Business Capability Mapping for High-Tech Manufacturers

1. Optimizing High-Tech Manufacturing Operations Strategic Capability Mapping www.capstera.com 1

2. Transform Your Manufacturing Enterprise with the Power of Capability-Driven Architecture Organizations struggle to maintain operational excellence ▪ while driving innovation at unprecedented speeds in today's hypercompetitive high-tech manufacturing landscape. The complexity of global supply chains, accelerating technological change, and evolving customer expectations create a perfect storm that threatens both agility and efficiency. Business Capability Maps have emerged as the essential ▪ strategic tool for navigating this complexity—providing a structured visualization of what the enterprise does, independent of how it operates. For high-tech manufacturers seeking to optimize business operations and rationalize their IT landscape, capability mapping offers the blueprint for transformation that connects strategy to execution with unprecedented clarity and precision. www.capstera.com 2 2

3. The Operational Complexity Challenge in High-Tech Manufacturing 1 High-tech manufacturers face a unique convergence of operational challenges that traditional management approaches struggle to address effectively. Business Capability Maps provide the foundation for systematic improvement. • Siloed Operations: Organizational boundaries create artificial barriers between interdependent functions, resulting in suboptimal processes and redundant capabilities across the enterprise. • Technology Fragmentation: The average high-tech manufacturer maintains 800+ applications with significant functional overlap, creating unnecessary complexity and integration challenges. • Data Inconsistency: Critical business information exists in multiple systems with varying definitions, compromising decision quality and operational efficiency. • Change Resistance: Complex interdependencies between business functions make operational improvements risky and difficult to implement without a holistic enterprise view. • Investment Misalignment: Technology investments often target symptoms rather than root causes, failing to address the fundamental capability gaps that limit performance. www.capstera.com 3

4. Business Capability Maps: The Strategic Foundation 2 Business Capability Maps provide a stable, business-focused view of the enterprise that transcends organizational boundaries and technological change. • Enterprise Blueprint: Capability maps create a comprehensive visualization of what the organization does (its capabilities) independent of how those capabilities are implemented. • Strategic Lens: The capability perspective provides a direct connection between strategic objectives and the operational capabilities required to achieve them. • Stable Reference: Unlike constantly changing organizational structures or technologies, capabilities remain relatively stable over time, providing a dependable reference for transformation. • Common Language: Capability maps establish a shared vocabulary that bridges communication gaps between business leaders, operational teams, and technology organizations. • Transformation Foundation: By decomposing the enterprise into discrete capabilities, organizations can systematically target improvements where they will deliver maximum strategic value. www.capstera.com 4

5. Essential Elements of High-Tech Manufacturing Capability Maps 3 Effective capability maps for high-tech manufacturing require specific components that reflect the industry's unique characteristics and operational requirements. • Hierarchical Structure: Capabilities are organized in a meaningful hierarchy, typically spanning 3-4 levels from enterprise-wide domains to granular functional capabilities. • End-to-End Coverage: Comprehensive maps span the entire manufacturing value chain, from research and development through production to customer service and support. • Industry Specificity: High-tech manufacturing capability maps include specialized capabilities like cleanroom operations, precision assembly, and semiconductor fabrication. • Assessment Dimensions: Each capability includes assessment criteria for strategic importance, performance effectiveness, efficiency, and supporting technology adequacy. • Visual Clarity: Capability maps utilize color-coding, symbols, and consistent visual language to communicate assessment results and transformation priorities. www.capstera.com 5

