Part 3b. Business Operating Model First Layer of the Consolidated Architecture Roadmap An Example
For some of you, finally, we have an example. This is a generic example of a Business Operating Model for a high tech company. In the last blog, Part 3a, we laid out some concepts for the Business Operating Model. Remember that the Business Operating Model is the first layer of our Consolidated Architecture Roadmap. And do you remember what the focal object is for the Business Operating Model layer? You’re right! The Business Model competency….if you don’t remember, I understand. Here is the link to Part 2. TOGAF and Architecture Roadmaps to go back to the Consolidated Architecture Roadmap. It’ll make a bit more sense…I hope.
Remember, that the main question of the Business Operating Model layer is, “What are the competencies that must be in place to meet or exceed the company’s business objectives?” Once this simple question is answered, it drives the rest of the Consolidated Architecture Roadmap. The rationale for why you have these competencies is not within the Consolidated Architecture Roadmap. You will see in this example that the rationale is contained within analysis of the Business Operating Model. For a summary of the first layer of the Business Operating Model, go to Part 3.
Back to the Business Operating Model Competency Map
The detail behind this layer begins with the Business Operating Model Competency Map. This is how we are organizing the competencies. There is a decomposition of the competencies, starting with an alignment to domains. The following diagram shows a generic example based on a high tech company’s Business Operating Model Competency Map or just Competency Map, for short.
Finding Value Opportunities: Simple Paradigm to Evaluate Value
In this process, as in most, simple is better. Start with well organized qualitative rules for your paradigm. Then, when the process is in place, begin to advance to quantitative measurements for your paradigm to measure value. The SAP Value Lifecycle Manager tool may be a good option when you are ready to systematically apply quantitative measures.
Refer to the next diagram and you will see that there are two dimensions. The horizontal dimension classifies the overall health of the competency. A low health competency would be one that is expensive compared to benchmark companies. The vertical dimension describes the priority of the competency based on the competitive factors. Based on these two dimensions, there are 9 categories, and there are natural strategies, based on these categories. For example, if a capability is a low health and it should be a differentiator, then, that is a high business risk and should be marked as a competency where investments are made to bring it back to an optimal level. You will need to customize your paradigm. In this example, this is traditionally an inventor high tech company, consistently developing “new to the world” high tech products. If you were a fast follower that waits for the market to be established, optimal for the Differentiator competency may be medium health; why invest heavily in R&D when you enhance only proven technologies. Now, that you have a paradigm established, you want to apply it to your competency map.
First, mark each competency based on the required priority level.
Next, objectively assess the health of the competencies. Make sure that you clearly define your qualitative criteria for low, medium or high health. In the following example, the competencies are colored in, based on their health. Immediately, you start to see opportunities where a competencies are in a state of over or under investment.
For example, the Test Competency needs to be competitive, but is has been invested as if it were a differentiator. On the other hand, EHS Compliance is a differentiator process with a poor health; this competency may need more investment to move it to be balanced.
Dose of Reality: Cost Factor in Value
Remember our definition of value. It is a ratio of utility, relative to cost. Now, we need to factor in cost to this analysis. Starting out with simple currency symbols (Euros, Rupees, Dollars, etc) to denote the cost range to bring this capability back to where you want it to be.
Now you are ready to make qualitative decisions on the competencies to invest in, based on their utility relative to cost. Some decisions may be invest, leave alone, pick logically related competencies and leave other worthy investments alone, or pick the capabilities based on an investment budget and use this as part of the strategic investment process.
Some of examples of decisions may be:
- TalentWorkforce Management – Leave Alone or Outsource – Base competency with high health; there is no need to invest in this.
- Core Services and Employee Retention – Invest in This – It is a differentiator and with a small relative investment, we can move it to be high health.
There may be enough opportunities to invest in a project for Human Resource Management or there may be a roadmap for Employee Self ServiceShared Services. Finally, you pick and roll up the relevant competencies from your Competency Map to your Consolidated Architecture Roadmap. That is your first layer of your Consolidated Architecture Roadmap.
Next, we will examine the Business Process Layer of the Consolidated Architecture Roadmap.
In the example, we showed
- Applied Example of a Competency Map
- Paradigm to evaluate value opportunities
- Method to mark your Competency Map
- Transferring the results of the Competency Map to the first layer of your Consolidated Architecture Roadmap
In Part 4, we will show the transition from the Business Operating Model to the Business Process Layer and drill into more detail of the Business Process Layer for a Consolidated Architecture Roadmap.
This blog is based on the ASUG Enterprise Architecture Roadmap Days. Be sure to attend one of the events coming to a city near you. The next even is in Atlanta on November 4th.
Also, there is a Roadmap Preconference Session at TechEd 2010 in Las Vegas. You will meet with more of the though leaders who have developed the SAP product roadmaps and meet with your colleagues who are developing best in class company architecture roadmaps.