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Retail Banking Industry Business Reference Architecture

Capability maps, value streams, and strategy maps for retail banking organizations.

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  • Banking leadership requires a unified and validated view of retail banking business capabilities that help CIOs and bank 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 banking 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 retail banking 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.

Retail Banking Industry Business Reference Architecture Research & Tools

1. Retail Banking Industry Business Reference Architecture – A deck to help accelerate the strategy design process.

Leverage a validated view of the retail banking organizations' business capabilities to realize measurable top-line business outcomes and unlock direct value.

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Retail Banking Industry Business Reference Architecture

Business Capability Maps, Value Streams, and Strategy Maps for the Retail Banking 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.

The retail banking industry is being driven by increasing levels of competition. Often, the competition is being enabled by new technologies that are creating new product and service offerings. To remain competitive, modern banks need to transform many of their core products and services along with how they are delivered.

The end result is that technology is getting closer to the customers. Often specialized technologies are at the center of the industry’s changes. IT departments are dealing with more vendors, new delivery models, and growing complexity. The reference architecture is a powerful stakeholder alignment and communication tool.

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

David Tomljenovic, MBA LLM CIM
Head of Financial Service Industry Research
Info-Tech Research Group

Executive Summary

Your Challenge
  • The pace of change within the retail banking sector is accelerating. New product and customer journeys are causing major changes to occur in your organization.
  • The number of vendors is likely increasing. They are also increasingly being delivered through cloud-based services that must be incorporated into your existing infrastructure and processes.
  • The business is also increasingly dependent on IT to enable its core activities. Stakeholder management and satisfaction are increasingly important to your overall success.
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.

The business and IT often speak in their own languages without a holistic 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 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 processes, information, applications, and technology support of key capabilities.
  • Adopt capability-based strategy planning by ongoing identification and road mapping of capability gaps.

Info-Tech Insight

Using an industry-specific reference architecture is central, and has many benefits, to organizational priorities. It’s critical not only to understanding, modeling, and communicating the operating environment and the direction of the organization but also, more significantly, to enabling 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 processes, information, applications, and technology support of key capabilities.

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


Industry Context

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: Retail Banking

'Value Streams' of Retail Banking: 'Attract Customers', 'Supply Loans and Mortgages and Credit Cards', 'Provide Core Banking Services', 'Offer Card Services', 'Grow Investments and Manage Wealth'.

The Retail Banking industry is rapidly evolving. It is being influenced and reshaped by many factors. Customer bases are aging, and younger, tech-savvy customers are becoming more important to the business. Non-traditional competitors and fintech competitors are using highly mature, digitally native products and delivery channels to compete with incumbents.

As a result, Retail Banking is changing rapidly, as is the technology required to compete effectively. IT has become an integral part of survival and success, and IT needs to align with the business to assure it can support business needs.

Figure above: Value Chain for the Retail Banking

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.

Retail Banking 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.

Retail business capability map with the retail banking value chain as column headers, 'Attract Customers', 'Supply Loans and Mortgages and Credit Cards', 'Provide Core Banking Services', 'Offer Card Services', 'Grow Investments and Manage Wealth', 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/Concept Definition
Industry Value Chain A high-level analysis of how the industry creates value for the consumer as an overall end-to-end process.
Business Capability Map The primary visual representation of the organization’s key capabilities. This model forms the basis of strategic planning discussions.
Industry Value Streams The specific set of activities an industry player undertakes to create and capture value for and from the end consumer.
Strategic Objectives A set of standard strategic objectives that most industry players will feature in their corporate plans.
Industry Strategy Map A visualization of the alignment between the organization’s strategic direction and its key capabilities.
Capability Assessments Based on people, process, information, and technology, a heat-mapping effort that analyzes the strength of each key capability.
Capability 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.
(Source: The Open Group, 2009)

Tools and templates to compile and communicate your reference architecture work

Title card for this blueprint.
  • The Retail Banking Industry Business 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 Retail Banking Industry Reference Architecture Template

Info-Tech’s methodology for Reference Architecture

1. Build Your Organization’s Capability Map 2. Use Business Capabilities to Define Strategic Focus 3. Assess Key Capabilities for Planning Priorities 4. 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 Organizations 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 6 to 9 calls over the course of 1 to 4 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.


