Enterprise Capability Management

There are three different kinds of capability : organizational capability , system capability , and operational capability . Management of organizational capability is addressed in the article called Enabling Businesses and Enterprises to Perform Systems Engineering . Management of system capability is addressed by the SE Management activities described in the articles called Systems Engineering Management and Product and Service Life Management . Management of operational capability is described herein.

The enterprise has a current and planned (baseline ) operational capability, based on its past activities and on its current plans for change. The purpose of the enterprise capability management function is to ensure the possibility of “vectoring” the enterprise away from the current baseline trajectory to a more desirable position where it can better meet its enterprise strategic goals and objectives, given all its resource constraints and other limitations.

Operational capability may need to include elements identified in Information Technology Infrastructure Library (ITIL) best practices for operations management, starting with strategic operation planning (OGC 2009).

The Information Technology Infrastructure Library (ITIL) is a set of concepts and practices for Information Technology Services Management (ITSM), Information Technology (IT) development and IT operations. ITIL gives detailed descriptions of a number of important IT practices and provides comprehensive checklists, tasks and procedures that any IT organization can tailor to its needs. ITIL is published in a series of books, each of which covers an IT management topic (http://en.wikipedia.org/wiki/Information_Technology_Infrastructure_Library).

Needs Identification & Assessment

The enterprise has key stakeholders that have operational needs they would like the enterprise to address. These operational needs must be identified and assessed in terms of their relevance to the enterprise and the relative priorities of these needs compared to each other and to the priorities of the enterprise itself. The enterprise exists to meet these needs. An operational need is an expression of something desirable in direct support of the enterprise’s end user activities. End user activities include such things as retail sales, entertainment, food services, and business travel. An example of an operational need is: “Provide transportation services to commuters in the metropolitan area of London.”

In addition to operational needs, there are enterprise needs that relate to enabling assets the enterprise has in place that allow the mission to be accomplished. Enabling assets are things such as personnel, facilities, communication networks, computing facilities, policies and practices, tools and methods, funding and partnerships, equipment and supplies, and so on. An enterprise need is an expression of something desirable in direct support of the enterprise’s internal activities. Internal activities include such things as market forecast, business development, product development, manufacturing, and service delivery.

The purpose of the enterprise’s enabling assets is to effect state changes to relevant elements of the enterprise necessary to achieve targeted levels of performance. The enterprise “state” shown in the figure below is a complex web of past, current and future states (Rouse 2009). The enterprise work processes use these enabling assets to accomplish their work objectives in order to achieve the desired future states. enterprise architecture EA can be used to model these states and the relative impact each enabling asset has on the desired state changes.

Figure 1. Enterprise State Changes Through Work Process Activities (Source: (Rouse 2009), Used with Permission)

Enterprise needs are related to the enterprise efficiencies achieved through the performance of enterprise activities. The main goal of enterprise needs is to maximize the efficient utilization of enterprise assets. In other words: enhance productivity, and find and eliminate waste. Waste represents that which does not contribute to the enterprise mission or that cannot reasonably be expected to be accomplished by the enterprise. An example of an enterprise need is: “Decrease power required for operation of enterprise data centers.” (Power is a limited asset that consumes scarce enterprise funds that could be used for delivery of other more valuable services to its customers.)

Capability Identification & Assessment

The capabilities of an enterprise should exist for the sole purpose of meeting mission and enterprise needs. Hence, there will be both mission and enterprise capabilities to identify and assess as to how well they meet these needs. An example of an operational capability is: “Transport 150,000 passengers per hour among 27 nodes in the network.” A supporting enterprise capability might be: “Process 200,000 tickets per hour during peak loading.” There is a baseline capability due to capability development up to that point in time, plus any additional capability planned for the future. The desired levels of capability (based on needs assessment) are compared to the baseline capability to determine the capability gaps for the enterprise. This activity will also determine points of excess capability.

The gaps should be filled and the excesses should be eliminated. The projected gaps and excesses are sometimes mapped into several future timeframes to get a better understanding of the relative timing and intensity of change that might be required. It is typical to use time “buckets” like near-term, mid-term, and far-term, which, for some long-lasting capabilities, might correspond to five, ten, and twenty years out respectively. Of course, for fast-changing capabilities (like consumer products), these timeframes would necessarily be shorter in duration: for example, one, two and three years out.

