Module in Strategic Business Analysis

Dr. Lorenzo B. Cabili, CPA, JD

Faculty, College of Business Administration

3
Controlled Start: Enterprise Analysis

“I have not failed. I’ve just found 10,000 ways that won’t work.

-Thomas Edison

Overview

In order to achieve a controlled start to a project or project phase, you must be

methodical and consistent in its planning and definition. The Enterprise Analysis
knowledge area focuses on definition. One essential skill that the business analyst
brings to the big picture work is knowledge of the internal and external business
environment surrounding the project. This is where experienced business analysts
begin to translate an organization’s business strategy into a proposed new business

Learning Objectives

At the end of this module, you should be able to:

 describe and understand the business need

 assess capability gaps in the organization
 determine the most feasible business solution approach
 understand the value of business case
solution.
 BUSINESS NEED

You have learned from the first module that Enterprise Analysis focuses
on how the business analyst identifies the business needs driving a
project by performing problem definition and analysis.

Tasks from the Enterprise Analysis knowledge area focus on defining the business
requirements and justifying delivery of the solution scope for the project. The business
analyst is responsible for developing, defining, and managing the roles and tasks
associated with this work. Tasks performed as part of this knowledge area are governed
by the business analysis plan or plans.

Define the Business Need

The first task found in the Enterprise Analysis knowledge area is defining the business
need. The business need “ defines the problem that the business analyst is trying
to find a solution for.” Not every project gets started because an organization is
having a problem. Organizations often consider adding new or changing existing
capabilities based on new market opportunities, customer feedback, newly available
technologies, or to meet changing legal and regulatory requirements.

In order to complete this task, the business analyst must look at the business drivers
and issues to determine if a change is really necessary. The business analyst becomes
the master investigator, questioning the business need and any assumptions to make
sure that the that the underlying problem or opportunity is being properly addressed.

Defining the business need starts key stakeholders down the path of fully understanding
a business problem or opportunity. Organizations need to stay targeted on the business
needs versus reacting too quickly to problems, issues, or perceived inefficiencies. The
business need sets the stage for what comes next in the early part of a project,
including deciding:

 The range of solution options to consider

 The set of stakeholders to involve
 The appropriate solution approaches to evaluate

After the business need is articulated for a project or initiative, it is not expected to
change significantly through that project’s life cycle. If the business need for a project
does change during that project’s life cycle, the business analyst will have to go back to
validate all of the high - level planning and definition work to make sure everything is still
okay.
 Business goals Define
and objectives Business
Need Business Need
Requirements
(Stated)

Benchmarking
Brainstorming
Business rules analysis
Focus groups
Functional decomposition
Root cause analysis

FIGURE 3.1 Task summary: Identify business need.

Business analysts need to step through three essential elements to identify, analyze,
and document a business need triggering a potential project. These detailed elements
necessary to identify the business need are

 Aligning to business goals and objectives

 Stating the business problem or opportunity
 Describing the desired outcome

Aligning with Business goals and Objectives

Early in a project or before a project even begins, business analysts are asked to
analyze the organization’s business goals and objectives as part of defining a particular
business need. This strategic information is usually located in the organization’s
strategic plan, starting with the organization’s mission , vision , and values .

Many people mistake the vision statement for the mission statement.

Vision. The vision describes a future identity.

Mission. The mission describes why that future identity will be achieved.
Values. Values provide boundaries for how an organization defines its mission in order
to achieve its vision.

Vision

Mission

Business Goals and Objectives

Business Needs

Portfolios, Programs, Project, Ongoing Operations and

other Initiatives

FIGURE 3.2 Relating strategy and implementation

State the Business Problem or Opportunity

The business analyst must investigate the business problem or opportunity to ensure
that there is a good reason to move forward and address the problem or opportunity.
You are looking for a way to improve the business and add value. The business analyst
should consider several factors when performing this work:

 Quantify any adverse impacts.

