Capabilities and Enterprise Architecture

It's perhaps the most popular buzzword of sorts in industry today - Capability!! :-)

In every other discussion, presentation, conference you hear the speaker using this term to convey his / her key message. However, exactly for same reason (used by different people in different context) I think it is one of the most misunderstood / misinterpreted / misused word in IT!

This is my earnest attempt to clarify this term & how they are used to describe various aspects of Enterprise Architecture, based on my experience and understanding.

So, to begin with - what exactly is this "capability" in first place?

TOGAF standard defines it as

"An ability that an organization, person, or system possesses"

And many other similar standards define it in equally open ended fashion, and perhaps that's why everyone use it to suit their purpose. Therefore, it is essential that every time we hear that word, we try to understand it in context.

We can understand the context by categorising them in three broad buckets (my way of segregating them for better understanding and relationship):

1. Business Capability
2. Operational Capability
3. Application Capability

Of course, these are not new terms, but I'm not sure if they are so clearly differentiated in everyone's understanding and some times people wrongly interchange them which is where I think we have a problem, e.g. I have seen even good architects bring in application capabilities into business capability map!!

Let me share my understanding around usage and high level interlink amongst these three types of capabilities.

Business Capabilities

• Business capabilities are derived from Business Model of the organization
• They essentially describe "what" must be done to achieve "business outcomes"
• They are typically independent of the organizational structure
• Amongst the three types considered here, in general, business capabilities are usually stable (if not static) over longest time (Exception of course is in industries where continuous disruptions demand frequent changes to business model - and hence business capabilities would change)
• Usage:- Business capabilities are typically used in making long term investment decision. They also play a very significant role in modelling overall business architecture as foundational building blocks (perhaps I'll write a separate article detailing various connections of business capabilities with other components used in modelling process!!)

Operational Capabilities

• Operational capabilities are derived from Operating Model of the organization
• They essentially describe "who" must do "what", and "how" to typically deliver "business value propositions"
• They are typically closely aligned with the organizational structure
• In comparison to business capabilities, operational capabilities tend to change often as organization changes its operating model for various reasons
• Usage:- Operational capabilities can be used in deriving various Value Streams which in turn be used to bring in alignment towards delivering value to customers

Application Capabilities

• Application capabilities are derived from technology solutions used by the organizations
• They essentially describe what the technology product / solution can perform in order to realize the operational capabilities
• Application capabilities have least longevity amongst the three types described here as technology evolves much faster and there are newer solutions in the market every day!
• Usage:- Application Capabilities help in building a very composable and modular architecture to support operational capabilities and bring efficiencies in tech operations

A graphical summary can be shown as follows:

As you can see, there is a sort of hierarchical relationship amongst these, but not necessarily in one to one fashion.

While Business Capability is at the top (being most abstract in nature), Operational capability in the middle and Application Capability at the bottom (being most granular) - there is reasonable possibility that an Operational Capability is enabled by multiple business capabilities and almost always one Application Capability realizes multiple Operational Capabilities!!

Let me give you a simple practical example which will make this very clear:

"Fulfil Customer Order" is a "Business Capability" which focuses on outcome of successful order completion. It can be decomposed into "Same Day Delivery", "Next Day Delivery", "Click & Collect" etc. "Operational Capability" which define how to fulfil a particular order.

We achieve our objective by using multiple applications like Order Management, Carrier Management etc. These applications provide "Application Capability" such as "Determining source location for inventory", "Book delivery slot with carrier provider", etc. which when used appropriately realize the operational capabilities given above.

Hope this helps you get some clarity on the various types of capabilities used in Enterprise Architecture.

Please share your thoughts through comments below and as always, you can ping me if you would like to discuss more!

Thanks for reading!