The world of business is truly fascinating. Businesses provide livelihood to the majority of the human race. Even farmers also depend on businesses to sell their products and get inputs for farming.
However, to most of us, the world of business remains a mystery. In these series of blogs, we try to unravel the mysteries of business.
In this blog we will learn about the ‘Purpose of developing and managing business capabilities.’
Capabilities are abilities of an enterprise to act on or transform something that helps achieve a business goal or objective. Capabilities describe outcome of performance or transformation, not how it is performed. Capability maps provide a graphical view of capabilities. Each capability is found only once on a capability map, even if possessed by multiple business units. Capabilities impact value by increasing or protecting revenue, reducing or preventing costs, improving service, or achieving compliance. Capabilities themselves don’t have risks. Risks are due to lack of performance in capabilities.
Access capabilities to identify gaps between expected and actual performance expectations. Use capability gaps to determine what enterprise needs to do to accomplish its strategy.
The main underlying components of a business capability are:
● People: The competencies, skills, and workforce necessary to enable a talent base to execute the capability.
● Process: An efficient set of processes and activities designed to produce the desired outcome.
● Technology: Software applications, hardware infrastructure, and necessary tools to enable the capability.
● Governance: Compilation of clear roles and responsibilities, decision policies to facilitate integrations within and across other capabilities, functions, and business partners.
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