 Define any increased benefits from the proposed solution.
 Estimate a timeframe for addressing the problem or opportunity.
 Look at the “Do Nothing” option as an alternative approach.
 Identify the underlying cause of the problem

Describe the Desired Outcome

The business analyst must also describe the desired outcome, which is the business
benefits resulting from meeting the business need. Do not confuse the desired outcome
with a solution; they are not the same thing. However, solution options will be evaluated
relative to the desired outcome to make sure they can deliver the business benefits that
are expected.
There are a number of techniques that you may choose to apply when defining the
business need for your project. To make sure you consider a range of business needs
and desired outcomes before settling on what is driving your potential project, you
should use the benchmarking and root cause analysis techniques. Let’s take a look at
these two techniques in greater detail.

Benchmark studies target using new and different methods,

ideas, and tools to improve organizational performance.
When conducting such a study, the business analyst
Benchmarking compares their organization’s strategies, operations, and
processes against the best-in-class strategies, operations,
and processes of their competitors and peers. After
determining how other companies achieve superior
performance, the organization can then propose projects to
reproduce solutions that work elsewhere.

This structured technique is used to examine a situation in

order to establish the root causes and resulting effects of a
Root Cause particular problem. Two common methods for root cause
Analysis analysis: the fishbone diagram and the five whys .

When you have a serious problem, it's important to explore all of the things that could
cause it, before you start to think about a solution. That way you can solve the problem
completely, first time round, rather than just addressing part of it and having the problem
run on and on. The Fishbone Diagram or sometimes known as Ishikawa diagram
was a tool developed by Kaoru Ishikawa from Japan. It is considered as a cause-and –
effect diagram that helps managers to track down the reasons for imperfections,
variations, defects, or failures.

Fishbone diagram is a great way to look for and prevent quality problems before they
ever arise. Use it to troubleshoot before there is trouble, and you can overcome all or
most of your teething troubles when introducing something new. According to Ishikawa,
these seven causes that may lead to problem may not be included all in the diagram

1. Methods
2. Machinery
3. Management
4. Materials
5. Manpower
6. Environment
 7. Measurement

Figure 3.3 A fishbone diagram offers the opportunity to analyze and discuss

The Five Whys is a questioning technique that asks, “Why?” repeatedly in order to get
to the root cause of a problem. This technique can be used alone or used with the
fishbone diagram technique. This is a very simple and effective facilitation tool. Many
business analysts customize their use of this tool by asking, “How? ” instead of “ Why? ”
or by alternating between the two terms. Often the root cause is identified before the
five questions are asked.

The Business rules analysis allows the business analyst to identify any changes in
organizational policies targeting business goals and objectives. This is important
because the business need and business goals and objectives are closely linked.

The Focus Groups. This group technique allows the business analyst to bring together
a selected group of key stakeholders to identify and discuss problems and opportunities
as part of identifying the business need for a proposed project.

The Functional decomposition allows the business analyst to break down the
business goals into the more detailed and measurable business objectives.
 MIND CHALLENGE #1

Make your own fishbone diagram from the problems

presented below.

 Uncooperative members of the group

 Missed deadline
 Declining number of customers

Assess Capability Gaps

After the business analyst identifies the business need, the next step is to identify the
new capabilities required in order to meet that business need and deliver the desired
outcomes or business benefits. You must determine if the organization’s existing
capabilities can meet the business need or if additional capabilities are necessary.
Typically, projects begin when organizations have to add new capabilities to the mix in
order to meet a business need.

Capabilities are functions that help the organization achieve its business goals or
objectives. Capabilities can be many things:

 Business processes
 Software application features
 End user tasks
 Responses to events
 Products
 Services
 Stakeholder goals

In order to assess existing capabilities relative to desired outcomes, you need to

perform three detailed steps within the task. The elements are

 Analyzing current capabilities

The question you must answer is, “Does the organization have the current
business and technology capabilities to meet the business need?” You will
look at specific parts of the enterprise architecture that relate to the business
need.
  Assessing new capability requirements

The business analyst is responsible for modeling and describing these new
capabilities. One common way to do this is called gap analysis: defining
what it will take to eliminate or minimize the gap between the current
capabilities and the desired future state. Remember, the desired future state
equals meeting the business need.

