Value analysis with Value Stream and Capability modeling

Competensis®
Christine Dessus
chdessus@competensis.com
+336 31 09 73 54
www.competensis.com
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Archimate 3.1
VALUE –VALUE STREAM - CAPABILITY
2

Sources
Value - Value stream - Business capability3
By the OPEN GROUPE
- ArchiMate® 3.1 Specifications, ISBN:1-947754-
30-0, Document Number:C197
-The Exploration & Mining Business Capability
Reference Map:Concepts and Definitions,
ISBN:1-937218-49-2, Document Number:C143
-Value Streams, ISBN:1-937218-85-0, Document
Number:G170
Other reference
-Transforming the Enterprise Using a Systems
Approach James N. Martin, JMartin-IS11-EntSE-
110318.doc
[http://incoseonline.org.uk/documents/groups/E
SE/JMartin-IS11-EntSE-110318.pdf]

Archimate 3.1 :Value stream and Capability
• With the new Archimate 3.1 , the strategy layer is now showing 2 major modeling
objects related to value analysis :value stream and capability.
• These objects are linked and answer 2 questions :
[VALUE STREAM]
What value do we deliver to
customers ?
What value do we want to
deliver to customers ?
This is the enterprise business
model
[CAPABILITY]
What operational model do we
need to deliver value ?
The capability describe the
operational model required to
deliver value to customers.

Value stream and Capability usage
Valuestream
What value do we deliver to
customers/clients/end-
users/stakeholders ?
What benefits are being
offered ?
Is the equation of customer
value is still positive ?
[Difference between value
and costs with the client
perspective] ?
Capability
What ability, competency
do we need to deliver value
to customers/clients/end-
users/stakeholders ?

What is value ?
Value -Value stream - Business capability 6

What is value ?
• Originate from the old French « valoir », be worth
• Something held to deserve, has importance, usefulness
• Today’s sense :usefulness, advantage, profit, desirability.The
financial and monetary perspective alone is too narrow
• Fundamental to everything that an organisation does :the
primary reason that an organisation exists is to provide value
to one or more stakeholders
✓Fundation of a business model
• Value producing activities are enabled by business
capabilities

Perspective
Value is always defined
from the recipient of the
product or service
perspective :customer,
end-user or stakeholder.
Value is the stakeholder
perception of the worth.

Role of business architects, enterprise architects
• Model, measure and analyze the
various way enterprise achieves
value
✓Decompose activities and systems
that contribute to the creation,
capture and delivery of value

Several approaches to value analysis
• Value chains
• Value network
• Lean value stream
• Value stream
• We focus onVALUE STREAM. Other approaches are (quickly) explained in the
annex, at the end of this chapter.

What is a value stream ?
End-to-end
activities that
create an overall
result for
customer, client
stakeholder, end-
user
Represented by
value stream
stages
Each stage creates
an incremental
value
Value stream are
internally or
externally
triggered

What is a value stream ?
• Example
Stakeholders
with provider role
Incremental value delivered
End to end value
delivered to
clients/customers
Stakeholders with
provider role

Use of value stream
• First step define a business model and transform it into an operating model
• From value stream to business processes
✓This is not a one-to-one translation
✓A deep reflection is needed on how to build a business model and infer an organisation
structure with business processes, business functions, actors, roles, activities, application
services and components
✓Value stream take an outward (external) perspective. Business processes and business
functions have an inward (internal) perspective

Benefit ofValue Stream Mapping
• To have a quick and easy way to get a snapshot of the entire enterprise business
• Value stream represent all the work that the business needs to perform to deliver
value
• Envision & prioritize impacts of strategic plans
• View business capabilities through the lens of value stream to get a customer
based analysis and planning
• Get more effective and operational models

Relation with other business architecture concepts
• Various concerns
Concern Business architecture concept
What we do ?What do we want to do ? Business capability
Who does it ? Organization
What value is delivered to clients ? Value stream
How activities are performed at the
operational level ?
Business Process
Business function
What information is needed ? Business information
What systems are used ? Application components
Application services
Facility, equipments, machines, tooling

Metamodel

Document theValue Stream
• modeling is never sufficient.
• Models are the entrance gate to documentation.
« Un schéma vaut mille mots mais mille et un
mots valent mieux qu’un schéma. »
« One picture is worth a thousand words, but
one word is worth a picture »

Document theValue Stream
Value stream
Name Should be clearly understandable from the stakeholder perspertive
Description Define the scope of activities
Stakeholder The person or role that initiate the value stream
Value Expressed in stakeholder terms
What the stakeholder expects to receive
Aggregation of the incremental value items
Value stream stage
Name What is achieved at this stage
Description Purpose and activities performed
Stakeholder Actors or roles who get measurable value from the value stage
Value item Incremental value created
Entrance criteria Starting condition or state change
Exit criteria End state condition that shows the completion of the value stream stage :the required value has been
created, delivered to stakeholders.

