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Private Equity and Venture Capital Industry Business Reference Architecture

Business capability maps, value streams, and strategy maps for the Private Equity and Venture Capital Industry.

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  • Private Equity & Venture Capital leadership requires a unified and validated view of business capabilities that helps CIOs and leadership accelerate the strategy design process and that aligns initiatives, investments, and strategy.
  • The business and IT often focus on a project, ignoring the holistic impact and value of an overarching value stream and business capability view.

Our Advice

Critical Insight

Using an industry-specific business reference architecture is central and has many benefits to organizational priorities. It’s critical to understanding, modeling, and communicating the operating environment and the direction of the organization, but more significantly, to enabling measurable top-line organizational outcomes and the unlocking of direct value.

Impact and Result

  • Demonstrate the value of IT’s role in supporting your organization’s capabilities while highlighting the importance of proper alignment between organizational and IT strategies.
  • Apply reference architecture techniques such as strategy maps, value streams, and capability maps to design usable and accurate blueprints of your private equity & venture capital operations.
  • Assess your initiatives and priorities to determine if you are investing in the right capabilities. Conduct capability assessments to identify opportunities and to prioritize projects
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Private Equity and Venture Capital Industry Business Reference Architecture Research & Tools

1. Accelerate the strategy design process

Leverage a validated view of the Private Equity & Venture Capital organization’s business capabilities to realize measurable top-line business outcomes and unlock direct value.

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Private Equity and Venture Capital Industry Business Reference Architecture

Business capability maps, value streams, and strategy maps for the Private Equity and Venture Capital Industry

Analyst Perspective

In the age of disruption, IT must end misalignment and enable value realization.

An industry business reference architecture helps accelerate your strategy design process and enhances IT’s ability to align people, process, and technology with key business priorities.

Private Equity and Venture Capital firms are going through a period of rapid change. Most of the core processes and technology are changing, which is creating the need for new talent within these organizations. Part of the challenge with significant change is communicating the complexity to the business and the broader community of stakeholders. The reference architecture is a powerful communications and alignment tool you can use to engage and inform stakeholders.

Photo of David Tomljenovic, MBA LL.M CIM, Head of Financial Service Industry Research, Info-Tech Research Group.

David Tomljenovic, MBA LL.M CIM
Head of Financial Service Industry Research
Info-Tech Research Group

Executive Summary

Your Challenge
  • You are a CIO, head of EA, or chief architect who needs to improve your organization’s understanding of business capabilities and how IT can support them.
  • You are an organization that wants to sharpen its alignment and focus on organizational outcomes and value by using architecture to better inform your IT governance, stakeholder management, and IT strategy capabilities.
  • Before executing any strategic initiatives, you need to understand how the organization creates value and its underlying capabilities and processes.
Common Obstacles
  • You don’t know where or how to begin or how to engage the right people, model the business, and drive the value of business architecture.
  • Business and IT often speak in their own languages without a wholistic and integrated view of mission, strategies, goals, processes, and projects.
  • Business and IT often focus on a project, ignoring the holistic value of an overarching value stream and business capability view.
Info-Tech’s Approach
  • Build your capability map by defining the organization’s value stream and validating the industry reference architecture.
  • Use business capabilities to define strategic focus by defining the organization’s key capabilities and developing a prioritized strategy map.
  • Assess key capabilities for planning priorities through a review of business processes, information, and application and technology support of key capabilities.
  • Adopt capability-based strategy planning by ongoing identification and road mapping of capability gaps.

Info-Tech Insight

Utilizing an industry-specific reference architecture is central, and has many benefits, to organizational priorities. It’s critical to understanding, modeling, and communicating the operating environment and the direction of the organization. More significantly, it is needed to enable measurable top-line organizational outcomes and the unlocking of direct value.

Reference Architecture Framework

Overarching Insight

Using an industry-specific reference architecture is central and has many benefits to organizational priorities. It's critical to understanding, modeling, and communicating the operating environment and the direction of the enterprise, and more significantly, to enabling measurable top-line business outcomes and the unlocking of direct value.

Determine your organizational priority.

Many organizational priorities are dependent on an understanding of how the organization creates value and the organization's capabilities and processes.

Examine organizational opportunities through the lens of business, information/data, applications & technology.

Your understanding of your organization's business capabilities, processes (rules & logic), information/data, and architecture will identify organizational opportunities to create value through reduced costs or increased revenues and services.

Follow Info-Tech's methodology to enable organizational outcomes and unlock direct value.

Your approach indicates the scope of your modernization initiatives.

Build your organization's capability map by defining the organization's value stream and validating the industry reference architecture.

USe business capabilities to define strategic focus by defining the organization's key capabilities and developing a prioritized strategy map.

Assess key capabilities for planning priorities through a review of business processess, information, applications, and technology support of key capabilities.

Sustain capability-based strategy planning through ongoing identification and roadmapping of capability gaps.

Logo for Info-Tech Research Group. Logo for iTRG.

Pinwheel diagram of value in the industry context. At the center is 'Value (Revenue, Margin, Assets)' surrounded by a cycle of '1. Build', '2. Define', '3. Assess & Prioritize' and '4. Sustain'. Surround that are categories 'Business', 'Information/Data', 'Applications', and 'Technology'. On the wings of the pinwheel are 'Governance & Risk', 'Business Context', 'Business Strategy', 'IT Strategy', 'Innovation', 'IT Budget', 'Digital Transformation', 'Core Application Rationalization & Modernization', 'IT Service Mgmt', 'Requirements', 'Data', and 'Org Design/ Operating Model'. The entire pinwheel exists within the 'Industry Context'.

Industry Overview: Private Equity and Venture Capital

'Value Streams' of PEVC: 'Create Fund or Limited Partnership', 'Capitalize Fund or Limited Partnership', 'Identify & Engage Potential Investees', 'Execute Investments', 'Post Deal Integration & Value Creation'.

The Private Equity and Venture Capital industry is experiencing a period of rapid change. Institutional investor preferences are shifting as a result of the rapid adoption of ESG principles. At the same time, there has been a tremendous increase in the amount of capital entering the industry and the number of investment opportunities has not increased proportionately, resulting in an escalating level of competition for assets.

Technology has increasingly been adopted to address some of the changes that the industry is experiencing. Growing use of CRM systems, automation, and workflow optimizations have been driving change. Private equity and venture capital firms with in-house employees are rapidly changing to reflect the new realities of the industry.

Business value realization

Business value defines the success criteria of an organization as manifested through organizational goals and outcomes, and it is interpreted from four perspectives:
  • Profit generation: The revenue generated from a business capability with a product that is enabled with modern technologies.
  • Cost reduction: The cost reduction when performing business capabilities with a product that is enabled with modern technologies.
  • Service enablement: The productivity and efficiency gains of internal business operations from products and capabilities enhanced with modern technologies.
  • Customer and market reach: The improved reach and insights of the business in existing or new markets.

Business Value Matrix

Business Value Matrix with four quadrants defined by an x-axis between 'Improved capabilities' and 'Financial benefit' and a y-axis between 'Inward' and 'Outward'. The four quadrants are 'Profit Generation (outward, financial benefit)', 'Cost reduction (inward, financial benefit)', 'Service enablement (inward, improved capabilities)', and 'Customer and market reach (outward, improved capabilities)'.

Value, goals, and outcomes cannot be achieved without business capabilities

Break down your business goals into strategic and achievable initiatives focused on specific value streams and business capabilities.

Example table for determining business capabilities. The first column is 'Business Goals & Outcomes' listing four Business Goals, two of which are color-coded similarly. The second column is 'Business Initiatives' with Initiatives 1 through 10, each color-coded to match the business goal they help to achieve. The third and fourth columns are 'Level 1 / Level 2 Business Capabilities' with capabilities grouped by 'Value Stream', each of which are color-coded to business goals and the business initiatives that create or improve them.

Rapidly intensifying competition: Editable business capability map

Instructions: Adjust the color of each business capability for your organization. PowerPoint’s Eyedropper tool is useful here.

PEVC business capability map with the PEVC value chain as column headers, 'Create Fund or Limited Partnership', 'Capitalize Fund or Limited Partnership', 'Identify & Engage Potential Investees', 'Execute Investments', 'Post Deal Integration & Value Creation', and row headers 'Defining', 'Shared', and 'Enabling'. Below is a legend with red as 'High Impact', blue as 'Medium Impact', and light blue as 'Low/No Impact'.

Private Equity and Venture Capital business capability map

Business capability map defined…

In business architecture, the primary view of an organization is known as a business capability map.

A business capability defines what a business does to enable value creation, rather than how. Business capabilities:

  • Represent stable business functions.
  • Are unique and independent of each other.
  • Typically will have a defined business outcome.

A business capability map provides details that help the business architecture practitioner direct attention to a specific area of the business for further assessment.

PEVC business capability map with the PEVC value chain as column headers, 'Create Fund or Limited Partnership', 'Capitalize Fund or Limited Partnership', 'Identify & Engage Potential Investees', 'Execute Investments', 'Post Deal Integration & Value Creation', and row headers 'Defining', 'Shared', and 'Enabling'. Some Level 1 capabilities contain multiple Level 2 capabilities.

Glossary of Key Concepts

A business reference architecture consists of a set of models to provide clarity and actionable insight and value. Typical techniques and terms used in developing these models are:

Term/ConceptDefinition
Industry Value ChainA high-level analysis of how the industry creates value for the consumer as an overall end-to-end process.
Business Capability MapThe primary visual representation of the organization’s key capabilities. This model forms the basis of strategic planning discussions.
Industry Value StreamsThe specific set of activities an industry player undertakes to create and capture value for and from the end consumer.
Strategic ObjectivesA set of standard strategic objectives that most industry players will feature in their corporate plans.
Industry Strategy MapA visualization of the alignment between the organization’s strategic direction and its key capabilities.
Capability AssessmentsBased on people, process, information, and technology, a heat-mapping effort that analyzes the strength of each key capability.
CapabilityAn ability that an organization, person, or system possesses. Capabilities are typically expressed in general and high-level terms and typically require a combination of organization, people, processes, and technology to achieve.
(Source: The Open Group, 2009)

Tools and templates to compile and communicate your reference architecture work

Title card for this blueprint.
  • The The Private Equity and Venture Capital Industry Reference Architecture Template is a place for you to collect all of the activity outputs and outcomes you’ve completed for use in next steps.

