Capabilities-based Enterprise Transformation
Better business definition leads to optimal technology solutions
Private & Confidential

Have you heard this before?
Business
80% of what we do is rework because
business keeps changing the requirements
Each BU wants different changes to the same
thing at different times
Business is incapable of thinking through the
implications of their “small tweaks”
All business needs are urgent – we are
drowning in unnecessary technical debt
Why does this button cost a million dollars
to build?
We need to go to market in two quarters. Why
does a small feature take so long to deliver?
How much detail does IT need? We’ve already
provided volumes of documents
I can’t wait for other groups in the firm to
agree to a path forward. Why not build for us
and then add on stuff for others?
IT
© 2013 CAPSTERA. All rights reserved.
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The track record of technology enablement is not
stellar
How do IT & Business Executives
feel about IT project success?1
% of IT projects
Rest
25%
75%
Doomed
from the
start
Not surprising when we look at large IT project (>$15M) outcomes2
Average cost overrun Average schedule
% of budget
overrun
% of project timeline
100%
45
45%
$
17% of large IT projects
go >200% over budget,
threatening the very
existence of the company
% of respondents
80%
Spend over half of
their time on rework
78%
Feel business and IT
are not aligned
>80%
Feel requirements do
not reflect business
needs
100%
7%
Average benefits
% of expectations

100%
Every additional year spent
on the project increases
cost overruns by an
average of 15%
Underlying causes of IT project failures2
>$15M IT projects
Other
13%
Execution
Unrealistic schedule,
25%
reactive planning
13%
Skills
Unaligned team,
lack of skills
29%
20%
1) Survey of 600 business & IT executives by Geneca
2) McKinsey-Oxford study on reference-class forecasting for IT projects (2010 dollars)
$$$
56%
Focus
Unclear
objectives/
business focus
Content
Shifting
requirements, tech
complexity

The current operating model of how IT projects are
spawned and managed is not sustainable
Requirements
IT
Products / BUs
Business
Programs / Initiatives
IT Projects
 Different language spoken by business and IT teams makes alignment impossible
 Lack of a big picture view, especially when using the project approach
 Frequent changes to business models/strategies lead to requirements churn &
obsolete solutions by launch
 Lack of traceability of requirements leads to replication
 Ambiguity of requirements creates unnecessary churn
 Redundancy of capabilities leads to complexity of the IT landscape & rework
 Lack of reuse increases complexity, makes costs spiral out of control, and wastes
resources
© 2013 CAPSTERA. All rights reserved.
4

Capabilities help by decomposing “what” a business
does
Business Capabilities are the “What” of a business. They are stable and long-term.
Business processes are the “How” of a business. They are considered volatile and ephemeral.
Illustrative Example of a Capability Map
L1: Value Chain
Product
development
Manufacturing
Marketing
Sales
L2: Sales
Sales planning &
forecasting
L3: CRM
Territory mgmt.
Client
segmentation
L4: Client
segmentation
Client contact
details mgmt.
Demographic
segmentation
Lead &
opportunity mgmt.
Client relationship
mgmt. (CRM)
Quotes, contracts
& negotiations
Customer Service
Order mgmt.
General &
Administrative
Pricing
Interaction mgmt. &
history
L5: Opportunitybased segmentation
Profitability
analysis
Psychographic
segmentation
Opportunity
mapping
Customer analytics
Activity planning &
meetings mgmt.
Opportunity-based
segmentation
Capability maps are:
 Stable and intuitive
 Hierarchical and logical
 Non-redundant yet comprehensive (MECE)
© 2013 CAPSTERA. All rights reserved.
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Cross-sell and
up-sell planning
Lifetime revenue
assessment

Capability mapping defines platforms as a combination
of capabilities and helps quickly identify overlaps
Business
Capabilities are like bricks – They
are used to “build” businesses
Product 1
IT
Project 8
Platforms are a
combination of
capabilities and
their evolution
Helps identify &
manage overlaps
 Avoids redundancy
 Fosters reuse
Program 4
Capabilities establish a common
language between business and IT
 Clear and unambiguous
 Organized/easy to navigate
Platforms can be products, services, projects, or initiatives. All of these business
entities are a set of activities the company does either to serve customers or to better
the business itself.
© 2013 CAPSTERA. All rights reserved.
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Capability architecture is the glue between the
business strategy, platforms, data and processes
2 Strategy
1 Capabilities
• Easy to use capability management
• Rich semantics
• Performance tracking
• Capture current functionality
• Develop roadmap
Data
• Define the value chain
• Model value streams/stakeholders
• Associate process diagrams
• Mark up processes
• Uses lenses/heatmaps to analyze
Strategy
Capabilities
Processes
5 Processes
• Capture & communicate BuRST
• Translate the strategy into capabilityspecific goals w/ resource allocation
• Identify gaps & benchmark
competitive position
Requirements
6
Data
• Capture & classify business terms
• Inform the CDM, LDM, and PDM
• Map data to capabilities, value
streams, processes & requirements
Platforms
3 Platforms
(Products/Services,
Projects/Programs/Initiatives)
• Use capabilities to define platforms
• Align capability and platform goals
• Easily identify & manage overlaps
4 Requirements
XML interface with
related applications
• Efficiently capture platform requirements
• Quickly rationalize & prioritize by capability
• Translate into capability roadmaps with
traceability

Capstera enables better business definition to help deliver optimal
technology solutions and provides benefits for various stakeholders
Executive Perspective
IT Perspective
•
•
•
•
Aligned organization
Execution linked to strategy
Stable view of business
Helps assess strengths &
weaknesses to inform the strategy
• Manages overlaps/synergies
• Reduces IT complexity
• Fosters reuse of assets
• Aligns IT with business strategy
and goals
• Reduces churn due to common,
MECE and simple language
Financial Perspective
Product Perspective
• Lower friction and less complexity
reduces costs
• Agility and responsiveness
increases enterprise value
• Long-term value of project funding
easier to see, set, and measure
• Building once and reusing often
speeds time-to-market
• Product segmentation and
proliferation eminently feasible
© 2013 CAPSTERA. All rights reserved.
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Let’s Get Started
© 2013 CAPSTERA. All rights reserved.
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