As described in our “What Are Business Capabilities” document, Business Capabilities refer to the core functions that a business undertakes. By defining its Business Capabilities, an organization understands its actual business and how it functions.
Business Capabilities are the building blocks of the organization’s business value streams and business processes and are the enabler for the business to develop through application rationalization, budgeting, mergers and acquisitions, and so on.
They provide the business structure needed to support modernization, expansion, and digital transformation.
A set of identified and defined Business Capabilities is referred to as a Business Capability model.
A Business Capability Model provides the structure and terminology to talk about what the business does in a standard way across the organization.
Businesses are always looking to improve how they operate and the products/services they take to market. The capability model provides the structure to evaluate each part of the business so that improvements can be identified.
The following document describes how to use a capability model to assess how well the business is operating, who is interested, and how it can start the business case for driving improvement.
Just like with Application Rationalization, where we assess the fit of the application, we should take a similar approach for capabilities. Capability Maturity is one of the metrics we use to determine how well a capability is delivering its desired outcome.
The following document describes how to capture the capability maturity analysis in a field value, who is interested in the metric, and how it can be used to benefit the organization.
What is Capability Maturity?
Business Capabilities are composed of people, processes, technology, and data. The maturity of a particular capability is the sum of how well those parts deliver. The Capability Maturity field, a field we provide in our capability metamodel, is used to assess how capabilities are delivered in the organization.
Capability models can contain multiple values for representing how well the people, processes, technology, and data are delivering a particular action for the company. In our Use Case guides, we use the “capability maturity” field to capture this information.
Some organizations use multiple criteria for capturing the maturity level. If you do capture multiple maturity criteria for capabilities then we recommend that you create a single calculated field to record an aggregated value. This makes it easier to visualize maturity results across your entire capability model, for example as a heatmap or bubble chart
By assigning a value to this field you will be able to see where improvements could and should be made to these capabilities.
Using this field will also demonstrate to what extent the processes, departments, systems, and skills that realize this capability are complete, reproducible, and adaptive.
The field can be further combined with other fields to give added depth and granularity to help define a strategy for capability improvement. For example:
Combining Business Fit / Technology Fit with Maturity will indicate IF we should be investing in the capability
Combining the Cost / Complexity fields with Maturity will give you an in-depth indication of where investment may be required
Having up-to-date capability maturity fields will give your organization a clearer understanding of the maturity of its business capabilities. These are important metrics for understanding business capability rationalization, capability assessments, and strategic planning.
What are some ways to determine the maturity of business capabilities?
The implementation in our standard metamodel for capability modeling uses the capability maturity field, a number field, with the following categories of classification of each business capability:
Your organization has no systems, processes, or skills to realize this capability.
Your organization has processes, systems, or skills to realize this capability but they are immature or hard to reproduce.
Your organization has stable or reproducible processes, processes, or skills to realize this capability although they are not yet efficient.
Your organization has stable, reproducible, and performance-managed processes, systems, or skills to realize this capability.
Your organization has reproducible, efficient, and continuously adaptive processes, processes, or skills to realize this capability.
The field should be populated by the appropriate capability expert and, typically, reviewed by the business stakeholders. It is, therefore, subjective in valuation.
However, as the model is developed and used, and more data is introduced, the Capability Maturity field value can be determined through the relationships the capability has with other components in the environment and their metadata. This makes the maturity valuation more objective.
Some organizations like to capture two maturity ratings, namely the “current” maturity of a capability and the intended “target” maturity. This allows for visualization of improvement against change.
It should also be noted that not all capabilities need to be improved to level 5. For example, you don't necessarily need high maturity on a capability that has low market differentiation.
There is always a cost associated with increasing the maturity of a capability so it is recommended to perform a cost-benefit analysis to determine if the required investment will provide a positive return.
The following two examples demonstrate an immature capability and a mature capability:
An organization has a service center capability to address customer problems. The company has an application for logging details about the problem, and an escalation process if an agent is unable to deal with the issue, but does not have sufficient people in the service center itself to answer calls promptly. In this case, the capability would be deemed to be “limited”.
An organization has an order processing capability, which manages orders from customers. The company has an application that automatically takes an electronically placed, inbound, order, processes it, undertakes credit checks, completes quality assurance, generates a picking list, and issues an acknowledgment to the customer. In this case, the capability would be deemed to be “optimized”.
Presenting Capability Maturity
Capability Maturity metrics can be presented to your organization in several ways with options including:
A straightforward presentation of the field and its value.
Heatmaps can be created, using conditional formatting, tabular overviews, and dashboards, to help analyze capability fields. Use the Capability Map and Dependency Map to analyze and present the Maturity attribute.
Note: Keep in mind that all views are context-sensitive, meaning you can drill down to just your core capabilities or a specific domain.
It allows you to view numerical component values in a matrix. In the screenshot below, you can see capability market differentiation vs. maturity. The bubble size represents the complexity.
How is Capability Maturity used within an organization?
Within a Capability Model, the Capability Maturity field can be used to quickly identify if the processes, departments, systems, and skills that realize each capability are complete, reproducible, and adaptive.
It can also be combined with other fields, such as Market Differentiation, Complexity, or Cost, to allow an organization to assess a capability’s performance. Based on this assessment the company can quickly identify, for example, if additional investment is required or if an existing investment has been well spent.
The capability maturity field can be used in multiple other use cases or techniques such as:
Business Capability Realization
The market differentiation classification of a capability will indicate how essential the desired business outcome is to your organization. When comparing that classification to a capability maturity level we can see how well we deliver these critical capabilities to our organization. With this information, we can pinpoint capabilities that need investment.
Further, the capability maturity field can be combined with the Cost, and Complexity fields to give you a more detailed assessment of where potential investment is required.
These three fields will highlight the most important capabilities that your business has, how much is spent on them, how the capability is realized, how it needs to be improved, and how difficult any improvement would be.
Assessing and building capability roadmaps, with clear transitions, illustrate how and when capabilities will mature over time.
You can then use these metrics and roadmaps as input when forming your approach to realizing Business Strategy.
The capability maturity field can be an important metric when identifying if multiple applications are serving the same purpose or have a functional overlap. If such an overlap exists the application could be considered for the Application Rationalization process.
For example, this field can be combined with the Complexity and Cost fields to help your organization quickly identify if an application should be tolerated, migrated, invested in, or eliminated.
Mergers and Acquisition
With any merger or acquisition, there will be systems, processes, and applications from both organizations. Comparing the capabilities that they realize will help prioritize the possible alternatives that are identified during post-merger integration planning.
Capability Realization analysis, Application Rationalization, and post-merger integration are all techniques that can use a capability map to evaluate the company, with the capability maturity value being a key metric within these processes.
Using Capability Maturity
Capability Maturity is a core metric assigned to each capability which, when combined with other fields such as Cost or Complexity, can be used by the business to drive forward improvements
Using appropriate capability experts a capability assessment can be completed, the output of which will be used for budgeting, strategic planning, and strategy setting.
It is therefore strongly recommended that the maturity of each capability be properly evaluated, and the capability maturity field correctly populated.
As you capture more evaluation criteria about your business and IT, the capability maturity field can be combined with other fields or components of the metamodel to make the metric evaluation more objective than subjective.
Check out the Business Capability Realization guide to see capability maturity in action.