Download the Private Equity And Venture Capital Industry Reference Architecture Template

Info-Tech’s methodology for Reference Architecture

1. Build your organization’s capability map2. Use business capabilities to define strategic focus3. Assess key capabilities for planning priorities4. Adopt capability-based strategy planning
Phase Steps

1.1 Define the Organization’s Value Stream

1.2 Develop a Business Capability Map

2.1 Define the Organization's Key Capabilities

2.2 Develop a Strategy Map

3.1 Business Process Review

3.2 Information Assessment

3.3 Technology Opportunity Identification

4.1 Consolidate and Prioritize Capability Gaps

Phase Outcomes
  • Defined and validated value streams specific to your organization
  • A validated Level 1 business capability map
  • Decomposed Level 2 capabilities
  • Identification of Level 1 cost advantage creators
  • Identification of Level 1 competitive advantage creators
  • Defined future-state capabilities
  • Identification of capability process enablement
  • Identification of capability data support
  • Identification of capability application and technology support
  • Prioritization of key capability gaps

Info-Tech offers various levels of support to best suit your needs

DIY Toolkit

Guided Implementation

Workshop

Consulting

"Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful.""Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track.""We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place.""Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project."

Diagnostics and consistent frameworks used throughout all four options

Guided Implementation

A Guided Implementation (GI) is a series of calls with an Info-Tech analyst to help implement our best practices in your organization.

A typical GI is between six to nine calls over the course of one to four months.

What does a typical GI on this topic look like?

Phase 1

Phase 2

Phase 3

Phase 4

Call #1: Introduce Info-Tech’s industry reference architecture methodology.Call #2: Define and create value streams.

Call #3: Model Level 1 business capability maps.

Call #4: Map value streams to business capabilities.

Call #5: Model Level 2 business capability maps.

Call #6: Create a strategy map.

Call #7: Introduce Info-Tech's capability assessment framework.

Call #8: Review capability assessment map(s).

Call #9: Discuss and review prioritization of key capability gaps and plan next steps.

Private Equity and Venture Capital Industry Business Reference Architecture

Phase 1

Build your organization’s capability map

Phase 1

1.1 Define the Organization’s Value Stream

1.2 Develop a Business Capability Map

Phase 2

2.1 Define the Organization’s Key Capabilities

2.2 Develop a Strategy Map

Phase 3

3.1 Business Process Review

3.2 Information Assessment

3.3 Technology Opportunity Identification

Phase 4

4.1 Consolidate and Prioritize Capability Gaps

This phase will walk you through the following activities:

  • Identify and assemble key stakeholders
  • Determine how the organization creates value
  • Define and validate value streams
  • Determine which business capabilities support value streams
  • Accelerate the process with an industry reference architecture
  • Validate the business capability map
  • Establish level 2 capability decomposition priorities
  • Decompose level 2 capabilities

This phase involves the following participants:

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

Step 1.1

Define the organization’s value stream

Activities
  • 1.1.1 Identify and assemble key stakeholders
  • 1.1.2 Determine how the organization creates value
  • 1.1.3 Define and validate value streams

This step will walk you through the following activities:

  • Identify and assemble key stakeholders
  • Determine how the organization creates value
  • Define and validate value streams

This step involves the following participants:

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

Outcomes of this step

  • Defined and validated value streams specific to your organization
Build your organization’s capability map
Step 1.1Step 1.2

1.1.1 Identify and assemble key Stakeholders

1-2 hours

Input: List of who is accountable for key business areas and decisions, Organizational chart, List of who has decision-making authority

Output: A list of the key stakeholders, Prioritized list of decision making support needs, Reference Architecture Template

Materials: Whiteboard/Flip Charts, Reference Architecture Template

Participants: Enterprise/Business Architect, Business analysts, Business unit leads, CIO, Departmental Executive and senior managers

Build an accurate depiction of the business.

  1. It is important to make sure the right stakeholders participate in this exercise. The exercise of identifying capabilities for an organization is very introspective and requires deep analysis.
  2. Consider:
    1. Who are the decision makers and key influencers?
    2. Who will impact the business capability work? Who has a vested interest in the success or failure of the outcome?
    3. Who has the skills and competencies necessary to help you be successful?
  3. Avoid:
    1. Don’t focus on the organizational structure and hierarchy. Often stakeholder groups don’t fit the traditional structure.
    2. Don’t ignore subject-matter experts on either the business or IT side. You will need to consider both.

Download the Reference Architecture Template

Define the organization’s value streams

  • Value streams connect business goals to the organization’s value realization activities. They enable an organization to create and capture value in the market place by engaging in a set of interconnected activities. Those activities are dependent on the specific industry segment an organization operates within. Value streams can extend beyond the organization into the supporting ecosystem, whereas business processes are contained within and the organization has complete control over them.
  • There are two types of value streams: Core value streams and Support value streams. Core value streams are mostly externally facing: they deliver value to either an external or internal customer and they tie to the customer perspective of the strategy map. Support value streams are internally facing and provide the foundational support for an organization to operate.
  • An effective method for ensuring all value streams have been considered is to understand that there can be different end-value receivers. Info-Tech recommends identifying and organizing the value streams with customers and partners as end-value receivers.

Outline for determining value streams, starting with 'Industry Value Chain', then 'Value Receivers': 'Customers' and 'Partners', then 'Value Streams' with 'Capabilities'.

Value stream descriptions for Private Equity and Venture Capital

Value
Streams
Create Fund or Limited PartnershipCapitalize Fund or Limited PartnershipIdentify & Engage Potential InvesteesExecute InvestmentsPost-Deal Integration & Value Creation
  • The investment management firm must establish a vehicle through which to execute its investments and strategy.
  • TVehicle structures are typically Limited Partnerships (LP) or trusts.
  • TThe type of vehicle will be influenced by the type of investments made as well as the investment strategy and investor type.
  • The newly created vehicle must be capitalized.
  • TThe company structure and the type of investment to be made will influence the type of capital that is raised.
  • TCapital formation may also be governed by specific legal restrictions.
  • TTypically capital is raised from sophisticated institutional investors.
  • Relationship managers will engage potential investees.
  • TEngagement can span multiple years before an investment is made.
  • TEngagement can be direct with investees or can involve intermediaries such as investment banks.
  • TEngagement must be actively tracked.
  • At larger investment firms, deal execution teams exist and are specialized in this function.
  • TDue diligence is a key part of deal execution.
  • TLegal, financial, technological, and customer/revenue due diligence are performed simultaneously.
  • TFollowing due diligence completion, the deal is executed.
  • Varying levels of investee systems integration occur.
  • TInitial integrations focus on financial/ reporting systems.
  • TIncreasingly, investees are looking to their investors for technology and systems access and advice.
  • TFollow up on M&A transactions are executed to round out product offerings, achieve scale, access new customers/markets, and reduce competition.

Determine how the organization creates value

Begin the process by identifying and locating the business mission and vision statements.

Ways to identify and locate 'Business Mission' and 'Business Vision' statements: 'Corporate Websites', 'Business Strategy Documents', and 'Business Executives'.

What is Business Context?

“The business context encompasses an understanding of the factors impacting the business from various perspectives, including how decisions are made and what the business is ultimately trying to achieve. The business context is used by IT to identify key implications for the execution of its strategic initiatives.” (Source: Business Wire, 2018)

1.1.2 Determine how the organization creates value

1-3 hours

The first step of delivering value is defining how it will happen.

  1. Use the organization’s industry segment to start a discussion on how value is created for customers. Working back from the moment value is realized by the customer, consider the sequential steps required to deliver value in your industry segment.
  2. Consider:
    1. Who are your customers?
    2. What tasks are your customers looking to accomplish?
    3. How does your organization’s set of products and services help customers accomplish their goals?
    4. What are the benefits the organization delivers to them?
  3. Avoid:
    1. Don't boil the ocean. Focus on your industry segment and how you deliver value to your partners and customers specifically.

Download the Reference Architecture Template

1.1.2 Determine how the organization creates value

Input

  • Business strategy
  • Financial statements
  • Results of SWOT analysis
  • Info-Tech’s industry-specific reference architecture accelerator

Output

  • Reference Architecture Template

Materials

  • Whiteboard/flip charts
  • Reference Architecture Template

Participants

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

1.1.3 Define and validate value streams

1-3 hours

Input: Business strategy, Info-Tech’s industry-specific reference architecture accelerator

Output: List of organization-specific value streams, Detailed value stream definition(s)

Materials: Whiteboard/flip charts, Reference Architecture Template

Participants: Enterprise/Business Architect, Business analysts, Business unit eads, CIO, Departmental Executive and senior managers

Unify the organization’s perspective on how it creates value.

  1. Write a short description of the value stream that includes a statement about the value provided and a clear start and end for the value stream. Validate the accuracy of the descriptions with your key stakeholders.
  2. Consider:
    1. How does the organization deliver those benefits?
    2. How does the customer receive the benefits?
    3. What is the scope of your value stream? What will trigger the stream to start and what will the final value be?
  3. Avoid:
    1. Don’t start with a blank page. Use Info-Tech’s value stream definitions on the previous slide as a starting point and customize from there.

