Capabilities-based Enterprise Transformation
Better business definition leads to optimal technology solutions
Private & Confidential
We need to go to market in two quarters. Why
does a small feature take so long to deliver?
How much detail does IT need? We’ve already
provided volumes of documents
I can’t wait for other groups in the firm to
agree to a path forward. Why not build for us
and then add on stuff for others?
Have you heard this before?
© 2013 CAPSTERA. All rights reserved. 2
Business
IT
Why does this button cost a million dollars
to build?
80% of what we do is rework because
business keeps changing the requirements
Each BU wants different changes to the same
thing at different times
Business is incapable of thinking through the
implications of their “small tweaks”
All business needs are urgent – we are
drowning in unnecessary technical debt
The track record of technology enablement is not
stellar
How do IT & Business Executives
feel about IT project success?1
% of IT projects
1) Survey of 600 business & IT executives by Geneca
2) McKinsey-Oxford study on reference-class forecasting for IT projects (2010 dollars)
Doomed
from the
start 75%
25% Rest
Not surprising when we look at large IT project (>$15M) outcomes2
Every additional year spent
on the project increases
cost overruns by an
average of 15%
17% of large IT projects
go >200% over budget,
threatening the very
existence of the company
Average cost overrun
% of budget
Average schedule
overrun
% of project timeline
Average benefits
% of expectations
Underlying causes of IT project failures2
>$15M IT projects
29%
20% 13%
25%
13%
Focus
Unclear
objectives/
business focus
Other
Content
Shifting
requirements, tech
complexity
Skills
Unaligned team,
lack of skills
Execution
Unrealistic schedule,
reactive planning
% of respondents
80% Spend over half of
their time on rework
78% Feel business and IT
are not aligned
>80%
Feel requirements do
not reflect business
needs
45 $ 56%
$$$ 45% 100% 7% 100% 100%
The current operating model of how IT projects are
spawned and managed is not sustainable
© 2013 CAPSTERA. All rights reserved. 4
Different language spoken by business and IT teams makes alignment impossible
Lack of a big picture view, especially when using the project approach
Frequent changes to business models/strategies lead to requirements churn &
obsolete solutions by launch
Lack of traceability of requirements leads to replication
Ambiguity of requirements creates unnecessary churn
Redundancy of capabilities leads to complexity of the IT landscape & rework
Lack of reuse increases complexity, makes costs spiral out of control, and wastes
resources
Business P
rod
uc
ts / B
Us
Programs / Initiatives IT Projects
Requirements
IT
Capabilities help by decomposing “what” a business
does
© 2013 CAPSTERA. All rights reserved. 5
Capability maps are:
Stable and intuitive
Hierarchical and logical
Non-redundant yet comprehensive (MECE)
Illustrative Example of a Capability Map
Business Capabilities are the “What” of a business. They are stable and long-term.
Business processes are the “How” of a business. They are considered volatile and ephemeral.
Product development
Manufacturing
Marketing
Sales
Customer Service
General & Administrative
L1: Value Chain
Sales planning & forecasting
Territory mgmt.
Lead & opportunity mgmt.
Client relationship mgmt. (CRM)
Quotes, contracts & negotiations
Order mgmt.
Pricing
L2: Sales
Client segmentation
Client contact details mgmt.
Interaction mgmt. & history
Customer analytics
Activity planning & meetings mgmt.
L3: CRM
Opportunity-based segmentation
Demographic segmentation
Psychographic segmentation
L4: Client
segmentation
Profitability analysis
Opportunity mapping
Cross-sell and up-sell planning
Lifetime revenue assessment
L5: Opportunity-
based segment-
ation
Capability mapping defines platforms as a combination
of capabilities and helps quickly identify overlaps
© 2013 CAPSTERA. All rights reserved. 6
Capabilities are like bricks – They
are used to “build” businesses
Platforms are a
combination of
capabilities and
their evolution
Helps identify &
manage overlaps
Avoids redundancy
Fosters reuse
Capabilities establish a common
language between business and IT
Clear and unambiguous
Organized/easy to navigate
Product 1 Project 8
Platforms can be products, services, projects, or initiatives. All of these business
entities are a set of activities the company does either to serve customers or to better
the business itself.
Business IT
Program 4
Data
• Capture & classify business terms
• Inform the CDM, LDM, and PDM
• Map data to capabilities, value
streams, processes & requirements
6 Processes
• Define the value chain
• Model value streams/stakeholders
• Associate process diagrams
• Mark up processes
• Uses lenses/heatmaps to analyze
5
Platforms
• Use capabilities to define platforms
• Align capability and platform goals
• Easily identify & manage overlaps
3
Strategy
• Capture & communicate BuRST
• Translate the strategy into capability-
specific goals w/ resource allocation
• Identify gaps & benchmark
competitive position
Capability architecture is the glue between the
business strategy, platforms, data and processes
Platforms (Products/Services,
Projects/Programs/Initiatives)
Strategy
Capabilities
Requirements
Data
P
roc
es
se
s
Capabilities
• Easy to use capability management
• Rich semantics
• Performance tracking
• Capture current functionality
• Develop roadmap
2 1
Requirements
• Efficiently capture platform requirements
• Quickly rationalize & prioritize by capability
• Translate into capability roadmaps with
traceability
4
XML interface with
related applications
Capstera enables better business definition to help deliver optimal
technology solutions and provides benefits for various stakeholders
© 2013 CAPSTERA. All rights reserved. 8
Executive Perspective
• Aligned organization
• Execution linked to strategy
• Stable view of business
• Helps assess strengths & weaknesses to inform the strategy
• Manages overlaps/synergies
IT Perspective
• Reduces IT complexity
• Fosters reuse of assets
• Aligns IT with business strategy and goals
• Reduces churn due to common, MECE and simple language
Financial Perspective
• Lower friction and less complexity reduces costs
• Agility and responsiveness increases enterprise value
• Long-term value of project funding easier to see, set, and measure
Product Perspective
• Building once and reusing often speeds time-to-market
• Product segmentation and proliferation eminently feasible