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
  • Department 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 involves the following participants:

  • Enterprise/Business Architect
  • Business Analysts
  • Business Unit Leads
  • CIO
  • Department Executive and Senior Managers

Outcomes of this step

  • Defined and validated value streams specific to your organization

1.1.1 Identify and assemble key stakeholders

1-3 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, Department 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 Retail Banking

Value
Streams
Attract Customers Supply Loans and Mortgages and Credit Cards Provide Core Banking Services Offer Card Services Grow Investments and Manage Wealth
  • Retail banks design new products to fill gaps in their product portfolios by analyzing the market for changing customer needs and new competitor offerings or pricing.
  • Pricing a product correctly through analysis and rate setting is a delicate balance and fundamental to a bank’s success.
  • Product performance in the marketplace is determined before launch through prototyping and testing.
  • Selecting lending criteria helps banks decide on the segment of customer they should take on and the degree of risk they are willing to accept.
  • A quick turnaround on the application and adjudication process is key to ensuring that customers are satisfied with the product.
  • Servicing includes the day-to-day interactions with customers for onboarding, payments, adjustments, and offboarding through multiple banking channels.
  • Customer retention and growing share of wallet are crucial capabilities in servicing that directly impact the growth and profitability of retail banks.
  • Card servicing involves quick turnarounds on card delivery and acceptance at a large number of merchants.
  • Accurate billing and customizable spending alerts are crucial in ensuring that the customer understands their spending habits.
  • Customer retention can be increased through effective wealth management and additional services that will increase the number of products owned by a customer.
  • Additional revenue can be generated through effective investment advice and investment portfolio management.

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 that?
    4. What are the benefits the organization delivers to customers?
  3. 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 (continued)

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
  • Department 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 organizational specific value streams, Detailed value stream definition(s)

Materials: Whiteboard/Flip Charts, Reference Architecture Template

Participants: Enterprise/Business Architect, Business Analysts, Business Unit Leads, CIO, Department 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 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. 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 involves the following participants:

  • Enterprise/Business Architect
  • Business Analysts
  • Business Unit Leads
  • CIO
  • Department Executive and Senior Managers

Outcomes of this step

  • A validated Level 1 business capability map
  • Decomposed Level 2 capabilities

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 Retail Banking

Business Capability Map for Retail Banking with the retail banking value chain as column headers, 'Attract Customers', 'Supply Loans and Mortgages and Credit Cards', 'Provide Core Banking Services', 'Offer Card Services', 'Grow Investments and Manage Wealth', 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.

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 Retail Banking capabilities that are used in this reference architecture model are:

Capability Definition
Marketing Management Marketing is an essential operation within a retail bank. They work to generate awareness and demand for the bank’s products and services.
Lending Management Includes all activities related the creation of demand for lending-based products through to its repayment.
Origination Origination is the process of sourcing, qualifying, processing, and approving a financial product or service.
Adjudication and Disbursements The process of making lending decisions and then funding them.
Collections and Recovery Collecting payments on loans and taking back pledged assets.
Provide Core Banking Services All processes and capabilities related to daily operations of the bank.
Payment Processing The bank’s credit card offerings and services.
Credit Card Management The daily operations related to issuing a credit card, merchant services, and transaction processing.
Investment and Wealth Management Providing investing and retirement goods and services to customers of the bank.

Glossary of Capabilities

Capability Definition
Product Management The daily operations of creating, launching, and running the products offered to customers.
Customer Management Capturing and maintaining customer data and dealing with ongoing customer questions and concerns.
Regulatory Compliance Internal processes designed to ensure ongoing compliance with all local, state, national, and international banking regulations.
Account Management Activities related to opening new accounts, monitoring activity, and reporting.
Risk Management All processes relating to operational risk within the bank including capital risk, reputational risk, and overall operational risk.
Channel Management Assuring functional management of all product and service delivery including in-branch, online, mobile, telephone, kiosk, and ATM.
Corporate Governance Assuring the organization is run in accordance with its mission and vision and regulatory frameworks.

