Approach – IT Functional Reviews
Executive Summary
Functional reviews of academic and corporate services departments will be performed on a rolling basis and input to
the Vice-Chancellor’s Operational Reviews. This paper describes a standard approach that documents each
department, the business functions and processes that it performs together with its main assets including systems.
The object of the exercise is to gain an increased understanding of the business of the University and how it is served
by systems and technology. This information will serve to identify gaps and opportunities that can be used to inform
IT Services strategic planning. The analysis is a business architecture activity performed by enterprise architects in
partnership with senior members of the academic or business teams. It is a relatively quick and efficient way of
evaluating IT support for a business domain intended to inform strategic decision making.
Business Capability Modelling is used to define a set of business capabilities that go to make-up a given business
domain, where a capability consists of a business function associated with a set of business processes, people (in the
sense of organizational entities capable of performing behaviour) and assets (including systems, information and
physical assets).
Focussing on information assets and systems, assets are analysed against capabilities to give a score for business value
delivered. The assets are also evaluated for technical quality and the two sets of scores combined in an integrated
approach to Application Portfolio Management.
The scores for Business Value and Technical Quality are plotted against each other for each business capability using
the matrix shown in Error! Reference source not found.. This yields a result for each capability / asset combination
and identifies any major gaps in the IT coverage. Results are one of:
 Invest – high business value and technical quality – merits further investment.
 Migrate – high business value but poor technical quality – upgrade or replace the system.
 Tolerate – low business value but high technical quality – system can be tolerated for now.
 Eliminate – low business value and poor technical quality – get rid of as soon as possible.
The evaluation gives a result as of a given point in time. The analysis may be repeated periodically to add a time
dimension that takes into account the evolving business environment and technical changes.
Methodology
Background
Business Capability Modelling is based on business functional analysis, not business process modelling. Unless we
start with business functions then the models produced are likely to be fatally flawed because they may be based on
elements that have no logical foundation. This is especially true for process modelling which, due to errors introduced
by large consultancies in the heyday of big Business Process Reengineering projects, has regressed.
Business Capability Modelling is part of an integrated approach that brings together Business Architecture,
Information Architecture and Information Security.
This document focusses on the use of capability modelling with Application Portfolio Management.
Business Capability Modelling
Capability modelling promotes a functional view of the enterprise that is more useful, flexible and durable than an
approach based on processes or organisation structures. Both processes and organisational structures change and
evolve more quickly than capabilities which are relatively static.
In Business Capability Modelling [3][4] a ‘capability’ is defined as the ability or capacity for an organisation to
deliver value. Business capabilities are useful abstractions because they represent the next level of detail below the
business strategy. They are usually defined as core rather than occasional activities and are either:
 Customer-facing – delivering value to customers, or
 Operational – delivering value to the organisation.
Business capabilities are valuable as a mechanism to translate strategy into action; they represent ways an organisation
generates measurable value so that costs and benefits can be attributed to them. They are hierarchical and can be
modelled using a stepwise refinement approach allowing analysis at multiple levels of detail. They can be managed as
assets, like a portfolio of investments.
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Approach – IT Functional Reviews
Capabilities can be modelled in a series of simple steps:
1. Develop the capability hierarchy.
2. Identify key relationships between capabilities and other planning elements.
3. Create demand models for the capabilities.
4. Develop financial models for the capabilities.
The technique is used here to provide a structure for the evaluation of IT systems but this is only one of a range of
possible applications. For the purpose of analysis, a business capability is defined as a business function with
associated business processes, people and assets [Glossary]. The select of a business capability, or business function,
for the purposes of modelling is largely a question of convenience, or preference, but there are a number of principles
that help in the definition of a suitable capability:
 Understandability – the capability should be comprehensible in its own right without undue reference to
other capabilities.
 Internal Cohesion – the people, process and assets with a capability should be linked or closely associated in
some way. For example, high-level capabilities often have their own business culture or specialised
vocabulary.
 Scope – capabilities should cover a distinct service or problem area that is well defined.
Established capabilities often map very closely to organisational units as with Finance, Human Resources, Teaching
and Learning but this may not be true of newer capabilities such as MOOCS.
The systems that serve each capability are evaluated in line with an ‘Application Portfolio Management’ approach that
takes into account the business value delivered by the system and its technical quality.
Figure 1 Business Capability
Assets
Anything that has value to the organisation or its customers, including physical
assets, information, systems etc.
Function
A convenient grouping of business behaviour based on criteria such as competences,
resources or organisational hierarchy.
Information Information that has business value.
People
Organisational entities capable of performing behaviour.
Physical
Assets
Physical assets such as buildings, vehicles, computers, communications networks.
Processes
Business Processes – group behaviour based on ordering of activities; intended to
produce a defined set of products or business services.
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Approach – IT Functional Reviews
Systems
A system is a combination of interacting elements organised to achieve a defined
objective. A system can include hardware, software, processes, human interactions
(or work), information, techniques and facilities. This term includes, but is not limited
to, IT systems.
