Business enterprises, irrespective of their location, size, industry or form i.e., brick and mortar or virtual, all define their vision, goals and objectives that they aspire to achieve. To achieve these, business enterprises create and deliver value to their respective customers in the form of products, services or both.
To create, deliver and manage these products and services through their lifecycles, business enterprises require a set of resources and capabilities.
According to ITILv3, resources include financial resources, infrastructure, applications, information and number of people that a business enterprise needs to create and deliver the envisioned product and services. Business enterprises also require specific capabilities to ensure that acquired resources are deployed appropriately to create and deliver these products and services in a manner that makes each business enterprise unique with distinct set of products and/or services.
While resources are relatively easier to acquire and may be readily available, capabilities represent uniqueness and may be hard to acquire. Capabilities, accordingly to ITILv3, includes management of a business enterprise (including leadership), its organization, processes that it follows to create and deliver those unique products and/or services, knowledge that it creates and requires to make informed decisions and unique people with distinctive skills and competencies. Capabilities enable business enterprises to make use of available and acquired resources in a way that leads to the creation of exclusive products and services. Departure of key capabilities may have tremendous impact on the ability of business enterprises to continue to operate in ways that created those distinguishing set of products and services to begin with. For instance, when Steve Jobs passed away, we saw a direct impact on Apple stock prices because on that day, Apple did lose a very specialized and unique capability without which Apple would not be able to produce as innovative products and services as it used to. Did it prove to be true? A discussion for another day.
Business enterprises need to define what specific resources and capabilities they will need to ensure that they are able to create and deliver their products and/or services and generate the desired value for their customers. Operating models or, commonly known as, Target Operating Models (TOMs) enable business enterprises to define what specific resources and capabilities the business enterprise will need and how it will need operate in future with these resources and capabilities such that each business enterprise is able to realize it’s defined vision, goals and objectives through creation and delivery of unique products and/or services in manners that generates expected value for its customers.
Defining and implementing these Target Operating Models requires a disciplined approach and pragmatic application of some of the industry best practices and frameworks including TOGAF, ITILv3, COBIT, PMBOK, SOA, SCRUM, RUP, SAFe and other. During this blog series, we will learn about these and other related topics.