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Value analysis with Value Stream and Capability modeling

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The new Archimate 3.1 has improved the strategy layer with major modeling objects related to value analysis: value stream and capability.

These objects are linked and answer major questions :
- [VALUE STREAM] What value do we deliver to customers ? What value do we want to deliver to customers ? This is the enterprise business model.
- [CAPABILITY] What operational model do we need to deliver value ? The capability model describes the operational model required to deliver value to customers.
You cannot succeed to transform a business model, enterprise activities without considering Value Stream & Capability analysis. Technology considerations are necessary but not sufficient.
Feel free to contact if you wish to get more support with your transformation projet.

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Value analysis with Value Stream and Capability modeling

  1. 1. Competensis® Christine Dessus chdessus@competensis.com +336 31 09 73 54 www.competensis.com COMPETENSIS® est une marque déposée. Ce document n’est pas libre de droit et ne doit pas être utilisé sans le consentement écrit de son ou ses auteurs.
  2. 2. Archimate 3.1 VALUE –VALUE STREAM - CAPABILITY 2
  3. 3. Sources Value - Value stream - Business capability3 By the OPEN GROUPE - ArchiMate® 3.1 Specifications, ISBN:1-947754- 30-0, Document Number:C197 -The Exploration & Mining Business Capability Reference Map:Concepts and Definitions, ISBN:1-937218-49-2, Document Number:C143 -Value Streams, ISBN:1-937218-85-0, Document Number:G170 Other reference -Transforming the Enterprise Using a Systems Approach James N. Martin, JMartin-IS11-EntSE- 110318.doc [http://incoseonline.org.uk/documents/groups/E SE/JMartin-IS11-EntSE-110318.pdf]
  4. 4. Archimate 3.1 :Value stream and Capability • With the new Archimate 3.1 , the strategy layer is now showing 2 major modeling objects related to value analysis :value stream and capability. • These objects are linked and answer 2 questions : Value - Value stream - Business capability4 [VALUE STREAM] What value do we deliver to customers ? What value do we want to deliver to customers ? This is the enterprise business model [CAPABILITY] What operational model do we need to deliver value ? The capability describe the operational model required to deliver value to customers.
  5. 5. Value stream and Capability usage Value - Value stream - Business capability5 Valuestream What value do we deliver to customers/clients/end- users/stakeholders ? What benefits are being offered ? Is the equation of customer value is still positive ? [Difference between value and costs with the client perspective] ? Capability What ability, competency do we need to deliver value to customers/clients/end- users/stakeholders ?
  6. 6. What is value ? Value -Value stream - Business capability 6
  7. 7. What is value ? • Originate from the old French « valoir », be worth • Something held to deserve, has importance, usefulness • Today’s sense :usefulness, advantage, profit, desirability.The financial and monetary perspective alone is too narrow • Fundamental to everything that an organisation does :the primary reason that an organisation exists is to provide value to one or more stakeholders ✓Fundation of a business model • Value producing activities are enabled by business capabilities Value - Value stream - Business capability7
  8. 8. Perspective Value is always defined from the recipient of the product or service perspective :customer, end-user or stakeholder. Value is the stakeholder perception of the worth. Value - Value stream - Business capability8
  9. 9. Role of business architects, enterprise architects • Model, measure and analyze the various way enterprise achieves value ✓Decompose activities and systems that contribute to the creation, capture and delivery of value Value - Value stream - Business capability9
  10. 10. Value analysis approach
  11. 11. Several approaches to value analysis • Value chains • Value network • Lean value stream • Value stream • We focus onVALUE STREAM. Other approaches are (quickly) explained in the annex, at the end of this chapter. Value - Value stream - Business capability12
  12. 12. What is a value stream ? Value - Value stream - Business capability13 End-to-end activities that create an overall result for customer, client stakeholder, end- user Represented by value stream stages Each stage creates an incremental value Value stream are internally or externally triggered
  13. 13. What is a value stream ? • Example Value - Value stream - Business capability14 Stakeholders with provider role Incremental value delivered End to end value delivered to clients/customers Stakeholders with provider role