6. Operational Optimization Through Capability Assessment 4 Capability mapping enables systematic operational improvement by providing a structured framework for identifying and addressing performance gaps. • Capability Benchmarking: Assessment of capabilities against industry benchmarks reveals operational areas where performance falls short of best practices or competitive requirements. • Root Cause Analysis: The capability view cuts through symptoms to identify the fundamental capability deficiencies that drive operational inefficiencies. • Investment Prioritization: Capability assessments enable fact-based decisions about where to invest improvement resources for maximum operational impact. • Cross-Functional Visibility: By visualizing capabilities that cross organizational boundaries, manufacturers can identify coordination challenges that compromise end-to-end performance. • Maturity Roadmapping: Capability maturity models provide the foundation for sequenced improvement initiatives that systematically enhance operational performance over time. www.capstera.com 6

7. Did You Know Optimization Impact: High-tech manufacturers with mature ▪ capability mapping practices achieve 23% higher operational efficiency and 18% lower IT costs than industry peers. (Source: Gartner Manufacturing Leadership Council, 2023) www.capstera.com 7

8. Streamlining the IT Landscape Through Capability-Based Portfolio Management 5 One of the most powerful applications of capability mapping is in rationalizing complex technology landscapes in high-tech manufacturing environments. • Application-to-Capability Mapping: Connecting applications to the business capabilities they support reveals redundancies, gaps, and misalignments across the technology portfolio. • Rationalization Framework: Capability maps provide the context for making evidence-based decisions about which applications to invest in, maintain, or retire. • Technical Debt Assessment: The capability view highlights where aging or inadequate technology constrains critical business capabilities, compromising operational performance. • Investment Alignment: By focusing technology investments on capabilities with both strategic importance and significant performance gaps, manufacturers can maximize return on technology spending. • Architecture Simplification: Capability-based portfolio management drives architectural simplification by consolidating applications around core business capabilities rather than organizational silos. www.capstera.com 8

9. Breaking Down Silos with Capability- Based Operating Models 6 Capability maps provide the foundation for more integrated, efficient operating models that transcend traditional organizational boundaries. • Capability-Based Organization: The capability perspective enables restructuring around end-to-end capabilities rather than functional silos, reducing handoffs and improving coordination. • Cross-Functional Ownership: Capability maps support the establishment of clear ownership and accountability for cross- functional capabilities that span multiple departments. • Skill Alignment: By connecting capabilities to the skills required to perform them effectively, manufacturers can align talent development with strategic capability needs. • Governance Optimization: Capability-based governance structures ensure that decisions reflect enterprise priorities rather than departmental interests. • Performance Measurement: Capability-based KPIs provide a more holistic view of performance that transcends functional metrics and focuses on end-to-end value delivery. www.capstera.com 9

10. Accelerating Digital Transformation Through Capability Clarity 7 Digital transformation initiatives often struggle without the guiding framework that capability maps provide for connecting technology to business outcomes. • Transformation Scope Definition: Capability maps enable precise definition of transformation boundaries and focus areas, preventing scope creep and ensuring strategic alignment. • Technology Selection Criteria: Deriving selection criteria directly from capability needs ensures new technologies address fundamental business requirements rather than chasing features. • Implementation Sequencing: Understanding capability dependencies helps manufacturers sequence digital initiatives to build momentum while managing organizational capacity. • Legacy Modernization: The capability view supports systematic legacy modernization by prioritizing systems based on the strategic importance of the capabilities they enable. • Change Impact Analysis: Capability maps help manufacturers anticipate and address the cross-functional impacts of digital transformation across interconnected capabilities. www.capstera.com 10

11. Optimizing Manufacturing Operations with Capability-Driven Process Improvement 8 Capability maps provide the essential context for process improvement initiatives, ensuring they deliver meaningful operational enhancements. • Value Stream Alignment: Mapping end-to-end value streams to the capabilities that enable them highlights process inefficiencies and improvement opportunities. • Process Prioritization: Capability assessments help manufacturers focus process improvement efforts on the operational areas with the greatest strategic leverage. • Automation Targeting: The capability view identifies high- volume, low-complexity capabilities that represent prime candidates for robotic process automation or AI enhancement. • Variability Reduction: By standardizing capabilities across manufacturing sites and product lines, organizations can reduce harmful process variation and improve quality outcomes. • Integration Optimization: Understanding capability interdependencies helps manufacturers streamline process interfaces and reduce coordination overhead between operational areas. www.capstera.com 11

