Data and Architecture: Business Capability Future State How-To, Pt. 2

The Future-State Business Capability Model How-To  is a series to help IT and architecture practitioners think about a few key steps to build a future-state business capability model to influence business and technology senior leaders and executive decision makers. Part 1 ran last week and looked at the first two steps to creating a strategy-defined project planning model: understanding the goals of the organization and determining the architectural scope model to use. This post explores the steps to actually defining and implementing your planning model. 

Step 3: Define the plan to develop your future state capability model

    1. Determine if your organization requires a current state capability model. If your organization does not have a current state capability model, this may be an easier exercise to initiate dialogue and understand the concept.
    2. Identify how the corporate goals and strategy are applicable to the future state lifecycle. If required, translate the corporate goal to the applicable lifecycle. For example, a Corporate Revenue Goal can be translated into order transaction volume, number of newly hired associates, number of marketing campaigns or new product launches.
    3. Determine your standard definitions to categorize your capabilities.  For example, Core vs. Differentiate is a foundational interpretation. Determine what capabilities are “core” (something required to keep our business running) vs “differentiating” (something that has a direct impact on our growth).  This is a helpful reference for modeling: CEB’s Business Architecture Handbook.

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Data and Architecture: Business Capability Future State How-To, Pt. 1

Does your organization need to improve strategic investments and prioritize investments? Do you feel confident in the objectivity of your investment and spend decisions? Are you constrained with annual budget allocations and have to make tough decisions year-over-year with running the business work or “keeping the lights on” versus transformational projects?

Establish a process to integrate an environment of many complex organizational capabilities to simplify and inform specific business outcomes through a future-state business capability model.

Portfolio Planning Prioritization 1.0 (in our blog series) features a way to prioritize investments from a “bottoms-up” perspective, as featured in the figure. The prioritization model identifies current or upcoming projects based on strategic drivers (key elements that align to organizational strategy, key portfolio data, and business value/outcomes) and detractors (elements that reduce value based on longer time periods, cost, and organizational readiness). Although this model is a good way to make data-driven prioritization decisions for the portfolio, it does assume that the organization has identified the critical must-have business capabilities needed to advance the business.

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Data and Architecture: Data-Driven Portfolio Decision Making

To effectively prioritize an organization’s collection of work, including operational services and projects to support products and innovation, leading organizations develop standard evaluation criteria to make data-driven decisions. These data-driven decisions help leadership make the right investments and ensure the organization is working on the most impactful work to improve competitive advantage. An organization’s decision makers should build simple and clear data requirements to enhance decision making and to better inform leadership and stakeholders.

Portfolio planning is the alignment of an organization’s corporate strategy to data-driven decisions about capabilities and resources to achieve desired business outcomes. Effective portfolio planning and management capabilities should provide the organization with dashboards, reports, and analytics to inform better decision making.

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Data and Architecture: Business Architecture and Capabilities

Does your organization talk about connecting the execution of work to its strategy? Are you building a roadmap on how to get there and achieve desired goals? To help your organization achieve the strategy and goals, model the business architecture by understanding the organization’s strategy, communicating business outcomes, and aligning these outcomes to the appropriate business capabilities.

Business architecture is illustrating what the business does and how the business operates. Gartner defines business capabilities as  “what the business needs to do to achieve the business strategy.” Business architecture uses business capability modeling, to visualize and influence people, processes, and technologies needed to maximize stakeholder value, achieve organizational goals, and execute on the business strategy. This model should map out the future state capabilities needed to support where the business is going over multiple years, as defined by the organization’s strategy.

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APIs Are The New Language of Collaboration

“Survival of the fit,” in Darwinian evolutionary theory, describes the mechanism of natural selection. The biological concept of fitness is defined as reproductive success. But could this also apply to modern business? Sustained growth might be the criterion for fitness in a business context. So why is sustained growth so difficult to achieve? Surprisingly, it is not for the lack of ideas but lack of ability to adapt to change and competition.

