HIGH-IMPACT CAPABILITY ROADMAPS

OVERVIEW
An approach to align technology solutions to strategic business objectives through capability roadmapping.
EXECUTIVE TEACHING
Leverage the process used to create capability roadmaps to obtain a deeper shared understanding of strategic business goals
and shift the dialogue with business partners away from short-term, project-based discussions. By broadening the conversation
to include people, process, and technology, capabilities can achieve a more holistic understanding of the underlying need.
COMPONENT TEACHINGS

Linking Business Strategy to CapabilitiesShift the dialogue between the IT liaison and business owner away from projects and
toward long-term plans.
Establishing Capability TargetsPut capability target choices into financial terms to help business partners make better investment
trade-off decisions.
Setting Capability Realization HorizonsHelp business partners understand the business and technology implications of different
paths to the target state.
Driving Application RationalizationExplicitly link programs to business capabilities to ensure application retirement goals are
being met.
Managing DemandUse the capability roadmap to manage demand by reconciling new project requests against established goals.

COMPONENT TEACHINGS

The MasterPlanning Process, pp. 1215

Linking Business Strategy to Capabilities, pp. 1617

Establishing Capability Targets, pp. 1822

Managing Demand, pp. 2324

COMPANY SNAPSHOT
Merck & Co., Inc.
Industry:

Pharmaceuticals

2009 Revenue:

US$27.4 Billion

Through medicines, vaccines, biologic therapies, and consumer and animal products, Merck
works with customers and operates in more than 140 countries to deliver innovative health
solutions. Merck also demonstrates a commitment to increasing access to health care through
far-reaching programs that donate and deliver products to the people who need them.

2015 CEB. All rights reserved.EAEC4641915SYN

To make the most progress

on portfolio simplification
efforts, use capability
roadmaps to align
technology investments
with business priorities.

ENABLING BUSINESS OUTCOMES

Challenge
In a complex environment with more than 5,000 applications, more than 10,000 interfaces, and 35 different
technical environments, Merck was challenged to reduce IT maintenance and operations costs to increase
funds available for strategic projects the business required.

Approach
Merck develops a master-planning process that EA provides to business units. The process uses capability
roadmaps to identify consolidation opportunities and align new technology investments to strategic
priorities.

Results
Merck reduces the total number of applications by 20% and increases the portion of the IT budget devoted
to strategic investments by 50%.

2015 CEB. All rights reserved.EAEC4641915SYN

Leverage the process

used to create capability
roadmaps to obtain a deeper
shared understanding of
strategic business goals.

THE MASTER-PLANNING PROCESS

612 Weeks (Depending on Business Area Scope)

Current Business
Capability
Outputs
Capability Model
Capability Prioritization
Strategy
Identification

Future Business
Capability
Outputs
To-Be Capability Map
Capability Gap
Assessment
To-Be Process
Framework

Output
Strategy on a Page

Outputs
Solution Evolution Plan
Capability Roadmap

Current
Solutions

Business Value Add

Strategic discussions are
focused on long-range
business priorities.

Capability
Roadmap

Future
Solution

Output
Current State
Architecture

Outputs
Solution/Capability Map
Target Architecture

Business Value Add

Current state evaluation
enables capability
prioritization.

Business Value Add

Consensus and buy-in on
future state solutions are
achieved.

Business Value Add

IT investments are clearly
aligned with business
priorities.

See Implementation Guide,

pp. 1215.
2015 CEB. All rights reserved.EAEC4641915SYN

Shift the dialogue between

the IT liaison and business
owner away from projects
and toward long-term plans.

Mercks EA group uses the

Business Journey Storyboard to
surface pain points.
The Strategy on a Page
Template articulates a set of
business imperatives that EA
can map to relevant capabilities.

1. L
 INKING BUSINESS STRATEGY
TO CAPABILITIES
Illustrative
FINANCE

Business Journey Storyboard

2010 Experience
Its difficult to create annual plans because the budget
data I need comes from multiple sources, and Im not
always sure its accurate.

2012 Experience
I have one source I can go to for my annual-planning
needs, and I know the data is correct.

Strategy on a Page

DO frame business goals in key

stakeholder experiences to help
business partners articulate pain
points.

Business
Drivers and
Goals

What we desire to accomplish

Optimize corporate performance

through strategic financial planning.