The assets belonging to a given business capability
may include anything that has value to the
organisation, including participation by people in
processes and systems. These are the same assets
used for strategic planning, information security
risk analysis and management as well as other
related activities.
Business capabilities are documented using
business capability maps as shown in the diagram:
Figure 2 Business Capability Map
Business Actor
An organisational unit that is capable of performing behaviour. This represents the organisational
unit(s) being studied and does not necessarily include all ‘people’ shown in Figure 1 Business
Capability.
Business
Function
Business behaviour grouped according to a chosen set of criteria such as resources, competences
or business culture.
Capabilities are listed in a table along with the associated business processes, people and assets. The convention is to
refer to a business capability using the business function name.
Business Capability
Capability 1
Description of the business function.
Capability 2
Description of the business function.
Capability 3
Description of the business function.
Capability 4
Description of the business function.
Capability N
Description of the business function.
1.
2.
3.
1.
Processes
Process name
Process name
Process name
Process name
1.
2.
3.
1.
2.
3.
1.
2.
3.
Process name
Process name
Process name
Process name
Process name
Process name
Process name
Process name
Process name
People
Assets
Dept or team
System names
Database names
Dept or team
System names
Dept or team
System names
Dept or team
System names
Dept or team
System names
These business capabilities are known as ‘Level 1’ capabilities where ‘Level 0’ refers to the business domain itself
(e.g. Human Resources Management, Finance, Registry, Library Services).
Processes
The processes that fall within the ambit of a given business capability may operate entirely within the scope of the
business function or be part of a larger process that traverses multiple business capabilities.
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Approach – IT Functional Reviews
People
The People component of a business capability refers to organisational units that perform business behaviour. It
concerns the work they contribute and their skills, business culture etc.
Some business functions match very closely the organisational units that participate in them, others cut completely
across the organisational structures of the enterprise. Where such a mismatch occurs, it can indicate an inappropriate
organisational structure or a new, emerging capability.
Assets
The next stage involves an analysis of the value delivered by individual assets against specific business capabilities.
Unlike some other approaches, capability modelling focuses on the knowledge and judgement of senior managers and
specialists who, unlike most front line staff, understand how things are intended to work rather than how they work in
practice. This allows the relevant information to be collected quickly and shortens the time needed to deliver results.
Here we are mainly interested in information assets and IT systems in particular so the exercise combines the
judgement of senior business managers and IT specialists in an approach that takes into account both the business
value delivered by assets and the technical quality of the information assets.
Assets may be shared across multiple business functions or ‘belong’ to a single function. As functions are more
durable and flexible than organisational structures, so information organised along functional lines is more ‘future
proof’. A well-known fundamental error in the field of Information Architecture is to create an enterprise file plan
based on organisational structures rather than business functions.
Application Portfolio Management
Application Portfolio Management focuses on how
each business capability is supported by IT.
Individual applications are judged according to
their technical quality and delivered business
value. In this way a picture of gaps and areas for
improvement can be built-up.
The business value delivered by a system is
evaluated in the context of each defined business
capability. It is a subjective measure that relies on
the experience and knowledge of the individuals
involved, and combines a view of the business
value actually delivered with an external-facing
view of what is possible with new products and
technology. This approach is aimed at systems, but
Figure 3 Application Evaluation Grid
equivalent techniques may be used for other asset
types.
For each business capability, the support provided by systems in scope of the study is evaluated, taking into account
technical quality and delivered business value. Scoring is based on a scale of 0 – 9 as shown in the following diagram:
The diagram shows a simple grid that can be used to drive decision-making concerning future investment in
technology for each application serving a given business capability; where.
Business
Value
Delivered
Technical
Quality
Eliminate
Low
Low
Remove and replace with a new system.
Tolerate
Low
High
Replace with something useful but no urgent technical reason to remove.
Migrate
High
Low
Fix the technology by upgrading or migrating to a new system.
Invest
High
High
Continue to invest, upgrade and build upon current system.
KEY
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In the interest of simplicity, the evaluation of Business Value is based on the value delivered by a given system. The
individual scores for the rows in the following table are averaged to give a net business value.
Functionality
A judgment of functional coverage, breadth and depth, of a given system for a
given business capability.
Information
The business value of the information contained within the system. This may
increase as more information is added, or reduce to reflect declining integrity.
Return on Investment (ROI)
A score reflecting opinion of whether a system represents a good or bad return
for the money spent.
Business Value (average) Overall rating.
The criteria used to assess technical quality are the System Quality Attributes defined in the Enterprise Architecture
Framework (EAF) [1], which is based on the University’s IT Strategy. The quality attributes are combined to arrive at
a technical quality value that is the applied to each capability / system combination. They are as follows:
Performance
The speed at which the system performs defined functions.
Scalability
The ability to handle increasing or decreasing volumes.
