Business Capability Map: The Essential Guide With Examples

Large organizations that want to maintain growth and outperform their competitors benefit hugely from knowing exactly what their capabilities are. Every capability represents an investment, after all, and provides opportunities for furthering goals, delivering additional revenue, and achieving brand differentiation.

If it sounds odd that an organization might lack awareness of its capabilities, consider the immense complexity and scale of enterprise-level operations. Organizations can have hundreds or even thousands of employees worldwide, provide numerous products and services, and feature many distinct departments.

Factor in the breadth of a modern application stack, and things get even more difficult to track. Past the small-business stage, business infrastructure can easily become convoluted and opaque, with even the biggest stakeholders lacking awareness of all the resources and processes in play.

This is why it’s highly valuable to map business capabilities. Documenting core capabilities, in particular, aids efforts to determine how well resources are being used and where to prioritize investment.

This guide will cover the practice of mapping business capabilities to drive better understanding and optimization of what a business can do. It will include examples to help clarify what a business capability map should look like.

Jump to:

What Is a Business Capability Map?
When Would You Use Business Capability Maps and How?
Seven Benefits of Business Capability Mapping
What Are Some Business Capability Mapping Challenges?
Key Components of a Business Capability Mapping Structure
Business Capability Map Examples
How to Create a Business Capability Map in 4 Steps
Business Capability Mapping Best Practices
Ardoq Business Capability Mapping Adds Context to Your Change Process, Linking Systems, Processes, and People
FAQs About Business Capability Maps

What Is a Business Capability Map?

A business capability map is a clear visual representation of all notable capabilities available to a business. But what are business capabilities? In brief, they’re all the things a business can do that are valuable or otherwise significant, either internally or externally. They’re all the functions that allow a business to deliver value to its customers, stakeholders, and itself.

A capability map is typically organized into a hierarchical structure that reflects an organization's strategic and operational facets. This structure helps in clearly understanding the relationships and dependencies between different capabilities. Each capability is unique and framed around delivering a practical outcome. If a capability is sufficiently complex, it may also have sub-capabilities.

A high-level capability might be Finance, which consists of several sub-capabilities that describe in more detail the activities that make up the Finance Capability. For example, Payroll, Tax Management, or General Accounting; and each of those will, in turn, have sub-capabilities. For example, General Accounting will have sub-capabilities such as Project Accounting, Investment Accounting and Reporting, and Accounts Consolidation.

It’s important to note that a business capability map doesn’t cover the processes through which the capabilities are realized. This is because these processes (and the tools used to make them work) aren’t set in stone. Over time, the methods used to get things done will change, but the results will remain aligned with broad business objectives that tend to be static.

Indeed, a map that included details about how work was done wouldn’t be useful. The point is to investigate a complex system and provide a clean and timeless view of elements that may benefit from further management and investment. A map with added information would quickly become outdated.

Why Are Business Capability Maps Important For Organizations?

Business capability maps are important for today’s organizations because they’re investing increasingly heavily in expansion and digital transformation, looking for ways to get bigger and better so they can outperform their competitors. When an organization grows rapidly, it can struggle to maintain awareness of what it has capacity to deliver, leading to capabilities being used sub-optimally.

By producing a business capability map, leaders of large organizations can reestablish an understanding of what they can do. This empowers them to make better use of their strengths and shore up their weaknesses. They can then focus their developmental efforts and feel confident that their actions will bear fruit.

Overall, operating without a business capability map (or business capability model, as the terms are often used interchangeably) makes it much more challenging to run a large organization, limiting how well resources can be allocated and hampering the development of valuable new use cases.

When Would You Use Business Capability Maps and How?

The purpose of a business capability map is to illuminate an organization’s infrastructure and market placement. While business capability maps are always vital assets for decision-makers, key events such as a post-merger integration or a digital transformation project can make the need for them more pressing.

Business capability mapping will help identify overlapping or redundant capabilities and unique differentiators for the new joint organization. This will allow for reallocating and reprioritizing resources to improve the new organization's efficiency.

Another good time to start mapping business capabilities is when there’s been a change in management or senior leadership. It’s not uncommon for even an enterprise-level business to rely on the knowledge of its most long-serving employees, not noticing that this vital knowledge has never been documented.

Mapping capabilities will provide new leadership with a clearer overview that can inform everything from application rationalization to SOP revision, ultimately improving the company’s efficacy, business continuity, and long-term success.

There’s also the challenging period preceding major investment or expansion. If a successful business has the funds and value proposition to seek large-scale growth, getting a capabilities map first will limit the investment risk and emphasize the most important areas.

