Leveraging Business Architecture to maximize IT investments

The Business Transformation Dilemma

Approximately 70% of all corporate change initiatives fail due to a disconnect between strategy and execution

Generally, the common challenge with transformations in the financial service industry is that the vision and strategy does not get translated into actionable objectives. Business units interpret the vision and strategy differently, which creates misalignment between Business and IT (and Finance, Sales, Marketing, C-suite) and results in waste and inefficiency.

The Value of Business Architecture

Change initiatives often fail for reasons other than a poor-quality platform; they fail because targets and objectives were not clear and aligned at the start of the project. By using Business Architecture to bridge the gap between the business and IT units, organizations can avoid common miscommunication and misunderstanding that are detrimental to the success of a project.

Business Architecture reveals how an organization is structured and can clearly demonstrate how elements such as capabilities, processes, organization and information fit and work together. The relationships among the elements dictate and specify what the organization does, and what it needs to do to meet its common goals.

Business Architects support enterprises with identifying the current state of their business, discussing the future state of their business, and addressing all dimensions of the enterprise challenges. Business Architects create a common language throughout the whole enterprise through Business Architecture assets which creates a common language for all the different business units to prioritize their business needs with IT’s delivery plan. This, in turn, aligns the organization by creating a direct and clear linkage between executive intent and organizational action.

Business Architecture reveals where organizational and IT investment is not well aligned to the strategies and goals of the business leadership within the company

Situations where Business Architecture can Deliver Substantial Value

Engage Business Architecture at the beginning of mission critical corporate initiatives. Examples of initiatives where Business Architecture can create important leverage for success include:

  • New Product/ Market/ Business Definition initiatives
  • Large Scale technology implementations
  • Mergers and Acquisitions where important consolidation and integration of assets is critical
  • Digital Transformation programs
  • New Business / Service Model rollouts
  • Critical Compliance Assurance & Management programs

Some people ask why Business Architecture is necessary now, especially after organizations have operated without it for so long? The pain of not having a Business Architecture is magnified by the pace of change in today’s world, as seen in organizations that morph over time into highly isolated silos, as a result of merger and acquisition, or through common lack of planning. The absence of Business Architecture prevents organizations from being able to adapt quickly. Companies that are not agile in today’s fast-path, hyper-competitive marketplace cannot survive.

Technology is rapidly evolving. Customers demand what they want, when they want it and where they want it. The business environment changes every day requiring organizations to react to security and privacy concerns, new regulatory and compliance measures, and new competitive threats from around the globe. Business Architecture has become an absolute necessity for an organization to identify the impact of change on the business and to respond quickly and effectively.

Where Does Business Architecture Fit within an Organization?

Architecture serves as the bridge between strategy and execution within an organization. Strategy and operational demands drive changes to Business Architecture and Business Architecture serves to translate these ideas into actionable steps that can be implemented in an integrated, consistent manner across the enterprise. As a result, Business Architecture typically has a direct tie into the enterprise strategy, planning and software development processes.

What are the Critical Dimensions of a Business Architecture Strategy?

The key dimensions of the enterprise that may be provided by business architecture address several aspects of the enterprise; they are summarized by the Object Management Group (2012) as follows:

  • The Business Strategy view captures the tactical and strategic goals that drive an organization forward…
  • The Business Capabilities view describes the primary business functions of an enterprise and the pieces of the organization that perform those functions…
  • The Value Stream view defines the end-to-end set of activities that deliver value to external and internal stakeholders…
  • The Business Knowledge view establishes the shared semantics (e.g., customer, order, and supplier) within an organization and relationships between those semantics (e.g., customer name, order date, supplier name) …
  • The Organizational view captures the relationships among roles, capabilities and business units, the decomposition of those business units into subunits, and the internal or external management of those units
Capability Maps – Creating a Common Language Between Business and IT

Business capability mapping depicts what a business does to reach its strategic objectives (its capabilities), rather than how it does it (its business processes). Business capabilities are the connection between the business strategy and business execution.

The image above demonstrates how business capabilities bridge the gap between the strategic objectives (what) and the business processes (how).

Enterprise and business architects model business capabilities and then assess the degree to which the capability is fulfilling its strategic objectives (which may be impacted by things like available capacity, materials, expertise, and technology). They may also model business capabilities that don’t yet exist but are needed in order to meet future business objectives thus creating a roadmap for capabilities which must be built out.

Each capability should have a unique name (usually a noun) and a concise one-sentence definition. A good way to create a capability definition is to use the following pattern:

(Capability Name): Ability to (actions) on/with (business concepts or business entities) in order to (outcome).

