Business Architecture concepts that help Business and IT to align (Value Streams, Business Capabilities, Business Processes)

Business Architecture has become a broadly used concept not only by Enterprise Architects but also by all kinds of stakeholders, including business people. In today´s article, we discuss three major concepts that can be used to describe an organization´s business architecture.

How to Model your Business Architecture?

In an Enterprise Architecture model, business architecture usually sits on top of the other layers. It serves as the connection between the IT layers (e.g., applications, data, technology) and the translation to business terms. However, business architectures are not only used in the area of Enterprise Architecture. Moreover, development teams, product teams, and other teams regularly exchanging requirements and progress with business stakeholders have adopted the concept of business architecture. In some organizations, this is reflected by the usage of business capabilities. In other organizations, value streams or business processes are used for that. What are the differences between them and when should you choose which one?

Business Capability Models

Business capabilities focus on what has to be done or what an organization can do. They are rather generic and high-level. Their goal is to provide a stable description of the business. To achieve that, a business capability is the result of a combination of different components. Typically, those are people, processes, and technology. Considering all three aspects allows describing an ability of an organization as independently as possible from each individual one. For instance, a capability should not describe a particular process of an organization or be based on a particular technology that the company uses. Consequently, a capability is more stable over time as it does not include many details about company particularities.

Business capability mapping is used as the translator between business and IT. Common situations in which there is a use case for business capabilities include (click here for the detailed explanation):

  1. Provide IT landscape transparency on all underlying enterprise architecture layers (typically applications, data, technologies)
  2. Prioritize projects based on the importance of their underlying business capabilities
  3. Optimize demand management processes based on business capabilities
  4. Optimize application landscapes based on business capabilities
  5. Use business capabilities to align different IT landscapes in the context of an IT post-merger approach

If you want to get started with business capabilities and do not repeat the failures of others, I highly recommend you read through the 12 Must-Dos to get Business Capabilities Right

Business Process Modelling

A business process is a sequence, in which functional activities and decision points are conducted. In contrast to business capabilities, which describe the what, business processes describe how an organization does something. A business process brings clarity around the order and reason for activities being performed in a predetermined order. It illustrates dependencies and the effect if certain activities are not carried out.

Nowadays, many companies have detailed business processes modeled on different levels. However, starting to model new business processes can be time-consuming. To save time and resources and to ensure industry standards, many organizations start their detailed modeling activities with an industry-standard framework, such as the one from APQC.

Business processes are used when the order of something or decision points are important. Typically, this is the case when process models are used to achieve operational excellence.

Value Streams

Value streams are a special type of business process. They focus on maximizing the value for a customer. This is done by showing the outside-in perspective of a business process or, more generally, the operations of an organization. A value stream visually shows how an organization creates value for a customer, making transparent all required end-to-end activities that add value. In addition, value streams include:

  1. The stakeholders initiating or being involved in the value stream
  2. The phases in which exactly value is generated
  3. The value proposition derived from the value stream

Value streams are the most high-level concept when it comes to business architecture. They are typically used to gain a broad, common understanding of a business. For instance, during restructuring activities. In a second step, business capabilities would be used to understand what exactly creates the value. In the last step, a business process would be modeled to understand the details. This shows that all three concepts have their place in business architecture, however, they especially differ in the level of detail that they are made for.

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