white paper business capabilities: a common language

WHITE PAPERBUSINESS CAPABILITIES: A COMMON LANGUAGE

2811 McKinney AveSuite 220, LB 126Dallas, TX 75204

[email protected]

T. 214.777.4600F. 214.855.1246

A Framework for Achieving Strategic and Organizational Alignment | 01© PARIVEDA SOLUTIONS

BUSINESS CAPABILITIES MAP

BUDGET / INVESTMENT PLANNING COST SAVINGS / CONSOLIDATION RISK

SYSTEMS VS CAPABILITIES PROJECT PORTFOLIO MANAGEMENT PEOPLE

Page 3 FOUNDATIONCreate a businesscapabilities map as astrong foundation for a range of businessanalyses and communications

Page 8 BUDGET/INVESTMENTPLANNINGFocus budget and investment where it counts most

Page 14SYSTEMS VS. CAPABILITIESEnsure capabilities coverage by systems

Page 10 COST SAVINGS/CONSOLIDATIONIdentify high impactopportunities toincrease efficiency across the organization

Page 16PROJECT PORTFOLIOMANAGEMENTSustain continuousimprovement by aligningprojects to business capabilities

STRATEGIC INITIATIVES Page 4 STRATEGIC INITIATIVESTarget your strategicinitiatives towardsdifferentiating capabilities

COMP. ADVANTAGE/ DIFFERENTIATION Page 6 COMP. ADVANTAGE/DIFFERENTIATIONTransform your shared services into a catalyst for competitive advantage

Page 18PEOPLEFocus a lens on the future of your staffingneeds

Page 13RISKQuantify the magnitude and impact of risks

A FRAMEWORK FOR ACHIEVING STRATEGIC AND ORGANIZATIONAL ALIGNMENT

EXECUTIVE SUMMARY

Executive Summary | 02© PARIVEDA SOLUTIONS

Pariveda Solutions engages with clients to help them improve strategic and organizational alignment. We frame these engagements around Business Capabilities. Business Capabilities can be used as a “bridge” to link Strategy, Initiatives, Costs, etc. in a way that promotes better and more consistent understanding within an organization. The value of Business Capabilities framework stems from three main characteristics:

Common Language: Business Capabilities provide a common language so that different business functions can communicate more uniformly. This has some value in and of itself and may be the end goal in some cases. However, much greater value can be realized when business capabilities are used as the common ground for a number of analyses in additional areas, such as competitiveadvantage/differentiation, cost savings, and budget/investment planning.

Wide scope: Business Capabilities can be used in the context of a department, a business unit or an enterprise.

Level of detail: Business Capabilities can be expanded upon at virtually any level of detail to suit a broad range of purposes. The goal is to facilitate decisions in a timely and informed way. This white paper presents a set of tools to drive alignment and actions to achieve desired business objectives.

SAMPLE BUSINESS CAPABILITIES MAPA Business Capabilities map provides a model of what a business does to reach its objectives.

For common reference purposes, a sample Capability Map is shown on the right.

Maximum strategic focus is achieved when an organization uses the map to identify its core and differentiating capabilities, as shown on the right.

In the following sections, we describe the use of Business Capabilities as a basis for analyses and improved communications.