Glossary of Capabilities

Capability Definition
Strategic Planning The high-level direction of the bank’s future activities as determined by its board and senior management.
IT Management The operation of the bank’s IT services and infrastructure.
Accounting and Reporting Establish an effective accounting and reporting infrastructure that meets regulatory requirements.
Enterprise Architecture A group responsible for the future design of the organization and its products and services and the infrastructure needed to enable it.
Human Resources The management of the bank’s employees and benefits.
Legal The group responsible for oversight of all of the bank’s legal matters.
Corporate Finance The group responsible for planning and managing the bank’s regulatory capital.

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. 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 organizational 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
  • Department 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? Deselect them if yes.
  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
  • Department 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, Department 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:
    • 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 that, overall, contribute to and enable the 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 at a deeper, more granular level the organization’s capabilities that support them. 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 the value stream?
    2. Which Level 1 capabilities enable the most stages of the value stream?
  3. 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 Retail Banking capabilities that are used in this reference architecture model are:

Capability Definition
Market Research A process completed by the bank's marketing personnel, which includes assessing other bank’s offerings, addressing internal requests, and determining what opportunities exist for new product and service creation.
Promotions and Incentives Once a product or service has been identified and created, promotional and incentive activities are created to build market awareness and adoption.
Advertising Can be brand, product, or service focused. May use multiple channels and are designed to establish or enhance market awareness of the bank and its products and services.
Needs Assessment The need for marketing services and management is constantly being evaluated within the bank to assure that adequate marketing activity is conducted to support the bank and its products and services.
Brand Management A bank's reputation is an essential part of its operations. The marketing department will create programs to support and enhance the bank’s brand in the marketplace.
Lead Qualification A lead is an expression of interest in a financial product or service generated electronically or through traditional channels.
Application Management A system that tracks an application as it moves through various stages of completion.
Pricing and Terms The process of pricing a loan, in terms of the interest rate charged and any associated fees or specific restrictions or rules.
Information Management Borrower information must be verified and stored for later use as the loan begins following closing and the loan must be serviced.

Glossary of Capabilities

Capability Definition
Due Diligence To complete a loan, investigations into collateral, the borrowers and other specific details must be completed.
Credit Scoring Internal and external credit scores are used to evaluate the credit worthiness of a borrower. The credit score is key into the pricing of a loan.
Deal Closing The completion of legal documents as well as protecting the security interest in any assets pledged as part of the loan process.
Payment/Disbursements Upon the successful completion of all of the loan processes, the funds will be disbursed to the borrower or the assignee of the funds.
Payment Plans When loans go into default, lenders work with borrowers to establish a structured payment plan to address the payment of outstanding balances.
Repossessions Taking back assets that have been financed by the bank, e.g. car or equipment, or enforcing and taking legal control of pledged assets such as a home used to secure a mortgage.
Debt Management Working with users of credit products to manage their debt levels and, if required, to move them into a structured program such as a payment plan.
Collection Management Using internal or external services to collect debts that are past due. Usually include written as well as voice communications.
Collateral Management Oversight and management of collateral pledged as security for a loan.

Glossary of Capabilities

Capability Definition
Cash Management An essential part of a bank's overall treasury management process. The high volume of daily transactions within a bank requires active management of cash with the goal of maximizing liquidity and cost of capital.
Deposit Management Assuring that processes relating to deposit taking are robust enough to address market needs and also plays a key role in cost management and new product development.
Currency Exchange Management Currency management is complex. Managing physical currency levels as well as managing large-value currency transactions and the associated foreign exchange rate risk.
ATM Network Management Ongoing cash restocking, deposit collection, and machine maintenance.
Fund Transfer and Remittance Broad-ranging transaction sizes require different transfer and remittance capabilities. Large-value transactions typically occur bank to bank electronically; new personal payment systems are actively evolving.
Correspondent Bank Fulfillment Correspondent banking provides domestic banking capabilities to foreign banks who typically do not have a local presence. Correspondent banking tends to be important in larger banking organizations.
Payment Tracking Growing levels of payments and increased service expectations make payment tracking an increasingly important service area.
Disputes and Chargebacks A key feature of credit card payments is the ability to dispute payments and the ability to charge-back items that should not have been charged. Growing use of online payments is driving volume.
Check and Draft Processing Processing cheques and drafts are declining and being replaced by electronic systems. There are still a meaningful number of checks and drafts that are used daily and services need to be optimized to minimize cost and fraud.
Central Cash Holding Banks are required to hold physical levels of cash that require safekeeping, oversight, accounting, and administration.
Transaction Authorization Growing use of electronic transactions are driving volumes. Banks partner with a credit card network to issue cards, manage credit, and process transactions.

