Strategic Analysis

How do you define the organisations internal environment?

The internal environment can be discovered using the most analysis.

Mission - a statement declaring what business the organization is in and what it is intending to
achieve.

Objectives - the goals against which the organization's achievements are measured.

Strategy - approach taken by the organization to achieve the objectives and mission.

Tactics - the detailed means by which the strategy will be implemented.

How do you define the organisations external environment?

The PESTLE analysis framework helps organizations assess the external environment. With the
PESTLE analysis dont simply see it as a set of checklists. Use it to identify the factors that really
affect the organization and then develop a real understanding of how they might evolve in the
future.

Political for example - tax policies, Govt laws and regulations

Economic - influences determining profitability for example - business cycles, interest rates, inflation
and availability and cost of energy.

Socio-cultural - influences include demand and taste issues and how tastes and preferences change
over time.

Technological the impact of technology

Legal these can include legislation and legal verdicts

Environmental issues like Global warming, Animal welfare and Waste, such as unnecessary
packaging.
How do you assess the impact of market conditions in the market the
organisation operates in?

Porters 5 forces model assess the affect of market forces.

How do you use the PESTLE and Porters 5 forces information?

You can use the environmental information to prepare for possible future situations. Scenarios look
at the medium- and long-term future by evaluating possible different futures to prepare the
organization to deal with them and prepare managers to deal with future shocks.

Scenarios begin by identifying the potential high-impact and high-uncertainty factors in the
environment. Usually four or more scenarios are needed, and they should be plausible and detailed.

Next, what futures could these factors construct, and what combination of these factors could build
a plausible scenario? In doing this, we are concerned with predetermined events such as
demographic changes, key uncertainties - often political and economic, including regulation and
world trade - and driving forces such as technology and education. This information comes from the
PESTLE analysis.
How would you assess the performance of individual products or
business units?

Portfolio Analysis provides a method for assessing the performance of individual products or SBUs. It
works on the idea that the portfolio of products or SBUs are managed to achieve balance. There
should be a mixture of high-growth, profit -maximizing, investment-needing and declining products.

Wild Cats or Problem Children these are unprofitable at the moment but are investments for the
future.
Stars these strengthen their position in a growth industry until they become big profit earners.
They are mature products or services and often market leaders. They provide the funding for the
other segments of the matrix.
Dogs these have low market share in markets with low growth.
Cash Cows these are mature products in well-established markets where they are the market
leaders. They are the most profitable products in the portfolio.

Put simply, the cows are milked, the dogs are buried, the stars get the gold and the wild cats are
examined carefully until they behave themselves or join the dogs and die.

How do you pull together the information from the internal and
external analysis techniques?

The SWOT analysis is used to pull together the results of an analysis of the external and internal
environments.
The SWOT analysis is where we summarize the key strengths, weaknesses, opportunities and threats
in order to carry out an overall audit of the strategic position of a business and its environment.
The language of a SWOT analysis is important. It needs to be brief, with strengths and weaknesses
related to critical success factors. Strengths and weaknesses should also be measured against the
competition. All statements should be specific, realistic and supported by evidence.

How are strategies formed for the information from the analysis?

Strategies are usually formed in a formal, rational and logical manner by the most influential
powerful and enterprising individuals such as Founders and CEOs. The strategy formation process:
When the strategy is formed how is it implemented?

The McKinsey 7-S model

All organizations are made up of seven components. Three 'hard' components - strategy, structure,
systems and Four as 'soft' components - shared values, style, staff, skills
These are the seven levers that can be used in the implementation of strategic change. All seven
components need attention if the implementation is to be successful, because if there is a change in
one, then others will be affected. Changing the strategy means that all of the other components
have to change as well:
Structure - this is the basis for building the organization, will change to reflect new needs for
specialization and coordination resulting from the new strategic direction.
Systems the formal and informal systems that previously supported the organisation must change.
Style the style or culture of the organization will be affected by a new strategic direction. Values,
beliefs and norms, which developed over time, may be swept away.
Staff The way staff were recruited, developed and rewarded may change. New strategies may
mean relocating people or making them redundant.
Skills Skills and competencies acquired in the past may be of less use now. The new strategy may
call for new skills.
Shared Values - Shared Values the fundamental ideas that are the basis of the organization change,
for example moving from an 'engineering first' company to a 'customer service first' company would
change the shared values.