Foundation | 03© PARIVEDA SOLUTIONS

Procurement Strategies

And Initiatives

Business Concept & Long-term Vision

Design Products & Services

ScheduleProduction

Sales Strategy

Plan Deliveryto Customer

Customer Care/Service Strategy

Marketing Strategy

Manage Compliance

Manage FinancialResources

Manage HumanCapital

NegotiateContracts

Develop BusinessStrategy

Develop Products & Services

Produce Product/Service

Sales Planning

OutboundTransportation

Customer ServiceOperations

Marketing Planning

Government &Industry

Relationships

Manage TreasuryOperations

Manage BusinessProcesses

Manage Suppliers

Strategic Planning

Manage Product& Services Portfolio

Quality Testing

ManageSalesforce

Returns/Reverse Logistics

Evaluate Customer Service Operations

CollectIntelligence

Manage Risk

Investor &Stakeholder

Relationships

Manage Program/Project

DetermineDemand

Strategic Initiatives

R & D

Maintenance

Manage Sales Partners &Alliances

Assess Performance

Online ProductCatalog

Manage Legal

Manage Assets

Manage Change

Manage Inventory

Manage Customer Sales

Manage Provider Network

Build FinancialRelationships

Manage Quality

Manage Outsourcing

Manage Orders

Manage Claims

Manage Taxes

ManageGovernance

Deliver Professional

Services

Manage Knowledge

Manage InformationTechnology

Manage International

Presence

CORE VALUE CHAIN CAPABILITIES

SUPPORT VALUE CHAIN CAPABILITIES

VISION & STRATEGY

SOURCE

PRODUCE

DEVELOP PRODUCTS& SERVICES

SELL

MARKET

REGULATORY/COMPLIANCE/RISK

ENABLINGCAPABILITIES

DISTRIBUTE & DELIVER

CUSTOMER SERVICE

FINANCE

Create a business capabilities map as a strong foundation for a range of business analyses and communications.

STRATEGICINITIATIVES

COMP. ADVANTAGE/DIFFERENTIATION

BUDGET/INVESTMENTPLANNING

COST SAVINGS/CONSOLIDATION

RISKSYSTEMS VS. CAPABILITIES

PROJECT PORTFOLIOMANAGEMENT

PEOPLEFOUNDATION

FOUNDATION

Core capability

Differentiating capability

Create a business capabilities map as a strong foundation for a range of business analyses and communications

STRATEGIC INITIATIVES

DRIVE OPERATIONAL EXCELLENCE

FOSTER & MAINTAIN A HIGH

PERFORMANCE CULTURE

PARTNER WITH CUSTOMERS

TO DRIVE MUTUAL VALUE

EXPAND INTO ADJACENT MARKETS

TO IMPROVE VALUE PROPOSITION

INNOVATE TO SOLVE UNMET

INDUSTRY NEEDS, LEVERAGING

OUR REACH AND KNOWLEDGE

1

2

3

4

5

Supplier spend reduction

Warehouse optimization: process re-engineering, logistics system

Talent acquisition: employment process and quality of hire

Rewards & recognition: compensation benefits and rewards

Key account management pilot and roll-out

Pricing, business intelligence

Global logistics expansion for launching new markets

Shipping channels: complete pilot, research organic/inorganic growth

Salesforce design and roll-out

1a

1b

2a

2b

4a

4b

3c

3a

3b

STRATEGIC GOALS CURRENT YEAR STRATEGIC INITIATIVESThere is a widely understood path that starts with corporate strategy and ends at strategic initiatives. An example of this is shown on the right, where five strategic goals are “translated” to ten strategic initiatives. Note that strategic initiatives may have to be further broken down into a number of programs/ projects spanning several organizational units.

Target your strategic initiatives towards differentiating capabilities

Strategic Initiatives | 04© PARIVEDA SOLUTIONS






PEOPLEFOUNDATIONSTRATEGICINITIATIVES

5Science-led product development to support customers: design, test5a

Procurement Strategies & Initiatives



ScheduleProduction

Sales Strategy



Marketing Strategy

Manage Compliance


NegotiateContracts




Sales Planning



Marketing Planning


Relationships



Manage Suppliers

Strategic Planning


Quality Testing

ManageSalesforce



CollectIntelligence

Manage Risk

Investor &Stakeholder

Relationships


DetermineDemand


R & D

Maintenance

Manage Sales Partners And Alliances

Assess Performance


Manage Legal

Manage Assets

Manage Change

Manage Inventory




Manage Quality

Manage Outsourcing

Manage Orders

Manage Claims

Manage Taxes

ManageGovernance


Services

Manage Knowledge



Presence



Each strategic initiative is in turn impacted by and/or impacts one or more capabilities, as shown on the right. Here are some preliminary hypotheses and discussion themes that can be extracted from this simple view:

Out of the ten strategic initiatives, only five (1a, 1b, 3a, 3c, 4b) address core capabilities and only four (1a, 1b, 3a, 3c) address differentiating capabilities, i.e., capabilities that result in competitive advantage for the organization.

There are eleven core capabilities, five of which are differentiating, that have no strategic initiatives associated with them.

Therefore, strategic initiatives may need to be realigned to promote or harness a higher percentage of core and preferably differentiating capabilities.