Note that a business capability map itself won’t necessarily reveal anything interesting. By documenting core capabilities, though, it identifies some areas worth investigating, and that investigation may well reveal unexpected strengths or weaknesses.

Seven Benefits of Business Capability Mapping

There are many benefits awaiting organizations that invest in business capability mapping, but here are seven that are particularly significant:

1. Improved Structural Perspective

Outside of very small-scale operations, there is rarely a single person in an organization who knows everything about it. People in important positions must delegate, of course, as routing every decision through a single point is unsustainable. And since big organizations change massively over time, awareness gaps rapidly increase.

This lack of contextual insight is a significant problem for making decisions about a business. This is where a business capabilities map can prove extremely useful. Access to such information makes it much easier to see how a company fits together and whether it can reach its strategic objectives. When business leaders have access to a comprehensive list of everything they can do, they can have a better understanding of impact, which teams to involve, and which capabilities are critical to the business.

2. Stakeholder-Friendly Framing

There are countless ways to represent a business, but universal accessibility is a mission-critical concern. When a business capability map is well-defined, it serves as a vital bridge between technical and non-technical stakeholders and between different departments in discussions over initiatives and investments.

Defining a common language through business capabilities will ensure a standard understanding of the business, remove potential conflict, minimize duplication of work, and save costs.

3. Enhanced Risk Management

By identifying core capabilities, areas in need of investment, and vital interdependencies, business capability mapping highlights organizational vulnerabilities with the potential to cause damage. With a map completed, an organization can target notable risks and find ways to mitigate them.

For maximum impact, this process should take potential or pending regulatory changes into account. Proactively managing capabilities to lean into industry shifts can avoid compliance issues and get ahead of industry standards.

4. Smarter Strategic Alignment

Though boasting numerous capabilities is inarguably a strength for an organization, having an abundance of options can also cause problems—most notably when it comes to strategy. An excess of initiatives and key performance indicators can muddy the waters, leaving it unclear how overall business goals are being served.

Building a business capability map helps management and decision-makers understand the business's needs to achieve its strategy. This helps leaders make informed decisions about investments and priorities. An organization can then better align capabilities with its strategic goals, ensuring that resources are directed toward activities that support overall business objectives.

5. Better-Informed Technology Decisions

With its capabilities mapped, an organization can link its technology decisions to specific capabilities, ensuring that IT investments are justified and strategically tracked to monitor ROI. Technologies drawing resources but not supporting value-adding capabilities can be deprioritized or discontinued.

Additionally, mapping capabilities aid future readiness by identifying those that would benefit from technological innovation. Because it often takes time and effort to deploy a technological solution, looking to the future is a worthwhile activity.

6. Greater Operational Agility

The larger an organization grows, the slower it moves, stopping it from experimenting in the ways a startup can. Speed matters in the market when it comes to remaining competitive and up-to-date. Persistently missing out on opportunities to leverage the latest innovations can ultimately lead to stagnation and losing competitive edge.

A business capability map can equip an organization to make speedy changes to accommodate impactful shifts in business environments, industry standards, available technology, or competitor actions by furthering an understanding of how capabilities fit together and the dependencies they rely on. It also makes it possible to complete strategic plans more quickly and easily.

7. Operational Efficiency

Efficiency is vital for sustainable business. Working smarter by making better use of resources helps organizations of all sizes endure challenging circumstances, and business capability mapping plays a crucial role in making that happen. By charting and linking capabilities, maps uncover misconfigurations and bottlenecks within them that could be negatively affecting overall business performance.

Using a business capability map, an organization can streamline its processes and achieve superior levels of standardization, leading to greater operational consistency, output quality, cohesion, and general strategic alignment.

What Are Some Business Capability Mapping Challenges?

Any organization interested in mapping their business capabilities should be aware that the conceptual simplicity of a capability map belies the complexity of its creation. Here are the three biggest challenges inherent to capability mapping:

Collecting Data

Operational knowledge is split throughout organizations, so gaining a holistic understanding of a company’s capabilities can require engaging the wider organization for input. Inconsistent or poor-quality data can lead to an inaccurate capability map, undermining the entire initiative.

Since data regarding capabilities can be complicated, there’s no guarantee that teams outside the architecture or IT organization will see the value in contributing without a clear mandate from above. Ensuring that the data collected is consistent, accurate, and complete is also a significant challenge.

Learn how Ardoq’s suite of collaboration features helps ease data collection from across the wider organization: Automating Data Collection Across the Organization

Delineating Capabilities

How broad or narrow should a capabilities naming convention be? Is “Online Marketing” adequate to aid cross-organizational understanding, and at which level of the hierarchy should it sit? The answer is that it depends on the nature, skills, and value proposition(s) of the organization. There’s no absolute answer on how a business should map its capabilities. Determining the right level of granularity for each capability can be challenging. Too high-level, and the capabilities may lack actionable detail; too granular, and the map becomes overly complex and difficult to manage.