Download the Reference Architecture Template

Step 1.2

Develop a business capability map

Activities
  • 1.2.1 Determine which business capabilities support value streams
  • 1.2.2 Accelerate the process with an industry reference architecture
  • 1.2.3 Validate the business capability map
  • 1.2.4 Establish Level 2 capability decomposition priorities
  • 1.2.5 Decompose Level 2 capabilities

This step will walk you through the following activities:

  • Determine which business capabilities support value streams
  • Accelerate the process with an industry reference architecture
  • Validate the business capability map
  • Establish Level 2 capability decomposition priorities
  • Decompose Level 2 capabilities

This step involves the following participants:

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

Outcomes of this step

  • A validated Level 1 business capability map
  • Decomposed Level 2 capabilities
Build your organization’s capability map
Step 1.1Step 1.2

Develop a business capability map – Level 1

  • Business architecture consists of a set of techniques to create multiple views of an organization; the primary view is known as a business capability map.
  • A business capability defines what a business does to enable value creation and achieve outcomes, rather than how. Business capabilities are business terms defined using descriptive nouns such as “Marketing” or “Research and Development.” They represent stable business functions, are unique and independent of each other, and typically will have a defined business outcome. Business capabilities should not be defined as organizational units and are typically longer lasting than organizational structures.
  • A business capability mapping process should begin at the highest-level view of an organization, the Level 1, which presents the entire business on a page.
  • An effective method of organizing business capabilities is to split them into logical groupings or categories. At the highest level, capabilities are either “core” (customer-facing functions) or “enabling” (supporting functions). As a best practice, Info-Tech recommends dividing business capabilities into the categories illustrated to the right:

Categories of Business Capabilities, referencing the business capability map. The first line is 'Defining Capabilities' - 'Defining core capabilities are the activities that define how you do business in your industry. These capabilities support specific value streams.' The second line is 'Shared Capabilities' - 'Shared core capabilities are typically customer facing. From an intra-industry perspective, the greatest variance occurs at the level of the differentiating capability. These capabilities demonstrate how you are different from the competition and can support multiple value streams simultaneously.' Both Defining and Shared capabilities are Core capabilities. The third line is 'Enabling Capabilities' - 'Enabling capabilities support the creation of strategic plans and facilitate business decision making as well as the functioning of the business (e.g. IT, Finance, HR).'

Business capability map for PEVC

Business Capability Map for PEVC with the PEVC value chain as column headers, 'Create Fund or Limited Partnership', 'Capitalize Fund or Limited Partnership', 'Identify & Engage Potential Investees', 'Execute Investments', 'Post Deal Integration & Value Creation', and row headers 'Defining', 'Shared', and 'Enabling'.

Glossary of Capabilities

A Business Capability is an ability that an organization, person, or system possesses. Capabilities are typically expressed in general and high-level terms and typically require a combination of organization, people, processes, and technology to achieve. Level 1 Private Equity and Venture Capital capabilities that are used in this reference architecture model are:

CapabilityDefinition
Strategic Advisory ServicesA group of external advisors to support the core business.
Capital Market CapabilitiesCapital market partners such as investment banks and research services.
Deal Screening/Relationship Mgmt.A team dedicated to the intake and evaluation of investment opportunities as well as relationship managers to facilitate a deal pipeline.
Deal ExecutionA team of individuals dedicated to moving the deal through its internal processes such as due diligence, legal, compliance, etc.
Integration, Advisory, and M&A SupportA team dedicated to the integration of assets that are purchased outright or to support acquisitions as part of a larger investment.
Regulatory/Compliance ServicesA team assuring that the fund remains compliant with regulatory requirements.
System Integration ServicesA team dedicated to integrating the systems of investees into the infrastructure of the PEVC organization.

Glossary of Capabilities

A Business Capability is an ability that an organization, person, or system possesses. Capabilities are typically expressed in general and high-level terms and typically require a combination of organization, people, processes, and technology to achieve. Level 1 Private Equity and Venture Capital capabilities that are used in this reference architecture model are:

CapabilityDefinition
Accounting ServicesProvides all financial and managerial accounting tasks required within the organization.
Enterprise Reporting ServicesA team dedicated to data capture, management, and reporting as required by the senior management of the organization.
Capital Market ServicesSales, trading and research, equity, and debt capital activities.
Corporate GovernanceOversight and governance of the internal operations of the PEVC firm.
Strategic PlanningA group dedicated to planning out the growth and development of the firm.
IT ManagementIT support of all capabilities within the organization.
Accounting and ReportingProvides financial reporting to investors, regulators, senior management, and the board of directors.

Glossary of Capabilities

A Business Capability is an ability that an organization, person, or system possesses. Capabilities are typically expressed in general and high-level terms and typically require a combination of organization, people, processes, and technology to achieve. Level 1 Private Equity and Venture Capital capabilities that are used in this reference architecture model are:

CapabilityDefinition
Enterprise ArchitectureEither an IT- or business-led group looking at current and future organizational design, processes, and capabilities.
Human ResourcesAdministration of all employees of the firm.
LegalInternal legal team supported by an external council to provide advice and oversight of the legal activities of the firm.
Corporate FinanceThe group responsible for the capital of the firm.

1.2.1 Determine which business capabilities support value streams

1-3 hours

Deconstruct value streams into their component capabilities.

  1. Analyze the value streams to identify and describe the organization’s capabilities that support them. This stage requires a good understanding of the business and will be a critical foundation for the business capability map.
  2. Consider:
    1. What is the objective of your value stream? This can highlight which capabilities support which value streams.
    2. What are the activities that make up the business?
    3. Segmenting your value stream into individual stages will give you a better understanding of the steps involved in creating value.
  3. Avoid:
    1. Don’t do this alone. Make sure the right stakeholders participate. The exercise of identifying capabilities for an organization is very introspective and requires deep analysis. It is challenging to develop a common language that everyone will understand and be able to apply. Don’t waste your efforts building an inaccurate depiction of the business.

Download the Reference Architecture Template

1.2.1 Determine which business capabilities support value streams

Input

  • Value streams from previous activities

Output

  • List of organization-specific capabilities mapped to value streams
  • Reference Architecture Template

Materials

  • Whiteboard/flip charts
  • Reference Architecture Template

Participants

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

1.2.2 Accelerate the process with an Industry Reference Architecture

1-3 hours

It’s never a good idea to start with a blank page.

  1. The business capability map on the previous slide can be used as an accelerator. Assemble the relevant stakeholders – business unit leads and product/service owners – and modify the business capability map to suit your organization’s context.
  2. Consider:
    1. What are the activities that make up your business?
    2. Can these activities be tied to outcomes? If not, they might not apply to your organization.
    3. Are there any capabilities on the map that don’t fit the organization? If so, deselect them.
  3. Avoid:
    1. Don’t repeat capabilities. Capabilities are typically mutually exclusive activities.
    2. Don’t include temporary initiatives. Capabilities should be stable over time. The people, processes, and technologies that support capabilities will change continuously.

Customize generic capability maps with the assistance of our industry analysts.

Download the Reference Architecture Template

1.2.2 Accelerate the process with an Industry Reference Architecture

Input

  • Value streams from previous activities
  • Info-Tech’s industry-specific reference architecture accelerator

Output

  • List of organization-specific capabilities mapped to value streams
  • Reference Architecture Template

Materials

  • Whiteboard/flip charts
  • Reference Architecture Template

Participants

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

1.2.3 Validate the business capability map

1-3 hours

Input: List of organization-specific capabilities mapped to value streams, Reference Architecture Template

Output: Level 1 business capability map, Reference Architecture Template

Materials: Whiteboard/flip charts, Reference Architecture Template

Participants: Enterprise/Business Architect, Business analysts, Business unit leads, CIO, Departmental Executive and senior managers

Crowdsource the capability map validation.

  1. Validate the capability map with the executive team (those who were not included) and other key stakeholders. Use validation of your business capability map as an excuse to start a conversation regarding the organization’s overall strategy.
  2. Consider:
    1. Are there any sensitive areas of the organization that may take this effort the wrong way? Engage them to get their input as early as possible to ensure they don’t feel left out or alienated.
  3. Avoid:
    1. Don’t delay validating the maps with top-level executives. Without their support, your architecture practice won’t be taken seriously.
    2. Don’t leave anyone out on the assumption that they won’t be interested. This process will foster alignment between organizational silos.

Download the Reference Architecture Template

Develop a Business Capability Map – Level 2

Level 2 business capabilities define individual Level 1 capabilities at a more granular level of detail. Level 2 capabilities typically represent individual stable business functions that, while unique and independent of each other, typically will have a collection of processes with overall contribution and enablement of Level 1 capability.Differentiating Level 1 and Level 2 capabilities. Notes label 'Human Resources' as a 'Level 1 Capability', then points to a capability within Human Resources, 'Learning & Development', and labels it a 'Level 2 Capability'.

1.2.4 Establish Level 2 capability decomposition priorities

1-3 hours

Deconstruct Level 1 capabilities into their component capabilities.

  1. Analyze the Level 1 business capabilities to identify and describe the organization’s capabilities at a deeper, more granular level. This stage requires a good understanding of the business and will be a critical foundation for the Level 2 business capability map.
  2. Consider:
    1. Which Level 1 capabilities enable the most critical stage of my value stream?
    2. Which Level 1 capabilities enable the most stages of the value stream?
  3. Avoid:
    1. Don’t try to cut corners. Although it may seem tempting to jump right to this step and avoid doing your Level 1 mapping, you will run the risk of model pollution. Starting with Level 1 helps ensure you have a unified view of your organization’s capabilities and will help you avoid having to re-do the work later.

Download the Reference Architecture Template

Glossary of Capabilities

A Business Capability is an ability that an organization, person, or system possesses. Capabilities are typically expressed in general and high-level terms and typically require a combination of organization, people, processes, and technology to achieve. Level 2 PEVC capabilities that are used in this reference architecture model are:

CapabilityDefinition
Management CapabilitiesOften includes an advisory board of other successful business owners or investors who can leverage their network to help the fund.
Legal CapabilitiesOngoing relationships with external legal council is very important, especially when potential deals are competitive.
Accounting CapabilitiesPartnerships with accounting firms who provide strategic transaction advisory services such as quality of revenue assessments and investee audit pre-closing.
Advisory ServicesOther specialty advisors such as technology experts to be utilized in more technically driven industries, e.g. oil and gas or mining.
Banking ServicesA bank will often provide prime brokerage services to the fund. They administer transactions and hold share certificates in trust for the fund.
Investment Banking ServicesA fund will have many standing investment banking relationships that provide deal flow, research, M&A as well as equity-raising capabilities and debt.
Accounting Advisory ServicesAccounting advisors are often used as part of the M&A or capital-raising process and may be separate from the firm’s accounting advisors.
Consulting Advisory ServicesSpecialized consultants in detailed areas such as industry specific data/insights are often used as part of capital market transactions.