Manage HumanCapital

Strategic Initiatives | 05© PARIVEDA SOLUTIONS

VISION & STRATEGY

SOURCE

PRODUCE


SELL

MARKET



DISTRIBUTE

& DELIVER

CUSTOMER SERVICE

FINANCE

Core capability







PEOPLEFOUNDATION

Supplier spend reduction

Key account management pilot and roll-out

Pricing, business intelligence

Global logistics expansion forlaunching new markets

Shipping channels: completepilot, research organic/inorganic growth

Salesforce design and roll-out

1a

1b

2a

2b

4a

4b

3c

5a

3a

3b

Warehouse optimization: process re-engineering, logistics system

Talent acquisition: employment process and quality of hire

Rewards & recognition:compensation benefits and rewards

Science-led product development to support customers: design, test


COMPETITIVE ADVANTAGE/DIFFERENTIATION

What is the degree of coverage of capabilities by IT Systems?

What is the degree of satisfaction with IT Systems mapped on the organization’s capabilities?

The view on the right may stimulate discussions along the following observations:

The differentiating capability “Manage Salesforce” is lightly covered by IT Systems. Nevertheless, the satisfaction from the existing coverage is high. This means that the organization should consider whether there is value from further automating this capability.

The core capabilities across the row “Distribute & Deliver” enjoy high coverage by IT Systems, but low satisfaction. Therefore, the IT function may consider discussing with the relevant business partners how satisfaction–and associated organizational value–can be improved.

Comp. Advantage/Differentiation | 06© PARIVEDA SOLUTIONS




ScheduleProduction

Sales Strategy

Plan DeliveryTo Customer


Marketing Strategy

Manage Compliance


Manage HumanCapital

NegotiateContracts




Sales Planning



Marketing Planning


Relationships



Manage Suppliers

Strategic Planning


Quality Testing

ManageSalesforce



CollectIntelligence

Manage Risk

Investor & Stakeholder

Relationships


DetermineDemand


R&D

Maintenance

Manage Sales Partners And Alliances

Assess Performance


Manage Legal

Manage Assets

Manage Change

Manage Inventory


Manage the Providers’ Network


Manage Quality

Manage Outsourcing

Manage Orders

Manage Claims

Manage Taxes

ManageGovernance


Services

Manage Knowledge



Presence



VISION & STRATEGY

SOURCE

PRODUCE


SELL

MARKET




CUSTOMER SERVICE

FINANCE

High Satisfaction

Med. Satisfaction

Low Satisfaction

Inhibitor

No systems

Capability not applicable

Degree of system coverage (excluding business-led IT)

Core capability


Transform your shared services into a catalyst for competitive advantage

A top executive may want to assess how IT (an example of a shared service) enables competitive advantage/differentiation. This can be achieved through linking IT Systems to Business Capabilities:





PROJECT PORTFOLIOMANAGEMENT PEOPLEFOUNDATION

System Satisfaction & Coverage


Comp. Advantage/Differentiation | 07

Marketing and Finance have poor systems coverage and low satisfaction (graphic on prior page). This may have been done purposefully, however, these functions may develop their own business-led IT or use third parties to achieve a higher level of satisfaction.

Finally, one third of Capabilities have no coverage by IT systems. This may be the result of a conscious decision not to invest in certain capabilities or an ad hoc set of efforts. From the view on the prior page, one can hypothesize that IT did strive to provide coverage to the core capabilities – probably as requested by the business – but this happened at the expense of the needs of the rest of the organization, which has now been left without any IT coverage. Perhaps, this is a good time for IT and other business functions to have a discussion on a holistic IT Strategy that will result in good coverage for the whole organization.

© PARIVEDA SOLUTIONS








The premise behind capabilities-based budgeting and/or investment planning is that investments should aim to improve competitive advantage through better ability to deliver on capabilities. Investments may be directly related to none, one or many capabilities. The purpose of aligning investments to capabilities is to ensure that core/ differentiating capabilities improve continuously by having sufficient investments associated with them. An example of a view that associates investments to capabilities is shown on the right.

A strategic question answered by this view is: Does the organization invest sufficiently in its core and differentiating capabilities? It is widely understood that competitive advantage stems from disproportionately high investments in a few differentiating capabilities, as opposed to “blanket” investing across a high number of capabilities. Of course, investment magnitude alone is not a sufficient indicator of future competitive advantage, because, for example,

On the positive side: Investment in a differentiating capability may be low, not because the capability is being ignored, but because there has been high investment in the past; this past investment provided the foreseen competitive advantage, and only incremental future investment is needed. Also, investment on a differentiating capability may be low if the capability is new and options are being tried.In this case, higher investments may follow when a specific option is selected.