Availability
The readiness of the system to perform its functions when
needed in spite of errors and exceptions.
Operability
The compatibility of the system with its environment and its
ability to interact with the environment and other systems.
Usability
A systems’ ease of use and accessibility.
Security
The ability to protect information from unauthorised access.
Regulation
Flexibility
Ease of change to meet changing business requirements.
Feasibility
The ability to deliver the system with available expertise,
technology, time and resources.
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Systems should be both vertically scalable by adding
resources such as CPU power, memory and storage and
horizontally scalable by adding multiple, parallel
instances.
Systems should be available as and when needed, or at
least fulfil their service level agreements.
This also takes into account the overall fit of the system
into the technical environment. Systems with different or
incompatible technology will score lower.
The user friendliness and ease of use of applications as
perceived by the users.
The score for security should take into account the
vulnerabilities and controls associated with each
information asset or system.
e.g. The Data Protection Act
Conformity with laws and regulations.
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Systems should deliver adequate performance for all
functions.
Gradual evolutionary change is preferred to a high-risk
‘big bang’ new release approach.
Systems that fall outside the available technical expertise
will involve a steeper learning curve and may score lower.
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Business Value
Business value is calculated by scoring each system against the business capabilities on a scale of 0 – 9, where 0 is the
lowest score and indicates that the business capability is not covered at all by the system in question.
Business Capabilities
Capability 1
Capability 2
Capability 3
System1
System2
System3
SystemN
7
6
2
2
Capability 4
Capability 5
8
Capability N
Technical Quality
The evaluation of technical quality is based on the System Quality Attributes that were developed as part of the
Enterprise Architecture Framework (EAF) [1]. These are used to evaluate every system in a standard way using a
scale of 0 – 9, where 0 is the lowest score.
System Quality Attributes
Performance
Scalability
Availability
Operability
Security
Flexibility
Feasibility
Usability
Regulation
Technical Quality (average)
System1
8
8
8
5
8
6
9
7
8
7
System2
5
5
3
3
5
3
5
5
5
4
System3 SystemN
9
7
8
8
3
7
3
3
5
8
5
0
9
3
8
8
8
8
6
5
For the sake of simplicity, the individual scores are averaged to give an overall technical quality score.
Results
The final evaluation is arrived at by plotting the business value against technical quality according to Error!
Reference source not found. and summarized in a table:
Business Capabilities
Capability 1
System1
Capability 2
Invest
Capability 3
Invest
System2
System3
SystemN
Eliminate
Capability 4
Migrate
Capability 5
Tolerate
Tolerate
Capability N
The table shows the actions by capability and system. Blank lines indicate gaps that may indicate the need to acquire
new applications.
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Business
Value
Delivered
Technical
Quality
Eliminate
Low
Low
Remove and replace with a new system.
Tolerate
Low
High
Replace with something useful but no urgent technical reason to remove.
Migrate
High
Low
Fix the technology by upgrading or migrating to a new system or platform.
Invest
High
High
Continue to invest and build upon.
KEY
Action
Gap – investigate the need for new applications
The results are used in decision making for each business capability. Capabilities must be treated individually in order
to give meaningful results.
The trajectory of a system over a sequence of evaluations and is based on the idea that the business and technical
environments are constantly changing and therefore a similar rate of change is required for systems to maintain their
value. Without such change both business value and technical quality will tend to decline over time.
Recommendations
Recommendations are presented, based on the results of the evaluation and informed by the IT Strategy and the
Enterprise Architecture Vision.
Gaps and areas for improvement will be listed together with any guidance concerning future actions and suggestions
for further investigation.
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Glossary
Business Capability
An activity, or Business Function, that is usually part of the core business together with
associated business processes, actors (people) and assets. The assets may be physical
assets, intangible or information assets such as systems and databases.
Business Domain
For the purposes of this exercise, business domain is assumed to be the area covered by an
organisational unit such as a college, school or corporate services department.
Business Function
A convenient grouping of business behaviour based on criteria such as competences,
resources or organisational hierarchy.
CPU
Central Processing Unit – the processor unit of a computer. This is often expressed as
MIPS (millions of instructions per second) and MFLOPS (millions of floating-point
arithmetic operations per second).
Service
A bundle of visible, meaningful functionality that is realised by systems or business
behaviour.
System
A combination of interacting elements organised to achieve a defined objective; includes
hardware, software, processes, people, information, techniques and facilities. This term
includes, but is not limited to, IT systems.
References
[1]. Enterprise Architecture Framework
https://intranet.birmingham.ac.uk/it/strategyarchitecture/architecture-standards.aspx
[2]. IT Strategy 2010-2015
https://intranet.birmingham.ac.uk/it/strategyarchitecture/strategy.aspx
[3]. Business Capability Modelling: Theory and
Practice. Architecture and Governance
Magazine, 2009
http://www.architectureandgovernance.com
[4]. Gartner Enterprise Architecture Summit
(Europe) 2012
http://www.gartner.com
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