What is Enterprise Analysis?
Enterprise analysis (also known as strategic enterprise analysis or company analysis) is defined as focusing “on understanding the needs of the business as a whole, its strategic direction, and identifying initiatives that will allow a business to meet those strategic goals.”[1] Enterprise analysis involves a thorough examination of not only the business problem (need) and its proposed business solution (if one already exists), but also an in-depth look into whether the proposed solution is truly the best solution, a detailed analysis of what the solution entails, its risks, and its feasibility in the existing organizational climate. Because so much research and examination are involved in the process of enterprise analysis work, they are routinely done at a project’s inception. (Or, for agile projects, they are done throughout the project.)
A thorough enterprise analysis endeavor will include:
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An examination of currently proposed business initiatives for both viability and effectiveness
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An identification of the true, core business need(s) at hand, regardless of what has been proposed thus far
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A description of the ideal solution to the need
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An evaluation of strategic risks and returns associated with any proposed business solution
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The scope of the business analyst’s proposed solution(s) to the business need, meaning what tools and processes are involved in getting to the solution
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The creation of business requirements defining the business need and proposed solution, complete with visuals and a sound business case
Because the work is so specialized—and so crucial—many organizations have senior analysts to spearhead their enterprise analysis endeavors. However, the understanding and application of business analysis is useful for a number of roles in the business world that may have interest in pre-project research and solution justification, including but not limited to business analysts, project managers, stakeholders, business owners, and software engineers.
The Role of Enterprise Analysis in the Requirements Process
As was mentioned above, enterprise analysis is the key starting point to the requirements process, identifying the scope of the business need and justifying its solution. According to BABOK, “It is through enterprise analysis activities that business requirements are identified and documented.”[2] Enterprise analysis is the foundational research that undergirds any successful set of requirements. In addition to being a crucial starting point, enterprise analysis is continually referenced and refined throughout any business analysis endeavor, particularly in agile development.
It is important to note that while many aspects of business analysis—including requirements gathering and implementation—are often done in concert with IT, enterprise analysis ideally is performed irrespective of IT. The work of enterprise analysis is business-focused, and while enterprise analysis may consider what IT can bring to the table in terms of solutions, its primary focus is on business, including changes in business processes, models, and strategies.
Steps Involved in Enterprise Analysis
BABOK has identified five main steps in the process of enterprise analysis, which are outlined below.
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Define the business need. A business need may already be stated prior to a project’s inception, but it may or may not be the true need that the business needs to address in order to achieve its goals. “The definition of the business need is frequently the most critical step in any business analysis effort.”[3] This is because without a correct identification of the need, one will never arrive at a viable solution and all efforts toward that end will be wasted. “An issue encountered in the organization, such as a customer complaint, a loss of rev¬enue, or a new market opportunity, usually triggers the evaluation of a business need.[4] It is common for organizations to act to resolve the issue without investigating the underlying business need.” It is incumbent on the business analyst, therefore, to examine the underlying causes of the need in order to accurately identify it and bring all viable solutions to the table for stakeholders’ examination. During this stage, it is imperative that the analyst avoid group think, assumptions, and preconceived ideas in order to bring an effective, objective voice to the process. In order for an analyst to accurately define the business need, she must identify the following (as outlined by BABOK):
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The quantifiable consequences of the perceived business problem to the organization (such lost revenue, dissatisfied customers, and so forth).
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The payback that is expected from any potential solution (greater profits, reduced spending, and so forth).
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How fast the solution can be implemented, and the consequences of doing nothing.
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The business problem’s real, underlying source.
This is also the stage in which the analyst must elicit the perceived business requirements from the business owners.
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Assess the capability gaps. Capability analysis is a key part of enterprise analysis. Separate from defining the business need, capability analysis defines whether the organization has the capability to meet that need. (For a succinct description of capabilities analysis versus requirements analysis, see John Owens’ article “Capability vs Requirement,” accessible here.)[5] BABOK notes that if an organization does not have sufficient capabilities to meet a business need, then it is incumbent on the analyst to identify the capabilities that need to be added.[6]
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Determine the solution approach. In this stage, the analyst must determine (based on research done in previous steps) the most viable solution to what has been determined to be the business need. The approach must describe what is needed to implement the business solution—such as new software, a revised website, a change in business processes, or some combination of these. More than one solution, or multiple parts to a solution, may be proposed. If capability gaps prohibit a smooth implementation of the ideal solution, solution alternatives must be anticipated. It is ideal for the analyst to make any list of solution alternatives as exhaustive as is humanly possible. Each solution must include any accompanying assumptions, constraints, or risks.
