Business Capabilities

Business capabilities are a concept, a part of 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 company can and cannot deliver.

In terms of a view, the Business Capabilities view describes the primary business functions of an enterprise and the pieces of the organization that perform those functions.

Business Capabilities Definition

Dragon1 defines business capabilities as follows:

A business capability is what an organization (potentially) is able to perform, not by itself, but 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 and 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 an organization can do all by itself.
  • A business capability is what an organization can do / perform, often only with the help or support of other organizations, systems or changes.
  • A disability is what you can't do as organization.

Take for instance payment services. Currently many banks do not provide payment services at all, 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 payment services via this startup, payment services become a business capability.

When in the end the bank acquires the startup, gains knowledge on payment services and does it completely on its own, payment services have become a business ability.

Business Functions, Business Processes and Business Concepts

Business Functions are the most generic concept in an organization describing what an organization does (task wise). Business Functions group activities that share common goals. Examples of business functions are: Sales, Service Delivery and Finance, 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 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 and performance and that they are generic. Business capabilities can be mapped onto business functions and can detail 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 and business capabilities focus on realizing performance. Examples of business capabilities are: 24x7 Service desk, 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 applied 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 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 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 on 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:

Source: Peter Lutz, Enterprise Architect, specialty in pharmaceutical industry

More Information

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

More information about business architecture can be found here.