Business Capability Mapping for Automotive Companies

1. Automotive Capability Mapping: Blueprint for Digital Transformation www.capstera.com 1

2. From Assembly Line to Digital Highway: Mapping Your Path to Automotive Excellence The automotive industry is experiencing its most significant ▪ transformation since the introduction of the assembly line. Electrification, autonomous driving, connected services, and changing consumer preferences fundamentally force manufacturers and suppliers to reimagine their business models. This seismic shift requires a clear understanding of organizational capabilities to prioritize investments and drive strategic change. Business capability mapping gives automotive companies the ▪ architectural foundation to navigate this complex transformation landscape. By creating a comprehensive inventory of what the organization does—separate from how it does it—capability maps enable leaders to align technology investments with business strategy, identify critical gaps, and create roadmaps for digital transformation. www.capstera.com 2 2

3. Understanding Business Capability Maps in Automotive 1 Capability mapping is an essential business architecture practice that creates a structured view of what your automotive organization does, independent of how it performs these functions. This foundation enables strategic alignment across the enterprise. •Capability Definition: A business capability represents a unique business function that delivers specific value, such as "Vehicle Design," "Supply Chain Management," or "Connected Services Development." •Strategic Alignment: Capability maps create a common language between business and technology leaders, ensuring IT investments directly support strategic automotive priorities. •Transformation Foundation: The capability map serves as the stable reference architecture against which transformation initiatives can be planned, prioritized, and measured. •Organizational Lens: Unlike process maps that focus on activities and workflows, capability maps provide an organizational view that remains stable even as processes and technologies evolve. •Value Chain Integration: Comprehensive automotive capability maps span the entire value chain from product conception through manufacturing, sales, service, and mobility services. www.capstera.com 3

4. The Structure of Automotive Capability Maps 2 An effective automotive capability map employs a hierarchical structure that provides both strategic overview and operational detail. This multi-level approach enables different stakeholders to engage at appropriate levels of abstraction. •Level 1 - Capability Domains: High-level groupings such as "Product Development," "Manufacturing Operations," "Customer Experience," and "Mobility Services" that align with major business functions. •Level 2 - Capability Groups: Mid-level categories within each domain that represent related capabilities, such as "Vehicle Platform Management" or "Connected Vehicle Operations." •Level 3 - Business Capabilities: Specific business functions that deliver discrete value, such as "Battery Management System Design" or "Over-the-Air Update Management." •Level 4 - Capability Components: Detailed components that constitute a capability, such as "Battery Thermal Modeling" or "Software Version Control." •Cross-Cutting Capabilities: Horizontal capabilities like "Data Management," "Regulatory Compliance," and "Sustainability" that span multiple domains across the automotive enterprise. www.capstera.com 4

5. Automotive-Specific Capability Domains 3 The automotive sector requires specialized capability domains that reflect its unique value chain, from advanced product development through manufacturing, distribution, and emerging mobility services. •Product Innovation Capabilities: Capabilities spanning traditional vehicle engineering, electrification technologies, autonomous systems development, and software-defined vehicle architectures. •Manufacturing Excellence: Production capabilities covering everything from traditional assembly operations to advanced manufacturing technologies, supply chain integration, and quality management. •Customer Experience Ecosystem: Capabilities that manage the complete customer journey from digital engagement through purchase, ownership experience, and loyalty programs. •Mobility Services Platform: Emerging capabilities required to deliver connected services, subscription offerings, fleet management, and mobility-as-a-service business models. •Sustainability Operations: Capabilities supporting circularity, carbon footprint reduction, sustainable material sourcing, and compliance with environmental regulations. www.capstera.com 5

6. Step 1 - Prepare for Capability Mapping 4 Successful capability mapping initiatives begin with thorough preparation to ensure stakeholder alignment, appropriate scope, and clear objectives. •Executive Sponsorship: Secure support from automotive C- suite leaders who understand the strategic value of capability mapping in driving transformation. •Cross-Functional Team: Assemble a diverse team representing product development, manufacturing, IT, customer experience, and emerging business units focused on services and mobility. •Scope Definition: Clearly define whether the scope encompasses the entire enterprise or focuses on specific domains such as product development or connected vehicle operations. •Success Criteria: Establish specific objectives for the capability mapping initiative, such as technology rationalization, merger integration, or digital transformation planning. •Resource Allocation: Ensure dedicated resources with business architecture expertise and automotive domain knowledge to drive the mapping process. www.capstera.com 6