 Documenting your assumptions

You will have to make assumptions to define new capabilities.

Assumptions are things that are believed to be true regarding
meeting the business need. Make sure that you clearly understand
any assumptions associated with the new capabilities. Be sure to
identify and document each assumption, just in case you discover
later on that one or more of them are actually false

DETERMINE SOLUTION APPROACH

The solution approach describes how you will create or acquire the required capabilities
(the solution) in order to meet the business need. This general definition identifies the
solution approach and the means of delivering the solution, such as a particular
methodology or life cycle model. This information allows you to assess whether or not
the organization is capable of implementing that solution

When assessing possible solution approaches, be sure to consider their feasibility in the
following areas when they are applicable:

 Operational
 Economic
 Technical
 Schedule - based
 Organizational
 Cultural
 Legal
 Marketing
There are a number of techniques that you may choose to apply when selecting the
solution approach for your project. Let’s take a closer look:

Feasibility analysis activities range from very informal

sessions for smaller efforts to formal feasibility studies
Feasibility looking at solution options. In all cases, feasibility analysis
Analysis focuses on identifying and analyzing potential solution
options to determine the most viable solution.

Benchmarking studies compare your organization’s

strategies, operations, and processes against the best - in
- class strategies, operations, and processes of their
Benchmarking competitors and peers. These studies can help you
identify solution approaches that have worked well in other
organizations.

This technique allows you to examine and model the

Decision consequences of different decisions before actually
making or recommending a particular decision. It is
Analysis possible to use graphical decision trees and financial
valuation techniques as part of identifying solution
approaches for your specific situation.

You can estimate and compare the range of cost and

effort associated with each solution approach you are
considering. Remember that your estimates should be
Estimation developed in conjunction with the project manager using
the project - level estimating tools and techniques.

SWOT analysis lets you compare possible solution

approaches relative to meeting a new business need.
SWOT There are two dimensions to this analysis: the internal
Analysis strengths and weaknesses of the organization and the
external opportunities and negative impacts that are in
play.
 DEFINE THE SOLUTION SCOPE

The Solution Scope defines “the set of capabilities a solution must

deliver in order to meet the business need.” It is derived from the
business need, the desired outcome (business benefits), and the required
capabilities. The solution scope is impacted by the solution approach that was selected.
Solution scope focuses on the key business stakeholders of a project. This is where the
business analyst defines a recommended solution in enough detail for these
stakeholders to understand the new business capabilities the solution will provide. This
definition includes all major features, functions, and external interactions of the solution.

When defining the solution scope, business analysts are expected to address three
essential elements when completing the task. The elements are:

 Defining the actual solution scope

 Determining the implementation approach
 Capturing solution dependencies

Define the Solution Scope. Solution scope must describe the major features, functions,
and interactions of the proposed solution. You need to be sure to state both the in -
scope and out - of - scope solution components across the full enterprise architecture.

Determine the Implementation Approach. The solution scope also contains the
implementation approach describing how the chosen solution approach will deliver the
solution scope. The implementation approach may involve release planning for certain
solution components or outsourcing of key processes.

Capture Solution Dependencies. You must capture the internal and external solution
scope dependencies, assumptions, and constraints when defining the solution scope.
The primary focus is on what it will take to deploy the solution. Remember to look at
both business and technical aspects of the solution scope.

Recommended Techniques:
Problem or vision statement- A problem statement or vision statement describes
the positive impact that meeting a business need will have on key project
stakeholders. The recommended contents for a problem or vision statement
include: a description of the problem or vision; list of affected stakeholders;
impacts the problem or vision will have on each listed stakeholder; and key
benefits of a successful solution

Functional decomposition- allows you to systematically break down the solution

scope components into smaller pieces.
 Interface analysis- focuses on interactions that the solution will have with people
and systems outside of its scope. This technique allows you to identify and
analyze these external interfaces.

