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Business meets Architecture
> Detecon Executive Briefing
Business Process
IT Strategy
Strategy
Business
Capabilities
To bridge this gap business and IT senior management need a joint approach. Within such
an overarching approach, experts from both sides define the bridging framework, which
comprises a common taxonomy and artifacts for the handover of deliverables based on a
commonly agreed language. This is what we call the Logical Business Architecture.
Typically, the initial project to develop the company-specific framework is initiated by the
corporate CIO or CTO and is led by an enterprise architect. It is important that this initial
work is executed in a short timeframe - two months at the most. After this short phase, the
framework with its components must be optimized as a result of its use within projects and
negotiations between business units or between business units and IT.
Business
Capabilities
Illustrative Excerpt
Business Capability:
Customer Scoring & Credit Rating
...
...
Business Object: KPI
Risk Profile
Figure 2 provides an illustrative excerpt of how the units are structured into high-level
domains like CRM and detailed business capabilities. Because they are identified top-down
and independently of the concrete process context, stability is emphasized. Business
capabilities can be realized either by means of IT services or human resources. This frees
them from the ballast of a process structure determined by the present organization, as well
as from the restrictions imposed by the IT applications presently in use. In addition to the
clear assignment of business capabilities to domains, business objects are allocated to each
business capability. Performance indicators (KPI) for measuring target achievement and
performance are a further important characteristic which should be designed for each
specific business capability.
The business capabilities should be designed so that they can exist autonomously without
being isolated. Fundamental design principles should enable the independent development
of the business capabilities, while at the same time ensuring that they share enough
common features to achieve the highest possible degree of standardization for their
interaction. They can then be used as a toolbox of building blocks which can be assembled
in flexible compositions for the execution of processes. If a high degree of implementation
standardization is achieved, then there will be savings in the set-up costs for additional and
changed processes and in the integration costs for new IT components.
What are the most important design principles for business capabilities so that on the one
hand greater flexibility and, on the other hand, cost efficiency through standardization can be
achieved?
Besides reusability and abstraction for increasing the usage of a single capability in different
business processes free from organizational straitjackets, further important design principles
for business capabilities include independence from specific status, modularity, and
granularity. If business capabilities are specified on the strict basis of structural logic,
liberated from any concrete context of processes and organization and without the ballast of
the currently implemented IT applications, a mapping from business processes via
capabilities to IT services and applications becomes possible. This mapping creates an
integrated view of process and IT architecture and a standard language between business
and IT. The joint language can also contribute to the simplification of agreements in
communications with partners and suppliers. The resulting transparency can be used to
realize cost effects by advancing standardization efforts from the technological to the
business process area. Also investments into IT can be steered more purposefully in line
with how critical the supported processes are to business.
Even after completion of the project the portfolio management of the business capabilities
means that the strategic planning process for the CRM landscape can be performed in an
integrated way between business and IT. This leads on to the overarching management of
the implementation covering both the process and IT aspects. The company can respond
specifically to unexpected changes during implementation, raising the overall level of
quickness and alertness whenever there are changes on the market.
Recommendations
A stable logical business architecture opens the door to increased flexibility in processes and
IT. It is the foundation for a low-cost, rapidly effective adaptation to market changes and
technological developments. BPM and SOA play a decisive role in the realization of this
holistic approach.
Management should keep the following points in mind when setting up a logical business
architecture:
Q Always select a top-down procedure for the design and specification of the logical
business architecture. This is the only way to ensure that the identified business
capabilities satisfy the requirements derived from the corporate strategy.
Q The business capabilities within the logical business architecture describe the business
functionality required for the implementation of the business model. Current
organizational circumstances and IT restrictions must not be allowed to play a role during
their customization.
Q A logical business architecture not only supports communication and coordination
between the business side and IT, but performs the same function between the various
business departments. So representatives of all units must participate in its development.
Q Do not spend too much time working on a concept. After a relatively brief phase for the
definition of the architecture elements and top level business objects, they should be
quickly put to the test in practice, e.g. in projects.
Q Establish a change request procedure which coordinates and implements change
requests on business capabilities within the framework of the portfolio lifecycle
management process.
Q Establish a governance function comprising representatives from business units and IT
for the maintenance and evolution of the logical business architecture. This could be an
architecture board, provided that it is authorized to make decisions.
Q Support demonstrated by senior management within the framework of a communication
concept will increase the acceptance of the logical business architecture. The logical
business architecture will then rapidly be applied on a broad scale going beyond the
binding requirements.