Connecting Enterprise Architectures with Business Models

Is there an easy way to connect your Enterprise Architecture with the business?

Enterprise architecture is often regarded as an ivory tower. This is certainly due to the excessive frameworks, such as Zachman or TOGAF, which produce a vast number of models and documents and are virtually out-dated as soon as they are created. On the other hand, the increasing complexity of the business environment is a strong necessity for enterprise architecture management. Rapid changes in technology and rapidly changing customer expectations result in constant pressure to adapt the enterprise architecture and the underlying IT systems landscape. How can this paradox be met?

Everything should be made as simple as possible, but not simpler.

Following Albert Einstein we are looking at simple ways to understand, model and design change. Our goal is to create value with a solution that fits to the changed requirements. And a good startinmg point is to understand what the business is trying to achieve. This can be done in various ways. Conducting a big picture EventStorming workshop, doing Impact Mapping or using a canvas to evaluate the essence of the business model.

Use a Canvas to understand the Business Model

A business model tells us how the business makes money. This is a good starting point for a meaningful Enterprise Architecture. One of the best ways to learn about the company's business model is to visualize it using a canvas. There are different techniques and canvases in the enterprise modelling market. Depending on your context choose an appropriate one. We start with the well-known Business Model Canvas (BMC) by Osterwalder and Pigneur [1]. They define a business model as 

A model that describes the rationale of how an organization creates, delivers and captures value.

Their canvas consists of nine building blocks focussing four areas of a business: customers, offer, infrastructure and financial viability. 

An adoption of the BMC to the Lean Startup philosophy (start small and scale fast) is the Lean Canvas by Ash Maurya [2]. In addition it focuses on the scaling aspect from solution-problem fit to product-market-fit. Another adoption that supports the aspect of sustainability is the Sustainable Business Canvas [3]. And in the academic literature there is also a trend to reach a common understand of the term busines models. [7] 

We use the original BMC in enterprise architecture to understand the differences or changes that make the new business model. The essence is either an optimization or an innovation of the product, process and/or the business model itself. Starting from the BMC, we follow two directions: Evaluating WHAT the business is doing and HOW the WHAT has to be implemented to generate value. 

Derive Business Capabilities and Architecture Principles

In contrast to the term business model, less is found in the literature about business capability. Let's start with some intuitive definitions:

1. A business capability is the fundamental abstraction used to describe “what” a business does at the very core [4]
2. A business capability is something that a business does in order to generate value....An organization's business capabilities capture what an organization's business is. They are generally stable, as opposed to how an organization conducts its business, which changes over time. [5]
3. A business capability is a general capacity of an organization to perform a specific activity. Business capabilities represent high-level abstractions encompassing all underlying business processes, roles, information systems and physical facilities fulfilling these capabilities [6]
4. Capabilities comprise not only the IT system part of what an enterprise does but capabilities describe a chunk of what the business is able to do in all aspects: People, processes, and also IT – or call it the technology used to support the activities needed to offer a capability. [9]

To derive the business capabilities from the business model, either the key activities, processes and customer journey or the key resources are then considered. 

With a view to the business model, we also identify whether a capability is strategic, key to competitive advantage, or merely supportive. We are therefore able to evaluate business capabilities with regard to the business model. The importance of a particular business capability is directly related to the business model.

Architecture principles are guidelines that lead us in the right direction when implementing business functions. They consist of non-functional requirements, technical capabilities, design rules and other guidelines: These can be derived from a careful analysis of the business model. For example, if we plan to offer a service online in the future, this forces us to think about the availability and scalability of this service.

Use the Business Capability Model for managing complexity

Business capabilities are grouped into a map in a hierarchical order. The business capability model as a functional decomposition is a blueprint that structures the business and forms the basis for key architectural decisions:

1. Sourcing decisions: Should the capability be outsourced or in-sourced? How strategic or important is the capability to the success of the business model. If the capability has a high cost of ownership and is also not competitively differentiated, then it would be a good candidate for outsourcing.

2. Make or buy: Is there an off-the-shelf IT product on the market that can be used for implementation, or is custom development a better option?

3. Organizational accountability: Organise teams around business functions. Decouple services and teams to enable independent development and deployment and promote rapid time-to-market. 

4. Transformation roadmap: When there is a mapping between the business capabilities and the current IT system landscape, transformation activities can be identified and planned in accordance with the business capability evaluation and architecture principles.

Keller [9] shows several use cases such as a heat mapping or foot printing and provides several ways to construct a capability model (or map). The authors in [10] collected and evaluated 14 use cases in EA. Of particular interest are Capability Spanning Applications and Capability Dependencies: both use a mapping from applications to capabilities and help to reduce the overall complexity by hotspot and dependency analysis.

Models are intended to help with analysis and understanding. They should reduce the underlying complexity in a meaningful way. They are necessary for transparency and communication. Therefore, they should always be up-to-date, easy to use and intuitively understandable. In addition, the costs for model creation and maintenance should be in reasonable proportion to the benefits. 

Business Model Canvas and Business Capability Map are such simple models, which in combination have an enormous power and impact on enterprise architecture management.

References

[1] Alexander Osterwalder & Yves Pigneur: Business Model Generation (2010)

[2] Ash Maurya: Running Lean (2012)

[3] Start Green

[4] William Ulrich & Michael Rosen: The Business Capability Map: The “Rosetta Stone” of Business/IT Alignment (2011)

[5] Chris Richardson: Microservices Patterns (2018)

[6] Svyatoslav Kotusev: Fake and Real Tools for Enterprise Architecture: The Zachman Framework and Business Capability Model (2019)

[7] Oliver Gassmann, Karolin Frankenberger, Roman Saue: Exploring the Field of Business Model Innovation, Palgrave Macmillan (2016)

[8] Andreas Slogar: Die agile Organisation, Hanser Verlag (2018)

[9] Wolfgang Keller: Using Capabilities in Enterprise Architecture Management (2009)

[10] Pouya Aleatrati Khosroshahi, Matheus Hauder, Stefan Volkert, Florian Matthes, Martin Gernegroß: Business Capability Maps: Current Practices and Use Cases for Enterprise Architecture Management (2018)