Balanced Business Scorecards(BBS)

The BBS can be thought of as the strategic balance sheet for an organization as it captures both the
financial and the non-financial components of a strategy. The BBS shows how the strategy
implementation process is working and the effectiveness with which the levers for change are being
used. The BBS supplements financial measures with other perspectives of organizational
performance - Customers, learning and growth, and internal business processes. Vision and strategy
connect with each of these.
Although the emphasis of the BBS is to measure all aspects of performance, many people pay more
attention to the non-financial measures, since these have not been measured previously, but
financial measures retain their importance.
The customer perspective measures those critical success factors that provide a customer focus. It
forces a detailed examination to be made of statements like 'superior customer I service' so that
everyone can agree what it means and measures can be established in order to show the progress
being made. But perhaps little progress is possible without new skills and different attitudes - a link
to the learning and growth perspective, which in turn could generate a need for new internal
processes to give the newly skilled people the tools to use.
Each perspective then answers questions like the following:
Financial: to succeed financially and have the resources to deliver our strategy, how must we be
seen by our stakeholders?
Customer: to achieve our vision, what do we want customers to say about us?
Learning and growth: how will we sustain our ability to change and improve so that we constantly
keep ahead of the competition?
Internal business processes: what are the business processes that we must excel at in order to
deliver customer value?
How can the success of the strategy be monitored?

Using Critical Success Factors and Key Performance Indicators. The Critical Success
Factors (CSFs) are the things that an organization must be good at in order to succeed. If
we are successful in these areas, then the organization will be performing well. Or I know
when I am successful if.
my customers are satisfied (customer satisfaction)
my cash flow is positive (positive cash flow)
my employees stay with me (employee retention)

The Key Performance Indicators (KPIs) are the measures which help to find out how well the
business is performing and help to measure the critical success factors. A KPI is a key part
of a measurable objective, which is made up of a direction, KPI, target, and time frame. If the
critical success factor is healthy revenue, the objective may be: increase revenue on the
sale of new Accords in the London showrooms by 3% by the end of quarter 4 this financial
year in comparison with the end of quarter 4 last financial year. Revenue from the sale of
newAccords in the London showrooms is the KPI. That is what we are measuring.
A KPI should be SMART or SMARTI.
Specific
Measureable
Achievable
Relevant
Time based
Involvement (involve those who have to meet the target dont just impose it on
them)
Exam style revision questions

A family-run farm shop (called The Farm Shop) in Hampshire has enjoyed unprecedented success in
recent years and wants to build on its fine reputation to expand. Providing good customer service
and convenience has helped their image and they now strive to be known as the best farm shop in
the county. This is particularly impressive in a time when the government has tightened its policies
on animal welfare and farming methods which adds extra cost to farmers and to the industry in
general. Farmers have passed the increased cost of farm produce on to the Farm Shop and it is partly
due to The Farm Shops excellent customer service that they have been able to remain profitable.
Business is also successful due to a recent TV cookery series which featured farm produce. This has
sparked an interest in the local, affluent population.

They source all the relevant ingredients from three local, reputable farms. They plan to launch a
series of home-cooked convenience foods, but need to investigate the food technology involved,
e.g. shelf life of sauces and partially cooked meats. Cleanliness and health and safety in the shop are
of vital importance. It is imperative to comply with the food standards, food labelling and food waste
disposal legislation.

The company directors are keen to increase the number of customers and also their net profit. One
director, Charlie, wants to open two more shops in different parts of the county. He has already
identified potential sites and is keen to get started with the various projects involved in this venture.
These include a marketing project to understand demand and competition, a facilities project to buy
and setup the shops and a purchasing project to identify potential new farms to be their suppliers.

However one of the other directors, Sam, is convinced that they should review their business
processes and IT before expanding. Their hardware runs slowly and the software is outdated.
Communication with the farms could be improved if they set up a business to business application
for ordering rather than just sending emails as they do currently.

