The significance of value in architecture

Traditionally, business processes have been the principal means of interaction between business stakeholders in enterprise architecture. The notion of business capability, a more recent concept, allows a better understanding of how software applications are supporting the business.

But because some new business capabilities have no supporting applications, while others have too many, this metric fails to capture the value of an agile, customer-driven organization that demands more rapid and continuous innovation and more fluid business strategies.

Daniel Lambert

The concept of value needs to be mastered and used by enterprise architects in a customer-driven enterprise, as shown in figure 1, which is extracted from my book entitled “Practical Guide to Agile Strategy Execution: Design, Architect, Prioritize, and Deliver your Corporate Future Successfully”. An organization usually provides several value propositions to its different customer segments (or persona) and partners that are delivered by value streams made of several value stages. Value stages have internal stakeholders, external stakeholders, and the customer as participants. Value stages enable customer journey steps, are enabled by capabilities and operationalized by processes (level 2 or 3 usually). The “TOGAF® Business Architecture: Value Stream Guide” 27-minute long video with Alec Blair, Steve Marshall and Brian Lail provides a very clear and simple explanation, should you want to know more. 

These value streams/stages cannot be realized out of thin air. An organization must have the ability to achieve a specific purpose, which is to provide value to the triggering stakeholder (i.e., the customer). This ability is an enabling business capability. Without this capability, the organization cannot provide value to customers. a capability enables a value stage and is operationalized by a business process. It is also owned by one business unit or a division within an organization and used by one or more business units or a division. A capability ordinarily needs to be supported by at least one application.

Practically, value propositions, value streams, and value stages are “Why” an initiative or a project needs to be done. A stakeholder is “Who” needs to participate to create value. The business process is “How” an organization can create value. Finally, the business capability is “What” the organization needs to manage or must do to create value. 

Important definitions

Each element mentioned in Figure 1 above can be defined as follows:

Business process. A business process is a group of related and structured activities made by individuals or equipment, which in a specific sequence produces a service or product (or serves a business goal or objective). Processes can be unstructured or preferably structured and repeatable.

Capability. A capability or a business capability is an ability that an organization may have or exchange to achieve a specific purpose or outcome.

Customer. One who purchases a product or service.

Customer Journey. The customer journey describes the full addition of all experiences that customers go through when interacting in a path of progressive steps with an organization before and after purchasing a product or service. Instead of looking at just a portion of a transaction or experience, the customer journey will document the complete experience of being a customer.

Product. A product offered by an organization is a good, an idea, a method, information, an object, or service conceived as a result of a process and serves a need or satisfies a want of a customer. A product is part of a value proposition.

Stakeholder. A stakeholder is a significant member of a group. The stakeholder concept is widely used in strategic management and corporate governance.

Service. A service is a valuable action, deed, or effort performed to satisfy a need or to fulfill a demand from a customer. A service is also an intangible product offered by an organization like an idea, a method, information, a human, or computer activity created as a result of a process and serves a need or satisfies a desire from a customer. A service is part of a value proposition. For example, accounting, banking, cleaning, consultancy, education, insurance, expertise, legal advice, medical treatment, publishing, and transportation are all services.

Value Proposition. A value proposition is a commitment to deliver value to the triggering stakeholder (usually a customer), who has the conviction that at least one benefit will be received after a purchase. A value proposition is made of one or several products or services.

Value Stage. A value stage is a specific phase within a value stream with at least one  identifiable participating stakeholder.

Value Stream. The value stream is an end-to-end compilation of value-adding activities that delivers a value proposition.

Enterprise architecture and the 5 phases of agile strategy execution

Let’s now examine each of the elements mentioned in Figure 1, and defined above, to figure out in which of the 5 stages of agile strategy execution they are the most relevant.

Daniel Lambert

Customers and partners are everywhere. Business stakeholders are involved in all but the fourth phase. IT stakeholders are mostly in initiative planning (phase 3) and agile delivery and execution (phase 4).

Value propositions, products, and services are mostly elaborated in business design and strategy (phase 1). Customer journeys, value streams, and value stages are examined while architecting transformation (phase 2). Business capabilities have a role in both architecting transformation and initiative planning (phases 2 and 3). As for business processes, they are essentially taken care of in the agile delivery and execution phase (phase 4) at the operational, tactical level where business process experts and agile experts need to meet clear objectives measuring tactics.

I hope I’ve been able to convince you that business architecture is not just about business capabilities and business processes but about architecting and optimizing value for your customers. Including all aspects of business architecture in your enterprise architecture practice will make your team much more valuable to both IT and business stakeholders.