Scope Modeling- assists the business analyst in determining what is in - scope

and what is out - of - scope for the solution.

User Stories- describe stakeholders and the goals they have for the proposed
solution.

DEFINE BUSINESS CASE

The final task found in the Enterprise Analysis knowledge area is

building the business case. Basically, the business case is used
to justify the costs of doing a project in terms of the value the
project adds to the business and the associated business
benefits. A business case must look at both sides of the equation, comparing both the
costs and benefits of a proposed solution. The expected business benefits of the
solution should be evaluated relative to achieving business objectives and meeting the
business need.

The template you use for your business case is up to you. Just be sure that the
information in your business case is adequate to support a go/no go decision about the
project that implements the proposed solution defined in the business requirements.

When building a business case, business analysts need to address four detailed
elements for the proposed solution. These elements are:

 Quantifying the benefits

 Estimating the costs
 Assessing initial risks
 Measuring expected results

Let’s step through each of the elements contained in the business case.

Quantify the Benefits This is where the business analyst answers the question,
“What’s in it for the business if we do this project?” Quantifying the business benefits
tells your key stakeholders what implementing a recommended solution will provide to
them and to the overall business. This is also where you relate the quantitative and
qualitative gains of implementing and operating a solution to the organization’s strategic
business goals and objectives.

Estimate the Costs Estimating the total net cost of the solution involves many
pieces and parts. The business analyst must estimate costs in a number of areas, such
as capital expenditures, development costs, and implementation costs. You will need to
look at the total costs associated with operating and supporting the solution after it has
been deployed. It is also wise to consider the opportunity costs of not selecting other
solution options or approaches that may have been cheaper or easier to do.

Assess Initial Risks Risk management will be performed throughout the project
with new risks being identified across the project life cycle and old risks being retired or
actually taking place. Performing an initial risk assessment in your business case
answers the question: “Does the project carry more risk than the organization is willing
to bear?” Sometimes the answer is, “Yes,” and a project is not approved. When the
business analyst looks at risks for the first time, the focus is on solution feasibility.

Measure Expected Results The business case should always address how to
measure, assess, and evaluate the projected costs and benefits that it contains. The
business analyst must define the use for this quantitative evaluation in order to be able
to plan for, measure, and report on solution performance and achievements. Good
metrics address both precision and accuracy . Precision focuses on the consistency of
measurements, targeting repeated measurements that yield the same value. Accuracy
looks at how close the true value is to the measured value. Closer values indicate
higher reliability and less uncertainty.

Recommended Techniques:

 Risk Analysis

Risk analysis is used when developing a business case to identify

areas of uncertainty about the technical, financial, and business
feasibility of a proposed solution. Risk analysis is ongoing throughout a
project. This initial risk assessment contained in a project’s business
case is the first step of many in the land of “things will not go as
planned.

 Decision Analysis

This technique allows the business analyst to examine and model

the costs and benefits of a proposed solution and its
implementation. You can use graphical decision trees and financial
valuation techniques to compare and contrast possible
outcomes.
  Estimation

You can forecast the investment required to deploy and operate the
proposed solution found in the business case. The estimates are done
in conjunction with the project manager using the project estimating
tools and techniques

 Metrics and Key Performance Indicators (KPIs)

Metrics and KPIs are used to measure, manage, and report on the
expected benefits of implementing a proposed solution. The business
analyst must make sure that the benefits being sought can be proven
to exist after the solution is deployed.

 SWOT Analysis

SWOT analysis lets you compare the costs and benefits of

implementing a potential solution. As previously discussed, there
are two dimensions to this analysis: the internal strengths and
weaknesses of the organization and the external opportunities and
negative impacts that are in play. The business analyst is seeking
to maximize strengths and minimize weaknesses.