Outcomes

How we know weve achieved

the goal

Annual-planning time reduced while

increasing accuracy in forecasting.

Actions we need to take to

accomplish the goal

Define and adopt a standard globalplanning, budgeting, and forecasting

process utilizing a common data source.

Business
Imperatives

DONT let the absence of

documented strategy serve
as a barrier to capability
roadmapping.
See Implementation Guide,
pp. 1617.

Business
Capability

Strategic and Tactical Financial Planning

Source: Merck; CEB analysis.

2015 CEB. All rights reserved.EAEC4641915SYN

Put capability target choices

into financial terms to help
business partners make
better investment trade-off
decisions.

Mercks EA group researches

industry capability models and
standards to help business
partners assess current maturity
and identify targets.
Rely on business partners
internal assessments and
maturity goals when industry
benchmarking is not warranted.

2. ESTABLISHING CAPABILITY TARGETS

Finance Capability Realization (Total Budget $9 M)
Illustrative

Capability

Below Industry
Standard (IS-)

Industry Standard
(IS)

Industry Leader
(IL)

Strategic and
Tactical Financial
Planning

Accounting
to Reporting

Distinctive Leader
(DL)

$5 M

$1.5 M

Treasury and
Capital Management

$3 M

$2.5 M

$4 M

Current Range of Capability Maturity

Average Capability Maturity
Initial Capability Target

Business partners
always want more than
budgets allow. Its our
job to help them assess where
they need to be industry leaders
and where its okay to meet the
industry standard by illustrating
the business costs and technical
costs.

Reset Capability Target

Capability Target Assessment Criteria

Mercks EAs work with business partners to force trade-offs between cost and capability
targets across the following four dimensions:
1. People: Skills needed to support new capabilities and/or process improvements
2. Process: Level of process maturity and standardization required
3. Information: Quality and completeness of data required
4. Technology: Availability of tools that provide end-to-end support

Source: Merck; CEB analysis.

Paula Kowalczyk
Senior Director, Business and Solutions
Architecture
Merck & Co., Inc.

See Implementation Guide,

pp. 1822.
2015 CEB. All rights reserved.EAEC4641915SYN

Help business partners

understand the business and
technology implications of
different paths to the target
state.

Create implementation
scenarios that enable certain
capabilities before the target
state is reached.

3. S
 ETTING CAPABILITY REALIZATION
HORIZONS
Implementation Scenarios
Illustrative
Year 1

Year 2

Year 3

Current State

Interim State

Interim State

Target State

Current state
evaluation

Scenario A

Year 0

100% of capabilities
realized

New applications
rolled out

Legacy applications
decommissioned

Feasibility Assessment

Cost
Legacy
Life Span
Complexity
Business
Urgency

Scenario B

Time to
Delivery

Current state
evaluation

Capability 1
urgency: low

Capability 2
urgency: moderate

Capability 2
realized

100% of capabilities
realized

Legacy applications
decommissioned

Cost
Legacy
Life Span
Complexity
Business
Urgency

DO present business partners

with alternative paths to reaching
the target state that they can
choose from.

DONT assume theres only one

right path to the target state.

Scenario C

Time to
Delivery

Current state
evaluation

Capability 1
urgency: high

Capability 2
urgency: moderate

Capability 3
urgency: low

Capability 1 realized

Capability 2
realized

100% of capabilities
realized

Legacy applications
decommissioned

Cost
Legacy
Life Span
Complexity
Business
Urgency
Time to
Delivery

Source: Merck; CEB analysis.

2015 CEB. All rights reserved.EAEC4641915SYN

Explicitly link programs

to business capabilities
to ensure application
retirement goals are being
met.

Key program milestones mark

occasions for major reductions
in now redundant applications.
The roadmap identifies all
applications supporting a
business capability.
Interim and target state goals
for application retirement are
captured in the out years.

4. DRIVING APPLICATION RATIONALIZATION

Business Unit RoadmapProgram and Capability Views
Illustrative
2007

Programs

Apr. July Oct.

Program 1

2008

2009

Jan. Apr. July Oct.

Jan. Apr. July Oct.

Geo 1

Program 2

Geo 2

2010

2011

Jan. Apr. July Oct. Jan.

Geo 3

Apr.

Geo 4

July

Oct.