7. Did You Know According to McKinsey research, automotive companies ▪ that base their digital transformation on comprehensive capability mapping are 2.5 times more likely to achieve their transformation objectives than those using traditional project-based approaches. www.capstera.com 7

8. Step 2 - Develop the Initial Capability Inventory 5 Creating the initial capability inventory requires a structured approach that balances industry standards with organization- specific requirements. •Industry Reference Models: Leverage automotive industry reference models as starting points to accelerate development and ensure comprehensive coverage. •Stakeholder Workshops: Conduct facilitated sessions with business domain experts to identify, define, and validate capabilities across the automotive value chain. •Existing Documentation Review: Analyze strategic plans, organizational charts, process documentation, and system inventories to identify implicit capabilities. •Hierarchy Development: Establish the proper hierarchical structure that provides both strategic overview for executives and sufficient detail for implementation teams. •Capability Definition: Create clear, consistent definitions for each capability, focusing on what the function delivers rather than how it operates. www.capstera.com 8

9. Step 3 - Enhance with Capability Attributes 6 Enriching capability maps with key attributes transforms them from static models into dynamic tools for transformation planning and investment prioritization. •Strategic Importance: Classify capabilities as differentiating, competitive, or basic to focus transformation investments on areas of strategic value. •Current Maturity: Assess the present performance of each capability using a structured maturity model specific to automotive functions. •Target State: Define the desired future maturity level based on strategic objectives such as electrification, autonomous development, or service business growth. •Technology Enablement: Map the systems and technologies that support each capability to identify redundancies, gaps, and modernization opportunities. •Organizational Alignment: Connect capabilities to responsible organizational units, revealing accountability gaps or overlaps. •Data Requirements: Document the data entities created, consumed, and managed by each capability to inform data governance and architecture. www.capstera.com 9

10. Step 4 - Apply Heat Mapping for Strategic Insight 7 Heat mapping techniques visually highlight capability gaps, priorities, and transformation opportunities across the automotive enterprise. •Maturity Gap Analysis: Visualize the difference between current and target maturity levels to identify critical improvement opportunities in areas like connected vehicle services or direct-to-consumer sales. •Competitive Benchmarking: Compare capability maturity against industry leaders and disruptive entrants to identify strategic weaknesses in areas such as software development or battery technology. •Investment Mapping: Overlay current and planned investment portfolios onto the capability map to identify over- invested and under-invested areas. •Pain Point Correlation: Connect known operational issues and customer pain points to capability gaps, creating clear links between capability improvements and business outcomes. •Transformation Impact: Assess how major transformation initiatives such as electrification or autonomous development will impact capability requirements across the organization. www.capstera.com 10

11. Step 5 - Connect to Related Architecture Views 8 Maximizing the value of capability maps requires integration with other architectural views that provide additional context and relationships. •Value Stream Alignment: Connect capabilities to automotive value streams to understand how they contribute to end-to-end customer journeys and operational processes. •Information Flow Mapping: Document how information flows between capabilities to identify integration requirements and data management opportunities. •Technology Architecture: Link capabilities to application portfolios, technology platforms, and infrastructure components to drive IT rationalization and modernization. •Ecosystem Integration: Map interfaces between internal capabilities and external partners, suppliers, and service providers that constitute the automotive ecosystem. •Organizational Structure: Overlay organizational responsibilities onto capabilities to identify governance issues, accountability gaps, and collaboration opportunities. www.capstera.com 11

12. Did You Know A 2023 study by Gartner found that automotive ▪ organizations using pre-built industry capability maps reduced their time-to-value by 65% compared to those building maps from scratch, while also achieving more comprehensive coverage of industry-specific functions. www.capstera.com 12