Mapping capabilities to value stream stages
Identify core capabilities required to
enable each value stream stages
Focus on critical capabilities that should be performed
with a high level of quality to meet stakeholder
expectations.
Identify supporting capabilities that do
not contribute to the core value stream

Mapping capabilities to value stream stages
Capabilities
Value streamStakeholderswith
provider role
Stakeholder with
client/end user role

Capabilities and value stream
• Which should come first :value stream or business capabilities ?
• Finally, it doesn’t really matter, just start with what looks easier to do
✓Value streams provide valuable stakeholder context into which business
capabilities are needed.
✓Business capabilities describe the enterprise activities required to perform the
value stream stages.
[Rule n°1] Wish to start a new a
value proposal from scratch
• Define your business model
• Elicitate value streams
[Rule n°2] Wish to harvest
existing business activities and
application portfolio
• Elicitate capabilities first

Value Stream
Annex
Other value analysis techniques

Other approaches to value analysis
• Value chains
• Value network
• Lean value stream

Value chain
• By Michael Porter in his book
« Competitive advantage »
• Disaggregate a firms into its strategically-
relevant activities in order to understant
the behavior of costs and the existint
potential source of competitive
differentiation.
Value chain analysis focus on
provider outcomes and financial
margins.
Value stream focus on value
delivered to the customer, not only
on the internal value captured.

Value network
• Visualizing sets of relationships from a
dynamic whole systems perspective
• Understanding, using, visualizing,
optimizing internal and external value
networks
Value network focus on stakeholder
relationships.

Lean value stream
• Document, analyse and improve the flow of
material and information required to produce a
product or a service for a customer.
• With the objective of identifing and eliminating
wastes and to retain activities that create or
increase value for the end-user.
• Not designed for architectural purposes
:decomposing the critical activities combined to
produce value for a stakeholder.
Lean value stream focus on
identifying internal sources of waste.

Business capability

Sources
By the OPEN GROUPE
-The open groupTogaf series guide, Business
capabilitiesG189
Other reference

What is a business capability
• Ability that a business may possess or use to achieve a specific business outcome
• Describe what a business is supposed to do to create value for its stakeholders and
customers, without attempting to explain how
• It encapsulates people, process, technology and information
• If you describe how people perform a task, it is a business process, not a capability
Note for French readers:
OUTPUT ≠ OUTCOME
The output
:the house
you built
The outcome :the money you
get after the house sale minus
the money spent to build it

Defining business capabilities
• Use nouns and not verbs that resonate with business leaders and stakeholders
• Forget the « management » word.
✓e.g. Sample management ➔ sampling
• Identify CORE capabilities and ENABLING capabilities
Business/evolving
capabilities
Respond to internal or
external change and
ensure the necessary
designs and plans are
in place to support the
business evolution
Operating/core
capabilities
Deal with the core
operations and are
specific to the industry
Enabling
capabilities
These capabilities can
be found in most
organisations to
ensure a smooth
functionning of the
organisation on a day-
to-day basis.

Definingbusinesscapabilities
Template to define capabilities in an organisation
Name The name of a capability should indicate a well-defined behavior
Short description Clarify the capability scope and purpose. Phrase it «The ability to… »
Business outcome High-level, business-oriented results produced by capabilities of an organization
Outcomes are closely related to requirements, goals, and other intentions.Outcomes are the end results, and goals or
requirements are often formulated in terms of outcomes that should be realized. Capabilities are designed to achieve such
outcomes.
Capability type Business, core, enabling
Domain, subdomain Domain :Supply-chain Sub-domain - Order-to-cash
People Actors or roles, individual actors, business units, stakeholders
Business Function Internal behaviour performed by Business Role that is required to produce a set of products and services.Very often,
performed by a single role within an organisation.
Business Functions group activities according to required skills, knowledge, and resources
Business Process Business Processes describe a flow of activities.
A series of actions or steps taken in order to achieve a particular output/outcome
Information a unit of information that has relevance from a business perspective
Technology application Application component,Application service, Application function
Major technology components
Maturity Non existent/Initial/Repeatable but intuitive/Defined/Managed & measurable/Optimized

Defining business capability

Business activity
mapping

Business activity modeling
• Contact us to get consulting services on value stream, capability and business
activities modeling
Model Objective
Business process reference map Categorization of the business activities applicable, so that the enterpriseas whole and its suppliers
and partners are in a position to speak a common language when they are considering the support
of specific activities (processes) in the business.
Busines processes are internal or external.
Business capability reference map Definition of the reference set of business capabilities that exists in the organization. It enables the
organization to analyze its ability to deliver successful business outcomes based on the reference
business capabilities.
Information reference map Describe the reference set of information components that exist in the industry and will provide
guidance on the management of information as an asset, the selection of suitable applications, and
the establishment of a common language in the organization.
Application reference map Identify candidate logical applications that exist

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