Budget/Investment Planning | 08© PARIVEDA SOLUTIONS

Manage Compliance


Manage HumanCapital

Government &Industry Relationships



Manage Risk

Investor & Stakeholder Relationships


Manage Legal

Manage Assets

Manage Change


Manage Quality

Manage Taxes

ManageGovernance

Sales Strategy



Marketing Strategy

Sales Planning



Marketing Planning

ManageSalesforce



CollectIntelligence

Manage Sales Partners & Alliances

Assess Performance




Procurement Strategies& Initiatives



ScheduleProduction

NegotiateContracts




Manage Suppliers

Strategic Planning


Quality Testing

DetermineDemand


R & D

Maintenance

Manage Inventory

Manage Outsourcing

Manage Orders

Manage ClaimsDeliver

ProfessionalServices

Manage Knowledge



Presence

VISION & STRATEGY

SOURCE

PRODUCE


SELL

MARKET



DISTRIBUTE

& DELIVER

CUSTOMER SERVICE

FINANCE



$3-6M

$2-3M

$1-2M

Under $1M

Core capability


3 YR Investment

Focus budget and investment where it counts most







Economies of scale, through low duplication of effort and high reusability of the investment outcome across business units;

Economies of scope, in maximizing the number of capabilities that can be concurrently improved within a given time horizon (e.g., 1-2 years);

Knowledge / Best practices transfer, in the sense that knowledge silos will be broken due to the common investment (and project) undertakings.

Additional benefits of this view can be realized when planning across multiple business units and each business unit produces one view like the one on the prior page. Different business units will likely have some common capabilities performed locally that result in their individual competitive advantage. In several organizations, investment planning is done at the business unit level, without harnessing the power of the organization as a whole, other than to request funding. The above view provides a good opportunity for business units to “synchronize” their investments, so they achieve:

Budget/Investment Planning | 09

On the negative side: Investment may be high, but some required human capital skills may be missing. In other words, the infrastructure needed for the competitive advantage may be built, but the necessary people competencies to realize the competitive advantage may be missing.









Cost Savings/Consolidation | 10© PARIVEDA SOLUTIONS

Capabilities “locality” across Business Units

The darkest blue capabilities are delivered locally by 13-16 (out of 20) business units.

The lighter blue capabilities are delivered locally by 9-12 (out of 20) business units.

Capabilities “popularity” across Business Units

The dark green capabilities are needed by 16-20 (out of 20) business units.

The light green capabilities are needed by 11-15 (out of 20) business units.


Business Capabilities are a great tool to identify cost savings opportunities across an organization with multiple business units. This tool can be particularly useful for companies that have grown through acquisition and are looking at rationalizing across many dimensions.

We use an example of an organization consisting of 20 business units, which display a high degree of commonality across their Level-0 and Level-1 capabilities, as shown on the top exhibit. At the same time, several of these common capabilities are delivered locally by a large proportion of the business units, as shown on the bottom exhibit.

The discussion points/hypotheses that arise from combining these two views are: Given that the same capability is provided locally by different business units:

Cost: Is there an opportunity to consolidate costs while achieving the same level of service?

Complexity: Is there an opportunity to reduce complexity by centralizing the capability’scoverage?

Identify high impact opportunities to increase efficiency across the organization





PROJECT PORTFOLIOMANAGEMENT PEOPLEFOUNDATION


This view shows the capabilities covered both by business units locally and by a centralized function (in yellow highlight). Capabilities highlighted in yellow are already provided by the central function to at least one business unit. Based on this view, capabilities that are dark blue (i.e., covered locally by many business units) and are also highlighted in yellow (i.e., they are already provided by central function to at least one business unit) are primary candidates for centralization.

For example, a primary candidate for centralization is the capability “Customer Service Operations” onthe “Customer Service” row of the exhibit to the right, because:

This capability is needed by all business units (see top exhibit on the previous page); and

This capability is covered locally by more than 14 business units (see exhibit on this page); and

This capability is also provided by a centralized function to at least one business unit (see exhibit on this page).


