business capability

What is a business capability?

A business capability is the ability of an organization to achieve a specific outcome or objective. It is a combination of the people, processes and technology that an organization needs to perform a task or function. Business capabilities are the building blocks of an organization's strategy and are essential for achieving its goals.

Why are business capabilities important?

There are many reasons why business capabilities are important. The most important reasons include the following:

  • They help organizations to achieve their goals. By understanding their business capabilities, organizations can better align their resources and activities to meet their strategic objectives.
  • They help organizations to be more efficient and effective. By identifying and improving their business capabilities, organizations can reduce waste and improve their bottom line.
  • They help organizations to be more competitive. By understanding their strengths and weaknesses, organizations can identify opportunities to improve their competitive position.
  • They help organizations to be more nimble. By being able to quickly adapt to changes in the market, organizations can stay ahead of the competition.

How to identify business capabilities

Business capability mapping is a useful tool for documenting the relationships between a business's core function and software applications, computing systems and components in the enterprise architecture.

Business capabilities can be identified and mapped in a myriad of ways, one of which is through reviewing the organization's strategy. This is because an organization's strategy typically highlights the essential capabilities needed for achieving its goals.

Another insightful approach is interviewing key stakeholders, such as customers, employees and suppliers. Their insights can offer valuable knowledge about the organization's business capabilities.

Additionally, a thorough analysis of the organization's processes can reveal the key capabilities that underpin those processes. Finally, examining the organization's IT systems can also yield important clues about its business capabilities, making it a beneficial method to consider.

diagram of enterprise architecture framework layout
Business capability mapping helps document relationships between a business's core function and IT systems, software and components in the enterprise architecture.

How to improve business capabilities

After identifying business capabilities, enhancing them becomes the next significant step. One commonly used method for such improvement involves reengineering processes. This method fundamentally redesigns the way tasks are done through business processes, thereby improving both efficiency and effectiveness.

Another method is the implementation of new technologies. By automating tasks, facilitating better communication and providing access to crucial information, these technologies can significantly boost business capabilities.

Employee training is also instrumental in capability improvement. When employees are provided with the necessary skills and knowledge, they can perform their tasks more effectively, contributing positively to the business.

business process categories diagram
Enhancing business capabilities commonly involves redesigning how tasks are performed through business processes to improve efficiency and effectiveness.

Additionally, fostering a culture of continuous improvement within the organization by using methods such as the Kaizen approach can have profound effects. This culture prompts employees to proactively seek out and improve areas of opportunity, leading to a steady, ongoing enhancement of business capabilities.

By enhancing business capabilities, organizations can meet their aims with greater speed and success. They can also be more competitive and nimble, and they can better adapt to changes in the market or within their own supply chain.

Learn how to define a continuous improvement process with enterprise architecture models and practices, and read about the changing role of the enterprise architect.

This was last updated in June 2023

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