How can a business architecture framework help you manage complexity and change in your business environment?

Whatever your strategy, it pays to start with an understanding of your existing business capabilities and processes, and the people and technology that underpin these. Architecture provides a “blueprint" of your business today. The next step is to understand the capabilities and processes you will need to realize your goals. Capabilities are the basic “building block”. A skilled architect will review the list of gaps and give options on how to fill them – e.g. new technology or recruitment or upskilling of people. Capabilities provide an excellent tool to compare the fit of different IT vendors or service providers via an RFI / RFP process, or a starting place for HR to define new job descriptions.

As a business scales up, it becomes harder to maintain a consistent view of the workings of the organisation. Siloes can develop across different teams, leading to duplication where the same thing is done differently. This is further exacerbated with mergers, where acquired firms also bring different cultures and terminology. A business architecture framework, agreed across the whole firm, embeds a common language and can be used as a dashboard to visualise a whole host of business risks and metrics. For example, impacts of change can be heatmapped by cost, headcount, delivery risk, programme phase and so on. This creates benefits from the feet on the ground right up to the Board.

A good example of this is using the architecture framework to illustrate where the responsibilities and accountabilities sit within and around the business. A “boundary model”, for example, illustrates where the dividing lines and hand-offs exist between the form and its outsourced service providers. This can help the business focus on reducing the risk that operational activity will fall down the gap between themselves and their vendors, by putting in checks and controls. Process value chain models can be used in a similar way, to assign executive owners for each end-to-end value chain.

Our framework incorporates a Target Operating Model template that we divide into Business and Operational layers. Using the business layer we examine the target market, the proposition that meets this market and the distribution channels through which we reach it. The Operational layer then systematically documents all the necessary components to deliver the proposition to market. The framework ensures we do not miss anything from our considerations when defining the business transformation.

Business architecture categorises activities into core components. Using capability or process as a unit, you can get a granular view of your organisation’s costs, pain points and outcomes. We use capability cost modelling as a core tool to help businesses understand valuable MI such as cost per transaction, customer or account. Aggregated, these give us industry benchmarks which clients really value, and this in turn focuses boards on driving down cost to find competitive advantage. Capabilities used across organisations can also find instances of multiple teams or technologies performing similar tasks, allowing businesses to harmonise activity according to best practice and carve out excess IT cost.

By way of example, we use frameworks to model financial regulations against the information flows, business capabilities and processes that they relate to. As this regulation is updated (it frequently is), teams using the framework have early sight of where in the business a new or changing piece of regulation will impact. They can react accordingly by allocating appropriate budget and resource. Our framework can also be used to model core regulatory responsibilities to their business owners (in our world, Senior Management Functions or SMFs). These SMFs can heatmap their responsibilities and, coupled with the mapping of regulation, work out which regulatory change belongs to them.

Firms are constantly looking over their shoulder at their rivals. But no firm can be the best at everything. Customer service, product excellence and price all compete so there are always trade-offs. Firms must decide how best to spend their limited change budgets for competitive advantage. A technique we use to help is capability maturity analysis. This attaches benchmark characteristics to each capability. Entry Level online service might include some behind the scenes re-keying into a different system to process while Best in Class would fully automate the process. Low maturity across Customer Administration capabilities would show a mismatch for a Customer-centric strategy, and indicate where budget needs to focus.