Glossary of Capabilities

Capability Definition
Card Facility Credit card facilities have very stringent security requirements typically set out by PCI rules. Card networks require extremely secure facilities for the bank to retain their use of the card network.
Card Authorization Transaction authorization is an essential function for a bank’s card programs. Merchants requesting payments submit requests and the bank must check credit limits and accept or decline the merchant request.
Card Capture A key security element of the card network is the presence of a card at the point of use. Merchants have a point of sales terminal to capture card details.
Card Billing and Payments The issuing bank must issue monthly statements to their customers and collect the associated payments from their customers.
Merchant Relations Banks are card issuers and they also issue card capture devices to their customers who are referred to as merchants who keep an account with the bank to facilitate payment from the bank for charges made in their stores.
Investment Management Typically run as a separate division within a retail bank where customers’ retirement and other savings are invested according to their age, investing knowledge, appetite for risk, and other factors.
Portfolio Planning The process of getting to know a client’s financial situation and goals to formulate a financial plan for the client, which leads to the creation of portfolio plan.
Trust Service Management Typically within higher net worth clients, trusts are legal entities used to hold assets for the purpose of estate planning, tax management, and the generational transfer of wealth.
Safety Deposit Box Management Banks offer space in their vaults at a fee for use by their clients to have safe storage of valuable items and documents.
Brokered Product Management Often within the wealth management division, clients are offered brokerage services, which facilitate the buying and the selling of public market investments such as stock, bonds, and ETFs.

Glossary of Capabilities

Capability Definition
Product Innovation The creation of new products and services. This is increasingly being completed using customer transaction data and through competitive market analysis.
Product Training Training must be provided to the individuals responsible for selling and servicing new products.
Product Catalog Management A product catalog of all goods and services is kept as a reference source.
Product Servicing Some products such as mortgages, credit cards, and investments have service requirements needed after the initial sale of a product. This must be considered when designing and launching new products and services.
Knowledge Management An archive of product information that employees can use to learn about the products and services offered in their organization.
Customer Care Customer care capabilities increasingly use omnichannel communications methods (voice, email, live chat, video, IVR) and must provide a unified approach to resolving customer issues.
Preference Management The increasing channels for customer support require that banks retain customer preferences for their care engagements.
Relationship Management Customer service is a key area for competitive differentiation. Strong relationship management skills must be in place to assure customers remain happy with the goods and services they receive.
Campaign Management Customer outreach is an ongoing process through which banks engage their customers to build awareness for and sales of new products and services being offered.
Retain Customer Customer retention typically deals with customers who have been dissatisfied with their experience with the bank or who may be seeking alternatives from competitors. Customer retention designs programs to address customer concerns.

Glossary of Capabilities

Capability Definition
AML and Fraud Management Among the most demanding pieces of regulatory compliance within a bank. It is a source of constantly growing regulation and effort within a bank.
Guideline Compliance Compliance guidelines can arise from international, national, state, or local authorities and continued compliance with guidelines is mandatory.
Compliance Reporting Many banking 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 Assurance Threat levels continue to escalate within banking. COVID-19 has seen a tremendous level of growth in security threats. Increasing risk from ransomware attacks is also making security assurance essential.
Account Setup Opening a new account as efficiently as possible is not only essential but increasingly becoming a point of competitive differentiation. Streamlined, self-service account opening is an essential capability for banks.
Billing Management Issuing bills and statements is changing rapidly as customers demand less paper billing and more timely and easier access to their accounts. This is an active area of innovation.
Account Monitoring Banks must monitor accounts to protect their clients and the bank from unauthorized or fraudulent activity. Growing use of automation and machines are providing much more timely oversight.
Position Keeping and Management Often associated with investing accounts, the accurate tracking of positions within a client account is essential. This is becoming more complex as the number of products and trading activity continue to grow.
Counterparty Risk As banks transact on their own behalf and the behalf of their clients, they are assuming settlement risk by having amounts owing to them from other parties. Counterparty risk management is essential to overall capital and risk management.
Account Write-Off Procedures must exist for when a bank's customer is not going to repay the loans or balancing outstanding. An account write-off occurs when all avenues for potential collection have been exhausted and repayment becomes unlikely.