13. Step 6 - Develop Capability-Based Roadmaps 9 Capability maps provide the foundation for more effective transformation roadmaps that connect strategic objectives to specific capability enhancements. •Strategic Alignment: Ensure roadmaps directly connect capability improvements to strategic objectives such as electrification targets, software-defined vehicle development, or mobility service expansion. •Investment Sequencing: Prioritize capability investments based on strategic importance, current performance gaps, and dependencies between related capabilities. •Technology Rationalization: Develop application and technology roadmaps that reduce duplication and technical debt while enhancing strategic capabilities. •Skills Development: Create workforce development plans that address capability gaps through training, hiring, and partnership strategies. •Incremental Delivery: Structure roadmaps to deliver incremental business value through capability enhancements rather than monolithic program approaches. 13 www.capstera.com 13

14. Step 7 - Maintain and Evolve the Capability Map 10 Capability maps must evolve as the automotive industry and organization change, requiring governance processes to maintain their relevance and value. •Governance Framework: Establish clear ownership, change management processes, and review cycles for the capability map. •Business Architecture Integration: Embed capability mapping into broader enterprise architecture and strategic planning processes. •Periodic Reassessment: Schedule regular reviews of capability definitions, attributes, and relationships to reflect industry evolution and organizational learning. •Transformation Alignment: Update the capability map to incorporate new strategic priorities such as emerging connected services or sustainability initiatives. •Tool Enablement: Implement appropriate architecture tools to maintain the capability inventory, visualize relationships, and share insights across the organization. www.capstera.com 14

15. Accelerating Value with Pre-Built Capability Maps 11 Pre-built industry-specific capability maps dramatically reduce time-to-value and ensure comprehensive coverage while allowing for customization to your unique automotive business. •Speed to Implementation: Pre-built automotive capability maps reduce development time from months to weeks, accelerating transformation planning and strategic alignment. •Industry Best Practices: Leverage capability definitions and structures developed from extensive automotive industry experience and benchmarking of leading organizations. •Comprehensive Coverage: Ensure no critical capabilities are overlooked by starting with a complete industry model that spans traditional automotive functions and emerging digital domains. •Cost Efficiency: Reduce the substantial resource investment required to develop capabilities from scratch, redirecting those resources to value-adding analysis and planning. •Customization Framework: Start with a proven industry model that can be tailored to your organization's specific terminology, strategic focus, and operational structure. •Reduced Risk: Minimize the risk of incomplete or inconsistent capability definitions that can undermine the credibility and utility of the capability mapping initiative. www.capstera.com 15

16. Tailoring Pre-Built Maps to Your Automotive Context 12 While pre-built maps provide an excellent foundation, effective customization ensures alignment with your specific automotive business model and strategic priorities. •Strategic Prioritization: Adjust capability emphasis based on your position in the value chain, whether as an OEM, tier supplier, technology provider, or mobility service operator. •Business Model Alignment: Customize capabilities to reflect your unique approach to vehicle development, manufacturing, distribution, or mobility services. •Terminology Harmonization: Adapt industry-standard terminology to match the language used within your organization to improve adoption and understanding. •Capability Depth: Adjust the hierarchical detail based on areas of strategic focus, such as deeper definition of electrification or autonomous driving capabilities. •Governance Integration: Align the customized capability map with existing governance structures and decision-making processes to drive adoption. www.capstera.com 16

17. Did You Know Forrester research indicates that automotive companies ▪ with mature capability mapping practices achieve 28% higher returns on digital transformation investments compared to industry averages. www.capstera.com 17

18. Special Considerations for Automotive Suppliers 13 Automotive suppliers face unique capability mapping challenges that require specialized approaches to address their position in the value chain. •OEM Alignment: Develop capability maps that clearly show interfaces with OEM customers, highlighting dependencies and integration requirements. •Multi-Industry Exposure: For diversified suppliers, create capability maps that accommodate different industries with varying product development approaches and timelines. •Technology Specialization: Emphasize deep technical capabilities in specialized domains such as electronics, lightweight materials, or battery systems. •Innovation Pipeline: Develop detailed capabilities around technology research, intellectual property management, and product innovation processes. •Manufacturing Flexibility: Map capabilities that enable agile production systems capable of responding to volatile automotive demand and customization requirements. www.capstera.com 18