1. Perform a MOST analysis on the Farm Shop business

2. Perform a PESTLE analysis for the Farm Shop.

3. Perform a SWOT analysis for the Farm Shop

4. Identify two critical success factors for the Farm Shop

5. Identify two key performance indicators for the Farm Shop

SCENARIO

The Greater London Authority (GLA) has decided to promote athletics in order to increase the
general health and fitness of its populace. It plans to set up new athletic clubs where the public can
be given top quality training and eventually go on to compete in inter-club athletic meetings.
Preliminary studies have suggested that reducing the incidence of coronary heart disease among
Londoners by 2% by 2020 is a feasible goal.

To put its vision into effect, the Authority plans to build new athletics stadia in Enfield (north
London), Hillingdon (west London) and Walthamstow (east London). It also plans to refurbish
existing stadia in Merton and Wimbledon (south London). It expects to stage its first inter-club
athletics competitions (to be called the All London Games) in two years time and it is hoped that
this event will stimulate public interest and participation in the initiative.

You are a member of a team conducting a business analysis study of the preliminary procedures
being set up by the club committee to operate at the pilot site (Merton). Facilities and staff will need
to be arranged and suitable publicity organised. Appropriate monitoring and control is necessary to
ensure that council-tax payers money is being well spent. All coaching and athletics meetings will, of
course, take place within the rules of the British Athletic Federation.

Perform a MOST analysis on the case study scenario, identifying at least one entry for each of the
MOST headings.
MOST
Mission To be the best farm shop in Hampshire.
Objectives Increase net profit, increase number of customers
Strategy Open new stores in different parts of the county
Tactics Understand demand and competition, buy and setup the shops, identify potential
new
suppliers.

PESTLE
Political: government policies on animal welfare and farming methods
Economic: cost of farm produce supplies
Sociological: Local, affluent demographic. TV cookery show.
Technology Food technology e.g. shelf life of sauces and partially cooked meats.
Legal Food standards, Food labelling, Health and Safety
Environment Food Waste disposal

SWOT
S Loyal customer base, profitable company
W Poor IT: slow hardware and outdated software
O Availability of sites for shops
T Increase of cost of supplies from farmers, change of food standards legislation

CRITICAL SUCCESS FACTORS

Provide excellent service
Compliance with Health and Safety and Food Standards laws

KPIs
Number of new customers
Amount of net profit
Mission: To improve the health and fitness of Londons
populace by the provision and promotion of athletics
facilities and competitions.
Objectives: To reduce the incidence of coronary heart disease by
2% by 2020.
Strategy: To provide athletics facilities in strategic locations
around London.
To stage athletics competitions in London.
Tactics: Build new stadia in Enfield, Hillingdon and
Walthamstow and refurbish stadia in Merton and
Wimbledon.
Stage first All London Games in two years time.
Terms of Reference/Project Initiation
When a project is initiated, the rationale for the change and the planned approach to the change
should be agreed and documented. Such a document may be referred to as a Terms of Reference or
Project Initiation Document (PID). It comprises:

Background
Project Objectives
Business case, or benefits and costs
Scope
High level timescale
Requirements
Budget
Deliverables
Key stakeholders, project governance, roles and responsibilities
Any relevant risks, issues, dependencies, constraints, assumptions are also defined.
Glossary

Business and Project Objectives

Objectives are measures that can be increased, decreased or maintained and - if they hit a certain
target value it equates to success.

Deliverables from Business Analysis Studies

A deliverable from business analysis studies is the product that the business analyst will produce
(normally a document) and will remain even after the study has finished.

Terms of Reference/Project Initiation

When a project is initiated, the rationale for the change and the planned approach to the change
should be agreed and documented. The generic name for such a document is the Terms of
Reference (ToR). However, this document has different names depending on the approach being
taken and the organisation standards. Another name is Project Initiation Document (PID).
Whatever it is called it will have certain information in it. The document will have the following
sections

Background
Sets the project in context and is typically written from the perspective of someone who knows
nothing about the project but does know the business environment.