 Vendor Assessment

When goods or services may be purchased from a third party as

all or part of a proposed solution, an assessment of that vendor
should be included as part of the business case. This decision to
purchase or outsource is made in the solution approach.

(A comprehensive discussion on business case shall be presented on Module 6)

 MIND CHALLENGE #2

Varsity Contracting has recently started negotiating to provide

custodial service for a local manufacturer at several facilities in the
area. The manufacturer has offered to contract for Varsity’s
services at the rate of P5.00 per square foot per month. To provide
nightly custodial service for the 100,000-square-foot plant, Varsity
would have to hire two more workers at P400.00 per hour. The new
service would require 8 hours per night, 5 nights a week. Supplies
would cost P10,000 per week, and overhead would be charged at
20% of the labor cost. Would you recommend that Varsity sign this
contract? Explain your reasoning?
 MIND CHALLENGE #3

Perform a SWOT Analysis on Brill Leisure Center based upon the following issues:

1. The Center is located within a two-minute walk of the main bus station, and
is fifteen-minute ride away from the local railway station.
2. There is a competition standard swimming pool; although it has no wave
machines or whirlpool equipment as do competing local facilities.
3. It is located next to one of the largest shopping center in Manila.
4. It is one of the oldest centers in the area and needs some cosmetic
attention.
5. Due to an increase in disposable income over the last six years, local
residents have more money to spend on leisure activities.
6. There had been a substantial decrease in the birth rate over the last ten
years.
7. In general people are living longer and there are more local residents aged
over fifty-five now than ever before.
8. After a heated argument with the manager of a competing leisure center,
the leader of a respected local scuba club is looking for a new venture.
9. Press releases have just been issued to confirm that Brill Leisure Center is
the first center in the area to be awarded quality assurance standard BS EN
ISO 9002.
10. A private joke between staff states that if you want a day-off from work
that you should order a curry from the Center’s canteen, which has never
made a profit.
11. The Center has been offered the latest sporting craze.
12. Brill Leisure Center has received a grant to fit special ramps and changing
rooms to accommodate the local disabled.
13. It is widely acknowledge that Brill has the best trained and most respected
staff of all of the centers in the locality.

That’s it for Module 3. If you’re not yet confident with

your understanding and were not able to get the ideas,
don’t give up. I suggest you go back to this lesson before
proceeding to the next one.
The Enterprise Analysis tasks address the most strategic part of business analysis work.
Often, these tasks take place before an actual project is planned or even approved.
Many organizations assess and evaluate the feasibility and value of possible solutions
to their problems and then select the most important projects to be done. Business
analysts focus on the strategic priorities business goals and business objectives of their
organizations when developing the business requirements. They have to define and
understand the business need and determine the desired outcomes the organization
would like to see to meet that need.

Once the business need is understood, the business analyst must assess the
organization’s current capabilities relative to that need. That means looking at the
enterprise architecture.

Next, the business analyst looks at ways to go about implementing a solution that
solves the problem and meets the identified business need. This is called the solution
approach. The selected solution approach depends a great deal on the nature of the
problem and the preferences of the organization. Some organizations might decide to
outsource services to implement a solution. Other organizations may prefer to build their
own software applications and to provide those services themselves.

Once the solution approach is selected, the solution scope can be defined. The
business analyst may find themselves working closely with the project manager in order
to get the solution scope definition in place.

Risk management kicks in as part of the Enterprise Analysis tasks when you build the
project’s business case. The business case requires the business analyst to identify and
analyze the technical, financial, and business risks related to the overall solution
feasibility. The business case is really the “authorization to proceed” document. It
justifies why the organization should invest in the implementation of a solution. Once the
business case is approved, the project itself can get merrily underway.
Weese, S., Wagner, T., CBAP CCBA Certified Business Analysis Study Guide

Kupersmith, K & Mulvey, P., Business Analysis for Dummies

[Link] –[Link]/guide/strategic-analysis/what-is-swot-analysis

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