Glossary of Capabilities

CapabilityDefinition
Investee Identification and ScreeningInternal relationship managers within the firm will work with potential investees to build relationships and screen potential investment opportunities.
Investee OutreachIncreasingly, firms are reaching out directly to potential investee companies. This can be through management, board, research, or relationship manager contacts.
Ongoing Opportunity Engagement and ManagementSome firms utilize a dedicated team of relationship managers. As investment opportunities become more competitive, pre-existing relationships are important.
Service Provider ManagementDeals screening can also be done through various service providers who will complete specific aspects of the due diligence process.
Accounting/Audit ServicesAs deals progress to the due diligence phase, more intensive accounting audits and verifications will be completed, sometimes by specialist firms.
Legal ServicesFirms may utilize specific lawyers for transaction execution based on their experience in a particular type of transaction or industry.
External Advisory ServicesExternal advisors can be brought in during the deal execution process, eg. A technology advisory company to audit/comment on an investee’s technology.
Accounting AdvisorySpecialized accounting capabilities may be required in heavily regulated industries like financial services or mining.
Systems Integration and AdvisoryAs firms more actively manage the companies they invest in, integrating investee technology into the parent may require specialized advisors.
Enterprise Systems IntegrationThe process of rolling out systems from the PEVC firm into the investee company.
Follow-on M&A Identification and ExecutionFollowing the closing of a key investment, PEVC firms will often complete some smaller acquisitions to build out a capability or to enter a new geography.
Compliance and OversightFollowing deal closing, oversight of the investee company must become more structured and be incorporated into the PEVC’s risk-management system.

Glossary of Capabilities

CapabilityDefinition
AML and Fraud ManagementAmong the most demanding pieces of regulatory compliance within a bank. It is a source of constantly growing regulation and effort within a firm.
Guideline ComplianceCompliance guidelines can arise from inter-national, national, state or local authorities and continued compliance with guidelines is mandatory.
Compliance ReportingMany financial regulations have mandatory reporting requirements around transactions, capital and risk. Having efficient processes and procedures in place for the timely completion of regulatory reporting is essential.
Security AssuranceThreat levels continue to escalate within financial services. COVID-19 has seen a tremendous level of growth in security threats. Increasing risk from ransomware attacks are also making security assurance essential.
Systems ArchitectureIncreasingly, systems architecture are becoming key enablers of value creation and specialized teams are dedicated to enterprise systems architecture.
Needs and Requirements GatheringCapabilities within an organization to capture and document the business needs to be built out in systems and technology.
Projects and PPMInternal capacity to organize projects in a structured manner, to allocate recourse, and to track performance and then to manage the ongoing projects.
System Update and MaintenanceThe capability to assure that all systems are properly maintained and kept up to date, this is particularly important from a risk perspective.
Accounting System DesignAs organizations grow large and more complex, their accounting systems will also have to become more complex and will likely require sophisticated system design.
Accounting System SelectionAccounting needs will change over time, the ongoing selection of the appropriate account system is essential.
Accounting Reporting ServicesThere is growing demand for reporting across all organizations and accounting reports are becoming increasingly important to senior management.
Regulatory Compliance CapabilitiesIn more highly regulated industries, accounting systems must be able to capture and report company activity to ensure ongoing compliance.

Glossary of Capabilities

CapabilityDefinition
Reporting and Performance Management DesignEnterprise reporting is growing in importance as management teams and boards want to make more date-driven decisions with timely data.
System ImplementationAs organizations grow in complexity, the ongoing implementation and adaption of enterprise reporting systems is required.
Reporting and Performance Mgmt. System SelectionA disciplined approach to vendor selection must be used to assure the best systems are in place for the needs of the organization.
System MaintenanceAll enterprise reporting systems and services will require ongoing monitoring and changes.
Investor Relations ServicesThe group responsible for reporting and communicating with external investors.
Financial Reporting and DisclosureIf the organization is highly regulated or is publicly traded, it will need to provide ongoing reporting and disclosure of its activities.
Corporate Communication ServicesCorporate communication is often centralized to control an organization’s communication and messaging to all stakeholders.
Capital Market Monitoring/ AnalysisOrganizations that require external capital will likely track and analyze the activity of capital markets for ongoing and potentially significant events.

Glossary of Capabilities

CapabilityDefinition
Corporate GovernanceCorporate governance is primarily provided by the board of directors of a bank. The board represents the investors of the firm. The majority of the oversight of a firm must come from outside and independent individuals with the skills and knowledge in governance matters.
Strategic PlanningStrategic planning typically occurs at the senior management level and includes the input and guidance of the board.
IT ManagementIT management covers the technology direction of the organization as well as its tactical executions. It must be done in a way that best aligns to business needs.
Accounting and ReportingAccounting and reporting is typically lead by the CFO and assures that financial policies and procedures are in place with the appropriate checks and balances to assure outside auditors will approve the financial statements produced.
Enterprise ArchitectureAn enterprise-level view of the roles and functions that exist within a firm to assure an optimal business structure is in place.
Human ResourcesDeal with a variety of functions relating to employees of an organization including hiring and terminations, strategic development and culture, and training. In the rapidly changing environment, HR is increasingly important from a strategic perspective.
LegalLegal is an essential function within a firm. Regulatory considerations, multi-jurisdictional compliance, contract review, employment law, and so on. The legal function within a firm is an essential role.
Corporate FinanceEvaluates potential M&A activities, helps in structing the organization as a whole, and provides input on capital activities within the firm.

1.2.4 Establish Level 2 capability decomposition priorities

Input

  • Level 1 capabilities map and a value stream for areas of interest and focus
  • Reference Architecture Template

Output

  • Prioritized list of Level 1 business capabilities for decomposition

Materials

  • Whiteboard/flip charts
  • Reference Architecture Template

Participants

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

1.2.5 Decompose Level 2 capabilities

1-3 hours

Input: Prioritized list of Level 1 business capabilities for decomposition, Reference Architecture Template

Output: Level 2 capabilities for areas of interest and focus

Materials: Whiteboard/flip charts, Reference Architecture Template

Participants: Enterprise/Business Architect, Business analysts, Business unit leads, CIO, Departmental Executive and senior managers

Deconstruct Level 1 capabilities into their component Level 2 capabilities.

  1. Using the Level 1 capability map as a baseline, hold working sessions with a line of business represented for each (or selected) Level 1 capability or set of related capabilities and decompose them.
  2. Consider:
    • Will you want to go deeper into Level 3? If so, then confirm if the same team for Level 2 has knowledge of Level 3 and decompose to Level 3 concurrently.
  3. Avoid:
    • Don’t do this alone. Make sure the right stakeholders participate. The exercise of identifying level 2+ capabilities for an organization is very introspective and requires deep analysis and understanding of business functions and processes. It is challenging to develop a common language that everyone will understand and be able to apply. Don’t waste your efforts building an inaccurate depiction of the business.

Download the Reference Architecture Template

Level 2 capability decomposition

Business Capability Map for PEVC with the PEVC value chain as column headers, 'Create Fund or Limited Partnership', 'Capitalize Fund or Limited Partnership', 'Identify & Engage Potential Investees', 'Execute Investments', 'Post Deal Integration & Value Creation', and row headers 'Defining', 'Shared', and 'Enabling'. Level 1 and Level 2 capabilities are color-coded to a Legend. Level 2 capabilities are grouped within Level 1 capabilities.

Private Equity and Venture Capital Industry Business Reference Architecture

Phase 2

Use business capabilities to define strategic focus

Phase 1

1.1 Define the Organization’s Value Stream

1.2 Develop a Business Capability Map

Phase 2

2.1 Define the Organization’s Key Capabilities

2.2 Develop a Strategy Map

Phase 3

3.1 Business Process Review

3.2 Information Assessment

3.3 Technology Opportunity Identification

Phase 4

4.1 Consolidate and Prioritize Capability Gaps

This phase will walk you through the following activities:

  • Determine cost advantage creators
  • Determine competitive advantage creators
  • Define key future-state capabilities
  • Identify the strategic objectives for the business
  • Map strategic objectives to IT programs
  • Validate the strategy map and program prioritization

This phase involves the following participants:

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

Step 2.1

Define the organization’s key capabilities

Activities
  • 2.1.1 Determine cost advantage creators
  • 2.1.2 Determine competitive advantage creators
  • 2.1.3 Define key future-state capabilities

This step will walk you through the following activities:

  • Determine cost advantage creators
  • Determine competitive advantage creators
  • Define key future-state capabilities

This step involves the following participants:

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

Outcomes of this step

  • Identification of Level 1 and 2 cost advantage creators
  • Identification of Level 1 and 2 competitive advantage creators
  • Defined future state capabilities
Use business capabilities to define strategic focus
Step 2.1Step 2.2

Define the Organization’s Key Capabilities

  • A discussion about the key or most critical capabilities is an excellent opportunity for IT leaders to review, refresh, and even reset expectations from the business as to what value IT should be providing to the organization. There is often misalignment as to whether, or to what extent, IT should be making strategic investments to help the business enhance its capabilities through technology. Some IT leaders believe they should be transforming the organization while their CEO wants them to focus on operational efficiencies.
  • Depending on the mandate from the business, an IT leader may focus on developing a cost advantage for the organization by directing technology efforts to capabilities that deliver efficiency gains. This is often the case for many IT leaders for whom the primary role for IT is to enable the business to deliver its products/services to the end consumer at the lowest cost possible. These capabilities are known as Cost Advantage Creators.
  • Organizations can develop a competitive advantage over their industry counterparts by creating a differentiated experience for the organization’s customers. Increasingly, this is facilitated and made possible through technology. IT can direct investment into capabilities that will improve their organization’s competitive position in its market by delivering unique or enhanced experiences for the organization’s end customers. IT can focus on developing a competitive advantage by directing efforts onto capabilities that are end-customer facing. These are known as the organization’s Competitive Advantage Creators.