  14. 14. Use of value stream • First step define a business model and transform it into an operating model • From value stream to business processes ✓This is not a one-to-one translation ✓A deep reflection is needed on how to build a business model and infer an organisation structure with business processes, business functions, actors, roles, activities, application services and components ✓Value stream take an outward (external) perspective. Business processes and business functions have an inward (internal) perspective Value - Value stream - Business capability15
  15. 15. Benefit ofValue Stream Mapping • To have a quick and easy way to get a snapshot of the entire enterprise business • Value stream represent all the work that the business needs to perform to deliver value • Envision & prioritize impacts of strategic plans • View business capabilities through the lens of value stream to get a customer based analysis and planning • Get more effective and operational models Value - Value stream - Business capability16
  16. 16. Relation with other business architecture concepts • Various concerns Concern Business architecture concept What we do ?What do we want to do ? Business capability Who does it ? Organization What value is delivered to clients ? Value stream How activities are performed at the operational level ? Business Process Business function What information is needed ? Business information What systems are used ? Application components Application services Facility, equipments, machines, tooling Value - Value stream - Business capability17
  17. 17. Metamodel Value - Value stream - Business capability18
  18. 18. Document theValue Stream
  19. 19. Document theValue Stream • modeling is never sufficient. • Models are the entrance gate to documentation. Value - Value stream - Business capability20 « Un schéma vaut mille mots mais mille et un mots valent mieux qu’un schéma. » « One picture is worth a thousand words, but one word is worth a picture »
  20. 20. Document theValue Stream Value stream Name Should be clearly understandable from the stakeholder perspertive Description Define the scope of activities Stakeholder The person or role that initiate the value stream Value Expressed in stakeholder terms What the stakeholder expects to receive Aggregation of the incremental value items Value stream stage Name What is achieved at this stage Description Purpose and activities performed Stakeholder Actors or roles who get measurable value from the value stage Value item Incremental value created Entrance criteria Starting condition or state change Exit criteria End state condition that shows the completion of the value stream stage :the required value has been created, delivered to stakeholders. Value - Value stream - Business capability21
  21. 21. Mapping capabilities to value stream stages Identify core capabilities required to enable each value stream stages Focus on critical capabilities that should be performed with a high level of quality to meet stakeholder expectations. Identify supporting capabilities that do not contribute to the core value stream Value - Value stream - Business capability22
  22. 22. Mapping capabilities to value stream stages Value - Value stream - Business capability23 Capabilities Value streamStakeholderswith provider role Stakeholder with client/end user role
  23. 23. Capabilities and value stream • Which should come first :value stream or business capabilities ? • Finally, it doesn’t really matter, just start with what looks easier to do ✓Value streams provide valuable stakeholder context into which business capabilities are needed. ✓Business capabilities describe the enterprise activities required to perform the value stream stages. Value - Value stream - Business capability24 [Rule n°1] Wish to start a new a value proposal from scratch • Define your business model • Elicitate value streams [Rule n°2] Wish to harvest existing business activities and application portfolio • Elicitate capabilities first
  24. 24. Value Stream Annex Other value analysis techniques Value -Value stream - Business capability 25
  25. 25. Other approaches to value analysis • Value chains • Value network • Lean value stream Value - Value stream - Business capability26
  26. 26. Value chain • By Michael Porter in his book « Competitive advantage » • Disaggregate a firms into its strategically- relevant activities in order to understant the behavior of costs and the existint potential source of competitive differentiation. Value - Value stream - Business capability27 Value chain analysis focus on provider outcomes and financial margins. Value stream focus on value delivered to the customer, not only on the internal value captured.
  27. 27. Value network • Visualizing sets of relationships from a dynamic whole systems perspective • Understanding, using, visualizing, optimizing internal and external value networks Value - Value stream - Business capability28 Value network focus on stakeholder relationships. Value stream focus on value delivered to the customer, not only on the internal value captured.