However, there is best practice guidance on defining business capabilities, which includes tips on capability naming and hierarchies. There are also industry capability models that businesses can reference to speed up their mapping initiatives.

To create a good business capability map, it’s important to determine the most important and urgent business questions that the organization is trying to address. The mapping initiative can then focus on the relevant areas connected to those questions first and expand the business capability map over time as needed.

Getting Project Support

Any business undertaking with a substantial cost must be sold to the person—or people—responsible for budget allocation. They must agree that the work is warranted and will ultimately return value. And though a business capability map is not difficult to understand, it may not seem like a reasonable priority to someone not familiar with the value of Enterprise Architecture.

Resistance to change, then, is a significant hurdle. Stakeholders may view capability mapping as a frustrating chore or worry that it could lead to a change in their preferred ways of working. Overcoming this resistance requires clearly explaining the benefits and value of capability mapping. This is particularly important as far as senior leadership is concerned, as without them the initiative may lack the necessary authority and resources.

It complicates things further that a business capability map requires some level of ongoing support as the organization changes. Instead of approving a one-off project, stakeholders must be willing to provide long-term commitment and understand its ongoing importance.

Given how much departmental perspectives can vary, there may be disagreements about how the capability map should be structured. Achieving a result that everyone is happy with takes conflict resolution skills and a willingness to iterate.

For all these reasons, getting over the first hurdle can be the toughest part of building a business capability map. Those spearheading the mapping project must fight hard to convince people of its value. It isn’t an impossible task, naturally, but it’s inevitably a challenge and something that must be carefully considered.

Key Components of a Business Capability Map Structure

A business capability map should include the following three key components to be useful and minimize complexity:

1. Selected Capabilities

In principle, it would be beneficial to account for all mappable capabilities, but it isn’t practical to include absolutely everything a business can do. Instead, a business should start by mapping the capabilities most essential to its operation, then get more granular if resources permit and it’s considered worthwhile.

For instance, while office management is a common capability, mapping it may not yield much if it does not contribute to the business’s value proposition and does not deliver additional ROI if cultivated.

2. Appropriate Classification

It’s important to classify your business capabilities according to how they deliver value to the business. At Ardoq, we find that a business capability typically falls into one of the following classifications:

Core: Capabilities that define the organization's proposition to the market, including its products and services, promoting them to the market and potential customers, setting up partnership and supply channels required to establish a business ecosystem within which to operate, provisioning and servicing those products and services, and maintaining ongoing relationships with clients and customers.
Supporting: Capabilities required to support the ongoing operations or trading of the organization through the management of finances, the provision of resources, the operation of Information Technology, and the ongoing control and governance of relations between the organization and the social environment it operates within, as well as the management of risk and provisions to ensure its continuing operation.
Strategic: Capabilities that set the direction for the organization, understanding environmental and market opportunities and challenges, defining the direction of travel and objectives, planning changes to operating models and IT provision, funding and prioritizing change initiatives, and tracking them to completion.

3. A Clear Hierarchy

As noted earlier, a business capability map should provide clarity and a logical hierarchy. Since the map needs to be updated over time (and, ideally, the structure adjusted on the fly), the best way to deliver clarity is to use a well-fitting presentation system.

Ardoq, for example, enables architecture teams to create dynamic business capability maps that can be visualized according to specific concerns or needs. Its data-driven visualizations are automatically up-to-date for sharing with key stakeholders.

Business Capability Map Examples

For a baseline idea of how business capabilities can be presented, take a look at the following map created in Ardoq Business Capability Map Example From Ardoq As shown above, Ardoq can present a map in multiple ways. On the left, the full map content is presented. On the right, a sidebar displays a flattened hierarchy for ease of navigation.

Note that these presentations are simple and accessible. The relationship management supporting them isn’t so simple, of course, but the final presentation-ready products are user-friendly in context.

Also, note that the language describing a capability must reflect the target audience. A capability such as “Extract-Transform-Load” is appropriate here but wouldn’t be if mapping a different business for non-technical stakeholders.

How to Create a Business Capability Map in 4 Steps

Creating a business capability map may be difficult, but at least the process is easy to understand. It generally requires four core steps:

1. Assess Business Needs

Business capabilities are ultimately there to serve business needs, so determining what an organization is trying to achieve (both overall and in specific departments or areas) is a rational first step toward mapping its capabilities. Doing this will require gathering information from stakeholders of all levels.

