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Business Capability Definition: What is a Capability?

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Business Capability Definition - What does capability mean in business architecture?

Why do we need a business capability definition? Because there is a lot of confusion about the word “business capability” or just the word “Capability” or “Capabilities” even among practitioners of business architecture discipline.  

Before we delve into what is the definition of “Business Capability” or “Business Capabilities” as we use in the context of Business Architecture and Business Capability Modeling, let’s look at what dictionaries define the term, “Capability” itself. 

Capability Definition: Defining the word “Capability” in general usage

Dictionary.com defined the word “Capability” as follows: 

Capability: 

  1. the quality of being capablecapacity; ability: His capability was unquestionable.
  2. Usually capabilities. Qualities, abilities, features, etc. that can be used or developed; potential: Though dilapidated, the house has great capabilities.

Merriam-Webster defines the word “Capability” as follows: 

Capability: 

1the quality or state of being capable

2a feature or faculty capable of development 

3the facility or potential for an indicated use or deployment

Business Capability Definition:

So, what is a Business Capability? Let’s define Capability in the Business Architecture realm.

A business capability, a key component of business architecture, is an expression of what business does and can do.  A business capability denotes the “What” a business can do, whereas a business process outline how a particular activity gets done.  

At an elemental level, a business capability is the encapsulation of the underlying functionality expressed abstractly.   

Confusion about the definition of a Business Capability: 

Despite several cogent explanations and description of what is a business capability, within the enterprise realm, there is a lot of confusion.  Is “Invoicing” a capability, or is it a process, or is it an activity? 

Furthermore, the concept of CMM (Capability Maturity Model) pertains to processes, not necessarily capabilities.  Obviously, one can use the tenets of a capability maturity model – five levels of maturity – and then adapt it to the needs of assessing a business capability. 

When a CEO says, “Our company has the capability to execute well.” Or if she says, “Our company has tremendous innovation capabilities,” do they mean the word in the meaning of a traditional business capability or is it something else? 

When someone says, “You have to build your leadership capability,” do they mean it as a “capability” or a “competency”? 

Difference between Capability, Process, Value Stream, Activity:

That brings up a great question? How does a capability differ from a process, or activity, or a method or a system? Let’s go with the concept of invoices, which are common in most types of businesses. 

Capability: For example, “Invoice Management” is a capability;

Process: “Generating Invoices” is a process

Activity: “Mail Invoices” is an activity

Value Stream: “Invoice to Receipt” is a value stream

System/Application: “ABCD Invoicing Software” is the system used to realize the Invoice Management capability. 

SOA Service or Microservice: “Invoice” service could be an SOA service or a Microservice (which pretty much does the same thing as the system/application, but as a concept of new generation architecture paradigm.)

Is Capability a Noun, or a Verb, or something else?

While there are a lot of discussions and debates about whether a capability is a noun or a verb or a noun-verb or a gerund, we at Capstera are pragmatists and not purists. Hence we suggest your company should use what makes sense without making the business capability map replete with the suffix “Management” or “Enablement” or another word to make it a noun.  

For example, “Invoice Management” is a capability; “Generating Invoices” is a process; “Mail Invoices” is an activity; “Invoice to Receipt” is a value stream; “ABCD Invoicing Software” is the system used to realize the Invoice Management capability. 

Capabilities come together to make a Business Capabilities Map: A set of capabilities which spans the enterprise functions constitute a capability map. A cluster of the higher level capabilities manifests an enterprise value chain. 

A business capability is an atomic building block to model an enterprise and is a crucial input into business architecture, IT enablement, and related disciplines.  

Irrespective of what business capability definition you use, the important thing is to maintain the structural integrity and internal coherence of your business capabilities modeling endeavor. 

Related Insights: 

Please review how to build a business capability map.  You may also be interested in sample business capability maps to accelerate your business capability modeling efforts. 

Or learn about the definitions of enterprise architecture and business architecture. 

What is your business capability definition?  Do you agree with our description and explanation of the business capability?

Here are a few other things you can learn about the business architect on Capstera website:

What does a business architect do? Business Architect Role Definition 

What is the career path of a business architect? Business Architect Career Path

What are some certifications available for a business architect? Business Architecture Certifications

Training for business architects: Business Architecture Training Program

The job of a business architecture leader: Business Architecture Leader

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