For example:

The IT department is running a project for the customer order delivery division of Ultimate
Catalogue Company. This division is responsible for delivering orders from the company warehouse
to the customers delivery address. The issue facing the division is that around a third of these orders
is being returned on first delivery attempt.
Objectives
Objectives are measures that can be increased, decreased or maintained and - if they hit a certain
target - value equate to project success.

For example:

Reduce the percentage of orders returned due incorrect delivery address the target is 66%.

Scope
Defines the extent of the projects deliverables impact. Extents can be defined in lots of ways
POLDAT is a common starting point (Process, Organisation, Location, Data, Application, Technology),
but there can be other extents and they can be combined in any way. A project can have many
scoping definitions.

Important: scope statements are anded together as in this process and this organisation and the
location and this data and this application and technology are the scope

Process: Record Sales Order

Organisation: Tele-Sales order team

Location: Wetherfield

Data: Delivery address

Application: Ultimate Ordering System

Technology: Ultimate Catalogue Company internal network

Specifically Out of Scope

Everything that is not defined as in scope is by definition out of scope. However, it is good
practice to record anything that is debated and ruled out of scope along with who made the decision
and why. This is used to justify why some requirements are excluded and saves having to re-open
the discussion.

For example:

Process: Self-Record Sales Order (Web) Organisation: Customer

Location: Anywhere

Data: Delivery address

Application: Ultimate On-Line Ordering System

Technology: Ultimate Catalogue Company internet website

Justification: the majority of errors are coming from the telesales order team, not customers on the
website.

Who was involved in this decision: A. Smith (project sponsor), B. Jones (project manager).
Note how delivery address is data in scope AND out of scope depending on the other scope
extents.

Constraints
Definition of what factors limit what can be done by the project (in the context of Requirements
Definition) in documenting requirements.

For example:

Requirements must be documented using the IT requirements templates.

Requirements
At this stage only the very high level requirements (general or business requirements) may be
understood. This may be simply in the form of one or two sentences summarizing the proposed
change. For more information on requirements see the JEEP manual Preparing for an exam in
Requirements Defintion.

For example:

We need to implement a system which will help us to track our deliveries.

Stakeholders
A list of who is involved and in what capacity in order to track who is generating and validating
requirements.

For example:

A. Smith (project sponsor) C. Gray (telesales order process subject matter expert)

Plan/Timescale
At project initiation stage the plan and timescales will not be detailed. However, some high level
planning must have already been done by now to estimate the cost and therefore have the funds
released. The overall project plan is typically owned and maintained by the Project Manager.

For example:

Target implementation date is 25th August 2010.

Budget
The overall project budget is typically owned and maintained by the Project Manager.

For example:

50,000

Business Case
See below for business case This may be a summary of the full business case summarising the
benefits and the costs. A link to the full business case may be included or it may be added as an
appendix. Business Cases break down to benefits and costs.
Benefits are the objectives. They are one and the same thing. This has already been documented.
The only way they may be expressed differently here is to assign monetary value.

Costs cannot be estimated with any accuracy until the solution in outline form is known. Only
indicative costs can be estimated. The way these two figures are related to form a payback model
vary by organisation.

For example:

Benefits:

Reduce the percentage of orders returned due incorrect delivery address by 66% There are 250
delivery drivers making 2,500 deliveries a day of which around a third are wrong 750. The project
aim is to reduce this to 250 or less. Each wrong delivery costs 10, so the saving would be 5,000 per
day.

Costs:

Changes to system, training and rollout estimated at 50,000.

Deliverables
What the project will produce and will persist after the project has closed down.

For example:

Changed Ultimate Order Taking System. Trained sales order team to use the new system capabilities.

Issues & Assumptions

Issues are factors outside the project control that materially impede project progress. Assumptions
are made in order to allow work to continue even though an issue is impeding progress. The Project
Manager normally has a central register of issues and assumptions.

For example:

Issue: There are insufficient Business Analysts to do the planned requirements analysis in the
allotted time.

Assumption: work will proceed on the assumption that more Business Analyst resource will be made
available.