19. Emerging Capabilities for Future Mobility 14 Forward-looking automotive capability maps must incorporate emerging functions required for future mobility business models and technologies. •Software-Defined Vehicle: Capabilities supporting over-the- air updates, feature activation, and ongoing software lifecycle management for increasingly software-centric vehicles. •Data Monetization: Capabilities enabling the collection, analysis, and commercialization of vehicle data through partnerships and direct service offerings. •Autonomous Operations: Specialized capabilities spanning autonomous system development, validation, deployment, and ongoing management. • Mobility Services: Capabilities supporting new business models around shared mobility, subscription services, and integrated transportation offerings. •Battery Lifecycle: Capabilities covering battery development, production, in-vehicle management, second-life applications, and eventual recycling. www.capstera.com 19

20. Capability Mapping Success Stories 15 Leading automotive organizations have leveraged capability mapping to drive significant transformation outcomes and competitive advantages. •Digital Transformation Acceleration: A major European automaker used capability mapping to prioritize digital investments, resulting in 30% faster implementation of critical customer-facing systems. •Post-Merger Integration: A tier-one supplier leveraged capability mapping to rationalize redundant operations after acquisition, identifying $120M in annual cost synergies. •EV Transition Planning: A global OEM employed capability mapping to identify critical gaps in electrification capabilities, informing build/buy/partner decisions that accelerated time-to- market by 18 months. •IT Rationalization: An automotive components manufacturer used capability mapping to reduce application portfolio by 22% while improving support for strategic capabilities. •Organizational Redesign: A mobility services provider aligned organizational structure to key capabilities, reducing decision cycles by 40% and improving cross-functional collaboration. www.capstera.com 20

21. Takeaway Business capability mapping provides the architectural foundation essential for navigating the automotive industry's unprecedented transformation. By creating a structured view of what your organization does—separate from how it does it— capability maps enable leaders to align technology investments with business strategy, identify critical gaps, and create effective transformation roadmaps. While developing capability maps requires significant effort and expertise, pre-built industry models offer a powerful shortcut that accelerates time-to-value while ensuring comprehensive coverage. As the automotive industry continues its evolution toward software-defined vehicles, electrification, and new mobility models, capability mapping will remain an indispensable tool for aligning organizational resources with strategic priorities and driving successful transformation. 21 www.capstera.com 21

22. Next Steps 1. Assess your current state: Evaluate existing business architecture artifacts and determine how a capability mapping initiative can address specific strategic challenges. 2. Secure executive sponsorship: Identify and engage key stakeholders who will champion the capability mapping initiative and ensure cross-functional participation. 3. Determine your approach: Decide whether to build capabilities from scratch, leverage industry reference models, or invest in pre-built capability maps based on your timeline, resources, and objectives. 4. Start with a focused scope: Consider beginning with a specific domain of strategic importance, such as connected vehicle capabilities or electrification, to demonstrate value quickly. 5. Establish governance: Define clear ownership, maintenance processes, and integration points with other architectural disciplines and strategic planning activities. 6. Connect to transformation: Use the capability map to inform specific transformation initiatives, technology investments, and organizational changes needed to achieve strategic objectives. 22 www.capstera.com 22

23. Capstera is a treasure trove for Business and Enterprise Architects. ▪ Capability Maps for Various Functions and Sectors. ▪ Value Streams ▪ Business Data Models ▪ Insights ▪ Tools, Templates, and Tutorials Stay in touch with Capstera. www.Capstera.com https://www.linkedin.com/company/capstera https://www.X.com/Capstera https://www.facebook.com/capstera Note: Capstera’s products and their contents may differ from the general information offered in these guides.) 23 www.capstera.com 23

24. Thank you Like | Share |Comment |Repost www.Capstera.com www.capstera.com 24