Example: Customer Management: Ability to capture, process, analyze, and report on all customer information related to an individual or organization that does, has done, or plans to do business with the company. (Note: Customer Information is an entity documented in the business capability model)

Capabilities are defined in a hierarchy. The process of decomposing capabilities helps ensure that capabilities are non-overlapping and unique.

Capabilities are unique based on the information they require and use. One capability may use or produce certain information that a similar sounding capability may not require or use making them two different capabilities. Similarly, child capabilities should be interpreted within the context of the parent (for instance, two separate capabilities both named Risk Assessment could exist under different parents named Solution Management and Capital Management).

Business capability mapping presents several benefits. The first goal of business capability mapping is to create a stable model of the key elements of the business. The basic capabilities of a business (the what) tend to remain constant while, in comparison, the way a business implements its processes (the how) is likely to change frequently, particularly with the technology used to deliver the capability. Thus, a capability map makes an excellent reference point for business planning. Changes to how capabilities are implemented do not impact the base model. Therefore, mapping and planning solutions based upon the stable business capabilities map leads to less change to IT infrastructure over time.

Using a business capability map to connect key strategy pillars to their methods of execution makes the business strategy tangible and more visible to the entire enterprise. This leads to more effective and efficient use of technology by identifying and eliminating enterprise-wide redundancies. A capability-centric organization also helps overcome the common problem of organizational silos. As such, both software and hardware assets may be leveraged, shared, or reused saving costs. The resulting organization is a more agile and adaptable one, leading to faster time-to-market.

Benefits of Taking a Business Architecture Approach

Organizations seek different benefits from their Business Architecture. Here are a few common benefits:

  • Focused and aligned strategy.Business Architecture helps to translate strategy into action and focus investment.
  • Improved decision-making ability.Business Architecture helps the business to understand the complete impacts of decisions before making them.
  • Increased operational efficiency and capacity for growth.Business Architecture helps an organization to rethink how it structures and streamlines business operations for efficiency and scalability.
  • Agility in business and IT execution.A repository of reusable architecture content and defined processes that translate strategies into execution greatly accelerate an organization’s ability to identify and implement the necessary changes.
How Can We Help You Deploy a Business Architecture Driven Approach?

We work with you to understand where your business really is, where it wants to go, and what it truly takes to get there — without the costly risk of trial-by-error. We integrate deeply into your organization to address all dimensions of your challenges and identify the best path to resolution and subsequent realization of strategic goals.

Exavlau will work with your internal team (or build your team from the ground up) to properly align the organization. Business Architecture reveals how an organization is structured and can clearly demonstrate how elements such as capabilities, processes, organization and information fit together. Exavalu works with our clients to operationalize their Business Architecture teams and capabilities.

If your organization has not applied Business Architecture before, we can help to select an appropriate pilot effort to build an understanding of how it applies to your organization and then foster buy-in. We provide services that meet your specific Business Architecture needs as they relate to the enablement of:

  • Business Transformation
  • Portfolio Management
  • New Business / Product / Market Penetration
  • Large-scale Digital Business Transformation
  • Business and IT Leadership Alignment
Engage Us to Help Start Your Own Business Architecture Team

Let us help you start your new Business Architecture practice, from defining your value proposition to standing up all the necessary components of your internal practice. We offer training and mentoring to develop your staff into highly trained business architects. We provide the following services to leverage, create, or enhance your own Business Architecture Practice:

  • Practice Evaluation and Strategy
  • Practice Structure and Role Development
  • Architecture Change Management and Communication
  • Enterprise Model Building
  • Standards and Methods Development
  • Governance Processes
  • Practice Metrics and Evaluation
  • Tool Assessment and Alignment
  • Training and Mentoring
  • Business Architecture Community Support

Whether you are embarking on a significant business transformation to propel your competitive edge, launching a new division, or implementing a large technology shift, the Exavalu Business Architecture Practice can help drive your project to successful completion. We offer solutions and services to support your efforts as well as provide consulting and training to stand up your own Business Architecture Practice.

About the Author:

Rob Golden is a Principal with Exavalu and leads the Business Advisory practice. He has over 25 years of experience in management consulting and excels in the ability to generate thought that drives disruptive solutions to successfully transform existing business models to be able to adapt to new market demands. You can reach him at Robert.Golden@exavalu.com.

Exavalu is your strategic partner on high impact Digital transformation relevant for your Industry. We’re a unique Business Advisory & Technology Consulting firm run by seasoned Industry veterans that are former executives, CIOs, CXOs, and Consulting Principals. We deliver meaningful change and sustained value aligned with your desired business outcomes leveraging our Industry experience and Solutions capability.

This publication contains general information only and Exavalu is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Exavalu shall not be responsible for any loss sustained by any person who relies on this publication.