Enterprise Architecture Formulation & Assessment

Enterprise Architecture analysis can be used to determine how best to fill these capability gaps and minimize the excess capabilities (or “capacities”). Usually a baseline architecture is characterized, for the purpose of understanding what one currently has and where the enterprise is headed under the current business plans. The needs and gaps are used to determine where in the architecture things need to be added, dropped, or changed. Each modification represents a potential benefit to various stakeholders, along with associated costs and risks for introducing that modification. Enterprise architecture can be used to provide a model to understand how the parts of the enterprise fit together (or don’t) (Giachetti 2010).

The enterprise architecture effort supports the entire capability management activity with enterprise-wide views of strategy, priorities, plans, resources, activities, locations, facilities, products, services, and so on (ISO/IEC 15288 2008, architectural design process; ISO/IEC 42010 2007; ISO 15704 2000).

Opportunity Identification & Assessment

The enterprise architecture is used to help identify opportunities for improvement. Usually these opportunities require investment of time, money, facilities, personnel, and so on. There might also be opportunities for “divestment,” which could involve selling of assets, reducing capacity , canceling projects, and so on. Each opportunity can be assessed on its own merits, but usually these opportunities have dependencies and interfaces with other opportunities, with the current activities and operations of the enterprise, and with the enterprise's partners. Therefore, the opportunities may need to be assessed as a “portfolio,” or, at least, as sets of related opportunities. Typically, a business case assessment is required for each opportunity or set of opportunities.

Enterprise Portfolio Management

If the set of opportunities is large or has complicated relationships, it may be necessary to employ portfolio management techniques. The portfolio elements could be bids, projects, products, services, technologies, intellectual property, etc., or any combination of these items. Examples of an enterprise portfolio captured in an architecture modeling tool can be found in (Martin 2005; Martin et al 2004; Martin 2003). References: (Kaplan 2009) on portfolio management, (ISO/IEC 2008) on projects portfolio management process.

Enterprise Improvement Planning & Execution

The results of the opportunity assessment are compiled and laid out in an enterprise plan that considers all relevant factors, including system capabilities, organizational capabilities, funding constraints, legal commitments and obligations, partner arrangements, intellectual property ownership, personnel development and retention, and so on. The plan usually goes out to some long horizon, typically more than a decade, depending on the nature of the enterprise’s business environment, technology volatility, market intensity, and so on. The enterprise plan needs to be in alignment with the enterprise’s strategic goals and objectives and with leadership priorities.

The planned improvements are implemented across the enterprise and in parts of the extended enterprise where appropriate, such as suppliers in the supply chain, distributers in the distribution chain, financiers in the investment arena, and so on. The planned changes should have associated performance targets and these metrics should be monitored to ensure that progress is being made against the plan and that the intended improvements are being implemented. As necessary, the plan is adjusted to account for unforeseen circumstances and outcomes. Performance management of enterprise personnel is a key element of the improvement efforts.

Enterprise Capability Change Management

In an operational context (particularly in defense) the term “capability management” is associated with developing and maintaining all aspects of the ability to conduct certain types of missions in a given threat environment. In an industrial context, capability refers to the ability to manage certain classes of product and service through those parts of their life cycle that are relevant to the business. Changes to enterprise capability should be carefully managed, to ensure that current operations are not adversely affected (where possible) and that the long term viability of the enterprise is maintained. These seven lenses can be used to facilitate change management: strategic objectives, stakeholders, processes, performance metrics, current state alignment, resources, and maturity assessment (Nightingale and Srinivasan 2011).

Capability Management is becoming more often recognized as a key component of the business management tool suite:

Capability management aims to balance economy in meeting current operational requirements, with the sustainable use of current capabilities, and the development of future capabilities, to meet the sometimes competing strategic and current operational objectives of an enterprise. Accordingly, effective capability management:

Assists organizations to better understand, and effectively integrate, re-align and apply the total enterprise ability or capacity to achieve strategic and current operational objectives; and

Develops and provides innovative solutions that focus on the holistic management of the defined array of interlinking functions and activities in the enterprise's strategic and current operational contexts. “ (http://en.wikipedia.org/wiki/Capability_management)

There is a widespread perception that capability management is only relevant to defense and aerospace domains. However, it is becoming more widely recognized as key to commercial and civil government efforts:

In business, capabilities are the Rosetta Stone for translating strategy into action. A relatively new topic outside of Defense, Capability Management is being applied to align organizations to strategic intent and to accelerate results. Capability Management (illustrated in steps 4-9 of the figure below) is closely tied to Operating model and Enterprise architecture.” (http://en.wikipedia.org/wiki/Capability_Management_in_Business)

Figure 2. Illustration of Capability Management in Business (Source: Wikipedia, 2010, Permission to Use the Work is released Under CC-BY-SA, URL is http://en.wikipedia.org/wiki/Capability_Management_in_Business)