On either side of the 'Business Capability Map' are descriptions of 'Cost Advantage Creators: Focusing on these capabilities will help the organization derive operational efficiencies' and 'Competitive Advantage Creators: Focusing on these capabilities will deliver differentiated end-customer experiences'.

Defining key capabilities for PEVC

The Business Capability Map for PEVC with 'Cost Advantage Creators' and 'Competitive Advantage Creators' color-coded to a legend. In this example, only fully decomposed capabilities are labelled as such. ie. Level 1 capability 'Strategic Planning' has no Level 2 capabilties within it and is a Competitive Advantage Creator, while Level 1 capability 'Strategic Advisory Services' has Level 2 capabilities 'Management Capabilities', 'Advisory Services', and 'Legal Capabilities', the former two of which are Competitive Advantage Creators and the latter of which is a Cost Advantage Creator.

2.1.1 Determine cost advantage creators

1-3 hours

Input: Value stream, Level 0, and Level 1 capabilities from previous activities, Reference Architecture Template

Output: Identified cost advantage creating capabilities

Materials: Whiteboard/flip charts, Reference Architecture Template

Participants: Enterprise/Business Architect, Business analysts, Business unit leads, CIO, Departmental Executive and senior managers

Focus on capabilities that drive a cost advantage for your organization.

  1. If your organization has a cost advantage over competitors, the capabilities that enable it should be identified and prioritized. Highlight these capabilities and prioritize the programs that support them.
  2. Consider:
    1. What is the source of your cost advantage? IT should support the capabilities that drive the cost advantage.
    2. Is the industry you operate in sensitive to prices?
  3. Avoid:
    1. Don’t focus on capabilities that create an unsustainable cost advantage. Take a long-term perspective and allocate your resources wisely.

Download the Reference Architecture Template

2.1.2 Determine competitive advantage creators

1-3 hours

Prioritize capabilities that give your organization an edge over rivals.

  1. If your organization does not have a cost advantage over competitors, determine if it can deliver differentiated end-customer experiences. Once you have identified the competitive advantages, understand which capabilities enable them. These capabilities are critical to the success of the organization and should be highly supported.
  2. Consider:
    1. Are there any products or services your organization provides that customers consider superior to competitive offerings?
    2. Which capabilities enable the competitive advantage?
    3. How easy is it for competitors to neutralize your competitive advantage? Focus on the capabilities that are difficult to replicate by competitors to create a more sustainable advantage.
  3. Avoid:
    1. Don’t determine the competitive advantages alone. Incorporate various perspectives from throughout the organization to truly understand how the organization competes in the marketplace.

Download the Reference Architecture Template

2.1.2 Determine competitive advantage creators

Input

  • Value stream, Level 1, and Level 2 capabilities from previous activities
  • Cost advantage creators from previous activity
  • Reference Architecture Template

Output

  • Identified competitive advantage creating capabilities

Materials

  • Whiteboard/flip charts
  • Reference Architecture Template

Participants

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

2.1.3 Define key future-state capabilities

1-3 hours

Input: Value stream, Level 0, and Level 1 capabilities from previous activities, Cost advantage creators from previous activity, Competitive advantage creators from previous activity, Reference Architecture Template

Output: Identified enhancements to existing or new organizational capabilities

Materials: Whiteboard/flip charts, Reference Architecture Template

Participants: Enterprise/Business Architect, Business analysts, Business unit leads, CIO, Departmental Executive and senior managers

Know where you want to go and chart a course to get there.

  1. In addition to the current cost and competitive advantage creators, the organization may intend to enhance existing or develop new capabilities. Discuss and select the capabilities that will help drive the attainment of future goals.
  2. Consider:
    1. Are your competitors doing anything to give them a competitive advantage? Can your organization easily replicate the capabilities needed to neutralize that advantage?
    2. How is the external environment (political, economic, social, or technological) likely going to change in the future? How might these changes impact your current key capabilities?
  3. Avoid:
    1. Don’t blindly copy your competitors’ strategies. It is important to understand that each organization is unique. Before focusing on key capabilities that might neutralize your competitors’ advantages, ensure they fit well with your overall strategy.

Download the Reference Architecture Template

Step 2.2

Develop a strategy map

Activities
  • 2.2.1 Identify the strategic objectives for the business
  • 2.2.2 Map strategic objectives to IT programs
  • 2.2.3 Validate the strategy map and program prioritization

This step will walk you through the following activities:

  • Identify the strategic objectives for the business
  • Map strategic objectives to IT programs
  • Validate the strategy map and program prioritization

This step involves the following participants:

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • CTO, VP Applications, VP Infrastructure
  • Portfolio Manager (PMO Director)
  • Departmental Executive and senior managers

Outcomes of this step

  • Identification of business strategic objectives
  • Defined and validated strategy map/goal cascade
Use business capabilities to define strategic focus
Step 2.1Step 2.2

2.2 Develop a strategy map

  • A strategy map is a tool to help narrow the focus onto what matters most. With ever-changing resources, business strategies, and external environments, the strategy map can ensure IT consistently provides value through the enhanced prioritization of IT programs.
  • Strategy mapping is a technique that helps the executive suite communicate the business strategy to other levels of the organization by visually representing the organizational strategic objectives and mapping each of them to value streams, business capabilities, and ultimately, to specific IT programs. There are five layers to a strategy map: strategic business goals, business initiatives, value streams, business capabilities, and IT programs.
    • Strategic business goals are the targets and outcomes that the organization is looking to achieve.
    • Value streams enable an organization to create and capture value in the market through interconnected activities that support strategic objectives.
    • Business capabilities define what a business does to enable value creation in value streams, rather than how.
    • IT programs are actionable descriptions of how the IT department will enable one or multiple business capabilities in its target state.

Strategy Map. Example table for determining business capabilities from earlier, but with IT Capabilities, Initiatives, and Goals included on the other side. The first column on either side is 'Business/IT Goals & Outcomes' listing four Business/IT Goals, some of which are color-coded similarly. The second column on either side is 'Business/IT Initiatives' with Initiatives 1 through 10, each color-coded to match the business/IT goal they help to achieve. The third and fourth columns on the left side are 'Level 1 / Level 2 Business Capabilities', and on the right side the third column is 'IT Capabilities', with capabilities grouped by 'Value Stream', each of which are color-coded to business goals and the business initiatives that create or improve them. The capabilities of either side support each other.
Figure above: Strategy Map

2.2.1 Identify the strategic goals and outcomes for the business

1-3 hours

Knowing the key strategic objectives for the business will drive business-IT alignment.

  1. It is important to make sure the right strategic objectives of the organization have been identified and are well understood. Engage the right stakeholders to help identify and document the key strategic objectives for the business.
  2. Consider:
    1. What are your targets for the organization?
    2. What are the organization’s strategic investment goals?
    3. What are the goals of the organization over the next 12 months?
    4. What are your top business initiatives over the next 12 months?
    5. Are there external forces that will impact the current strategic objectives?
  3. Avoid:
    1. Don’t simply go with the existing documented strategic objectives for the business. Ensure they are up to date, and interview the decision makers to get the most updated objectives if needed.

Download the Reference Architecture Template

2.2.1 Identify the strategic goals and outcomes for the business

Input

  • Business strategy
  • Executive stakeholder interviews
  • IT project portfolio

Output

  • Business goals
  • Business context information

Materials

  • Whiteboard/flip charts
  • Reference Architecture Template

Participants

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • CTO, VP Applications, VP Infrastructure
  • Portfolio Manager (PMO Director)
  • Departmental Executive and senior managers

Illustrative example of strategic goals and outcomes for Private Equity and Venture Capital

Acme Corp.

A colorful bracket with dots corresponding to the associated line items.

1

Profitable GrowthWe are committed to maximizing shareholder value by achieving an annual growth in profitability by increasing signed agreements, % of direct bookings, and RevPar in excess of 15%.

2

Customer ServiceWe demonstrate respect for our guests and deliver the most exceptional customer service possible, resulting in brand loyalty and low guest incidents.

3

Operational ExcellenceWe will demonstrate operational efficiency by balancing profitability with occupancy levels and labor efficiency along with automating and streamlining internal processes.

2.2.2 Map strategic objectives to IT programs

1-3 hours

Input: List of IT projects, initiatives, and IT capabilities, Business goals

Output: IT initiatives, Goals cascade

Materials: Whiteboard/flip charts, Capability maps, Reference Architecture Template

Participants: Enterprise/Business Architect, Business analysts, Business unit leads, CIO, Portfolio Manager (PMO Director), Departmental Executive and senior managers

Communicate the business strategy to other levels of the organization visually.

  1. Starting with strategic objectives, map the value streams that will ultimately drive them. Next, link the key capabilities that enable each value stream. Finally, map the IT programs supporting those capabilities. This process will help you prioritize IT programs that deliver the most value to the organization.
  2. Consider:
    1. Focus on the value streams that truly drive the strategic objectives.
    2. Are there any capabilities that are not tied to outcomes?
    3. Are all strategic objectives supported with IT programs?
  3. Consider:
    1. Don’t be too granular. The audience for a strategy is interested in a higher-level understanding of what IT is doing. As such, keep things at the program level as opposed to the individual projects that programs are composed of.

Download the Reference Architecture Template

Illustrative example of strategy map

Strategy Map. Example table for determining business capabilities from earlier, but with IT Capabilities, Initiatives, and Goals included on the other side. The first column on either side is 'Business/IT Goals & Outcomes' listing four Business/IT Goals, some of which are color-coded similarly. The second column on either side is 'Business/IT Initiatives' with Initiatives 1 through 10, each color-coded to match the business/IT goal they help to achieve. The third and fourth columns on the left side are 'Level 1 / Level 2 Business Capabilities', and on the right side the third column is 'IT Capabilities', with capabilities grouped by 'Value Stream', each of which are color-coded to business goals and the business initiatives that create or improve them. The capabilities of either side support each other.
Note: Illustrative example. To edit and customize this visual please download the corresponding template.

2.2.3 Validate the strategy map and program prioritization

1-3 hours

Crowdsource the strategy map validation.

