Key takeaways
- Capability = general ability; Business Capability = business ability, possessed or exchanged.
- Business Model = logic of creating, delivering, and capturing value.
- Value Stream = end-to-end activities toward a result for a customer.
- Business Function = grouping by criteria; Business Service = encapsulated behavior.
Abilities: Capability and Business Capability
Capability is a general definition: an ability held by an organization, a person, or a system. Business Capability refines it for Business Architecture: a particular ability that the business may possess or exchange to achieve a specific purpose. A capability says what one is able to do, without saying how or by whom.
Do not confuse these abilities with Capability Architecture, which is an architecture describing the enterprise's abilities, nor with a Capability Increment, a portion of that architecture delivered separately.
Creating and delivering value
The Business Model describes the logic by which an enterprise creates, delivers, and captures value. A Course of Action is the direction that strategic goals and objectives give, often to deliver the value proposition described in that model. A Value Stream represents an end-to-end set of activities producing an overall result for a customer, stakeholder, or end user. Finally, a Product is an outcome generated by the business to be offered to customers; it may include goods and services.
Example: a bank has the capability 'Assess a loan application'. Its 'Obtain a loan' Value Stream chains request, assessment, decision, and release of funds, and the capability is used at the assessment step. The mortgage offered to customers is a Product, and the Business Model explains how the interest earned funds the whole.
Grouping and exposing behavior
A Business Function is a collection of business behavior grouped by chosen criteria and closely aligned to the organization, such as 'Purchasing' or 'Accounting'. A Business Service supports the business by wrapping one unique element of business behavior; it may in turn support services offered outside the enterprise. More generally, a Service is an encapsulated element of behavior that responds to requests from actors or other services, and has an interface and a description.
- What can we do? Business Capability.
- How do we earn value? Business Model.
- Which steps lead to the customer's result? Value Stream.
- How is behavior grouped or exposed? Business Function or Business Service.
TERMS TO KNOW
The terms, in context.
- Capability
- Ability held by an organization, a person, or a system.
- Business Capability
- Particular ability the business may possess or exchange for a specific purpose.
- Business Model
- Logic by which the enterprise creates, delivers, and captures value.
- Value Stream
- End-to-end set of activities producing a result for a customer, stakeholder, or user.
- Business Function
- Business behavior grouped by criteria and aligned to the organization.
- Business Service
- Unique element of business behavior, encapsulated to support the business.
- Course of Action
- Direction given by goals and objectives, often to deliver the value proposition.
- Product
- Outcome produced by the business and offered to customers, goods or services.
- Service
- Encapsulated element of behavior answering requests from actors or other services.