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Capabilities in Businesses

Business capabilities are the core abilities or capacities that an organization needs to achieve its objectives, deliver value, and operate effectively.

They are what a business does (its intrinsic abilities), not how it does it (processes, people, or systems).


Definition

A business capability represents what the organization is able to do — regardless of how, where, or by whom it is executed.


Key Characteristics of Business Capabilities

FeatureDescription
Stable over timeUnlike processes or technologies, capabilities are relatively stable even as tools and org structures change.
Independent of implementationDescribes the what, not the how. E.g., "Customer Management" is a capability; CRM software is a tool used to implement it.
Outcome-focusedTied to delivering value, achieving outcomes, and enabling strategy.
Modular and hierarchicalCapabilities can be broken down into sub-capabilities. For example: "Marketing" → "Digital Marketing" → "SEO Management".

Examples of Common Business Capabilities

DomainCapability
Sales & MarketingCustomer Relationship Management, Lead Generation
FinanceBudgeting, Financial Reporting
HRTalent Acquisition, Workforce Planning
ITIT Service Management, Data Management
OperationsSupply Chain Management, Inventory Control

Why Business Capabilities Matter

  • Strategic Planning: Helps executives align investments with business strategy.
  • Gap Analysis: Identifies weak or missing capabilities needed to compete or transform.
  • Digital Transformation: Enables organizations to focus on what needs to change, independent of current systems.
  • Mergers & Acquisitions: Helps in assessing overlap or gaps across organizations.
  • Enterprise Architecture: Forms the foundation for capability-based planning and roadmaps.

Business Capability vs Business Process

Business CapabilityBusiness Process
What a business doesHow it does it
Stable over timeMay change frequently
Abstract, strategic viewConcrete, operational view
"Order Fulfillment""Pick, pack, ship an order"

Business Capability Models

Organizations often visualize capabilities in capability maps (e.g., boxes grouped into categories). These maps:

  • Support maturity assessments
  • Inform technology investment
  • Enable strategic discussions between business and IT

1. General Business Capability and Maturity Frameworks

Capability Maturity Model Integration

  • Focus: Engineering, Software
  • Use Case: Process Improvement
  • Focus: IT governance and management.
  • Similarity: Provides maturity models and capability assessments similar to CMMI.
  • Use Case: Aligns IT with business goals, manages risk, and ensures value delivery.

Business Process Maturity Model (BPMM)

  • Developed by: Object Management Group (OMG).
  • Focus: Organizational business processes.
  • Similarity: Structured in levels like CMMI, from Initial (ad hoc) to Optimizing.
  • Use Case: Process improvement, operational efficiency.

PCF (Process Classification Framework) by APQC

  • Focus: Business process benchmarking and management.
  • Similarity: Organizes business capabilities and processes but less prescriptive than CMMI.
  • Use Case: Capability modeling, benchmarking against industry peers.

Baldrige Performance Excellence Framework

  • Focus: Organizational performance across leadership, strategy, customers, operations, and results.
  • Similarity: Encourages continuous improvement with maturity assessments.
  • Use Case: Holistic business excellence.

2. Software and Systems Engineering

ISO/IEC 330xx (SPICE – Software Process Improvement and Capability dEtermination)

  • Focus: Software process capability and maturity.
  • Similarity: Very similar in structure to CMMI, based on capability levels.
  • Use Case: Software development process improvement, often used in automotive and aerospace.

SAFe (Scaled Agile Framework) – Business Agility Maturity Model

  • Focus: Agile maturity across the enterprise.
  • Similarity: Provides maturity assessments and capability maps for agility across functions.
  • Use Case: Agile transformation, lean portfolio management.

3. Enterprise Architecture / Capability Planning

TOGAF (The Open Group Architecture Framework) Capability Maturity Model

  • Focus: Enterprise architecture capability.
  • Similarity: Has its own maturity model for architectural practices.
  • Use Case: EA development and governance.

Gartner’s Business Capability Model

  • Focus: Mapping what a business does, independently of how or where it's done.
  • Similarity: Focuses on capabilities rather than processes, often used with maturity models.
  • Use Case: Strategic planning, IT alignment, capability-based planning.

4. Industry-Specific Capability Models

  • eSCM (eSourcing Capability Model) – For sourcing and IT-enabled services.
  • eTOM (Enhanced Telecom Operations Map) – For telecom service providers.
  • SCOR (Supply Chain Operations Reference Model) – For supply chain performance and capability.

Summary Table

FrameworkFocusMaturity Model?Primary Use
CMMIEngineering, softwareYesProcess improvement
COBITIT governanceYesGovernance, risk, compliance
BPMMBusiness processesYesProcess maturity
PCF (APQC)Business capabilitiesNo (structure only)Benchmarking, capability modeling
BaldrigeOrganizational excellenceYesBusiness performance
ISO/IEC 330xx (SPICE)Software processYesSoftware quality/process
SAFeAgileYesAgile transformation
TOGAFEnterprise architectureYesEA capability planning
Gartner BCMBusiness capabilitiesSometimesStrategic planning
SCOR / eSCM / eTOMIndustry-specificYesSpecialized domains

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