References

Citations

Giachetti, R. E. 2010. Design of enterprise systems: theory, architecture, and methods. Boca Raton, FL, USA: CRC Press.
ISO. 2000. Industrial automation systems -- requirements for enterprise-reference architectures and methodologies. Geneva, Switzerland: International Organization for Standardization (ISO), ISO 15704:2000.
ISO/IEC. 2008. Systems and software engineering - system life cycle processes. Geneva, Switzerland: International Organization for Standardization (ISO)/International Electrotechnical Commission (IEC), ISO/IEC 15288:2008 (E).
———. 2007. Systems and software engineering -- recommended practice for architectural description of software-intensive systems. Geneva, Switzerland: International Organization for Standards (ISO)/International Electrotechnical Commission (IEC), ISO/IEC 42010:2007.
Kaplan, J. 2009. Strategic IT portfolio management: Governing enterprise transformation. Washington, DC: Jeffrey Kaplan PRTM.
Martin, J. N. 2005. Using an enterprise architecture to assess the societal benefits of earth science research. Paper presented at 15th Annual International Council on Systems Engineering (INCOSE) International Symposium, Rochester, NY, USA.
———. 2003. On the use of knowledge modeling tools and techniques to characterize the NOAA observing system architecture. Paper presented at 13th Annual International Council on Systems Engineering (INCOSE) International Symposium, Arlington, VA, USA.
Martin, J. N., J. Conklin, J. Evans, C. Robinson, L. Doggrell, and J. Diehl. 2004. The capability integration framework: A new way of doing enterprise architecture. Paper presented at 14th Annual International Council on Systems Engineering (INCOSE) International Symposium, 20-24 June, 2004, Toulouse, France.
Nightingale, D., and J. Srinivasan. 2011. Beyond the Lean Revolution: Achieving Successful and Sustainable Enterprise Transformation. New York, NY: AMACOM Press.
OGC (Office of Government Commerce). 2009. ITIL V3 Foundation Handbook. The Stationery Office.
Rouse, W. B. 2009. Engineering the enterprise as a system. In Handbook of systems engineering and management., eds. A. P. Sage, W. B. Rouse. 2nd ed. New York, NY: Wiley and Sons, Inc.

Primary References

Kaplan, J. 2009. Strategic IT Portfolio Management: Governing Enterprise Transformation. Washington, DC: Jeffrey Kaplan PRTM.

Nightingale, D., and J. Srinivasan. 2011. Beyond the Lean Revolution: Achieving Successful and Sustainable Enterprise Transformation. New York, NY: AMACOM Press.

Rouse, W. B. 2009. Engineering the Enterprise as a System. In Handbook of systems engineering and management., eds. A. P. Sage, W. B. Rouse. 2nd ed. New York, NY: Wiley and Sons, Inc.

Additional References

Dahmann, J. S., J. A. Lane, and G. Rebovich. 2008. Systems engineering for capabilities. CROSSTALK: The Journal of Defense Software Engineering. November 2008.

Hillson, D. 2004. Effective opportunity management for projects. Petersfield, Hampshire, UK; New York, NY: Rick Doctor & Partners; Marcel Dekker, Inc.
Lillehagen, F., J. Kostie, S. Inella, H. G. Solheim, and D. Karlsen. 2003. From enterprise modeling to enterprise visual scenes. Paper presented at International Society for Pharmaceutical Engineering (ISPE) Conference on Concurrent Engineering (CE), 26-30 July, 2003, Madeira Island, Portugal.
McGovern, J., S. Ambler, M. Stevens, J. Linn, V. Sharan, and E. Jo. 2004. A practical guide to enterprise architecture. New York, NY: Prentice Hall.
Rechtin, E. 1999. Systems architecting of organizations: Why eagles can't swim. Boca Raton, FL, USA: CRC Press.
Roberts, J. L. 2006. Enterprise analysis and assessment. Paper presented at 16th Annual International Council on Systems Engineering (INCOSE) International Symposium, 9-13 July, 2006, Orlando, FL, USA.

Article Discussion

Alice (review):

This article starts out: "As defined above," -- there is nothing defined above. The article needs to stand on its own and it does, from this point forward.
There should be a similar introduction in 'Enterprise SE Process Activities' as there is here.
Wow -- this article needs to be reconciled with "Organizing..." "Assessing..." and "Developing Systems Engineering Capabilities within Businesses and Enterprises" -- this one is managing the operational capability of the enterprise and how is that different?

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