Financial Attributes for the Capabilities Inventory - Capabilities Inventory and Attributes

Financial Attributes for the Capabilities Inventory

(Chapter 28 of Capabilities Inventory and Attributes)

Executive Summary: Chapter Overview

IF4IT

The Bottom Line

This chapter defines financial attributes that connect each Capability to cost, budget, and investment analysis so portfolio decisions can account for the economics of capability delivery.

Core Concepts

Concept	Definition & Strategic Role
Annual Run Cost	Shows the recurring cost of operating the capability.
Planned Investment	Captures budgeted spend to improve, expand, or transform the capability.
Financial Transparency	Supports cost-benefit and portfolio prioritization decisions.

Quick Q&A

Question: Why attach financial attributes to capabilities?

Answer: They allow decision-makers to compare capability importance, maturity, risk, and investment against the cost of sustaining or improving the capability.

Financial attributes capture the cost and value profile of each Capability — what it costs to deliver and what value it produces.

Attribute Name	Maturity	Description and Notes
Annual Delivery Cost	Walk	Description — The total annual cost to deliver this Capability, including people costs, technology costs, and any outsourcing costs. Benefit(s) — Enables capability-level financial analysis. Identifies high-cost, low-importance capabilities as rationalization candidates. Source — Manual Notes — Typically an estimated allocation at Walk maturity. A rough order of magnitude is more useful than no value.
Cost Allocation Model	Run	Description — The method by which the cost of this Capability is allocated across the business units or legal entities that consume it. Benefit(s) — Enables showback and chargeback for capability delivery costs. Source — Manual Examples — Activity-Based Costing, Usage-Based Allocation, Headcount-Based Allocation, Fixed Allocation
Value Delivered	Run	Description — The assessed business value delivered by this Capability — the quantified or qualified contribution to revenue, cost reduction, risk mitigation, or strategic differentiation. Benefit(s) — Enables ROI analysis at the capability level. Source — Manual Examples — $5M annual revenue attribution; $2M annual cost avoidance; Regulatory compliance (existential); Competitive differentiation

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