12. Did You Know Application Rationalization: Companies leveraging ▪ capability-based portfolio management reduce their application landscape by an average of 30% while improving business satisfaction with technology support. (Source: Forrester Research, 2024) www.capstera.com 12

13. Enhancing Supply Chain Resilience Through Capability Mapping 9 In today's volatile manufacturing environment, capability maps provide the foundation for building more resilient, adaptive supply networks. • Capability Gaps Identification: Systematic assessment of supply chain capabilities reveals vulnerabilities that threaten continuity in the face of disruption. • Redundancy Planning: The capability view helps manufacturers identify critical capabilities requiring backup resources or alternative execution paths to ensure resilience. • Partner Evaluation: Extending capability mapping to include supply chain partners enables more rigorous assessment of their operational strengths and weaknesses. • Technology Enablement: Capability mapping highlights where digital technologies can enhance visibility, collaboration, and responsiveness across the supply network. • Risk Management: By connecting risk factors to specific capabilities, manufacturers can develop more targeted, effective risk mitigation strategies across the supply chain. 13 www.capstera.com 13

14. Accelerating Innovation Through Capability-Driven R&D 10 For high-tech manufacturers, capability maps provide a powerful framework for optimizing research and development investments and accelerating innovation. • Innovation Focus: Capability assessments help manufacturers direct R&D resources toward the capabilities most critical to future competitive advantage. • Capability Gaps Targeting: The capability view highlights where innovation investments should focus to address fundamental capability limitations that constrain growth. • Portfolio Balancing: Capability mapping supports more balanced R&D portfolios by ensuring investments span critical capability domains rather than concentrating in familiar areas. • Make vs. Buy Decisions: The capability perspective informs strategic choices about whether to develop new capabilities internally or acquire them through partnerships or acquisitions. • Time-to-Market Acceleration: By highlighting capability dependencies in the product development lifecycle, manufacturers can identify and address bottlenecks that delay market introduction. www.capstera.com 14

15. Enhancing Decision Quality Through Capability-Based Information Architecture 11 Capability maps provide the foundation for information architectures that deliver the right information to the right stakeholders at the right time. • Information Requirements: The capability view helps manufacturers identify the specific information assets required to perform each capability effectively. • Data Ownership: Capability mapping supports clearer definition of data ownership and stewardship responsibilities aligned with capability ownership. • Integration Prioritization: By understanding which capabilities share information requirements, manufacturers can prioritize integration efforts to enable critical information flows. • Analytics Focus: Capability assessments help direct analytics investments toward the decision-making capabilities that most directly impact strategic outcomes. • Master Data Management: The capability perspective highlights where inconsistent master data compromises operational performance, focusing data quality initiatives for maximum impact. www.capstera.com 15

16. Optimizing Manufacturing Technology Investments 12 For high-tech manufacturers making significant technology investments, capability maps ensure these investments deliver maximum operational value. • Investment Alignment: Capability-based portfolio management ensures technology investments directly support the capabilities most critical to strategic objectives. • ROI Enhancement: By connecting technology investments to specific capability improvements, manufacturers can establish clearer ROI expectations and measurement approaches. • Architecture Simplification: The capability view supports architectural rationalization by consolidating redundant technologies and establishing clearer technology standards. • Implementation Risk Reduction: Understanding capability interdependencies helps manufacturers anticipate and mitigate the cross-functional impacts of technology changes. • Innovation Focus: Capability mapping helps manufacturers direct technology innovation investments toward the areas of greatest strategic leverage rather than spreading resources too thinly. www.capstera.com 16