Glossary of Capabilities

Capability Definition
Capital Risk Management Capital risk management is the process of assuring that a bank’s capital is adequately provisioned to assure compliance with national and international banking standards.
Credit Risk Management Credit risk management is an essential function to assure that a bank is accurately assessing and preparing for potential losses resulting in losses from their customers. Effective capital risk management is essential to ensuring a bank’s overall credit rating.
Operational Risk Management A bank must assure that its policies and procedures are adequately robust to protect the bank from the risks associated with running its day-to-day operations. Fraud and theft are among their primary concerns.
Reputation Risk Management A bank's reputation is essential to its continued viability. Without trust a bank cannot survive, so the active management of its reputation is essential.
Digital Banking Digital banking is growing in importance and complexity. Following COVID-19, the transition to digital banking has become even more important. Increasingly, new technologies such as video are driving digital banking.
ATM and Kiosks ATM and kiosks are maturing and growing in complexity and the functions that they perform, especially following COVID-19. In-branch banking is being transformed and ATM and kiosks are part of that transformation.
Contact Centre Typical voice-driven contact centers have grown in importance during COVID-19. The growing use of video is starting to cause a transformation in typical voice-driven contact centers.
Branch Branch banking was already being heavily altered by changing technology and customer preferences. COVID-19 has accelerated the pace of change and many banks are reconsidering the future role of branches.

Glossary of Capabilities

Capability Definition
Knowledge Management Organizations are increasingly trying to capture the knowledge of their employees, processes, and systems into systems to reduce risk and enhance their understanding of their own organizations.
Partner Management The delivery of banking services increasingly is done through a network of partners. Effective partner management processes must be in place to assure secure and effective delivery of goods and services are delivered.
Enterprise Data Management Major efforts have taken place or are underway in most banks to escalate their maturity around data, data management, data classification, and data security to assure compliance with an increasing level of data-related regulations.
Workflow Management Competitive forces and changing customer preferences are causing workflows to be dramatically altered. Process optimization and automation are increasingly important within most banks.
Capital Management The process of managing the capitalization of the bank. A key function to assure regulatory compliance is maintained while optimizing the capital cost of the bank.
Treasury Administration Treasury provides the key function of managing the inflows and outflows of capital within a bank. They focus on the daily funding needs of the bank.
Credit Bureau Reporting Banks are one of the primary custodians of individuals’ financial lives and data. As such, they must assure that customer activity is reported accurately to credit rating agencies.
Analytics and BI As banks increasingly move toward data-driven business decisions, the use of analytics and BI is growing exponentially as the business searches out new insight from the data that exists within their own organizations.
Settlement and Reconciliation Banks work in cooperation with a number of other banks and businesses. At the end of every day a bank must assure reconciliations are completed and settlement of amounts owing are collected and paid.
Transaction Processing One of a bank’s critical functions is to process the transactions of their customers. Transactions are growing in complexity and volume, making this an increasingly important function within most banks.

Glossary of Capabilities

Capability Definition
Corporate Governance Corporate governance is primarily provided by the board of directors of a bank. The board represents the investors of the bank. The majority of the oversight of a bank must come from outside and independent individuals with the skills and knowledge in governance matters.
Strategic Planning Strategic planning typically occurs at the senior-management level and includes the input and guidance of the board.
IT Management IT management covers the technology direction of the organization and its tactical executions. It must be done in a way that best aligns to business needs.
Accounting and Reporting Accounting and reporting is typically led 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 Architecture An enterprise-level view of the roles and functions that exist within a bank to assure an optimal business structure is in place.
Human Resources Deal with a variety of functions relating to employees of a bank from hiring and terminations to strategic development, culture, and training. In the rapidly changing banking environment, HR is increasingly important from a strategic perspective.
Legal Legal is an essential function within a bank. Regulatory considerations, multi-jurisdictional compliance, contract review, and employment law. The legal function within a bank is an essential role.
Corporate Finance Evaluates potential M&A activities, helps in structing the bank as a whole, and provides input on capital activities within the bank.

