Wednesday 7 September 2011

Every company needs a Capability Model

In the past 3-4 months I had the opportunity to work with IT management to help formulate their upcoming strategy. It has been a great exercise so far already and without disclosing any information its kind of interesting to walk you through it, who knows you might be struggling with a similar situationy.
Basically you start out by investigating the strategic directions of the business to get an insight into scope and content. In cheaper words; what do they want. Without diving into the execution of anything (remember you are doing "important" strategic work here... stay away from any architecture, solutions or technology ideas), you need to decide where you'll spend your money. Very few companies can do it all. In all of the years I work in the IT industry I noticed a trend that the demand side is always bigger than the supply side :D. So you need to make decisions based on business priorities and feasibility (you could use a feasibility matrix for this if you want).

So, here you are, you think that you understand the business and you selected the topics you want to focus on. Where do you go from here? Well, it's time to create a story which involves slides... lots of it. Just kidding, the lesser slides the better as long as you can transfer your point to your audience. In this case there are several people ("stakeholders") that are interested in this story. You have the senior management (the people that are usually older than you) that wants to know if their business is going to be supported and that IT is taking care of their needs. There could be a board that decide on the budget or any other "upwards" communication path. On the other hand, the same story needs to be told to your own IT staff. The difficulty is to make one story that can serve all of these stakeholders. Your tool of choice here should be a capability model.

So, what is a capability model then exactly? Let's describe how you could produce one to understand the concept. In IT we typically implement business processes, we analyze these and automate them. Sometimes we develop software to automate or sometimes we buy and configure software for it. The level of automation usually depends on your company culture, capacity or budget. An example is: "Every time the sales rep propose a discount of more than 10%, an email is automatically sent to the manager for approval." So, generalizing this would result into "the sales organization should be capable of approving a discount", the magic word here is capable. It implies that the company needs the ability to execute discount approval without specifying how exactly it fits in a given process. Now this capability is a sub capability which is actually part of a bigger capability called Sales Quotation. So, from a birds eye view you ought to be able to describe the high level capabilities that describe end to end what your company does. Here's an example: When you have done this exercise, your result is a capability model. While finding the capability model, be sure to make a proper distinction between process and capability like described here as well.
Ok, let's go back to our strategic story, you now have the capability model, what can you do with it? A lot; here are some examples:
  • Overlay the IT Architecture: You can draw the big IT systems that you have in house and place them over the capability model. This way you can communicate to management who are usually less tech savvy the place and purpose of your IT landscape.
  • Focus area's for change: You can use this model to indicate the area's where your future project will focus on. This is a very interesting way to communicate to the management what part of the business will be impacted.
  • The big picture for your project teams: Sometimes, team members don't realize where they are working, they know they have a certain task they're working on, but they usually miss the bigger picture. Using the capability model, you can provide this bigger picture.
  • SOA design: Your SOA service taxonomy could be build based on your capability model. I'm not saying every granular capability is a service, but rather that the hierarchy of services can be based on the hierarchy of capabilities. (see also
  • ...
Every time we create a model we actually simplify the reality, a capability model is one other way to do this. In TOGAF terms, we could say it is another Viewpoint.

For us, it helped a lot, hopefully for you too :)