  1. Validate the strategy map in layers. Start with IT and confirm which IT programs enable particular capabilities. Next, work with the business departments to validate the capabilities that support the value streams. Finally, validate the strategic objectives of the organization with the C-suite and communicate the value streams that support them.
  2. Consider:
    1. Are all strategic objectives equally important? If not, get a prioritized list of strategic objectives.
    2. Do any of the programs have critical dependencies that influence sequencing?
    3. If there are strategic objectives that do not have any IT programs mapped to them, consider adding new programs. Conversely, reconsider upcoming programs that do not have a connection to strategic objectives.
  3. Avoid
    1. Don’t delay validating the strategic maps with top-level executives. A proactive approach will save you time in terms of rework and maximize alignment.
    2. Don’t leave anyone out on the assumption that they won’t be interested. It is easy to miss key stakeholders – be careful and organized.

Download the Reference Architecture Template

2.2.3 Validate the strategy map and program prioritization

Input

  • IT initiatives
  • Goals cascade

Output

  • Validated strategy map and goals cascade

Materials

  • Whiteboard/flip charts
  • Reference Architecture Template

Participants

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • CTO, VP Applications, VP Infrastructure
  • Portfolio Manager (PMO Director)
  • Departmental Executive and senior managers

Private Equity and Venture Capital Industry Business Reference Architecture

Phase 3

Assess key capabilities for planning priorities

Phase 1

1.1 Define the Organization’s Value Stream

1.2 Develop a Business Capability Map

Phase 2

2.1 Define the Organization’s Key Capabilities

2.2 Develop a Strategy Map

Phase 3

3.1 Business Process Review

3.2 Information Assessment

3.3 Technology Opportunity Identification

Phase 4

4.1 Consolidate and Prioritize Capability Gaps

This phase will walk you through the following activities:

  • Assess process support for capabilities
  • Evaluate user adoption of processes for key capabilities
  • Prioritize key capabilities process refinement
  • Assess how well information supports capabilities
  • Evaluate accessibility to data for key capabilities
  • Prioritize data improvements for key capabilities
  • Assess technology support of capabilities
  • Uncover value opportunities for applications
  • Compare results with industry research to determine your plan of action

This phase involves the following participants:

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

Step 3.1

Business process review

Activities
  • 3.1.1 Assess process support for capabilities
  • 3.1.2 Evaluate user adoption of processes for key capabilities
  • 3.1.3 Prioritize key capabilities process refinement

This step will walk you through the following activities:

  • Assess process support for capabilities
  • Evaluate user adoption of processes for key capabilities
  • Prioritize key capabilities process refinement

This step involves the following participants:

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

Outcomes of this step

  • Identification of capability process enablement
Assess key capabilities for planning priorities
Step 3.1Step 3.2Step 3.3

Business process review

Use process analysis and assessment to drive collaboration and integration.

  • Organizations undergoing growth, either organically or through M&A, tend to develop in a piecemeal and short-sighted fashion in an attempt to preserve their view of agility. This can lead to the following pains:
    • Duplicated or conflicting business activities.
    • Processes that create bottlenecks by involving too many business units.
    • Manual rekeying of data into multiple systems.
    • Inefficient process for producing standard reports.
  • These organizations are driven by the desire to effectively manage existing business processes while recognizing the need to quickly share data, information, and insight across multiple systems and business units to support increasing demands for more rapid response.
  • A primary goal of a strategy is to provide a framework that enables the current business environment to function as seamlessly as possible, allowing for flexibility when processes need to evolve.
  • Through effective strategy design, IT can provide integration across business units by performing an analysis of how well the organizational capabilities are supported by processes. Specifically, IT should analyze and assess processes on the basis of adherence, enforcement, overlap and on the presence of effective monitoring measures.
Assess how well processes support capabilities
Color-coding legend item for 'NONE' is red.NONE: No documented process exists.
Color-coding legend item for 'LOW' is yellow.LOW: Processes have been documented, but have not been effectively communicated and may be in conflict.
Color-coding legend item for 'MEDIUM' is yellow-green.MEDIUM: LOW + processes are explicitly defined and have been formally communicated. There is minimal overlap between processes.
Color-coding legend item for 'HIGH' is green.HIGH: MEDIUM + processes are enforced and regularly monitored for deviations. Employees typically adhere to the process.

Figure above: Process Assessment Legend

Business process support of key capabilities

The Business Capability Map for PEVC with process support level for key capabilities color-coded to a legend. ie. Level 1 capability 'Regulatory/ Compliance Services' is not coded, but Level 2 capabilities within it, 'Compliance Reporting', 'KYC Capabilities', 'Client On-boarding', and 'Anti-terrorism Compliance', are coded as 'HIGH' support.

3.1.1 Assess process support for capabilities

1-3 hours

Input: Reference Architecture Template, Standard operating procedures, Capability maps

Output: Heat mapped capability map

Materials: Whiteboard/flip charts, Reference Architecture Template

Participants: Enterprise/Business Architect, Business analysts, Business unit leads, CIO, Departmental Executive and senior managers

Standardization breeds efficiency.

  1. Begin by assessing whether each key capability has documented processes supporting it. Then evaluate whether the documented processes have been communicated and the extent to which there is process overlap.
  2. Consider:
    1. What processes are documented?
    2. Have the documented processes been communicated to the business users?
    3. Are some of the processes redundant? Has that been done on purpose, or can you optimize them?
    4. Are there key capabilities that lack processes all together?
  3. Avoid:
    1. Don’t waste time. Only evaluate processes that are documented and communicated and then evaluate them for exclusivity.
    2. Don’t do this in a vacuum. Validate that you have captured all existing processes by speaking to other employees.

Download the Reference Architecture Template

3.1.2 Evaluate user adoption of processes for key capabilities

1-3 hours

Having processes is one thing, but are they being adhered to?

  1. The next level of analysis involves assessing whether defined processes are being adhered to. Confirm if the organization enforces adherence and that regular monitoring for deviations is occurring.
  2. Consider:
    1. Is there regular monitoring for deviations from the defined process? Is this recorded and acted upon?
    2. Are there certain groups of users that are not following the processes in place? Why?
  3. Avoid:
    1. Don’t think the lack of process adherence is simply the employees’ fault. In some cases, the processes might not be well designed or are outdated, thus warranting the need for refinement.

Download the Reference Architecture Template

3.1.2 Evaluate user adoption of processes for key capabilities

Input

  • Reference Architecture Template
  • Standard operating procedures
  • Capability maps

Output

  • Heat mapped capability map

Materials

  • Whiteboard/flip charts
  • Reference Architecture Template

Participants

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

3.1.3 Prioritize key capabilities process refinement

1-3 hours

Use process to drive collaboration and integration.

  1. Key capabilities should be well supported by processes. If there are any capabilities that scored Medium or below, prioritize delivering effective process support, improving user adoption, and establishing effective process governance.
  2. Consider:
    1. Is business process management in your mandated area of influence, responsibility, or accountability? If not, consider who you may need to recruit for support from the business side to drive refinements.
    2. Communicate any new processes or changes to existing ones through a variety of mediums. Make it easy for users/employees to reference them if needed.
  3. Avoid:
    1. Don’t create redundant processes. Ensure there is minimal overlap with existing processes if you are creating a new process.
    2. Don’t forget to think about user adoption and governance when creating new processes. This might be more challenging, but it will ultimately ensure long-term success.

Download the Reference Architecture Template

3.1.3 Prioritize key capabilities process refinement

Input

  • Reference Architecture Template
  • Standard operating procedures
  • Capability maps

Output

  • Heat mapped capability map

Materials

  • Whiteboard/flip charts
  • Reference Architecture Template

Participants

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

Step 3.2

Information assessment

Activities
  • 3.2.1 Assess how well information supports capabilities
  • 3.2.2 Evaluate accessibility to data for key capabilities
  • 3.2.3 Prioritize data improvements for key capabilities

This step will walk you through the following activities:

  • Assess how well information supports capabilities
  • Evaluate accessibility to data for key capabilities
  • Prioritize data improvements for key capabilities

This step involves the following participants:

  • Enterprise/Business Architect
  • Data Architect
  • Organizational planning and analysis staff
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

Outcomes of this step

  • Identification of capability data support
Assess key capabilities for planning priorities
Step 3.1Step 3.2Step 3.3

The Data, Reporting, and Analytics Diagnostic helps identify information gaps

Assessing how well information supports capabilities is nearly impossible to perform without an honest and thorough understanding of end user sentiment toward data, reporting, and analytics.

Develop data-driven insights to help you decide which business capabilities require new or improved reporting and analytics and opportunities to improve business processes, and by extension enable the capabilities of the business.

The Data, Reporting & Analytics programs will help you:

  • Assess data quality and reporting satisfaction at a glance
  • Evaluate data quality across nine dimensions of quality
  • Evaluate reporting across ten dimensions of satisfaction
  • Determine which areas are the most critical
  • Determine effectiveness of analytics tools
Samples of the 'Data Quality Scorecard' and 'Report Scorecard' from the Data, Reporting, and Analytics Diagnostic.

Here are some critical insights to extract from the Data, Reporting, and Analytics Diagnostic report

Begin with understanding the perception of the information in use in your organization to assess the effectiveness of supporting key business.

Critical insights from the Data, Reporting, and Analytics Diagnostic are 'Clarity', 'Accuracy', 'Currency', and 'Completeness'.

Data and reports that are deemed to be low accuracy, currency, or have a low level of completeness could hamper strategic business capabilities and should be investigated in further regarding the effectiveness of supporting key business capabilities.

Information Assessment

Assess the availability and quality of data in providing information as a business asset.

