Making the Elephant Dance: Strategic Enterprise Analysis


Many years ago, I attended a meeting held by a new CEO of an oil company. I was a stockholder and anticipated an announcement on a new strategic direction for my investment. The CEO’s first words were “I am going to make the elephant dance.” At the time, I did not understand the profoundness of the statement. Later I learned that the elephant was the company and the dance was a supposed quick change of company direction. However, what was ever more profound was how difficult it is to change the direction of a company. Changing the direction of a company is like turning a very large crude carrier (VLCC) at sea (Strategic Enterprise Analysis – no pun intended); it takes a lot of insight and time to make the turn. The CEO cannot just say, “Make it so” like the Captain of the USS Enterprise traveling in outer space at warp speed.
Strategic Enterprise Analysis is the study, modeling, and maintenance of the strategic direction of a company. This article is about conducting SEA. Moreover, it is about how a senior business analyst facilitates this executive board effort.

Strategic Enterprise Analysis (SEA)
Where do major projects come from and how do they obtain funds? Major projects are born during a company-planning phase that business people call “Strategic Enterprise Analysis.” Executives hold this phase when a major event(s) happens within a company or in the market place. For example,

To prepare for a change in executive leadership, an acquisition, merger or a divestiture

  • To respond to performance issues (positive or negative)

  • To respond to changes in the market place such as
    • customer demand
    • competition
    • new opportunities
  • To conduct a regularly scheduled review of current projects

Typically, during a SEA effort, the executive board examines the company’s mission and determines where they need to take the company (vision) based on the major events such as the ones listed above (i.e., as-is versus to-be, respectively). With the mission reviewed and the vision created, the executive board conducts a gap analysis to recognize what projects they need to charter to realize the vision. All these SEA activities (mission, vision, and gap analysis) require someone to facilitate a series of executive meetings.

Enter the Senior Business Analyst
Most business analysts work on an approved project that consists of a single vision and scope. These project business analysts may be at a junior or intermediate experience level. However, for preapproved project (SEA) activities, the executives need senior business analysts. The typical senior BA has broad experience within the company with assignments in various parts of the company (e.g., operations, planning, marketing, information systems, etc.).

After the senior business analysts assist the executive board describe and model the company mission (present strategic plan) and vision (new strategic plan), the senior business analysts conduct a gap analysis considering various aspects on how to achieve the vision. Some aspects may be changes to:

  • customer profiles – values and price perceptions

  • staff competencies – hiring and training programs

  • business policy and rules – employee and process behaviors

  • process management – steps for achieving products or services

  • information technology – software/hardware/network that facilitates process improvements

The result of the gap analysis is a set of proposed projects that will transform the existing business to the vision. Each of these projects has an accompanying business case consisting of a project description stating the 5Ws of journalism (who, what, where, when, and why) and associated income stream economics:

  • payback period (PP) – time to recover cost

  • return on investment (ROI)– returned % for single year projects (no discounting)

  • benefit cost ratio (BCR)– benefits discounted over the life of the project divided by the initial cost

  • net present value (NPV) – returned value discounted over the life of the project minus the initial cost

  • internal rate of return (IRR) – breakeven % for a multiyear project using the breakeven % for reinvestments

  • modified internal rate of return (MIRR) – breakeven % for a multiyear project given a reinvestment rate

The projects may be nondiscretionary (mandatory) with various compliance issues or discretionary (optional) with an associated cost benefit analysis. If a project involves a radical change from the mission, the senior business analysts may recommend a feasibility study (proof of concept) to the executive board.

Priority Funding
No company has unlimited funds for projects; typically there is a set amount of money the company has for capital investments each year. Therefore, the executive board must rank the proposed projects by business value to determine the order of funding until they exhaust the annual pot of capital money. Note: The executive board places nondiscretionary projects at the top of the rank list since they are mandatory. The question is not if the executive board will execute these projects, but when; the senior business analysts facilitate a board dialogue on the impact if delayed. If the board schedules them for that year, the board allocates funds to these projects first.

