By Daniel Lambert, VP Business Architect, Benchmark Consulting
The business architecture domain within Enterprise Architecture is not just about business capabilities and business processes. It is foremost about optimizing value for your customers and contribute to building a more customer-driven organization.
The Importance of Value in Enterprise Architecture
Traditionally, business processes have been the principal mean of interaction with business stakeholders for Enterprise Architects. As for the notion of business capability, it is a more recent concept also often used in Enterprise Architecture. Business capabilities allow a better understanding of how software applications are supporting the business, as very well explained in this video entitled “TOGAF® Business Architecture: Business Capability Guide”. Often, some new business capabilities have no supporting applications, while other older capabilities have too many. Both concepts alone fail to capture the value that an agile customer-driven organization must undertake to keep and grow its market share with more and more rapid and continuous innovative changes and more informed customers that are forcing them to have more fluid business strategies.
The concept of value needs to be mastered and used by enterprise architects in a customer-driven enterprise, as shown in Figure 1 above. An organization usually provides several value propositions to its different customer segments (or persona) and partners that are delivered by value streams made of several value stages. Value stages have internal stakeholders, external stakeholders, and often the customer as participants. Value stages enable customer journey steps, are enabled by capabilities and operationalized by processes (level 2 or 3 usually). The TOGAF® Business Architecture: Value Stream Guide video provides a very clear and simple explanation, should you want to know more. Customer journeys are not strictly speaking part of business architecture, but still, be very useful to interface with business stakeholders.
These value streams/stages cannot be realized out of thin air. An organization must have the ability to achieve a specific purpose, which is to provide value to the triggering stakeholder, in occurrence the customers. This ability is an enabling business capability. Without this capability, the organization cannot provide value to triggering stakeholders (customers). a capability enables a value stage and is operationalized by a business process. It is also owned by one business unit or a division within an organization and used by one or more business units or a division. A capability ordinarily needs to be supported by at least one application, system, or IT service.
Practically, value propositions, value streams, and value stages are the ‘Why’ an initiative or a project needs to be done. A Stakeholder is the ‘Whom” that needs to participate to create value. The business process is the “How” an organization can create value. Finally, the business capability is the “What” the organization needs to manage or must do to create value.
Referring often to TOGAF Standard definitions, each element mentioned in Figure 1 above can be defined as followed:
Business Process. A business process is a group of related and structured activities made by individuals or equipment, which in a specific sequence produces a service or product (or serves a business goal or objective).
Business Capability. A business capability is a particular ability that a business may possess or exchange to achieve a specific purpose. A business capability needs to be supported by applications, systems, and/or IT services.
Customer. One who purchases a product or service.
Customer Journey. The customer journey describes the full addition of all experiences that customers go through when interacting in a path of progressive steps with an organization before and after purchasing a product or service. Instead of looking at just a portion of a transaction or experience, the customer journey will document the complete experience of being a customer. A customer journey is comprised of several journey stages.
Product. A product offered by an organization is a good, an idea, a method, information, an object, or service conceived as a result of a process and serves a need or satisfies a want of a customer. A product is usually part of a value proposition.
Stakeholder. An individual, team, organization, or class thereof, having an interest in a system.
Service. A repeatable activity – a discrete behavior that a building block may be requested or otherwise triggered to perform. A product is usually part of a value proposition.
Value Proposition. A value proposition is a commitment to deliver value to the triggering stakeholder (usually a customer), who has the conviction that at least one benefit will be received after a purchase. A value proposition is made of one or several products or services.
Value Stream. A representation of an end-to-end collection of value-adding activities that create an overall result for a customer, stakeholder, or end-user. A value stream is composed of several value stages with at least one identifiable participating stakeholder.
Roger Burlton, Jim Rhyne, and Daniel St. George recently wrote a whitepaper entitled “Similar Yet Different – Value Streams and Business Processes: The Business Architecture Perspective”, whish explains clearly how business processes and value streams and their enabling capabilities differ. “The business architecture value stream and associated capabilities provide a value-based perspective on the capabilities needed to operate any business of a type (e.g., any hotel), without regard for organizational structure, location, product variants, specific procedures, or other operational characteristics that distinguish a particular business or chain of businesses. By contrast, the value-based business process and its decomposition as activities and flows, provides a value-based perspective on the flow of goods, information, and attainment of outcomes through the activities of a (potentially generic) business.”
Enterprise Architecture and the 5 Phases of Agile Strategy Execution
Let’s now position each one of the elements mentioned in Figure 1 above to figure out which one of the 5 steps to an organizational agile strategy execution, as illustrated in Figure 2 below. These stages are explained in detail in this book entitled “Practical Guide to Agile Strategy Execution: Design, Architect, Prioritize, and Deliver your Corporate Future Successfully”.
Customers (segments and/or persona) and partners are involved everywhere during the five steps of an organization’s agile strategy execution. Business stakeholders are involved in all steps, except in the fourth one, which is the agile delivery and execution phase. As for IT Stakeholders, they are mostly implicated in initiative planning (step 3) and agile delivery and execution (step 4).
Value propositions, products, services are mostly elaborated in business design and strategy (step 1) to meet specific strategies and goals. Customer journeys, value streams, and value stages are usually examined at the beginning of your architecting transformation (step 2). Business capabilities are explored in both architecting transformation and initiative planning (steps 2 and 3). As for business processes, they are essentially taken care of in the agile delivery and execution phase (step 4) at the operational and tactical level where business process experts and agile experts need to meet clear objectives measuring tactics.
To provide further value to their organization, enterprise architects need to understand that business architecture is not just about business capabilities and business processes. Enterprise architects should not limit their scope only to architecting the transformation and initiative planning of their organization. Enterprise architects can also contribute to the optimization of value for their organization’s customers and partners. Including all aspects of business architecture in your enterprise architecture practice will make your team much more valuable to business stakeholders at the initial business design and strategy phase and to IT stakeholders at the agile delivery and execution phase.
Daniel Lambert is a marketing and finance strategist assisting expanding companies in their growth, their business architecture, and ultimately their digital transformation. He has worked in the past with organizations in a broad array of industries: financial services, insurance companies, telecom, utilities, pharmaceuticals, transportation, computer software, healthcare, and the public sector. His current clients include FedEx, the TD Bank, Regeneron, UnitedHealthcare, Independence Blue Cross, Autodesk, the US government, and the UK government, among others.
Mr. Lambert is currently VP Business Architect at Benchmark Consulting. Benchmark provides digital transformation consulting services and is also the creator of the collaborative IRIS Business Architect software application for enterprise architects, business architects, IT/Solution architects, and business analysis to optimize planning and roadmaps from strategy to delivery. Benchmark Consulting has clients of all sizes from as little as 800 employees to as large as 600,000 employees. In his previous life, Mr. Lambert was also a venture capitalist. He was involved in these successful and very profitable exits: Giganet sold to Broadcom; Kinaxis now trading on NASDAQ; SFI sold to BMC Software, Taleo sold to Oracle, and Telweb sold to Schlumberger.