Risks

Risks are factors outside the project control that could realistically occur and if they did would be
issues that materially impede project progress. The Project Manager normally has a central register
of risks and in that case only those that materially affect the requirements need to be included here.
Not all requirements will be fully analysed if sufficient Business Analysis resource is not made
available in the right time-frame.

Dependencies
Dependencies are factors outside the project control which the project needs in order to make
progress, or which the project produces and without which another project cannot proceed. The
Project Manager normally has a central register of dependencies and in that case only those that
materially affect the requirements need to be included here.

The project to improve capture of delivery address on the corporate website needs this projects
requirements to define what a valid delivery address is before it can proceed.

Glossary
Any terms which could or have been misinterpreted are defined in order to minimise ambiguity in
the requirements.

Delivery Address: the UK postal address to which the goods ordered by the customer for a particular
order are to be delivered.

Notes: there is a default delivery address (see separate entry in this glossary), which is not
necessarily the billing address.

Business and project objectives

Objectives are measures that can be increased, decreased or maintained and if they hit a certain
target value equate to success.

An example of a business objective is: Reduce lost revenue

An example of a project objective, related to the above business objective, where the
project is to implement a new invoicing and credit control system is: Reduce the number of
days for debtors to pay our invoices

Deliverables from Business Analysis Studies

A deliverable from business analysis studies is the product that the business analyst will produce
(normally a document) and will remain even after the study has finished. Examples are:

SWOT and recommendations

Business Activity Model
Root Definition
Business Case
Agreed CSFs (Critical Success Factors) and KPIs (Key Performance Indicators)
 Requirements document
Process models
Data models
Understanding the Situation and Issues
Who is a Stakeholder?

A stakeholder is anyone who has an interest in, or may be affected by, the issue under
consideration'

How do you identify the stakeholders for a project?

The nature of the project will dictate the set of stakeholders. However, we can identify some generic
stakeholder categories that may apply to most projects.

What role do the different stakeholder groups play within the project?
How do you decide how closely you work with each stakeholder
group?

You use the power/influence grid to determine the impact each stakeholder group will have on the
project and tailor your strategy for working with each stakeholder group based on the result.

How do you deal with stakeholders that have no power or influence

over the project?

You can ignore these stakeholders regarding day-to-day issues on the project, and no special effort
needs to be made to 'sell' them its benefits. Stakeholders do change positions on the grid so inform
them occasionally about what is going on using vehicles such as organization newsletters.

How do you deal with stakeholders that have high interest but no
power over the project?

This group can feel powerless over shaping project direction, resulting in frustration and passive
resistance to change, which, although overcome by positional power, can lead to delay and less-
than-optimal results.

The strategy here is to keep such stakeholders informed, in particular, of the reasons for proposed
changes. Often more effort has to be devoted to 'selling' the project to this group. Be honest as
possible about the need for change; highlight the positive aspects of the change or negative
consequences of not changing and use frequent and focused communication of progress.
How do you deal with stakeholders that have No to high interest and
some power/influence over the project?

This varied group includes stakeholders such as middle or senior managers who do have some
power or influence but, are not affected directly or are not very concerned about the direction that a
project is taking. Regulators may also fall into this category; they will start to get involved only if
some breach of the rules is suspected, at which point they could squash an initiative. The group can
also include people with more interest in the project but only some power or influence over it.

The best approach is to keep them supportive of the project, possibly by frequent positive
communication and perhaps also involving them more with the project.

How do you deal with stakeholders that have No interest but high
power/influence?

This group are usually very senior managers with no direct interest in the project. This may be
because it is too small or unimportant for them to bother with or because it is in an area that does
not interest them. Ignoring this is a risky approach.

If a situation arises that might cause this group to take a greater interest in the project, we should
address their needs directly, perhaps via one-to-one meetings, ensuring they dont start to raise
concerns or exert their influence negatively.

You may wish to encourage the increased interest of influential stakeholders, for example if we felt
that their support would help achieve the project objectives. Where this is the case, we may need to
highlight any aspects of the project that directly impacts on the stakeholders' business area.
Schedule a meeting to discuss this.