What it takes to bring success to an organization will shift over time, so external factors (including market trends, competitor actions, and regulatory changes) must also be considered. This is particularly significant for IT infrastructure, as having a well-optimized application stack can provide a competitive advantage.

Note that paying close attention to performance metrics during this step will lay the foundation for assessing capabilities accurately once they’ve been mapped. The more thorough this step can be, the easier it will be to quickly and effectively align capabilities with key organizational goals.

2. Identify Needed Capabilities

Once the business needs have been documented, it’s time to focus on identifying the capabilities that are required to fulfill them. While listing these capabilities, it’s important to rank them by how much they can contribute to strategic objectives and competitive edge.

Then, place these capabilities into a hierarchy. Because there will be various connections between capabilities, it’s vital to know which ones are mission-critical. It’s often hard to change the approach to a given capability without that change having knock-on effects on other capabilities, so a full-spectrum strategy is a necessity.

Note that this step doesn’t require looking at the organization’s actual list of capabilities, as that comes next. Instead, it picks out the capabilities the organization should have as a precursor to finding out what it actually has.

3. Identify Current Capabilities

4. Link Capabilities With Applications

The final step in business capability mapping spotlights the applications that make the capabilities possible and the processes that enable them. It isn’t possible to fully assess a capability's maturity and refinement without examining the technology resources used to develop it.

In addition to highlighting potential issues with the array of capabilities, this step can spot deficiencies in the technology stack. There may be redundant technologies that can be removed without impacting capabilities or room for new systems with the potential to deliver these capabilities with much greater efficiency.

Syncing up a business capability map with an application portfolio is an excellent way to align everything. Optimization demands detailed investigation, after all, so leave no stone unturned.

Business Capability Mapping Best Practices

For in-depth guidance on best practices, read the full Ardoq guide to defining business capabilities. For now, here are some high-level highlights:

Focus on present and future needs. Assessing capabilities should consider not only what the business is currently doing but also what it may need to do down the line. In addition to aiding innovation, this will help efforts to keep the map relevant for months or even years to come.
Engage everyone in the mapping process. Getting as many people as possible involved in mapping will ensure it reflects the actual reality of the organization.. Additionally, those who contribute to a business capability map are more likely to view it as worth using, so this is a way to encourage buy-in from all stakeholders.
Give capabilities detailed explanations. Without being placed into context, listed capabilities won’t be that useful for those seeking optimization. Each capability should be accompanied by a clear explanation of how it’s implemented, what it does, how it returns value, and how important it is to the organization.
Prioritize core objectives and obstacles. Painstakingly accounting for every capability and documenting each one to the same extent is a mistake, as some business capabilities are more important than others.

Ardoq Business Capability Mapping Adds Context to Your Change Process, Linking Systems, Processes, and People

Using Ardoq’s data-driven platform, organizations can produce dynamic business capability maps that vastly outperform the static charts commonly used in businesses. Our out-of-the-box solution for business capability mapping uses automatically generated and updated dashboards and visualizations to quickly kickstart your modeling initiative.

To find out just how powerful and flexible the Ardoq platform is, book a product demo today.

FAQs About Business Capability Maps

How Do Business Capability Maps Help in Strategic Planning?

Business capability maps help in strategic planning by making it easier to gauge how well the capabilities they chart are aligned with organizational goals. This allows leaders to easily make informed decisions regarding priorities, levels of investment, or tweaking overall objectives.

How Is a Business Capability Map Different From a Value Chain?

A business capability map identifies and organizes the core functions an organization needs to achieve its goals, focusing on "what" is done. A Value Chain analyzes the sequence of activities adding value, focusing on "how" value is created.

Can Business Capability Maps Be Customized to Fit Different Industries or Organizations?

Yes, a business capability map will change according to an organization's and industry's needs. It only needs to list capabilities clearly and thoroughly. Beyond that, it’s highly flexible. The categories used, the language, the visual structure—most elements can be adjusted to suit communication and clarity for a given organization.

How Often Should Business Capability Maps Be Updated?

While a business capability map is meant to define the timeless truths about an organization's work, it should still be updated regularly, typically annually, or whenever there are significant changes in the organization's strategy, structure, or external environment. Regular reviews ensure the map remains relevant and aligned with business goals.

How Can Business Capability Maps Drive Business Transformation or Improvement Initiatives?

Business capability maps drive transformation by clarifying essential functions, identifying gaps and inefficiencies, aligning initiatives with strategic goals, and facilitating better resource allocation. Thus, they enable targeted improvements and more effective change management.

More to Explore

Ardoq This article is written by Ardoq as it has multiple contributors, including subject matter experts.

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