Amidst rapid digitization, automation, and evolving customer demands, companies need to continuously transform their strategies and operations to remain competitive. However, to identify areas that require transformation, they need to first understand the various layers of their architecture and how they drive business activities.

Business capabilities offer an overarching and integrated approach for understanding how the business currently operates and how it can continue to deliver its services and products in the future. As such, they help answer business-critical questions, including: 

• What are my core business activities?

• Which of these do I need to invest in to remain competitive? 

• How can I optimize my processes, applications, data, and technology to achieve this? 

In this blog post, we'll dive into numerous benefits and best practices for capability mapping. We'll explore how to create a business capability map and how it can inform your transformation planning. 

What is a Business Capability Map?

A business capability map is a visual representation of all the business capabilities within a specific business unit. It shows the complete range of activities a company performs to execute its strategy and achieve its objectives. 

By linking capabilities to the supporting architecture, organizations can understand exactly how these business capabilities are performed and interconnected. However, before diving into the operational details, it’s important to look at your business capability map in isolation. This helps define what the business currently does and can do in the future to reach its goals. 

Benefits of a Business Capability Map

1. Defines the 'what', not just the 'how'

Capability maps break down the business into core areas. In other words, they illustrate ‘what’ the business does to execute its strategy. As such, they offer a stable view of the organization that doesn’t change significantly unless there’s a shift in the business model itself. 

Architecture elements, on the other hand, describe ‘how’ capabilities are performed. Due to their operational and transient nature, they are far more prone to change. While having an overview of these elements is essential for designing any transformation, organizations should also understand the impact of these changes on broader business activities. Business capabilities help identify the organization's key focus areas, both in the present and future, ensuring a clear alignment between strategy and execution.

2. Offers a common language

As the building blocks of the organization, business capabilities offer a common language for different stakeholders and departments. For instance, most business stakeholders will not understand or analyze the details of the IT landscape. However, they might understand the value of IT projects if they know how they impact or support capabilities like “Customer Service” or “Financial Management”.

By using capability maps to communicate the current or future setup of the business—and how they are supported by architecture initiatives—EA teams can improve collaboration and bridge the gap between business and IT.

3. Places data-driven insights in a business context

An organization’s architecture is a treasure trove of data, offering deep insights into every layer of the business. However, organizations may struggle to place these insights in a business context for prioritization and long-term planning. By linking the architecture to business capabilities, they can clearly understand where their strengths, weaknesses, and opportunities lie—and how they tie to business goals.

In this way, capability maps improve decision-making and prioritization. They help leaders assess the impact of initiatives, balance budget allocations across business capabilities, and plan effectively for the future.

How to Create a Capability Map

There are several best practices that you can adopt to get the most out of your capability map.

Determine your starting point

To capture the entirety of the business, you will typically strive to map all capabilities. However, in certain cases, and especially for large organizations, this might be a lengthy task. Therefore, you might want to start by mapping key areas. For example, if there is a certain set of capabilities that are of a high priority for the business or if there are critical projects underway to improve strategic areas, you will want to start by mapping those.

Of course, the end product will almost always be a full capability map. However, as a general rule of thumb, you should start with your primary or core capabilities and expand from there.

If you’re still wondering where to get started, you may be able to rely on industry standards or examples. For instance, many industries have reference architectures that include topical business capability maps and descriptions to get started with. Conduct research before developing your model to determine the best framework for your organization.

Gather information from the wider organization

As you’ve already seen, organizations are complex, and so are their capability maps. But the good news is that there’s often information that is already available. Try to collect any existing documentation, organizational charts, or business model canvases, and adapt from there.

To make sure that your capability map reflects the business well, you should continue to gather information from different stakeholders and departments. After all, they are the ones most familiar with the inner workings of the business and its departmental activities. By doing this, you’ll be able to clearly define the full scope of capabilities and understand their placement in the organization.

Create a hierarchical structure

Organizations typically have a large number of capabilities that are vital for its day-to-day operations, but not all of them are directly tied to the value proposition and delivery. For this reason, organizations typically make a distinction between core and supporting capabilities:

Core capabilities are performed to provide services or products to customers. They are critical to a business’ performance and competitive advantage. Examples include “Supply chain management” in the retail industry and “Innovation management” in the technology industry.

