Understanding Business Capabilities and Functions in Enterprise Architecture

As seen in the previous blog, ArchiSurance aims to build new capabilities to support its “digital customer intimacy” strategy, such as digital customer management, data‑driven insurance, data collection and data analysis. The diagram below highlights these new elements using Enterprise Studio’s “highlight” feature.

Figure 1. New capabilities for Digital Customer Intimacy.

Capabilities and Business Functions

Note that business functions differ from business capabilities. A capability represents an organization’s current or desired ability, realized through people, processes, information and technology, focusing on specific business outcomes for strategic planning. In contrast, a business function describes the work actually performed by the organization, is explicitly managed, and is more tightly coupled with the organizational structure. Each capability appears only once in a capability map, whereas the same sub‑function can appear multiple times in a functional decomposition.

When describing the baseline business architecture, the value of a capability map lies mainly in analyzing current versus desired capability levels and revealing capabilities the organization possesses but has not explicitly identified or managed. Capabilities and capability levels in the target business architecture provide high‑level guidance for change; this is the core of capability‑based planning.

Of course, when you map the organization’s current capabilities, its current business functions will often occupy a prominent position, because what you do today must be what you are able to do. Multiple business functions (along with other elements) may contribute to a capability.

The diagram below shows some of ArchiSurance’s major capabilities and their relationships to current business functions. The new sub‑functions are part of the two green functions in the diagram. They can be realized by extending existing business functions (and their processes), but may also require new functions and resources. For example, the data‑driven insurance capability and its sub‑capabilities may require establishing a completely new part of the organization, and the actuarial, claims and underwriting functions may undergo significant changes.

Figure 2. Capability realization.

These capabilities need appropriate resource support, including personnel with suitable digital‑era knowledge and skills, smart devices for data collection, and the customer data itself.

The resources themselves are realized by the core of enterprise architecture. This may produce a small set of results shown here. Note that this does not describe all elements required to implement these resources, but provides a representative example. In practice, separate views are usually created to show how a single function and its resources are realized.

By putting all of this together, we can see the link from your various assets to the capabilities they support, and the strategy, objectives and outcomes outlined in the previous blog. You can go further by linking more detailed models (e.g., BPMN processes or UML data models) to the ArchiMate architecture model, simply by linking those models together in Enterprise Studio. This gives deeper insight into the impact of strategic decisions and, conversely, reveals new options and innovations offered by the resources you use. Planning, executing and controlling change across the enterprise has never been easier!