What Are Technical Capabilities and Why Are They Important?

As we covered in the What are Business Capabilities, Business Capabilities are the core functions that a business undertakes. For example, a real estate company buys and sells properties, manages rentals, often has a finance division arranging mortgages, and so on.

Similarly, Technical Capabilities, also known as Technical Reference Architecture, define a company’s ability to deliver business services but from a technical perspective. They refer to applications and infrastructure concepts and are agnostic of any specific business activity.

In our example, the Technical Capabilities of a real estate company will include reporting on property rentals and inter-office communications.

A set of identified and defined Technical Capabilities is referred to as a Technical Capability model.

The need for a separate Technology Capability model may not be immediately obvious. After all, isn’t the technology there to support the business?

The answer is yes but the problem is that using a Business Capability model to describe IT systems may not accurately describe what all the IT systems can do. This is because, fundamentally, software comes in two flavors:

  1. the first is designed to do one thing and one thing only, straight out of the box. It is specialized and designed to perform a particular Business Capability or Function, such as paying customers or running marketing promotions

  2. the second is more generalized and can be configured to do many different things. For example, one application could be used for payments to customers, or to run marketing promotions, but could equally be used to do a whole host of other things

Ardoq business capabilities vs technical capabilities

This can be demonstrated using the followed example. Assume that I have an SAP Accounting System which I use for running my accounts, and a Business Intelligence (BI) System which I use for analyzing those accounts. My SAP system is purely for accounting, I couldn’t use it for running a marketing campaign, but I could use my BI system for analyzing marketing campaigns.

Why? Because out of the box, the BI system doesn’t do anything but analyze data. What kind of data, in support of which business capabilities or processes, is determined by its configuration.

If I mapped my BI system only to the Business Capability it currently performs, I could be misled into thinking it’s a dedicated Accounts Analysis system. As a result, when I require a Marketing Analysis system, I could end up purchasing another application rather than using something that I already have.

So the Technical Capability model is used to describe how lower-level capabilities, such as data analysis, can be configured to support multiple business capabilities.

In this way, by mapping out the IT systems using both Technical Capability and Business Capability models, we get a much more accurate view of how efficiently the IT estate has been implemented.

technical capability

How Are Technical Capabilities Categorized?

Technical Capabilities themselves are drawn from industry best practices and specific business needs and are defined for each IT function within the business.

Each technical capability is unique for the business and is completely product agnostic.

The information about each capability is collected, via a standard template, using appropriate resources within the business, usually technical personnel or employees with IT knowledge.

As with Business Capabilities, identifying, naming, and clarifying each capability not only determines the technical services provided to the business but creates a common framework and structure that all parts of the company can understand.

What Are the Benefits of Technical Capabilities?

The key benefits that a business will get from defining its Technical Capabilities are to provide technical clarification about its existing technology and act as an enabler for business efficiency.

Once the Technical Capabilities have been identified the Business Capabilities can be mapped onto them. The Technical Capability model can then really deliver value by linking the capabilities to the actual technologies being used. Very quickly it is possible to see details such as:

  • Technology weaknesses (i.e. a key business area is not well supported by IT e.g. products being mapped are End of Life, not got the level of support). Whilst some of these will be ‘no brainers’ it is more than likely a few surprises will also be identified

  • Technology duplication as sometimes we’ll see multiple products in one area. Can the product list be rationalized to maximize license investment? Would it be more cost-effective to invest in one high-end product and eliminate lots of smaller niche applications?

  • Where IT investment will likely improve key capabilities versus investment in niche capabilities

  • How technology change can impact the business, for example replacing a Content Management System may impact an organization's online presence, but it may also show the impact on how we deliver support services to customers

  • If the business prioritizes a specific area, how does that map onto IT systems and processes?

Whilst a lot of this will seem pretty obvious, it will uncover unexpected details and most importantly provide a relatively simple set of visualizations as cross-references that help understand the business and explain the impact of IT-related decisions on the business in their terms.

Having a well-defined technical capability model enables a business to respond more quickly and efficiently to changes in its business resulting from growth, mergers, acquisitions, or new legislation, and to assist with budget planning.

Summary

Companies are constantly looking to digitally transform themselves to maintain a competitive edge, often in a complex and financially challenging marketplace. One of the key enablers of digital transformation is the creation of a Technology Capability model.

A technology capability model identifies and documents the technology platforms and infrastructure concepts used by the company to support its business operations.

By defining these capabilities, and then mapping the Business Capabilities onto them, an organization has a focus on application rationalization, unused IT capability, IT investment requirements, and many other strategic activities.

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