Architecture is a word that comes from Greek and means primary structure.
So if you want to know the answer to the question ‘what is business architecture?‘
It can be defined as how the larger structures that define your business model take steps to capture value throughout the production process to deliver the highest possible perceived value to the end customer.
Usually, this business architecture structure is divided into 5 different levels:
- Mission Statement
Thus, we can define ‘what is business architecture?’ (in a hierarchical order that goes from the more comprehensive to the more focused), from the definition of:
- The business’s raison d’être, what it intends to offer society (its Mission);
- Where it intends to be in the long term, usually 20 years (the Vision);
- The ways of identifying and creating sustainable competitive advantages to build this future (the Strategy);
- How leaders will organize people and define projects in a practical way, supported by culture (the Actions);
- The elements of the business actions, products, processes, people and technology that add value to all stages of the process of generating goods and services (Operations).
The definition of ‘what is business architecture?’ is long because it ranges from the strategic level, through the tactical to the operational, i.e., everything that is done in a corporate organization.
What is business architecture in practice?
Sometimes, after a conceptual exercise like this, we get the impression that we talk a lot, but we say tiny.
How can we translate all of this into day-to-day practice, assisting in defining strategies, implementing tactics and controlling tasks?
You must have certainly heard of business strategic management frameworks, metrics‘, and tools used to define some of the elements discussed above.
To better contextualize all of these theories and definitions, and how they influence process management, let’s talk a little about some of them.
The 3 most commonly used ways to define architecture, strategy, and business operations
1- SWOT Matrix
Possibly the best known of the strategic positioning tools, the SWOT (Strengths, Weaknesses, Opportunities & Threats) Matrix, analyzes the internal and external environments of the company.
The internal environment, the one you can control, harbors the strengths (superior technology or privileged location, for example) and weaknesses (such as an inexperienced sales force or obsolete machinery). Note that it is possible to change these strengths and weaknesses if you so decide.
The external environment encompasses everything that the company can not control, such as forces of nature, political decisions or the economy, among many others. Examples of opportunities could be the reduction of taxes or the construction of a new road by the government, next to your factory. Threats could be the rise in interest rates or the closure of a port exporting your raw material due to a war.
The SWOT Matrix maps these 4 elements and looks for ways to use the forces to potentiate opportunities or defend against threats or reinforce weaknesses to defend against threats or prevent them from thwarting opportunities.
2- Balanced Scorecard – BSC
The Balanced Scorecard concept seeks to broaden the performance indicators used to measure companies progress in 4 perspectives (Financial, Market, Internal Processes, and Learning.
Next, a methodology must be used that will define the strategic management, process measurement, strategy, objectives, indicators, goals and strategic initiatives, all summarized in a strategic map.
3- Canvas Business Model
Based on a canvas divided into 9 areas, the Canvas Business Model is mostly used by startups because of its practicality and speed in decision-making by filling each of the 9 areas, which are the following:
- Value Proposition
- Relationship with the Client
- Customer Divisions
- Key Activities
- Key Resources