  • Information is central to every organization’s success and ability to realize its goals. Too often organizations experience the following pains:
    • Duplicated or conflicting data residing in disparate databases.
    • Inadequate controls or edits on data.
    • Manual rekeying of data into multiple systems.
    • Inability to provide executives with reliable and easily accessible information for decision making.
    • Inability of business units to assume “ownership” of data.
  • These organizations are driven by the desire to effectively manage existing business processes while recognizing the need to more quickly share data, information, and insight across multiple systems and business units to support increasing demands for more rapid response.
  • A primary goal of a strategy is to provide a framework that enables information to be viewed as a critical business asset, across organizational boundaries and accessed as seamlessly as possible.
  • Through effective strategy design, IT can provide integration of data across business units by performing an analysis of how well the organizational capabilities are supported by information. Specifically, IT should analyze and assess data on the basis of quality, integrity, ownership and on the presence of an effective data governance framework.
Assess how well existing information supports capabilities
Color-coding legend item for 'NONE' is red.NONE: Data is unavailable, unreliable, duplicated, or not of sufficient detail
Color-coding legend item for 'LOW' is yellow.LOW: Data is available but not subject to adequate integrity or quality controls. Data ownership is undefined.
Color-coding legend item for 'MEDIUM' is yellow-green.MEDIUM: LOW + Data is available but not fully automated. Data ownership is mostly defined.
Color-coding legend item for 'HIGH' is green.HIGH: MEDIUM + Data is available, of high quality, fully automated with clear ownership.

Figure above: Information Assessment Legend

Information support of key capabilities

The Business Capability Map for PEVC with information support level for key capabilities color-coded to a legend. ie. Level 1 capability 'Capital Market Capabilities' is not coded, but Level 2 capabilities within it 'Investment Banking Services', 'Accounting Advisory Services', and 'Consulting Advisory Services' have 'LOW' information support while 'Banking Services' has 'MEDIUM' support.

3.2.1 Assess how well information supports capabilities

1-3 hours

Information is a key business asset.

  1. Begin by assessing whether each key capability has data available to support it. Then evaluate the quality and integrity of the data and the extent to which there is clear business unit ownership of the data.
  2. Consider:
    1. What data exists to support the capability?
    2. Does the same data exist in various databases?
    3. What controls exist to ensure quality and integrity?
    4. Are there key capabilities that lack automated information all together?
  3. Avoid:
    1. Don’t waste time. Only evaluate information holdings that are central to the capability.
    2. Don’t do this in a vacuum. Validate that you have captured all existing data by collaborating with other IT and business unit employees.

Download the Reference Architecture Template

3.2.1 Assess how well information supports capabilities

Input

  • Reference Architecture Template
  • Data dictionary
  • Key reports
  • Capability maps

Output

  • Heat mapped capability map

Materials

  • Whiteboard/flip charts
  • Reference Architecture Template

Participants

  • Enterprise/Business Architect
  • Data Architect
  • Organizational planning and analysis staff
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

3.2.2 Evaluate accessibility to data for key capabilities

1-3 hours

Having data is one thing, but is it easily accessible and available in a format suitable for decision making?

  1. The next level of analysis involves assessing whether data is easily accessible to the main users of the information.
  2. Consider:
    1. Is data well integrated so executives do not have to access more than one source for the information they need? Is there a Data Warehouse capability to bring together data from disparate databases?
    2. Is there an end-user Business Intelligence (BI) capability? Are users sufficiently trained in its use?
  3. Avoid:
    1. Don’t think that the lack of information is the fault of any one IT unit or application. In most cases, there is a lack of a comprehensive approach to Enterprise and Data Architecture at the core of the problem.

Download the Reference Architecture Template

3.2.2 Evaluate accessibility to data for key capabilities

Input

  • Reference Architecture Template
  • Data dictionary
  • Key reports
  • List key system of records/transactional data source system inventory
  • Capability maps

Output

  • Heat mapped capability map

Materials

  • Whiteboard/flip charts
  • Reference Architecture Template

Participants

  • Enterprise/Business Architect
  • Data Architect
  • Organizational planning and analysis staff
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

3.2.3 Prioritize data improvements for key capabilities

1-3 hours

Use data to institute information as an asset.

  1. Key capabilities should be well supported by data. If there are any capabilities that scored Level 2 or below, prioritize establishing an effective data governance framework. Leverage Build a Business Aligned Data Architecture Optimization Strategy.
  2. Consider:
    1. Is data management fully in your mandated area of influence, responsibility, or accountability? If not, consider who you may need to recruit for support from the business side to drive refinements.
    2. Effective data governance will require close collaboration between IT and the data owners on the business side.
  3. Avoid:
    1. Don’t create redundant data. Ensure there is minimal overlap with existing data elements if you are creating a new application or database process.
    2. Don’t forget to think about end user access and reporting tools when creating new data holdings. This might be more challenging, but it will ultimately ensure long-term success.

Download the Reference Architecture Template

3.2.3 Prioritize data improvements for key capabilities

Input

  • Reference Architecture Template
  • Standard operating procedures
  • Capability maps

Output

  • Heat mapped capability map

Materials

  • Whiteboard/flip charts
  • Reference Architecture Template

Participants

  • Enterprise/Business Architect
  • Data Architect
  • Organizational planning and analysis staff
  • Business analysts
  • Business unit leads
  • CIO
  • Departmental Executive and senior managers

Step 3.3

Technology opportunity assessment

Activities
  • 3.3.1 Assess technology support of capabilities
  • 3.3.2 Uncover value opportunities for applications

This step will walk you through the following activities:

  • Assess technology support of capabilities
  • Uncover value opportunities for applications
  • Compare results with industry research to determine a plan of action

This step involves the following participants:

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • CTO, VP Applications, VP Infrastructure
  • Department Executive and senior managers

Outcomes of this step

  • Identification of capability application and technology support
Assess key capabilities for planning priorities
Step 3.1Step 3.2Step 3.3

The Application Portfolio Assessment Diagnostic helps identify application gaps

Application portfolio management is nearly impossible to perform without an honest and thorough understanding of end user sentiment toward IT software.

Develop data-driven insights to help you decide which applications to retire, upgrade, re-train on, or maintain to meet demands and by extension enable the capabilities of the business.

The Application Portfolio Assessment program will help you:

  • Assess the health of the application portfolio
  • Understand the business’ perception of the application in use throughout your business
  • Identify and build core IT processes that automate IT-business alignment
  • Create a plan to address alignment gaps impeding business growth
  • Deliver your plan to demonstrate IT value and progress
Title card for the 'End-User Satisfaction Diagnostic Program'.

Here are some critical insights to extract from the Application Portfolio Assessment report

Begin with understanding the perception of the applications in use in your organization to assess the effectiveness of supporting key business capabilities.

Differentiating performance levels of applications in the Application Portfolio Assessment. 'High Performing Appplications': 'End Users love these apps. Pat yourself on the back and find ways to get more out of unleveraged apps that are unused or nice to have.' On the Importance/Effectiveness map they are on the far right 'Extremely Effective' and are categorized as 'Effective' or 'Unleveraged'. 'At Risk Applications': 'While crucial to the business, these apps are underperforming and should be addressed for root cause immediately.' On the Importance/Effectiveness map they are on top in the left two spots 'Important'/'Mission Critical' and are categorized as 'Hazardous' or 'Contentious'. 'Nonessential Applications': 'These apps bring questionable value proposition to the table. Consider retiring, upgrading or retraining end users on these apps.' On the Importance/Effectiveness map they are on bottom in the left two spots 'Unused'/'Nice to Have' and are categorized as 'Unwanted' or 'Questionable'.

Applications that are deemed as unleveraged, questionable, or contentious should be investigated further regarding the effectiveness of supporting key business capabilities.

Technology Opportunity Assessment

New technologies can create opportunities for business agility and help develop resilience to changing market conditions.

  • Business agility is essential to staying competitive. However, the application portfolio of many organizations cannot sufficiently support the flexibility and efficiency the business needs because of legacy challenges.
  • Organizations experience application sprawl over time, caused by many factors, that can end up costing more for licenses, operational resources, and maintenance.
  • Organizations are looking for ways to modernize their applications, but they want to develop options without introducing additional risks. Adopting a capability-based approach to assessing applications will enable the IT department to identify opportunities to:
    • Automate tasks through the strategic selection and implementation of applications.
    • Integrate applications that have cross-capability implications.
    • Rationalize the application portfolio.
    • Eliminate redundant or legacy applications that don’t deliver enough value.
  • The market availability for software applications dedicated to supporting a specific capability (or set of capabilities) can serve as an indicator of the presence of legacy challenges. Where there is a lack of application availability, it may be a signal of either custom developed, ad-hoc and makeshift solutions or shadow IT.
Availability of software applications that support each capability
Color-coding legend item for 'NONE' is red.NONE: Capability is typically unsupported by applications. The likelihood of legacy applications supporting these capabilities is high.
Color-coding legend item for 'LOW' is yellow.LOW: Capability is somewhat supported by applications. There is typically a mix of legacy and purchased applications supporting these capabilities.
Color-coding legend item for 'MEDIUM' is yellow-green.MEDIUM: Capability is moderately supported by applications. Organizations do not have to build their own applications; however, there aren’t many solutions to choose from.
Color-coding legend item for 'HIGH' is green.HIGH: Capability is well supported by applications. Organizations can choose from a variety of solutions that will meet or exceed their needs.

Figure above: Technology Opportunity Assessment Legend

3.3.1 Assess technology support of capabilities

1-3 hours

Input: Reference Architecture Template, Listing of key system of records/transactional system inventory, Capability maps

Output: Heat mapped capability map

Materials: Whiteboard/flip charts, Reference Architecture Template

Participants: Enterprise/Business Architect, Business analysts, Business unit leads, CIO, CTO, VP Applications, VP Infrastructure, Departmental Executive and senior managers

Determine how well key capabilities are supported by applications.

  1. Perform an application rationalization exercise on the key capabilities to determine how well they are being supported by applications. Applications should be assessed based on their flexibility, ease of use, and integration.
  2. Consider:
    1. How flexible are the applications?
    2. How well do the applications integrate?
    3. How easy are the applications to learn and use?
    4. Are there overlap, unplanned redundancy, or data quality issues?
  3. Avoid:
    1. Don’t perform a complete overhaul. Consider continuity in delivering business services before you rip and replace everything.
    2. Don’t forget about shadow IT. Ask around to get an accurate understanding of what applications are being used to support business capabilities.

Download the Reference Architecture Template

Application support of key capabilities

The Business Capability Map for PEVC with application support level for key capabilities color-coded to a legend. ie. Level 1 capability 'Integration, Advisory & M&A Support' is not coded and neither are two Level 2 capabilities within it, but the other two Level 2 capabilities within it are coded as 'MEDIUM' support.

