to their future strategy, this in an unwanted situation.

Suppose a bank starts to collaborate with a startup and starts providing online payment services via this startup, online payment services becomes a business capability, whereas payment services can be labeled as business ability.

When in the end the bank acquires the startup, gains knowledge on online payment services, does it completely on its own and it has become a commodity (everyone has it and can do it), online payment services have become a business ability.

Business Functions, Business Processes and Business Concepts

Business Functions are the most generic concepts in an organization describing what an organization does or is able to do (task wise). Business Functions group activities that share common goals. Examples of business functions are: Sales, Service Delivery and Finance. They are grouping sales activities, service delivery activities and financial activities. Business functions have no start or stop event.

Business Processes create order and structure between activities to align them and for an optimal use of resources. Business processes have a start event and stop event. Examples of business processes are: hiring new staff, producing a series of products, paying invoices.

Business functions and Business processes differ from Business capabilities in a sense that business functions do not mention quality, capacity and performance and they are generic. Business capabilities can be mapped onto business functions and can detail skills, capacity, performance and quality of the business function in relation to creating customer value. Business capabilities are abstracted from the organizational structure. Business processes focus on realizing output. Business capabilities focus on realizing performance. Examples of business capabilities are: 24x7 Service desk, Online Payment Services, Self-service shopping and Automatic Processing Off Online Requests.

Business concepts are an abstraction of implementation, an approach and an idea of (parts of) doing business. All business capabilities are business concepts in the context of an organization. But not all business concepts are business capabilities. Some business concepts contain a lot of technology, or are too detailed to be regarded as business capability or do not have a direct business value or customer link.

But most important is that business concepts exist without the context of an organization. They exist in theory and practice. Business capabilities are applied to business concepts, so they only exist in practice.

Candidate business concepts for business capabilities have been researched by the architect using literature.

Examples of business concepts are: Zero waste, Self-service, Sustainable production and Bitcoin payments.

Business is used here as a term for trading goods and services for value (money). Any concept within this context, even containing IT, is a business concept.

Business Capabilities Study

In order to create a view of the current and future state of the business capabilities of an enterprise, a study is undertaken.

In Dragon1 the major steps in a business capability study are:

  • List your business functions
  • List your business concepts
  • List your customer’s needs (demand for value)
  • List your strategic goals and ambitions
  • Detail your business functions on what is necessary to focus on for fulfilling the needs with business concepts. Be SMART about the performance or quality that needs to be delivered.
  • Identify the business processes needed to implement a business capability
  • Identify the jobs needed to work in the business capability
  • Identify the services that can be provided internally and externally if the business capability is implemented.

Business Capabilities Map

Business Capabilities can be best visualized in a business capabilities map. In this kind of maps you not only visualize the existence of business capabilities, but also the processes, people and services that 'implement' the business capability.

Below you see an example a business capability map:

More Information

Capability Definition

Read the blog about the modern usage of business capabilities here.

More information about business architecture can be found here.