Business capability analysis is a method used for scoping and planning by creating a shared understanding of the expected results, spotting alignment with strategy, and providing a range and ranking filter.
Business capability analysis defines what an organization, or part of an organization, is able to do. It define the capability of the organization to change something that would help it obtain a business goal or objective.
Capabilities may be analyzed for performance and connected risks to spot specific performance gaps and rank investments.
Many product development efforts are an endeavour to enhance the performance of an existing business capability or to deliver a new business capability.
As long as an enterprise continues to do comparable functions, the capabilities required by the enterprise should remain constant even if the system of implementation for those capabilities go through a remarkable change.
There are some elements of business capability analysis, which are:
1. Capabilities: capabilities are the potential of an enterprise to act or change something that helps it to fulfill a business goal or objective.
Capabilities defines the motive of the transformation, but not how the transformation is performed.
2. Using Capabilities: capabilities affect value by enhancing or assuring revenue, lowering or averting cost, bettering service, achieving compliance, or arranging the company for the future.
Not all capabilities have the same standard of value, there are various tools that can be used to make value specific in a capability assessment.
3. Performance Expectations: capabilities can be evaluated to identify specific performance expectations.
When a capability is aimed for improvement, a specific performance gap can be identified. The performance gap is the difference between the current performance and the desired performance, given the business strategy.
4. Risk Model: capabilities alone do not have risks, the risks are in the performance of the capability, or in the deficiency of performance.
These risks fall into the usual business categories, which are:
- Business risk.
- Technology risk.
- Organizational risk.
- Market risk.
5. Strategic Planning: business capabilities for the current state and future state of an enterprise can be used to decide where that enterprise needs to go in order to achieve its strategy.
A business capability assessment can create a set of recommendations for solutions. This assessment forms the foundation of a product roadmap and helps in release planning.
At the strategic level, capabilities should assist an enterprise in setting up and maintaining a durable competitive advantage and a definite value proposition.
6. Capability Maps: capability maps give a visual view of elements involved in business capability analysis.
The business capability analysis has both its strengths and weaknesses which are:
Strengths
- It provides a shared vocalisation of outcomes, strategy, and performance, that helps in creating very directed and aligned initiatives.
- It helps in aligning business actions across multiple visible features of the organization. Which is useful when evaluating the ability of an organization to offer new products and services.
Limitations
- The organization needs to agree to agree on this model.
- When created independently it fails to deliver on the alignment and shared understanding goals.
- It needs extensive, multifaceted collaboration in defining the capability model and value framework.