Many executive boards scrutinize discretionary projects even before the project ranking starts. With the help from a financial analyst, the board establishes a minimum return on investment for discretionary projects. The board calls this the hurdle rate. The hurdle rate consists of the current bank rate (cost of capital), the rate variance over five years, plus the board’s risk tolerance. In order not to miss lower return projects, the board sometimes establishes a range of hurdle rates based on project risks. Essentially, the board only considers projects that the IRR or, even better, the MIRR jumps the hurdle rate; IRR overstates reinvestments in the project’s income stream. For example, if the hurdle rate is 20% and the project’s MIRR is 25%, the project is eligible for the ranking process.

Comparative Ranking
With the eligible set of projects, the senior business analysts facilitate a Comparative Ranking session for the discretionary projects to determine the order of funding. The executive board, using a defined set of criteria, compares each proposed project with all the other proposed projects one at a time. The board determines the project rank by the number of times a project “wins” the comparison. For an example of a Comparative Ranking Matrix, see Figure 1. The board ranks each project against all other projects and places the winning project in the intersecting cell. The number of wins then determines the fund ranking. If the funds are exhausted prior to your project being allocated funds, well better luck next year; assuming the project makes the hurdle jump again the following year.

Comparative Ranking Project A Project B
Project C Project D
Project A   Project A Project A Project D
Project B     Project B Project D
Project C       Project D
Project D        

Figure 1. Comparative Ranking (Order: Project D, Project A, Project B, Project C)

The executive board decides on the criteria and the weight of each criteria item. Qualitatively, the board considers the project description (e.g., how the project contributes to the strategic plan, impact on employee morale or company image, etc.). However, more often, the board makes its decision based on quantitative measures such as economic indicators PP, ROI, BCR, and NPV.

Portfolio Management
After a review of the proposed projects, the executive board meets with portfolio managers to compare existing projects with the new strategic plan and the list of proposed projects. The senior business analyst helps the executive board ensure that

  • all projects (existing and proposed) are aligned with the new strategic plan

  • all projects are unique (no redundant projects)

If a project is not aligned or redundant, the executive board instructs the appropriate portfolio manager to cancel the project. The executive team approves the proposed projects and assigns each one a sponsor and portfolio manager. In some companies, the senior business analyst responsibilities continue in monitoring the realization of the project benefits. Unfortunately, many companies declare victory upon the close of the project rather than monitor the business for the actualization of the project’s business case.

Strategic enterprise analysis is the study, modeling, and maintenance of the strategic direction of a company. It is the realm of the senior (broad company experience) business analyst in facilitating the executive board through describing the company mission and creating a vision. The senior analyst then facilitates a gap analysis to identify the projects that will transform the company into the vision set by the executive board and may even recommend a feasible study. Putting the nondiscretionary projects aside, the board then scrubs the results of the gap analysis with hurdle rates and a comparative ranking process for funding discretionary projects. In the final stage, the senior business analyst facilitates a conversation between the executive board and portfolio managers to ensure all projects are strategically aligned and unique.

Post Script
Besides the SEA projects identified during gap analysis, project managers may submit additional projects/business cases for the priority funding and portfolio management process

Author: Mr. Monteleone holds a B.S. in physics and an M.S. in computing science from Texas A&M University. He is certified as a Project Management Professional (PMP®) by the Project Management Institute (PMI®), a Certified Business Analysis Professional (CBAP®) by the International Institute of Business Analysis (IIBA®), a Certified Scrum Master (CSM) and Certified Scrum Product Owner (CSPO) by the Scrum Alliance, and certified in BPMN by BP Messentials. He holds an Advanced Master’s Certificate in Project Management (GWCPM®) and a Business Analyst Certification (GWCBA®) from George Washington University School of Business. Mark is also a member of the Association for the Advancement of Cost Engineering (AACE) International, and the International Association of Facilitators (IAF).

Mark is the President of Monteleone Consulting, LLC and author of the book, The 20 Minute Business Analyst: a collection of short articles, humorous stories, and quick reference cards for the busy analyst; available on and extended networks. He can be contacted via –

The 20 Minute Business Analyst: a collection of short articles, humorous stories, and quick reference cards for the busy analyst, Mark Monteleone, (March 2013), see Enterprise Project Slate chapter for details on SEA activities with graphic process flows, business cases, economic indicators, and terms used in the article



Copyright 2006-2024 by Modern Analyst Media LLC