10 years, 9 months ago

The Chicken or the Egg. Process or Capability. Which comes first?

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By Bill Cason, CTO, Troux 

chicken egg blogIn conversations with customers and prospects we sometimes find they are struggling with the right starting point to bring a business architecture focus to their EPM program. Should they start with a business capability approach or a business process approach? This sounds like the “chicken or egg” dilemma — which comes first? Much like the chicken and the egg it isn’t an either/or situation, you will have to have both, and much more, for a successful program. That said, the “which comes first” question is probably the wrong question; we should be asking what outcome are you looking for? If the outcome is tactical such as improving a specific process then you might want to start with understanding that process and where it fits in the value chain. Alternatively if the enterprise is looking to the greater value you will likely need to take a different and more considered approach.

Strategy to Execution.
There are a multitude of benefits to a business architecture program, but certainly one of the most important is to improve “strategy to execution”. In fact, a Harvard Business Review survey of 1000 companies reported that only 37% thought they were “very good” or “excellent” at execution. If this is the objective then you will first have to start with understanding the strategy. One of the best approaches to understanding strategy is to understand how strategy affects the business. Since business capabilities are a common and very useful abstraction of what the business does they are an excellent starting place to begin the work of linking strategy across the set of enterprise portfolios. Using business capabilities as a common foundation for assessing enterprise performance it will be possible to create an investment roadmap that improves alignment and execution.

But What about Business Processes?
Business capabilities create the context for strategic planning, but that is not the end of the story by any means. Whereas business capabilities define what the business does, it is business processes that define how the business executes. Business processes and their assembly into value chains provide important baseline performance information for assessment of business capabilities. This baseline information can be compared to industry benchmarks and future state targets to highlight investment needs and possibly even the need for creation of new capabilities. Furthermore, there has been a proliferation of Business Process Management Suites (BPMS) across the enterprise. These suites enable the modeling, simulation, execution and monitoring of processes. When integrated with an enterprise portfolio management system they can provide ongoing measurements— but given the departmental nature of their usage they likely will not give a complete picture of the process landscape across the enterprise. In most cases performance information will require both automatic and manual assessments (see our Case Study: Capabilities-Based Planning at Fidelity Investments). In fact, in many instances manual subjective performance assessments are “good enough” to start driving real business value.

A Complete Picture.
An assessment of the business capabilities’ performance sheds light on the high priority investment areas but to get a complete picture you will need to understand how the other enterprise portfolios support those capabilities. A complete picture would include how the application, information, and technology portfolios impact the investment plan. Only then can you be sure that not only are doing the right things, but also doing them right (see our blog ‘Doing the Right Thing vs. Doing Things Right’).

Learn more:
Surveys indicate that both BPM and EA are top of mind with today’s CIO’s This comes as no surprise as CIO looks to the EA team to lead strategy development and they look to modern BPM suites to deliver those transformations. Unfortunately in the real world there are gaps in the “strategy to execution“ of a transformation. Our upcoming expert brief will discuss how to leverage the integration of BPM into your EPM program to deliver improved business transformation and identify gaps and redundancies in your Enterprise Portfolios.

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[1] http://hbr.org/web/extras/strategy-execution/1-slide