  28. 28. Lean value stream • Document, analyse and improve the flow of material and information required to produce a product or a service for a customer. • With the objective of identifing and eliminating wastes and to retain activities that create or increase value for the end-user. • Not designed for architectural purposes :decomposing the critical activities combined to produce value for a stakeholder. Value - Value stream - Business capability29 Lean value stream focus on identifying internal sources of waste. Value stream focus on value delivered to the customer, not only on the internal value captured.
  29. 29. Business capability Value -Value stream - Business capability 30
  30. 30. Sources By the OPEN GROUPE -The open groupTogaf series guide, Business capabilitiesG189 Other reference Value - Value stream - Business capability31
  31. 31. What is a business capability • Ability that a business may possess or use to achieve a specific business outcome • Describe what a business is supposed to do to create value for its stakeholders and customers, without attempting to explain how • It encapsulates people, process, technology and information • If you describe how people perform a task, it is a business process, not a capability Value - Value stream - Business capability32 Note for French readers: OUTPUT ≠ OUTCOME The output :the house you built The outcome :the money you get after the house sale minus the money spent to build it
  32. 32. Defining business capabilities • Use nouns and not verbs that resonate with business leaders and stakeholders • Forget the « management » word. ✓e.g. Sample management ➔ sampling • Identify CORE capabilities and ENABLING capabilities Value - Value stream - Business capability33 Business/evolving capabilities Respond to internal or external change and ensure the necessary designs and plans are in place to support the business evolution Operating/core capabilities Deal with the core operations and are specific to the industry Enabling capabilities These capabilities can be found in most organisations to ensure a smooth functionning of the organisation on a day- to-day basis.
  33. 33. Definingbusinesscapabilities Template to define capabilities in an organisation Name The name of a capability should indicate a well-defined behavior Short description Clarify the capability scope and purpose. Phrase it «The ability to… » Business outcome High-level, business-oriented results produced by capabilities of an organization Outcomes are closely related to requirements, goals, and other intentions.Outcomes are the end results, and goals or requirements are often formulated in terms of outcomes that should be realized. Capabilities are designed to achieve such outcomes. Capability type Business, core, enabling Domain, subdomain Domain :Supply-chain Sub-domain - Order-to-cash People Actors or roles, individual actors, business units, stakeholders Business Function Internal behaviour performed by Business Role that is required to produce a set of products and services.Very often, performed by a single role within an organisation. Business Functions group activities according to required skills, knowledge, and resources Business Process Business Processes describe a flow of activities. A series of actions or steps taken in order to achieve a particular output/outcome Information a unit of information that has relevance from a business perspective Technology application Application component,Application service, Application function Major technology components Maturity Non existent/Initial/Repeatable but intuitive/Defined/Managed & measurable/Optimized Value - Value stream - Business capability34
  34. 34. Defining business capability Value - Value stream - Business capability35
  35. 35. Business activity mapping Value -Value stream - Business capability 36
  36. 36. Business activity modeling Value - Value stream - Business capability37 • Contact us to get consulting services on value stream, capability and business activities modeling Model Objective Business process reference map Categorization of the business activities applicable, so that the enterpriseas whole and its suppliers and partners are in a position to speak a common language when they are considering the support of specific activities (processes) in the business. Busines processes are internal or external. Business capability reference map Definition of the reference set of business capabilities that exists in the organization. It enables the organization to analyze its ability to deliver successful business outcomes based on the reference business capabilities. Information reference map Describe the reference set of information components that exist in the industry and will provide guidance on the management of information as an asset, the selection of suitable applications, and the establishment of a common language in the organization. Application reference map Identify candidate logical applications that exist
  37. 37. Competensis® Christine Dessus chdessus@competensis.com +336 31 09 73 54 www.competensis.com COMPETENSIS® est une marque déposée. Ce document n’est pas libre de droit et ne doit pas être utilisé sans le consentement écrit de son ou ses auteurs.