Business Capability Strategy Development
In the digital age, the role of technology shifts from supporting processes of the business strategy to becoming the key source of strategy execution itself. Technology helps consumers to ease their everyday life, and this has caused a challenge of how to bridge the gap between strategy and execution in IT. Business capabilities have the potential to serve as the bridge to this gap.
Business capability is the expression or articulation of an organisation's capacity, resources, and knowledge required to accomplish its fundamental functions. It also encapsulates what an organisation is doing right now and what it will need to be doing in order to meet current and future challenges. It describes what an organisation does instead of how an organisation does it.
Business capability is what determines the growth of an organisation. If organisations cannot solve problems, they will not be able to grow as a business. In other words, if an organisation does not have the capability to fix its own problems it will fail. Understanding what capability entails can go a long way towards identifying how the business is doing currently, and what it needs to do in order to expand. The key concepts that organisations need to understand in order to be successful in this digital era are creativity and analytical thinking capacity. This is what enables organisations to innovate, discover new ways of doing things and come up with new ways to reach their customers.
Figure 1: Categorisation of Business Capabilites
The business capabilities can be categorised into 4 as portrayed in Figure 1. Strategic Capabilities provide the organisation with a competitive advantage. These can be either existing capabilities that need improvement or new ones that need to be developed. Core Capabilities are the inherent capabilities that is crucial to the existence of the organisation. Context Capabilities are essential capabilities that runs the organisation. Foundational Capabilities are basic and necessary to the functioning of the organisation.
Strategy Development and Realisation
Organisations with good business capabilities have demonstrated having the ability to develop and realize the business strategy. The foundational building block of a business capability strategy is defining its goals, which means setting out a roadmap for the strategies to achieve those goals. It is also determining its scope, which is how well the organisation can deliver on purpose and how efficiently it can do so. In order to create better respond to competitions, improve its bottom line and increase the market share, organisations need to identify these key goals and set them as the business strategy as well as outlining and developing the business capabilities. This will also assist the organisations to deliver better customer experience, attract more customers and create a better reputation.
According to a research by the Global IT Architect Association (IASA), the 5 foundation pillars of ITABoK (IT Architecture Body of Knowledge) were developed in order to overcome business and technology challenges. One of the pillars is called “Business Technology Strategy” that provide the basis of competitive advantage for an organisation. In developing the business capability strategy, it is important to comprehend the fundamentals of both business and technology strategy. The partnership between business and technology strategy has to support the common business goals of an organisation and this is done by evaluating a business problem and an appropriate technology direction will be identified.
In developing business capabilities, it is also crucial to realise the requirements discovery and constraint analysis. Requirements discovery is the process of converting business needs into capabilities required from an end solution. Constraint analysis involves identifying the business or technological characteristics that influence the organisations decisions. Once the constraints and requirements to the technology and business decisions have been applied, organisations are able to comprehend business requirements with multiple strategic impacts and plan for technology capabilities of the current resources or environment. The organisations are also able to identify the best practices for ensuring the quality of the business requirements.
A business capability strategy is the combination of all strategic frameworks and technology initiatives in a cohesive, complementary, and overarching whole. On one hand, business capability strategy integrates technologies and identifies where they support different functions within the organisation. On the other, it applies a context-specific process to each of these to develop capabilities. Like all strategy developments, the business capability strategy is also about the journey. It is not a linear list of activities and outcomes. It is about the mindset of an organisation.
When organisations build new capabilities, it is not only creating new business opportunities, but it is also higher maturity with a new set of business skills. The need for organisations to find ways to perform with new levels of business and technology demands and solutions as well as closing the skills gap required to operate in the Digital Age will allow them to innovate and perform digital transformation journey successfully.
Author: Aaron Tan Dani
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