Why is Business Capability Mapping Beneficial?
Thousands of years ago, people used maps to discover where they were and understand how to get to where they wanted to go. The technological revolution continues to reshape our world, so businesses need to use maps to determine where they are and where they need to go.
Businesses often use various maps to explain roles, responsibilities, processes, and systems. You can use flowcharts, diagrams, org charts, timelines, and so on to build a business map. You can easily see where improvements are needed and where your business needs to optimize when you use maps.
In addition to ease of reading and understanding, business capability mapping helps keep the focus on the big picture and align internal processes. This article is devoted to business capability maps, a map that helps companies clarify what they do rather than how they do it.
What is a Business Capability Map?
Mapping business capabilities is considered an important step in business process management (BPM). It is an overarching term that refers to the process of mapping business capabilities to learn more about how to optimize and improve them. Optimizing and improving a business involves understanding its strengths and its values. Capability maps can make that happen.
A capability map is also known as a business process map. The purpose of capability mapping is to carefully examine a company's existing strategies, which are at the core of the value they offer to its clients. In contrast to business process management, it includes existing and upcoming processes.
Ultimately, business process management is a business capability map that can be used to better understand what processes can add the most value to the enterprise. To create a business capability map, businesses must ask themselves:
What are the most common business processes we undertake?
Which processes are essential to our value proposition and generating value?
How stable are our existing business models?
What are the Benefits of Business Capability Maps?
Using business capability maps supports efficient and effective business management. For example, they explain how well or poorly available IT applications support your business capabilities. You can then figure out where improvements are needed.
Other benefits include:
Ensures funding matches core competencies.
Shows an enterprise-wide view of business motivation, capabilities, processes, data, and resources.
Creates a common language to facilitate communication between diverse departments and divisions. The goal is to keep everyone on the same page.
When Would You Use Business Capability Maps?
Business capability maps can be useful in several situations -
Organizing Departments. After a merger and acquisition, the functions of the two companies are consolidated. The functions are often overlapping and redundant. A business capability map is a good tool for identifying overlaps between organizations.
Planning for the Future. Business capability maps are useful when planning long-term, multi-year investments. You can use the maps to identify areas that need funding based on the gaps between current and future capabilities.
Creating Roadmaps. Conceptualizing new products or services can be helped by a product roadmap and capability mapping. Keep everyone on the same page by keeping the vision of the finished product in focus.
Things To Consider When Creating Your Business Capability Map
Business capability maps represent a company's items, processes, and assets, not simply checklists and boxes. A business capability map is a tool that companies use to map activities related to their strategic goals. In turn, this will help understand the company's potential and capabilities by analyzing its structure and resources.
Creating a business capability map is an iterative process. However you choose to go about it, you need to keep these things in mind:
Understand your business' value chain. Value chain refers to the chain of activities that a company undertakes to identify what it needs to provide value to the market. This process is ongoing. They can be developed over time. Creating a business capability map becomes easier once you've defined your value chain.
Utilize Your Experiences. Make your organization's capability map unique by leveraging technology and business knowledge.
Take stock of where you are and where you are going.
To complete your value chain, collaborate with team members from other teams in real-time. Determine the major capabilities you and your business require.
How Can Organizations Develop Capability Maps?
Here are two things to consider:
Start by identifying which core capabilities are necessary for the organization and which are strategic.
Secondly, how is the organization currently performing?
You must list all the critical capabilities your organization requires at the moment. This could include delivering programs, developing employee skills, writing content, etc. Decide on the one of utmost importance right now and begin working on it.
Business Capability Map Approaches
For those who decide to start from scratch and perform capability mapping, there are two options to consider:
Straw Model-Based Approach
To create a business map from scratch, you will need to assemble a cross-functional team of experts from both the business and technology fields.
Business models that work best are tailored to the customers' needs and to the industry's specific needs. Suppose you are creating a business model innovation for your company. In that case, you should benchmark the current business models of the most innovative firms in the world—research and model your innovation after what the top 5 companies in your industry are doing. You will then be able to create something that customers will want to pay for.
Understanding Business Capability Mapping
When you're creating a business capability map, you should focus on identifying capabilities and arranging them hierarchically. The purpose of this is to connect strategic vision and realized value. During this process, business capabilities are identified as existing practices crucial for the business's core operation. They are prioritized according to executive vision and day-to-day operations as important factors. The following capabilities are part of the business:
Sales and marketing
Production chain management
How To Use Business Capability Map?
The benefits of business capabilities can vary depending on how they are defined. A capability map can serve several purposes. These include:
Planning for Investments
Suppose your organization is planning for investment, and you already have capabilities mapped out from the previous years. In that case, a strategic vantage point can tell where your money would best be spent. It provides a broad overview of the current situation versus the future, making it the cornerstone of capital investment planning.
By identifying existing overlaps, organizations can disassemble an IT unit when becoming part of another organization with a current IT unit.
Duplicating essential functions throughout a business unit is not cost or resource-efficient. Another result of process mapping is discovering areas of a business where functions are not working in the company's favour.
How Do You Create a Business Capability Map?
Business capability maps do not apply to all situations. Below are some general guidelines to assist you in developing a procedure that works for you. CEO-ME's intelligent features and templates will help you build a better future for your company by making it easier to collaborate and make better decisions.
1. Begin with the value chain
A value chain is made up of all the steps and processes that lead to the release of a product or service into the market. Using a value chain, you can identify what our business capabilities are and how these align with business activities like material and equipment procurement, manufacturing, resource management, and marketing.
2. Industry and vision alignment
Understand the market forces driving your industry and list your firm's strengths. List how these strengths align with your program vision.
3. Document capabilities
Focus on customer-related activities like onboarding, account access, retention, and so on by bringing together subject matter experts. This includes determining who the stakeholders are, managing expectations, etc. Also, focus on distribution channel activities such as client service and relationship management.
Business support activities such as accounting, risk, and compliance must be documented. Moreover, don't forget about infrastructure management, data management, etc. Break down these capabilities into smaller units and subcategories of other capabilities. Identify how they are related. Define your business model based on the findings of this activity.
4. Overlay business and technical architecture
In addition to your business architecture, it is important to have a capability map. In addition, your IT architecture should be included. You can then ensure that business and IT teams are aligned and working towards the same goals.
5. Review and prioritize
Review the defined capabilities with key stakeholders. Determine where gaps and redundancies exist. Identify the capabilities that have a higher customer value and give them a higher priority, then work your way down to the capabilities with the lowest customer value.
Using capability mapping, companies can identify what they need to do to achieve their desired results. Businesses can define business capability maps properly and save money, lower risk, and expand. To link execution to strategy, you may establish which capabilities support the core strategy pillars, align funds to core capabilities, and define, monitor, and measure key performance indicators.
You can outsource and standardize your commodity capabilities by focusing on capability mapping to give your company a competitive advantage. In this post, we hope to have provided you with a better understanding of capability mapping. Check out our blog for more info about business process management and optimization! Cheers to your success.