VISION & STRATEGY

SOURCE

PRODUCE


SELL

MARKET




CUSTOMER SERVICE

FINANCE

Manage Compliance


Manage HumanCapital

Government &Industry Relationships



Manage Risk



Manage Legal

Manage Assets

Manage Change


Manage Quality

Manage Taxes

ManageGovernance

Sales Strategy



Marketing Strategy

Sales Planning



Marketing Planning

ManageSalesforce

Returns/reverse Logistics


CollectIntelligence


Assess Performance



ManageProvider Network

Procurement Strategies& Initiatives



ScheduleProduction

NegotiateContracts




Manage Suppliers

Strategic Planning


Quality Testing

DetermineDemand


R&D

Maintenance

Manage Inventory

Manage Outsourcing

Manage Orders

Manage ClaimsDeliver

ProfessionalServices

Manage knowledge



Presence

13-16

9-12

5-8

# of BUs (out of the 20) indicating capability is 100%local

1-4

Centralized functionalso provides capability

Cost Savings/Consolidation | 11








VISION & STRATEGY

SOURCE PRODUCE DEVELOP PRODUCTS

& SERVICES

SELL MARKET REGULATORY/COMPLIANCE/RISK


DISTRIBUTE

& DELIVER

CUSTOMER SERVICE

FINANCE

100

80

60

40

20

0

High economies of scale potential(wide and most capabilities are Local)

Low economies of scale potential(narrow and/or many capabilities already provided by Corporate)

Local Shared Corporate

Cost Savings/Consolidation | 12

Prioritization of Consolidation Efforts: An IT example

The usual justification given by business units for local IT coverage of a needed capability is that theyhave special needs which cannot be covered by central IT. It may be truly the case that for some business units and for some very specialized capabilities IT needs are so unique that they cannot be “trusted” to central IT. However, this is the exception rather than the rule. In the majority of cases, the IT needed to cover a capability is not extraordinarily specialized and the locality of IT coverage has happened more due to historical reasons (e.g., differing maturity of business units).

A cost savings/consolidation discussion may be prioritized on (a) quick wins, as described above, and/or (b) the high impact potential, as shown on the right. The view on the right indicates potential for economies of scale. The x-axis indicates the cost of Level-0 capabilities to the organization. The y-axis indicates (in green) the percentage of capabilities covered locally by business units. The highest savings potential is where there is high cost (i.e., wide on the x-axis) and high degree of locality (i.e., lots of green within a bar). These include the Level-0 capabilities “Sell”, “Customer Service”, and “Enabling Capabilities”.

% of capabilitiescovered

COST







RISK

Organizations have different ways of viewing risks. Within Operational Risk, a common approach is to assess the magnitude of a failure’s impact on three dimensions: confidentiality, integrity and availability. Systems are assessed on a scale of 1 = low impact (best) to 3 = high impact (worst). Having assigned systems to capabilities, organizations can perform an analysis on the systems-driven risk on capabilities, as per the exhibit on the right.

Observations from this view include:Among Level-0 capabilities (within the black rectangles), core capability “Distribute andDeliver” has the highest combined risk. Given this capability’s importance to the organization, a CISO should consider reducing the risk related to systems that cover it.

There are 13 Level-1 capabilities with a combined risk score of 6 or above. The systems coveringthese capabilities should be an immediate priority regarding reduction of risk.

Besides assigning a risk score to systems, organizations should also estimate the monetary impact of each risk. Efficient prioritization of risk-mitigating initiatives stems from the combination of three factors:

Identification of systems with a high risk score;

Identification of systems that affect many capabilities, i.e., fix -one, improve-many;

Identification of risks that have a high monetary impact.

Risk | 13© PARIVEDA SOLUTIONS

VISION & STRATEGY

SOURCE

PRODUCE

DEVELOP PRODUCTS & SERVICES


SELL


Develop Business Strategy

Strategic Planning



Negotiate Contracts

Manage Suppliers

Determine Demand

Manage Inventory

Manage Outsourcing

Schedule Production


Quality Testing

Maintenance



Manage Product & Service Portfolio

R&D

Plan Delivery to Customer

Outbound Transportation


Assess Performance

Manage the Providers’ Network

Manage Claims

Deliver Professional Services

Sales Strategy

Sales Planning

Manage Salesforce



Manage Orders

MARKET

CUSTOMER SERVICE

FINANCE

REGULATORY / COMPLIANCE / RISK

ENABLING CAPABILITIES

Marketing Strategy

Marketing Planning

Collect Intelligence

Online Product Catalog


Customer Service Operations


Manage Financial Resources

Manage Treasury Operations


Manage Assets

Build Financial Relationships

Manage Taxes

Manage Compliance

Government & Industry Relationships

Manage Risk

Manage Legal

Manage Quality

Manage Governance

Manage Knowledge

Manage Information Technology

Manage International Presence

Manage Human Capital

Manage Business Processes


Manage Change

1 2 3 4 5 6 7 8 90 1 2 3 4 5 6 7 8 90

Weighted Confidentiality

Weighted Integrity

Weighted Availability

Quantify the magnitude and impact of risks

Combined Risk Score Combined Risk Score

Note: The exhibit on the right depicts a systems risk example, however the framework applies equally to financial, market and operational risks.