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
  • Department 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, Department 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 the line of business represented for each (or selected) Level 1 capability or set of related capabilities and decompose them.
  2. Consider if you will want to go deeper to 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. 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 Retail Banking with the retail banking value chain as column headers, 'Attract Customers', 'Supply Loans and Mortgages and Credit Cards', 'Provide Core Banking Services', 'Offer Card Services', 'Grow Investments and Manage Wealth', 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.


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
  • Department 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 involves the following participants:

  • Enterprise/Business Architect
  • Business Analysts
  • Business Unit Leads
  • CIO
  • Department 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

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 Retail Banking

The Business Capability Map for Retail Banking with 'Cost Advantage Creators' and 'Competitive Advantage Creators' color-coded to a legend. In this example, only fully decomposed capabilities are labelled as such, i.e. Level 1 capability 'Enterprise Data Management' has no Level 2+ capabilities within it and is a Cost Advantage Creator, Level 2 capability 'Customer Care', within Level 1 'Customer Management', has no + capabilities within it and is a Competitive Advantage Creator, and Level 3 capability 'Loyalty Management', within Level 2 'Retain Customer' within Level 1 'Customer Management', is a Competitive 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, Department 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:
    • What is the source of your cost advantage? IT should support the capabilities that drive the cost advantage.
    • Is the industry you operate in sensitive to prices?
  3. 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. 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
  • Department 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, Department 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 have the intention to enhance existing or develop new capabilities. Discuss and select the capabilities that will help drive the attainment of future goals.
  2. Consider:
    • Are your competitors doing anything to give them a competitive advantage? Can your organization easily replicate the capabilities needed to neutralize that advantage?
    • 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. 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 involves the following participants:

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

Outcomes of this step

  • Identification of business strategic objectives
  • Defined and validated strategy map/goal cascade

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 is consistently providing 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. 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)
  • Department Executive and Senior Managers

Illustrative example of strategic goals and outcomes for Retail Banking

Acme Corp.

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

1

Profitable Growth We are committed to maximizing shareholder value by achieving an annual growth in profitability by increasing the number of customers, reducing costs through automation, and creating new products and services.

2

Customer Service We strive to deliver the highest level of customer service delivered through the channel that they prefer to use.

3

Operational Excellence We will strive to drive maximum automation of routine and low-value processes, streamline workflows, and offer the leading-edge technology solution to the business as well as to the customer.

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), Department 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:
    • Focus on the value streams that truly drive the strategic objectives.
    • Are there any capabilities that are not tied to outcomes?
    • Are all strategic objectives supported with IT programs?
  3. 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 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 down 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 & 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)
  • Department Executive and Senior Managers


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 plan of action

This phase involves the following participants:

  • Enterprise/Business Architect
  • Business Analysts
  • Business Unit Leads
  • CIO
  • Department 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 involves the following participants:

  • Enterprise/Business Architect
  • Business Analysts
  • Business Unit Leads
  • CIO
  • Department Executive and Senior Managers

Outcomes of this step

  • Identification of capability process enablement

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 for a faster ability to 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, and 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 Retail Banking with process support level for key capabilities color-coded to a legend, i.e. Level 1 capability 'Lending Management' is not coded and neither is the Level 2 capability 'Origination' within it, but Level 3 capabilities within it 'Lead Qualification', 'Application Management', and 'Pricing & Terms' are coded as 'HIGH' and 'Information Management' is coded as 'LOW' 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, Department 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:
    • What processes are documented?
    • Have the documented processes been communicated to the business users?
    • Are some of the processes redundant? Has that been done on purpose, or can you optimize them?
    • Are there key capabilities that lack processes all together?
  3. Avoid:
    • Don’t waste time. Only evaluate processes that are documented and communicated, and then evaluate them for exclusivity.
    • 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. 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
  • Department 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 the 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 (continued)

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
  • Department 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 involves the following participants:

  • Enterprise/Business Architect
  • Data Architect
  • Organizational Planning & Analysis Staff
  • Business Analysts
  • Business Unit Leads
  • CIO
  • Department Executive and Senior Managers

Outcomes of this step

  • Identification of capability data support

The Data, Reporting & 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 towards Data, Reporting & Analytics.

