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 solution.

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
 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
Business Define Business
Need

goals and
Need

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
Benchmarking performance. When conducting such a study, the
business analyst 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
This structured can then
technique propose
is used projects
to examine a to
Root Cause Analysis reproduce solutions that work elsewhere.
situation in order to establish the root causes and
resulting effects of a particular problem. Two
common methods for root cause 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

Feasibility Analysis informal sessions for smaller efforts to formal
Benchmarking studiesat solution
feasibility studies looking compare your
options. In all
organization’s strategies, operations,
cases, feasibility analysis focuses on identifying and
Benchmarking processes
and againstpotential
analyzing the best - solution
in options to
- class strategies,
determine the most operations, and processes of
viable solution.
their competitors and peers. These studies can
help you identify solution approaches that have
worked well in other organizations.

Decision Analysis This technique allows you to examine and model

the consequences of different decisions before
You can estimate
actually making orandrecommending
compare the range of cost
a particular
and effortItassociated
decision. with
is possible to each solution approach
use graphical decision
Estimation you and
trees are financial
considering. Remember
valuation techniquesthat your
as part of
estimates should
identifying solutionbe developedforinyour
approaches conjunction
specific
with the project manager using the project - level
situation.
estimating tools and techniques.

SWOT analysis lets you compare possible solution

SWOT approaches relative to meeting a new business
Analysis need. 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.
 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

https://visual –paradigm.com/guide/strategic-analysis/what-is-swot-analysis

https://hbs.edu/strategy/business-strategy