RISK SYSTEMS VS. CAPABILITIES



Systems are mapped to capabilities to address the following questions:

How many systems are required to cover a single capability?

What systems support a high number of capabilities?

Which systems support core/differentiating capabilities?

Which capabilities are not coveredby any systems?

The Systems vs Capabilities map on the right triggers the following discussions/hypotheses:

Core capabilities are covered by a high number of systems. While this is positive in terms ofcoverage, it may be an indicator of increased complexity.

System 1 (column 2) supports a high number of capabilities, which means it is of high importance to the company. System owners should always make sure it is always available and closely manage its life-cycle (e.g., a carelessly executed change program may result in business disruptions).

The Systems vs Capabilities map may just be a yes/no exercise, i.e., a “Yes” in a cell indicates a system supports a capability, whereas an empty cell indicates a system does not support a capability. This produces a map similar to the one shown on this page.

Systems vs. Capabilities | 14© PARIVEDA SOLUTIONS

VISION & STRATEGY

SOURCE

PRODUCE

DEVELOP PRODUCTS & SERVICES

SELL

MARKET


ENABLING CAPABILITIES

CUSTOMER SERVICE

FINANCE


1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

SYSTEM:

Differentiating CapabilityCore Capability# of Level-1 capabilities covered by the system

SYSTEMS VS.CAPABILITIES

Ensure capabilities coverage by systems

CAPABILITIES:







3

3

3 3

116 4

6 4 2 2 2 1 1 2 1 1 1 1 1 1 4 5 1

1 1 1 13 3 1 1 1 1 3 3

1111

1 1 13 1 1 1 1 1 1 11 1 3 1 1

1

1 1 111

1

1

3 31 2 3 3 31 1

Systems vs. Capabilities | 15© PARIVEDA SOLUTIONS

However, the Systems vs Capabilities map may also contain a number of additional dimensions, such asdegree of coverage, satisfaction, cost, risk, etc. It can also be “deeper” by including Level-1, or even Level-2 capabilities. The exhibit on the right shows an analytical view which coversLevel-1 capabilities and contains information on coverage and satisfaction.

Insights/hypotheses stemming from this view include:

The core Level-0 capability “Customer Service” is deconstructed into three applicable Level-1 capabilities. Out of these three capabilities, twoenjoy high coverage by systems (indicated by only 5% and 10% under column “other”), whereas one capability is poorly covered by systems (indicated by 65% under column “other”).

The whole Level-0 capability, as well as its Level-1 components have low satisfaction scores, probably stemming from the high number of systems needed for the job to be done. A high number of systems may point to high complexity.

Nevertheless, half of the systems (8 out of 16) have a high satisfaction score.

Combining the aforementioned observations, systems owners and their business partners may decide to prioritize on improving System 1 and System 19 which are necessary for all three Customer Service Level-1 capabilities but have a low satisfaction score.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

MARKET

Marketing Strategy

Marketing Planning

Collect Intelligence

Online Product Catalog

CUSTOMER SERVICE


Customer Service Operations


Build Financial Relationships

Manage Financial Resources

Manage Treasury Operations


Manage Assets

Manage Taxes

FINANCE

SYSTEM:

OTHE

R

Weighted SatisfactionCAPABILITIES:







3 1 1 1 1 1 1 1 1 1 1 1 1 3 1 1

1 1 1 12.1

2.3

2.0

2.3

2.3

2.4

2.2

1.3

1.3 10%

1

60%

30%

20%

30%

5% 5% 5% 5% 5%

20%

5% 5% 5% 5% 5% 5% 5%5%

5%

10%

10%

20%20%

20%

20%

4

100%

100%

30%

80%

65%

5%

10%

3

4

70%

100%

100%

100%

% Coverage of the Level-1 capability by each system (row total = 100%)High Satisfaction Medium Satisfaction Low Satisfaction Inhibitor %


The premise behind capabilities-based project management is that projects should aim to improve capabilities. It should be pointed out that projects may be directly related to one or more capabilities. The purpose of aligning projects to capabilities is to make sure that all important capabilities have planned improvements, which will produce competitive advantage. An example of a capabilities vs projects mapping is provided in the exhibit on the next page.