Supporting capabilities are essential for maintaining business operations but do not directly create value for customers or impact the business strategy. These include “Human resource management” or “Finance and accounting”.

Across both categories, what you’ll often find is that there is a large number of distinct yet interconnected capabilities. Therefore, it’s best to build your capability map as a hierarchy.

At the highest level, you should include the major activities or functions that the organization performs. You can then continue to include more detailed activities as you reach the lower layers. For example, if “Warehouse management” is a core capability, it can be broken down into sub-capabilities like “Physical inventory” and “Shipping and loading.”

Keep in mind, however, that including more detail is now always better. What is most important is that your capability map is useful to the organization.

If you’re wondering whether you’ve included too many layers, consider the purpose of your most detailed ones. Are they relevant for decision-making? And can they help highlight any notable differences between the applications, processes, and data used to perform different activities?

Example of a business capability map in the retail industry

Best Practices for Building a Business Capability Map

a. Encourage collaboration

Capability maps should accurately reflect the entire organization and should serve as a common language between not only business and IT, but all departments. To achieve this, you should involve key stakeholders from across departments, including business leaders, IT professionals, and functional managers.

A collaborative approach will help you capture the needs and realities of the business and help you obtain buy-in. You can do this through interviews, discussions, and iterative feedback sessions. This inclusive approach fosters a sense of ownership and ensures that the map delivers its intended value.

b. Make it clear and practical

Effective communication should not only be a tool for building but also a goal for utilizing your capability map. Business capabilities have the potential to bridge different departments, but in order to do so, they must be clearly visualized and defined.

As a first step, make sure that you assign a meaningful name and clear description to every capability. Cross-check these with relevant stakeholders to make sure they are accurate. Second, build your map using an intuitive and visual tool. This will help you edit and share this view in real time with your selected stakeholders.

Lastly, consider the needs of the business to put it into practice. By building a capability map in an Enterprise Architecture tool, you can connect it to various architecture and business assets. This will help you generate data-driven insights and share relevant information with decision-makers.

One business-critical insight is how capabilities are impacted by strategic goals. Another one might be how data flows between related capabilities. Ask yourself which insights are relevant for the organization and how you can communicate these in the best way.

c. Consider both the present and the future

While it’s essential to address current needs when building your capability map, it’s also important to account for the future. As an organization makes changes to its business strategy or operations, there will likely be a need to either build or adapt the capabilities. The good news is that if you’ve captured a sufficient level of insight into your capabilities and architecture, you will be better equipped to plan these changes.

In general, you should treat your capability as a living document that grows and adapts over time. Not as just a one-off project that you complete and set aside. Consistent updates and revisions will keep the map relevant and help the organization strategically plan new projects and transformations.

Using a Business Capability Map for Transformation Planning

One of the primary reasons that organizations and Enterprise Architecture teams build a capability map is to better inform their transformation planning. By providing an overarching and abstracted view of the business, capability maps offer a lens into how the business currently operates and will develop in the future. This enables organizations to pinpoint key areas that require investment and plan transformation projects that will either enhance or build new capabilities to reach those goals.

Enterprise Architecture plays a key role in this process. By mapping and evaluating the capabilities’ architecture, architects are able to identify and design the required changes to reach transformation goals. This includes several key steps.

Tactical Planning

Tactical planning involves assessing relevant capabilities to identify potential improvements to the current landscape. This assessment may address the maturity, health, or other performance metrics of the capability.

Strategic Planning

Strategic planning includes aligning capabilities with business goals to either enhance existing ones or identify opportunities for building new capabilities. This process results in a future-state architecture designed to achieve long-term strategic objectives.

Solution Design

By analyzing the organization's needs and existing infrastructure, architecture teams design both the high-level and detailed solution that is aligned with the goals. This includes an overview of the business requirements as well as detailed application, technology and process designs.

To dive into a more detailed approach for transformation planning using business capabilities, explore our eBook “Business Capability Mapping: Strategies for Transformation Planning”.