17. Did You Know Decision Velocity: Manufacturers with well-established ▪ capability maps make strategic technology decisions 2.5x faster than competitors using traditional approaches, significantly enhancing their ability to respond to market changes. (Source: IDC Manufacturing Insights, 2023) www.capstera.com 17

18. Building and Sustaining Capability Maps for Operational Excellence 13 Creating and maintaining effective capability maps requires a structured approach and ongoing governance to ensure sustained value. • Executive Sponsorship: Secure active support from senior leadership by demonstrating how capability mapping directly enables operational excellence and strategic execution. • Cross-Functional Engagement: Involve stakeholders from across the organization to ensure the capability map reflects diverse operational perspectives and requirements. • Appropriate Granularity: Balance the need for detail with practical usability, typically limiting decomposition to Level 3 for most capabilities and only extending to Level 4 for strategically critical areas. • Regular Updates: Establish governance processes for periodically reviewing and updating the capability map to reflect evolving strategic priorities and operational realities. • Tool Selection: Choose appropriate tools for capability documentation, visualization, and analysis that balance sophistication with accessibility for business stakeholders. www.capstera.com 18

19. Measuring the Impact of Capability-Driven Optimization 14 To sustain organizational commitment to capability-based approaches, establish clear metrics that demonstrate tangible operational and financial benefits. • Operational Efficiency: Track how capability improvements translate into measurable operational enhancements such as cycle time reduction, quality improvements, or resource utilization. • IT Cost Reduction: Measure the financial impact of application rationalization and technology portfolio optimization enabled by capability-based management. • Strategic Alignment: Assess how capability-based approaches improve the alignment between strategic priorities and resource allocation across the organization. • Decision Velocity: Evaluate how capability clarity enhances the speed and quality of operational and strategic decisions across the manufacturing enterprise. • Innovation Acceleration: Measure how capability-driven approaches improve the success rate and time-to-market for new product introductions and process innovations. www.capstera.com 19

20. Future-Proofing Manufacturing Operations Through Capability Evolution 15 As manufacturing continues to transform, capability maps provide the essential foundation for navigating ongoing change and disruption. • Capability Evolution Planning: Use capability mapping to identify how core capabilities must evolve to address emerging market requirements and competitive threats. • Digital Twin Integration: Connect digital twin implementations to capability maps to create more comprehensive virtual representations of manufacturing operations. • AI-Enabled Capabilities: Identify where artificial intelligence can enhance critical capabilities through greater automation, prediction, or optimization. • Ecosystem Integration: Extend capability mapping beyond enterprise boundaries to include partners, suppliers, and customers in a more integrated capability network. • Sustainability Enhancement: Use capability mapping to systematically identify and address the capabilities required for more sustainable manufacturing operations. www.capstera.com 20

21. Takeaway Business Capability Maps provide high-tech manufacturers with the essential foundation for optimizing operations and streamlining IT landscapes in an increasingly complex environment. Capability mapping enables manufacturers to systematically identify improvement opportunities, prioritize investments, and align resources with strategic priorities by creating a stable, business-focused view of the enterprise that transcends organizational boundaries and technological change. Whether targeting operational excellence, technology rationalization, or digital transformation, the capability perspective ensures initiatives deliver meaningful business value rather than merely implementing technological change. 21 www.capstera.com 21

22. Next Steps 1. Baseline Your Current State: Conduct a rapid assessment of your organization's capability mapping maturity and identify the most significant gaps in your current approach. 2. Secure Executive Support: Develop a compelling business case for capability mapping that connects directly to your organization's strategic priorities and operational pain points. 3. Start with Strategic Focus: Begin your capability mapping journey by focusing on the capabilities most directly connected to your strategic differentiation and competitive advantage. 4. Connect to Concrete Initiatives: Immediately link your capability mapping effort to pressing business priorities— whether operational improvement, application rationalization, or digital transformation. 5. Establish Governance Early: Define clear ownership, update processes, and measurement approaches for your capability maps to ensure they remain living tools rather than static documents. 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