INITIATIVES MAPPED TO BUSINESS CAPABILITIES

1.31 External Relations - continue to drive efficiencies in the processing of annual requests from global regulatory and enforcement agencies

1.32 Discovery Process - demonstrate adherence to records policies, automate collection of data, cull data down outside counsel costs

1.33- Operational Excellence - scale processes and minimize 1. 36 headcount growth:

Manage outside counsel spendCoordinate Board of Directors Meetings in multiple countriesPatient licensing and processingGlobal stock for M&As, support global differences in tax and payroll

1.37 Contract Management - improve compliance with terms of contracts and reduce life-cycle time

1.38 Record Management - policies and tools that enable employees to easily store data while allowing the company to effectively retrieve it

PROJECTS

Data automation, PCI zones, multi-language external portal request system Enhanced reporting, improved portal experience, automate more data sources

Automate Holds & Notices, Hard Drive retention for employee exits Accurately track all collections and retention, index patent data sources

Automate checks for fee arrangementsMove to hosted board member solutionSelf service transactions and document retrieval

Upgrade and standardize all employee facing sitesMigrate Stock Team

Contract Management – eSignatures, contract request form improvements Enterprise Contracts – Clause Mgmt, Integrate with Oracle and Salesforce.com

Policies. Governance, and Email Archiving Enterprise Content Management

Project Portfolio Management | 16© PARIVEDA SOLUTIONS

Sustain continuous improvement by aligning projects to business capabilities







One important benefit of this view is realized when the scope of the analysis spans more than one business unit of an organization. In this case, each business unit produces a map like the one shown on the right. The following discussion themes may emerge:

More than one business unit plans to initiate projects to improve the same capability. This may be an opportunity to consolidate projects, thus avoiding duplication of effort.

One business unit plans to initiate a project to improve a capability that had been improved earlier by another. This may be an opportunity to examine whether the improvement may be reused.

One or more business units plan to initiate projects to improve a locally provided capability also provided by a central function to other business units, which are satisfied with the service received. This may be an opportunity for the former business units to receive the needed capability by a central function, rather than developing it locally.

© PARIVEDA SOLUTIONS Project Portfolio Management | 17

CAPABILITY PROJECT PRIORITY YEAR 1 YEAR 2 YEAR 3

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Enterprise KnowledgeManagement

OE Backlog

Employee Exits & Mac Support

Automated PatentData Sources

Automated EnterpriseCollections

eBilling

Legal Intranet

Business Intelligence

Stock Plan

eSignatures & OE

Enterprise Contract Life-cycle Mgmt.

Policy, Team, & Training

Email Archiving

ERP Automation H

H

H

H

H

H

H

H

H

H

H

H

H

H

1.32 DISCOVERY PROCESS

1.33- OPERATIONAL 1.35 EXCELLENCE

1.36 STOCK ADMIN

1.37 CONTRACT MGMT.

1.38 RECORD MGMT.

1.13 EXTERNAL RELATIONS

Benchmark estimates Project timeline Deployment timeline Milestones Functional Projects






PEOPLEFOUNDATION

BUSINESS UNIT 1

BUSINESS UNIT 2

BUSINESS UNIT 3


PEOPLE

Staffing is a ubiquitous issue in organizations, and it is especially prevalent in shared services functions. To address staffing, capabilities are usually deconstructed to a lower level of detail, as Level-0 and Level-1 do not provide enough granularity. For this example, we use a three-level-deep capabilities decomposition. Based on the view on the right, one can easily observe the following:

The Level-1 capability “Manage Products & Services Portfolio” is understaffed as a whole. For the Product Development department, this may result in hiring requests. Another solution could be a discussion with technology on the possibility of the benefits of additional automation that might lessen the hiring needs.

All Level-2 capabilities are also understaffed. The most severely impacted are the capabilities closely linked to the rest of the business, namely “ManageProduct/Service Life-cycle” and “Confirm Alignment of Product/Service Concepts with Business.” This may support the hypothesis that the Product Development department may be developingnew products in a somewhat “autonomous” manner, rather than aligning the product strategywith the business strategy. Perhaps the Product Development department should consider ways to improve its alignment with the business and investigate communication and collaboration tools to achieve this.

