What is Business Architecture?
What is business architecture? Business architecture is a discipline that explains the business domain of an enterprise and how it can be improved.
Business architecture is an architecture domain, that provides a partial representation of an entire enterprise architecture. The business architecture shows the organizational design, operations, business model and ability to execute meet its objectives.
Business architects develop a business architecture to translate the complexity of an organization into terms that assist stakeholders select and govern improvements.
What is Business Architecture
Business Architecture is one part of a complete enterprise architecture. It is used to guide change, and serves as a foundation for all other domains.
Whether to change & what to change?
How to change?
What to leave alone?
How to deal with failing change?
You use business architecture when you have a wicked problem. Problems that defy simple apple-to-apples comparison or consistent selection criteria.
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Business Architecture Models
Developing a business architecture will require developing several architecture models. Each architecture model describes a fundamental structure or group of structures.
Different models explain the enterprise in a different way. Taken together, the models describe the business architecture.
In the complete enterprise architecture, these models will link to other models that describe the other enterprise architecture domains.
To effectively manage your business architecture, you will need to implement an enterprise architecture tool.
Business Model
The Business Model describes how value is captured. We will often use Strategyzer's Business Model Canvas to develop and document a business model.
The Business Model Canvas works well for one product or service. As a modelling technique, it struggles with complex business models. In fact, one strength of the Business model canvas is identifying where the business model is becoming muddy.
The physical process of creating a business model artifact allows the architect to include the enterprise's strategic viewpoints into strategy development and business planning operations. The architect and the models he or she creates to bridge the gap between strategy and architecture in this scenario. This helps to enhance Enterprise Architecture's alignment with strategy, improve the overall quality of the architecture, and boost the architect's expertise and value to the business.
The TOGAF ADM's Phase B: Business Architecture can include business models as a critical input. The business model is very good at getting members of the leadership team to agree on new strategies or a new company direction. At an operational and organizational level, the Business Architecture is more successful at aligning the rest of the company on what has to be done (and how).
Operating Model
Many people confuse how they use an operating model with what an operating model is. An operating model describes how a business structures its core activities. The operating model shows the unique capabilities aligned with the enterprise's strategy, skilled leadership teams, or unique investment profiles.
The Operating model is an anchor for the enterprise. It is critical for the strategy's effectiveness and longevity.
We will often use a Kaplan Strategy Map to identify the changes or focus required in an operating model.
Value Chain
A value chain diagram is a high-level representation of an organization's activities to generate value. A classic Porter Value Chain diagram separates supporting activity from primary activity. Primary activity is sequences to show the hand-off of activity in a value chain. In a Porter diagram, we always put the supporting activity on the top - all supporting activity is a burden on the primary activity. The primary activity must produce enough customer value to pay for the supporting activities.
A value chain diagram is a high-level representation of an organization's interactions with the outside world. The value chain diagram, in contrast to the more formal functional decomposition diagram generated in Phase B, concentrates on presentational impact. The goal of this diagram is to swiftly onboard and align stakeholders for a specific change endeavor so that all participants are aware of the architectural engagement's high-level functional and organizational context. A common technique is to provide a simplified business process diagram and define the value components and adjustments required for each activity.
We can further break a Value Chain down into pillars or value streams.
Capability Map (Capability Model)
Capability Maps are used to focus attention. A good process model is comprehensive. A good functional model is both comprehensive and organizationally aware. A good capability model is a subset of the activities and organization. We should focus the subset on the activities that must be improved or sustained to reach the desired outcome.
Capability Models are usually presented as Business Capability Maps. A capability map is a visual representation of the capabilities required to achieve your business objectives. Use a capability map to identify gaps in your current capabilities and prioritize investments to fill those gaps.
Capability-based planning focuses on the enterprise's strategic business capabilities planning, engineering, and delivery. It is business-driven and -led, and it brings together all the activities from all areas of the business to attain the required capacity. Most, if not all, corporate business models are accommodated by capacity-based planning, which is especially beneficial in companies where a latent capability to adapt is required and we use the same resources for various capabilities. Business scenarios are frequently used to find and refine the demand for these competencies.
Capability-based planning is very important from an enterprise architecture standpoint. A capability stands in for everything required to perform some activity - people, process, technology. As a stand-in it provides a great tool for focusing improvement attention.
When we use a Business Model Canvas the capabilities in Key Resources and Activities and the customer channel leap off the page. When we use a Kaplan Strategy Map, everything placed on the map is a capability.
We use scores to explain improvements and changes in capability planning. See the Business Architecture Capability Assessment Guide.
Business Service Model
Business service models take two forms - either an internal approach, or an external one. An internal approach will look at the activities of the business as composable services. Externally, it looks at the various services a business offers.
Both service models will look at what the services are, how they are delivered, operational aspects, and the overall strategy for creating and capturing value.
Externally, pricing and revenue generation strategies are integral components of a business service model.
Information Model
The information model reflects the information that is important to an organization. The Information Model is built from the Subject Model, Subject Area Model, and Logical Document Models. Good data architecture will encompass the Information Model.
and about which it is likely to gather data (as entities), as well as linkages between pairs of those important things (as relationships). It encompasses all company information, not only digital information.
Each organization will have one Information Model, which describes all relevant data throughout the whole organization.
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Why Develop a Business Architecture?
Business Architecture is guides choice and delivers constraint.
Stakeholders use the business architecture development process to understand the implications of their options and select the best option. That option constrains everyone making change in the organization.
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Business Architecture Example
Example Business Architecture Capability Model
Example Business Architecture Capability Model in three Transition Statges
Business Architecture Definition of Value
Value-adding activity is:
- a customer will pay for it,
- it transforms (changes form, fit or function) a product or service,
- it is done the first time correctly.
All discussion of value-adding requires consideration of waste. We should consider every activity to be waste unless it:
- meets an explicit customer requirement
cannot be shown to be performed more economically
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Conclusion
Business architecture is a discipline that explains the business domain of an enterprise and how it can be improved.
Business architecture develops the business architecture domain. Each domain is a partial representation of an entire enterprise architecture.
The business architects develop business architecture models. Different models show separate aspects of the organization - it's design, operations, business model, information model and ability to change.
Business architects use these models and the business architecture to understand the organization. They work with other enterprise architects to develop architecture alternatives, and views. Business architects will often use scenario analysis.
Stakeholders use this information to select an improvement. The business architecture is a critical input to an architecture roadmap.