3.3.2 Uncover value opportunities for applications

1-3 hours

Make sure the business is leveraging applications wherever it should.

  1. Unsupported key capabilities are areas in which IT can deliver high value for the business. The key capabilities that score None or Low in the technology assessment are the ones that require the most attention.
  2. Consider:
    1. Prioritize which unsupported key capabilities to focus on based on their importance.
  3. Avoid:
    1. Don’t focus on unsupported key capabilities that will require too much investment.
    2. Don’t build an application just because you can. Research existing solutions before deciding to build in-house.

Download the Reference Architecture Template

3.3.2 Uncover value opportunities for applications

Input

  • Reference Architecture Template
  • Listing of key system of records/transactional system inventory
  • Capability maps

Output

  • Heat mapped capability map

Materials

  • Whiteboard/flip charts
  • Reference Architecture Template

Participants

  • Enterprise/Business Architect
  • Business analysts
  • Business unit leads
  • CIO
  • CTO, VP Applications, VP Infrastructure
  • Departmental Executive and senior managers

Private Equity and Venture Capital Industry Business Reference Architecture

Phase 4

Adopt capability-based strategy planning

Phase 1

1.1 Define the Organization’s Value Stream

1.2 Develop a Business Capability Map

Phase 2

2.1 Define the Organization’s Key Capabilities

2.2 Develop a Strategy Map

Phase 3

3.1 Business Process Review

3.2 Information Assessment

3.3 Technology Opportunity Identification

Phase 4

4.1 Consolidate and Prioritize Capability Gaps

This phase will walk you through the following activities:

  • Assess capability gaps via a MoSCoW analysis

This phase involves the following participants:

  • Business analysts
  • Business unit leads
  • CIO
  • CTO, VP Applications, VP Infrastructure
  • Departmental Executive and senior managers
  • Portfolio Manager (PMO Director)

Step 4.1

Consolidate and prioritize capability gaps

Activities
  • 4.1.1 Assess capability gaps via a MoSCoW analysis

This step will walk you through the following activities:

  • Look at current and future state to develop categories/gaps to be addressed
  • Prioritize the effort to derive the greatest business value

This step involves the following participants:

  • Business Analysts
  • Business Unit Leads
  • CIO
  • CTO, VP Applications, VP Infrastructure
  • Department Executive and Senior Managers
  • Portfolio Manager (PMO Director)

Outcomes of this step

  • Prioritization of key capability gaps
Adopt capability-based strategy planning
Step 4.1

Consolidate and Prioritize Capability Gaps

  • Direct strategic IT investments based on the collective output of the capability assessments.
  • When combined with a solid understanding of business priorities and IT’s mandate, a capability assessment can be the driving force that informs a unified perspective on the sequencing of an organization’s strategic IT initiatives.
  • Assessments based on how well a capability is supported by people (via organizational analysis), process (via process review), data (via information assessment), and technology (via application, infrastructure, data, and security improvements) will inform the overall health of a capability, or in other words, the size of a capability gap. This information, when contrasted with the concept of a MoSCoW-based effort to value, forms an enhanced decision-making framework that can be used to determine initiative sequencing on a strategic roadmap.
  • If a capability has a large gap (is poorly supported by people, process, data, or technology), it should be considered as high effort, or difficulty, to address. When the capability is well aligned with business priorities and the IT mandate, the capability gap should be considered as high value to address.
  • See the figure on the right: IT leaders should focus their efforts on the lower-right quadrant (high value, low effort). In the top-right quadrant (high value, high effort), IT should seek business support to drive the initiative. Capability gaps on the right side of the quadrant overall are good candidates for capability outsourcing.
MoSCoW Analysis for Business Capabilities with axes 'EFFORT' and 'VALUE', and the 'Must Address: Low Effort / High Value' quadrant highlighted.
Figure above: MoSCoW Analysis for Business Capabilities

MoSCoW capability gap analysis

MoSCoW Analysis for Business Capabilities with axes 'EFFORT' and 'VALUE', and the 'Must Address: Low Effort / High Value' quadrant highlighted.

Value to Effort Impact Ratio

  • HE = High Effort
  • LE = Low Effort
  • HV = High Value
  • LV = Low Value
‹— We are looking to act on low effort, high value

4.1.1 Assess capability gaps via a MoSCoW analysis

1-3 hours

Elevate your focus from the IT level to the organization level.

  1. Gather and synthesize the priorities from the information, people, process, and technology assessments to develop a consolidated view of IT’s planning responsibilities.
  2. Consider:
    1. How big is the difference between current needs and the assessment of the factors that support each capability?
    2. Are there any groups of capabilities that have low scores from the assessments? Consider a root-cause analysis to determine what could be impacting multiple capabilities.
  3. Avoid:
    1. Don’t forget about healthy capabilities. Enhance the green (low-gap) capabilities once you have resolved the issues with the red and yellow (large-gap) key capabilities.

Download the Reference Architecture Template

4.1.1 Assess capability gaps via a MoSCoW analysis

Input

  • Reference Architecture Template
  • Capability maps

Output

  • Shortlisted assessment of capability gaps via 2x2 matrix

Materials

  • Whiteboard/flip charts
  • Reference Architecture Template

Participants

  • Business analysts
  • Business unit leads
  • CIO
  • CTO, VP Applications, VP Infrastructure
  • Departmental Executive and senior managers
  • Portfolio Manager (PMO Director)

MoSCoW analysis for business capabilities

MoSCoW Analysis for Business Capabilities with example PEVC capabilities mapped onto it and 'Must Address: Low Effort / High Value' highlighted. In 'Won't Address: HE/LV' are 'Human Resources' and 'Legal'. In 'Should Address: HE/HV' is 'Financial Reporting & Disclosure'. In 'Could Address: LE/LV' is 'Contract Management'. In 'Must Address: LE/HV' are 'Investee Outreach' and 'Ongoing Opportunity Engagement & Management'.
Note: Illustrative Example. To edit and customize this visual please download the corresponding template.

Value to Effort Impact Ratio

  • HE = High Effort
  • LE = Low Effort
  • HV = High Value
  • LV = Low Value

Ranked list of IT implications template

Template for the ranked list of IT implications using MoSCoW. Column headers are 'MoSCoW Rank', 'IT Implication', 'Value Stream Impacted', and 'Comments/Actions'.

Address key capability gaps

As part of your next steps checklist, leverage the reference architecture for priorities that drive measurable top-line organizational outcomes and the unlocking of direct value.

Reference Architecture

Enterprise ArchitectureDocument Your Business ArchitectureEA StrategyData ModelsEA Governance
Business Context & IT StrategyDocument Business Goals and Capabilities for Your IT StrategyIT StrategyDigital StrategyIT Budget
Applications StrategyReview Your Application StrategyData QualityApp Dev ThroughputERP Selection
Infrastructure & Operations StrategyBuild the Business by Building an Infrastructure RoadmapChange Mgmt.Asset Mgmt.Cloud Strategy

Summary of Accomplishment

Problem Solved

  • Accelerated the building of your organization’s capability map by defining the organization’s value stream and validating the industry reference architecture.
  • Used business capabilities to define strategic focus by defining the organization’s key capabilities and developing a prioritized strategy map.
  • Assessed key capabilities for planning priorities through a review of business processes, information, and application and technology support of key capabilities.
  • Consolidated and prioritized capability gaps for incorporation into priorities.

If you would like additional support, have our analysts guide you through other phases as part of an Info-Tech workshop.

Contact your account representative for more information.

workshops@infotech.com 1-888-670-8889

Additional Support

If you would like additional support, have our analysts guide you through other phases as part of an Info-Tech workshop.

Photo of David Tomljenovic, MBA LL.M CIM, Head of Financial Service Industry Research, Info-Tech Research Group.

Contact your account representative for more information.

workshops@infotech.com 1-888-670-8889

To accelerate this project, engage your IT team in an Info-Tech workshop with an Info-Tech analyst team.

Info-Tech analysts will join you and your team at your location or welcome you to Info-Tech’s historic Toronto office to participate in an innovative onsite workshop.

The following are sample activities that will be conducted by Info-Tech analysts with your team:

Sample of a business capability map with level 1 and 2 capabilities.
Model Level 1 and 2 business capability maps.
Using the business capability map as an accelerator, Info-Tech analysts will work with relevant stakeholders to modify and validate the business capability map to suit your organization’s context.
Sample of a business capability map with the assessment level color-coding that we saw earlier.
Review capability assessment map(s).
Info-Tech analysts will work with relevant stakeholders to review the various capability assessment maps and identify value opportunities within your organization.

About Info-Tech

Info-Tech Research Group is the world’s fastest-growing information technology research and advisory company, proudly serving over 30,000 IT professionals.

We produce unbiased and highly relevant research to help CIOs and IT leaders make strategic, timely, and well-informed decisions. We partner closely with IT teams to provide everything they need, from actionable tools to analyst guidance, ensuring they deliver measurable results for their organizations.

What Is a Blueprint?

A blueprint is designed to be a roadmap, containing a methodology and the tools and templates you need to solve your IT problems.

Each blueprint can be accompanied by a Guided Implementation that provides you access to our world-class analysts to help you get through the project.

Business capability maps, value streams, and strategy maps for the Private Equity and Venture Capital Industry.

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Get the help you need in this 2-phase advisory process. You'll receive 8 touchpoints with our researchers, all included in your membership.

Guided Implementation #1 - Model
  • Call #1 - Introduce Info-Tech’s Industry business reference architecture methodology.
  • Call #2 - Define and create value streams.
  • Call #3 - Model Level 1 business capability maps.
  • Call #4 - Map value streams to business capabilities.
  • Call #5 - Create a strategy map.

Guided Implementation #2 - Drive
  • Call #1 - Introduce Info-Tech's capability assessment framework.
  • Call #2 - Review capability assessment map(s).
  • Call #3 - Discuss and review prioritization of key capability gaps and plan next steps.

Author

David Tomljenovic

Search Code: 99020
Last Revised: June 27, 2022

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