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Define the solution scope. According to BABOK, the function of this enterprise analysis stage is “to define which new capabilities a project or iteration will deliver.” This stage puts the flesh on the bones of the solution approach, helping stakeholders understand the path to the solution’s arrival, and the tools that will be required to implement it. Examples of items that may be included in the scope are data warehouses, databases, software, processes, and so on. According to BABOK, “The solution scope will change throughout a project, based on changes in the business environment or as the project scope is changed to meet budget, time, quality, or other constraints.”
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Define the business case. What are the practical, tangible benefits of the solution? “The business case describes the justification for the project in terms of the value to be added to the business as a result of the deployed solution, as compared to the cost.”[7] In other words, how is the proposed solution truly beneficial, from a business sense, to the organization? The business case is all about quantifying the solution’s benefits (with greater specificity than was done in stage 1 in describing the expected payback). A specific amount of revenue, dollars saved, and other quantifiable benefits, with a description of the metrics that helped the analyst arrive at those numbers.
A final, polished description of business need, capability gaps, proposed solution and scope, and business case are normally included in the business requirements that are presented to stakeholders. As with any set of requirements, stakeholder involvement, agreement, and communication are keys to their implementation success.
Core Competencies for Enterprise Analysis
A business analyst must possess certain core competencies in order to effectively lead enterprise analysis projects[8]. These include (but are not necessarily limited to) the abilities to:
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Create and maintain business architecture. To perform this, an analyst must be able to research and discern where a business is (baseline architecture) and where it should be (target business architecture). According to BABOK, business architecture “defines an organizations current and future state, including its strategy, its goals and objectives.”[9]
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Conduct feasibility studies. A feasibility study looks at the options that are proposed and examines whether they are technically possible within the organization and whether they will meet the organization’s goals.
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Perform opportunity identification and analysis. This is the practice of identifying and analyzing “new business opportunities to perform organizational performance[10]. This is typically done in consultation with subject matter experts.
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Prepare and maintain the business case. For this competency, an analyst must be able to identify the cost in time, money and resources that the proposed solution will consume and weighs that against the tangible benefits that the solution will offer.
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Understand and perform risk management. For this skill, an analyst must understand the risks (technical, financial, business, and so on) of implementing the proposed solution and weigh those against the risk of not implementing the solution.
For more information on these competencies, please review their descriptions within BABOK.
Enterprise Analysis Services
Many able consultants, both individuals and firms, offer enterprise analysis services that are useful to organizations that may be less experienced or familiar with enterprise analysis. A few examples of these services include
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Broad in-depth organizational and industry research, helping to ensure that all avenues are explored to guarantee the very best business solution is proposed
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Business analysis and business development
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Capability modeling, business case creation, and decision support, helping to justify the business solution to management
(An analyst or manager may find an able firm in their area by looking up enterprise analysis consultants or management group consultants that offer enterprise analysis services.
For Further Reading and Research
- For more in-depth research, the article “Towards a truly integrated enterprise modeling and analysis environment” is available here.
- Additionally, the classic tome UML for the IT Business Analyst includes chapters that cover identifying capability gaps, business models used in enterprise architecture, and business process descriptions[11].
Author : Morgan Masters is Business Analyst and Staff Writer at ModernAnalyst.com, the premier community and resource portal for business analysts. Business analysis resources such as articles, blogs, templates, forums, books, along with a thriving business analyst community can be found at http://www.ModernAnalyst.com
[1] http://en.wikipedia.org/wiki/Business_analysis. Accessed June 20, 2010.
[2] A Guide to the Business Analyst’s Body of Knowledge® (BABOK® Guide), Version 2.0, International Institute of Business Analysis, Toronto, Ontario, Canada, © 2005, 2006, 2008, 2009.
[3] Ibid.
[4] Ibid.
[5] Owens, John. “Capability vs Requirement.” Accessed June 24, 2010.
[6] A Guide to the Business Analyst’s Body of Knowledge® (BABOK® Guide), Version 2.0, International Institute of Business Analysis, Toronto, Ontario, Canada, © 2005, 2006, 2008, 2009.
[7] Ibid.
[8] http://download.theiiba.org/files/resources/GLITBACompetencyModel.pdf. Accessed July 23, 2010.
[9] A Guide to the Business Analyst’s Body of Knowledge® (BABOK® Guide), Version 2.0, International Institute of Business Analysis, Toronto, Ontario, Canada, © 2005, 2006, 2008, 2009.
[10] Ibid.
[11] Podeswa, Howard. UML for the IT Business Analyst: A Practical Guide to Requirements Gathering Using the Unified Modeling Language. © 2010 Course Technology.