Develop data-driven insights to help you decide which business capabilities require new or improved reporting and analytics and which opportunities will 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 9 dimensions of quality
  • Evaluate reporting across 10 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 & Analytics Diagnostic.

Here are some critical insights to extract from the Data, Reporting & 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 & Analytics Diagnostic are 'Clarity', 'Accuracy', 'Currency', and 'Completeness'.

Data and reports that are deemed to be low accuracy, currency, or completeness could hamper strategic business capabilities and should be investigated 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 for a faster ability to 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, and 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, and has clear ownership.

Figure above: Information Assessment Legend

Information support of key capabilities

The Business Capability Map for Retail Banking with information support level for key capabilities color-coded to a legend, i.e. Level 1 capability 'Account Management' is not coded, but Level 2 capabilities within it 'Account Setup' and 'Account Monitoring' have 'HIGH' and 'LOW' information support, respectively.

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 & Analysis Staff
  • Business Analysts
  • Business Unit Leads
  • CIO
  • Department 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. 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 & Analysis Staff
  • Business Analysts
  • Business Unit Leads
  • CIO
  • Department 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 Info-Tech’s blueprint Build a Data Architecture Roadmap for more information.
  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 & Analysis Staff
  • Business Analysts
  • Business Unit Leads
  • CIO
  • Department 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 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

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, retrain 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 Applications': '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 stay 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, which 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, Department 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 on the basis of flexibility, ease of use, and integration.
  2. Consider:
    • How flexible are the applications?
    • How well do the applications integrate?
    • How easy are the applications to learn and use?
    • Are there overlap, unplanned redundancy, or data quality issues?
  3. Avoid:
    • Don’t perform a complete overhaul. Consider continuity in delivering business services before you rip and replace everything.
    • 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 Retail Banking with application support level for key capabilities color-coded to a legend, i.e. Level 1 capability 'Marketing Management' is not coded, but all Level 2 capabilities within it are coded as 'NONE', and Level 3 capabilities, within 'Origination' within 'Lending Management', 'Application Management' and 'Pricing and Terms' have 'MEDIUM' application support while 'Lead Qualification' has 'LOW' 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. 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 (continued)

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
  • Department Executive and Senior Managers


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
  • Department 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 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

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 left 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. 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 matric

Materials

  • Whiteboard/Flip Charts
  • Reference Architecture Template

Participants

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

MoSCoW analysis for business capabilities

MoSCoW Analysis for Business Capabilities with example 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 'Data Quality'. In 'Could Address: LE/LV' is 'Contract Management'. In 'Must Address: LE/HV' are 'Digital Banking' and 'Contact Center'.
Note: Illustrative Example. To edit and customize this visual please down 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 Architecture Document Your Business Architecture EA Strategy Data Models EA Governance
Business Context & IT Strategy Document Business Goals and Capabilities for Your IT Strategy IT Strategy Digital Strategy IT Budget
Applications Strategy Review Your Application Strategy Data Quality App Dev Throughput ERP Selection
Infrastructure & Operations Strategy Build the Business by Building an Infrastructure Roadmap Change 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 & 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.

Bibliography

“Define the Business Context Needed to Complete Strategic IT Initiatives.” Business Wire, 1 February 2018. Web.

TOGAF Version 9.1. The Open Group, 2 February 2009. Web.

INFO-TECH RESEARCH GROUP

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.

Need Extra Help?
Speak With An Analyst

Get the help you need in this 4-phase advisory process. You'll receive 9 touchpoints with our researchers, all included in your membership.

Guided Implementation 1: Build your organization’s capability map
  • Call 1: Introduce Info-Tech’s industry reference architecture methodology.

Guided Implementation 2: Use business capabilities to define strategic focus
  • Call 1: Define and create value streams.
  • Call 2: Model Level 1 business capability maps.
  • Call 3: Map value streams to business capabilities.
  • Call 4: Model Level 2 business capability maps.

Guided Implementation 3: Assess key capabilities for planning priorities
  • Call 1: Create a strategy map.
  • Call 2: Introduce Info-Tech's capability assessment framework.

Guided Implementation 4: Adopt capability-based strategy planning
  • Call 1: Review capability assessment map(s).
  • Call 2: Discuss and review prioritization of key capability gaps and plan next steps.

Author

David Tomljenovic

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