People | 18© PARIVEDA SOLUTIONS

VISION & STRATEGY

SOURCE PRODUCEDEVELOP

PRODUCTS& SERVICES

SELL MARKETREGULATORY/COMPLIANCE/

RISK



CUSTOMER SERVICE

FINANCE

Core value chain capabilities Support value chain capabilities

Design Products & Services Develop Products & Services Manage Product & Services Portfolio R&D

Evaluate Performance of Existing Products / Services Against Market

Define Product/ Service Development

Perform Discovery Research Confirm Alignment of Product / Service Concepts with Business

Manage Product / Service Life-cycle

Basic Competent Expert

Basic Competent Expert Basic Competent Expert Basic Competent Expert Basic Competent Expert Basic Competent Expert

Needed AvailableInternal

AvailableExternal

15

8

2

3

2

.5

3

1.5

3

1

3

2

.5

3

2

.5

8

3

22 1

.511

2

1

1

11

1

2

.51

3

Focus a lens on the future of your staffing needs

LEVEL 0

LEVEL 1

LEVEL 2







People | 19

In addition to sizing (i.e., the number of people necessary to perform a job), staffing has two additional dimensions:

Quality of available and needed skills: This is indicated in the view on the previous page by the designations “basic”, “competent” and “expert”. These do not necessarily correspond to hierarchical levels. Although within a single capability, a person demonstrating expertise would probably be more senior than a colleague who demonstrates basic-level of competence, this is not necessarily true when planning across capabilities.

Timing: The chart on the previous page should be prepared both for the present and future, based on business strategy. When planning is done well, business strategy changes the total height of the bar (i.e., skills needed) and the business unit can plan for the solid-filled bars (i.e., skills available) to match business strategy needs. Poor planning results in the business unit suddenly discovering that the skills needed must change, and may not have time to react within a given time horizon. Business strategy may also dictate a completely new set of capabilities that need to be built, which need to be staffed by an affected department.








Conclusion | 20

CONCLUSION

At Pariveda Solutions we have used the Business Capabilities framework extensively, across business units and functions. We believe it is a flexible framework that can add significant value in a variety of client situations.

While there are many approaches to Business Capabilities, it seems that a high degree of complexity has been added by organizations and consultants alike, who tend to prefer detail to value, or believe that value is directly proportional to detail. Although maximum detail may be beneficial in theory, we would like to remind the reader of the law of diminishing returns: after a certain degree of analysis, a significant incremental effort will provide only marginal–if any–improvements in terms of thinking and decision making.

At Pariveda Solutions, we believe that a framework’s true value comes from, among other factors, its flexibility. In client engagements, our focus is on creating value, without requiring a major undertaking on the side of the client in terms of cost and effort. In doing this, the client is able to make decisions fast, holistically, and efficiently, while keeping the option open to build greater detail into the framework if and when needed.


Ms. Susan Paul works with senior executives to collaboratively develop technology organization strategy, governance and process solutions that can be acted on quickly and pragmatically. With more than 20 years of experience in IT strategy and operational management, she brings a unique mix of skills building and managing organizations and developing successful business partnerships. Spanning multiple organizations, she has successfully built national alliance relationships that produced significant revenue and increased shareholder value upon acquisition. Bringing together her wealth of skills in relationship management and operational experience, she has authored the Fusion framework for aligning technology goals across multiple business functions within an organization. Fusion, a combination of survey assessments and workshops, has been successfully implemented in numerous Fortune 500 organizations enabling better business value from technology investments.

Contact | 21

CONTACT

Mr. Dimitrios Vilaetis has over 15 years of experience in Corporate Strategy and IT Strategy, both in Management Consulting and in industry. He focuses on creating/unlocking corporate value stemming from either the revenue or the cost side of business. As a Management Consultant, in addition to Corporate and IT Strategy, Dimitrios has worked on organizational, process, and change management projects. As an executive in both banking and technology companies, he led cross-functional teams to convert strategy into execution and results. Revenue-driving examples include the identification, quantification, and realization of growth opportunities for new products/services, new geographies, and new sectors/customers. Cost-containment examples include the design and execution of several efficiency-related initiatives combining people, processes, and technology.

Susan Paul VICE PRESIDENT

Dimitrios VilaetisVICE PRESIDENT

This White paper was developed by Pariveda Solutions’ Strategy Practice. For further information, please contact:

EMAIL: [email protected]


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