Geo 5

Program 3
Program 4
Program 5

Business Capabilities
Capability 1

(5)

(3)

(2)

Capability 2

App. A (6)

(5)

ERP (3)

Capability 3

App. C (3)

Capability 4

(4)

(1)

(2)
(3)

(1)

(0)

ERP (1)

Capability 5

(1)

Capability 6

App. H (9)

ERP (5)

Capability 7

App. M (15)

ERP (4)

(3)

Capability 8

App. Z (44)

ERP (20)

(19)

(43)

Program Key

(2)

(5)

Symbol Key

Concept/Preparation

Rollout

Extends Before Timeline

Fixed Phase Start

Design

Multiple: Concept Through Rollout

Extends After Timeline

Fixed Phase Completion

Construction

Program Being Considered

Transition Between Phases

Milestone

Capability Key
Current Solution (Primary/Total Number Applications Used to Support Capability)
Planned Solution
Solution Being Considered

Source: Merck; CEB analysis.

2015 CEB. All rights reserved.EAEC4641915SYN

Use the capability roadmap

to manage demand by
reconciling new project
requests against established
goals.

5. MANAGING DEMAND
Demand Management Decision Tree

No.

Business
Request:
New
Imperative

Yes.
Review trade-offs (what comes off/
gets delayed?) and adjust roadmap.

Yes.
Adjust timing?
Yes.
Forward?

No.

Already on
roadmap?
No.

No.
Add capability?

No.
Aligned
to strategy?
Yes.
Aligned to
capability?

We had new technology

requests coming in from
all over the place. The
roadmap allowed us to stop
demand for two years. Now we
have a plan, and when a new
request comes in, we can assess if
and how it fits within that existing
plan.
Stacie Kyle
IT Account Executive
Merck & Co., Inc.

Yes.
Include capability in roadmap,
identify solutions, and make trade-offs.

Yes.
Yes.
Existing
solution?

No.
Review trade-offs (what comes off/
gets delayed?) and adjust roadmap.
Source: Merck; CEB analysis.

See Implementation Guide,

pp. 2324.
2015 CEB. All rights reserved.EAEC4641915SYN

Capability roadmaps
enable Merck to simplify
the portfolio and shift
funds from maintenance to
strategic investments.

RESULTS
Net Reduction in Applications

IT Budget Allocation

Indexed

Percentage of Total IT Spend

Strategic Investments
M&O

100

100

= 5%
95

100%

= 15%

23%

81

50

35%

50%

77%
65%

0
2008

Source: Merck; CEB analysis.

2009

2010
(Projected)

0%

2003

2010
(Projected)

Source: Merck; CEB analysis.

2015 CEB. All rights reserved.EAEC4641915SYN

KEY TAKEAWAYS
1. Use capability roadmaps to achieve a deeper shared understanding of longer-term strategic
business goals. Too often, conversations with the business focus on short-term, technology solutions. By
broadening the conversation to include people, process, and technology, capabilities can achieve a more
holistic understanding of the underlying need.
2. Give business partners flexibility when developing a capability roadmap by presenting them with
multiple paths to the target state. To facilitate better trade-off decisions, make sure they understand the
financial implications of capability improvement choices.
3. Involve business partners in the roadmap creation process to increase their ownership of and
accountability for specific roadmap outcomes. By tying roadmap milestones to application retirement
and demand management objectives, getting business buy-in to more ITcentric goals becomes easier.

2015 CEB. All rights reserved.EAEC4641915SYN

10

IMPLEMENTATION GUIDE OVERVIEW

The MasterPlanning Process

Master-Planning
Methodology, pg. 12
Master PlanningDefinition,
pg. 13
Master Planning
Deliverables and
Responsibilities, pg. 14
Business and Solutions
Architect/Strategist Job
Description, pg. 15

Linking Business
Strategy to Capabilities

Business Context Summary,

pg. 16
Strategy on a Page
Template, pg. 17

Establishing
Capability Targets

Enterprise Business Capability

Model, pg. 18
Capability Maturity-Level
Definitions, pg. 19
Capability Gap Analysis, pg. 20
Capability Gap SelfAssessment, pg. 21

Managing Demand

Business Capability
Roadmap (Executive View),
pg. 23
Business Capability
Roadmap (High-Level
Planning View), pg. 24

Capability Gap Analysis

Template, pg. 22

2015 CEB. All rights reserved.EAEC4641915SYN

11

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