Business Capabilities do not stand by themselves. They have both inputs and outputs and have explicitly defined service expectations. They may be hierarchical with established dependencies or inter-dependencies.

Business Capabilities are the fundamental components that provide an organisation’s capacity to achieve a desired outcome.

They can be thought of as describing the organisation’s potential. When looked at in full they describe a model representing all the functional abilities a organisation needs to execute its business model, fulfill its mission and realise its vision.

The relatively simple views provided by a Capability Model establishes the foundation for complex discussions on strategy and resource allocation.

Capability models do not in themselves reduce business complexity, but they do highlight the complexity in a manner that provides for higher levels of insight and perspective.

Before going to ‘market‘ it is essential that an organization understands both the capabilities it requires and its ability to deliver.

A business that understands its capabilities understands what it is able to do and how well it can perform.

A Business Capability

• May be ‘built’ or enhanced as a consequence of a defined business strategy.
• May deliver a service.
• Is constructed from a collection of Business Functions
• Is supported by one or many business processes
• Consumes and creates Business Information

The delivery of a Business capability will not remain static. It is reasonable to assume that when first defined there will be aspects of the delivery that can be improved.

Capability Maturity Cycle

As a business grows and evolves it should continually reassess the capabilities it has to ensure that:

• All capabilities required to deliver on the current Business Vision are defined
• Each capability is delivering what it should.
• New capabilities are developed or existing capabilities are improved in alignment with the Business Strategy.
• Capability developments or enhancements are prioritised to provide the greatest long term benefit to the business.

A business when managing its capabilities should ensure that it has a good understand of what they are and how they relate to one another.

Establishing a Capability Model of related capabilities allowing a business user to drill down to greater levels of granularity provides the opportunity to establish:

• what might be missing
• what is redundant
• which capabilities need to be improved.

A Business Capability Model should encompass all capabilities required by the organisation whether they are currently delivered or not.

A rigorous process of assessment should be established that enables decision makers to prioritise which capabilities should be the focus of attention when evaluating initiatives to be progressed to realisation.

Acknowledging Capabilities that are currently not provided or provided poorly realises opportunities that may be exploited.

Example of a Capability Model

High Level Insurance Capability ModelHigh Level Insurance Capability Model – Detail 1

High Level Insurance Capability Model – Detail 2