The fittest business can quickly innovate and adapt to competition and it can use its core competencies to extend itself in new ways. These organizations are often lean, mean, and learning machines using application programming interfaces (APIs). They are built on a foundation of cloud, mobile, big data analytics and social computing and they are generally connected to the internet of things, to extend and monetize the organization’s core assets for growth and  new value and revenue streams.

Even organizations born in different eras of digital transformation (mobile, internet-based, and client/server) that are successfully using APIs to achieve disruptive growth in their respective industries.

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Five Links: Culture Is the Way We Do Things Edition

Happy Friday, everyone.

True story: I was at an OpenStack conference a couple of years ago, and on a whim, I signed up for a contest to install OpenStack in a certain configuration. I did it on a whim because I wanted the T-shirt, but I found out later that this was a huge deal — guys had been prepping their automated installs for weeks leading up to the event. I went to the organizer and tried to back out, and he got this panicked look and begged me to stay, just to show up — he had already told his manager that they had their first woman in the competition ever, and if I just showed up, no matter how badly I did, I was guaranteed the “diversity prize.” Long story short, I did terribly, but I got a T-shirt and a Venue 8 Chrome tablet.

I mention this, because I have stumbled across probably a half dozen stories on diversity in IT departments in the past couple of weeks, which seemed like an oddly-specific trend in articles. But that’s not all I’ve been seeing! I have hit a lot of really great articles on team work and productivity in general — attributes of healthy teams, setting effective priorities, and managing your talent.

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Five Links: Embrace the Change Edition

Happy Friday, everyone.

As we come upon the glorious time change weekend, I’ve been seeing a lot of posts lately on changes — planning, designing, trying to understand what needs to change and how. Change is inevitable, but the question seems to be how far can we control it or define it. Within technology, we talk a lot about disruptive companies or key innovators, and sometimes it’s easy to begin looking at change for change’s sake. Disruptors and innovators don’t (only) change because it’s fun — they do something new with purpose. So this week’s posts look at change, design, and transformation as means to an end — chaotic yet intentional.

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Portfolio Management Best Practices: Measuring Business Value

Enterprise goals, the portfolio, work, and investment decisions should all be based on measurable business outcomes. Business outcomes generate metrics, the way to measure value. The key is to standardize the way the enterprise measures business value.

Business Value Standards can help guide the right decisions for the portfolio, based on the work that can generate the most value. The standards list in the table provides six primary business value types with the associated examples and metrics.

Table 1

Business Value Type Associated Examples Associated Metrics
Generate New Revenue Net new sales, improve lead conversion rates or reduce sale cycle time, improve up-sell/cross-sell Increase revenue by X currency
Reduce Costs Reduce costs for licensing, managed services, maintenance support contracts costs, retire legacy platform, reduce workforce needs due to automation or reduced skills needed Reduce costs by X currency
Increase Productivity Automate or eliminate a process step or task, reduce cycle time or manual hours # of hours * estimated hourly cost * quantity
Improve Service Delivery Improve service delivery by reducing cost of performing a service Reduce cost per day, per hour, or per service
Mitigate Business Risk Implement new security systems or disaster recovery solutions Benchmarked industry risk analysis data with (ROM) risk scenarios

These example metrics help define how to measure the results from prioritization of items within the portfolio. The performance of the portfolio is based on the business value results that are realized by successfully executing on business objectives.

Portfolio Management: Balancing the Portfolio

One of the challenges of IT management is to balance the enterprise portfolio with initiatives that deliver on objectives and outcomes with varying timeframes and differing investment categories. Yet this balance is key to run, grow, and transform the business now and over time.

Balancing the enterprise portfolio is important to deliver on initiatives within short (within the fiscal year), medium (1 to 2 years) and long (over 2 years) timeframes. This is part of the advice for a lean startup.

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Source: Gartner PPM & IT Governance Summit 2016 – Secrets of Prioritizing IT Demand – Audrey Apfel

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Data and Architecture Simplified, pt. 3: Business Architecture – The Core Diagram

To effectively plan and execute a technology-driven service or product offering, IT and business leaders should start with business architecture. Business architecture is the essential building block for mapping an organization’s business vision of what they want to accomplish. Business architecture is one of the four enterprise architecture domains – including data, applications and technology.

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