What are Business Capabilites?
The Management of Business Capabilities attracts the attention of Business, IT and EAM representatives. It not only represents one of the cornerstones of Business Informatics (and Information Systems respectively) but it is also considered a key topic of Enterprise Architecture Management (EAM). As outlined by Wolfgang Keller,
„Capabilities are one of the later ‚hot topics‘ in Enterprise Architecture Management.“ [Kell09, p. 1]
Beimhorn et al. describe the term “Capabilities” as follows:
„Capabilities represent firm-internal encapsulable services, i.e. units of business functionality. In contrast, a workflow or procedure is the end-to-end group of activities that describes how a capability is performed, while a business process is the interconnection resp. a composition of capabilities to fulfill a market demand.“ [Bei+05, p. 5]
Balasubramanian et al. provide the following definition:
„A business capability is a distinctive attribute of a business unit that creates value for its customers. Capabilities are measured by the value generated for the organization (…). Thus, capabilities differentiate an organization from others and directly affect its performance. ” [Bal+00, p. 41]
As you can see, there are a lot different views on this topic and a “plethora” of definitions. From my point of view, Business Capabilities are a promising instrument that promotes the sustainable alignment of the artifacts of the Enterprise Architecture to the corporate strategy. Capabilities allow a business-focused perspective – abstract from technologies, applications and infrastructure. This is an encouraging way to reduce complexity and to support management decisions. Another aspect is the constancy:
„While processes are modified, technology changes, and people reorganize, a business capability remains constant.” [SyCl09]
Beside, this instrument helps companies and groups to achieve transparency in their IT landscape.
As investments are more and more questioned and budgets get increasingly scarce, the business value of Capabilities will increase in future. A good introduction is given by Wolfgang Keller (see [Kell09]). Currently, I am working on a further publication on this topic. You will hear on this website about this publication (expected Summer 2011, http://www.generate-value.com/publications/).
Reference list:
- [Bal+00] Balasubramanian, P.; Kulatilaka, N.; Storck, J. (School of Management, Boston University): Managing information technology investments using a real-options approach. In: Journal of Strategic Information Systems 9 (2000).
Amsterdam: Elsevier, 2000, pp. 39-62 - [Bei+05] Beimborn, Daniel; Martin, Sebastian F.; Homann, Ulrich: Capability-orientated Modeling of the Firm. In: Proceedings of the IPSI 2005 Conference. Category: Proceedings. http://www.wiiw.de/publikationen/protected/CapabilityorientedModelingoft1269.pdf. Registration required, last verified on April 7, 2010.
Amalfi/Italy: IPSI 2005 Conference - [Kell09] Keller, Wolfgang; Using Capabilities in Enterprise Architecture Management, Version of 2009-12-18. URL: http://www.objectarchitects.biz/ResourcesDontDelete/CapabilityBasedEAMWhitepaper.pdf, last verified on April 20, 2010.
Lochham: Wolfgang Keller, 2009 - [SyCl09] Sykes, Martin; Clayton, Brad (Microsoft Corporation): Surviving Turbulent Times: Prioritizing IT Initiatives Using Business Architecture. In: MSDN Architecture, The Architecture Journal, www.thearchitecturejournal.net, last verified on April 13, 2010. URL: http://msdn.microsoft.com/en-us/architecture/aa902621.aspx.
Redmond: Microsoft Corporation, 2009