How do you deal with stakeholders that have some interest and high
power/influence?

These people have some interest in the project - probably an indirect interest, as the project is
happening within or affecting their empire - and they have real power. The usual stakeholder
management strategy here is to keep them satisfied and, perhaps, to prevent them from taking a
more direct (and possibly more obstructive) interest in the project.

In other circumstances, the strategy may be precisely the opposite - to get the stakeholder involved
more actively in a project. For example, if the finance director of an organization can be persuaded
to get positively involved in a project, then he will often be a powerful force for success, since he can
make resources available that would otherwise be hard to come by.

How do you deal with stakeholders that have High interest and high
power/influence?

These are the key players, the people who are interested in the project and have the power to make
it work - or not. Often, the key players are the managers of the functions involved in a project.
Initially, it is important to determine whether individual key stakeholders are positive or negative in
their approach to a project. If positive, then their enthusiasm must be sustained, especially during
times of difficulty. It is also important to appreciate the concerns and opinions of key stakeholders,
and you will need to take these into account when making any recommendations. For example, if
one of the key stakeholders has a particular solution in mind, then it is important to know about this
as early as possible in order to ensure that, at the very least, the solution is evaluated as one of the
options. It is also vital that the key stakeholders understand the progress of the project and why
certain decisions have been made. These are the people to whom any final recommendations will be
presented and who will have the final say on any decisions. They need to be kept informed at all
stages of the project so that none of the recommendations comes as a shock to them.
What techniques can be used to gather information?

How can you depict the business position based on the information
gathered?

Rich Picture development and Problem Analysis are two methods for investigating the situation and
finding out the problems.
How do Rich Pictures vary from other methods of problem analysis?

Rich pictures contained all the elements of the situation, for example, interpersonal, political and
cultural issues are rarely covered by other methods.

What should be included in a Rich Picture?

The Rich Picture should include everything that the analyst feels is relevant to the business situation.
This can include:

Structures
Processes
Climate
People
Issues expressed by people
Conflicts
In Problem Analysis what framework is used for solving problems?

Mess Finding
Many problem situations are complex. There may be many issues and conflicts. The situation is not
defined and is therefore a mess. A start can be made to help understand and define this by using
Rich Pictures

Data Finding
Research and document all the relevant information including opinions and ideas. Indicate where
the information is factual or based on opinion. Show the different perspectives.

Problem Finding
Use the information gathered so far to understand, agree and document the fundamental and
underlying problem. The problem analysis technique can be used for this.

Idea Finding
Generate a range of ideas use workshops, brain storming, rich pictures, mind mapping and other
techniques such as assumption reversal.

Solution Finding
Evaluate the ideas and agree solutions.

Acceptance Finding
Implement the solution
In Problem Analysis what written structure is completed to help
identify, analyse and solve a problem?

Given the desire to.it should follow that.

The reasons this isnt happening now are..

resulting in the business problems of
and the desire will have been satisfied when..
Getting the Business Perspective
How does the analyst get an understanding of the business
perspective?

The analyst develops an understanding of the business perspective by asking each of the stakeholder
groups what they feel the purpose and the objectives of the project is.

What framework is useful for analysing the different business

perspectives?

The CATWOE technique helps define the business perspective and therefore the definition of the
business system (root definition). One CATWOE should be defined for each viewpoint. The six
CATWOE elements are then formed into one or two sentences describing the system in a very rich,
comprehensive, but concise way. Each sentence is called a Root Definition. In other words, the
sentence defines the business system.

A useful framework for defining and analysing business perspectives is the CATWOE approach. The
purpose of CATWOE is to ensure that the Root Definition is well formulated.

Customers - the beneficiaries of the transformation, the recipients of the systems end
product or the person on the receiving end of the system services.

Actors those responsible for performing business activities. They could be within the
organisation or they could be external business partners or suppliers.

Transformations the core business processes that are carried out to convert an input to
output. What are the transformations that generate a change? How are they achieved?

Weltanschauung or world-view - what are the groups perspective of what is going on in the
wider world that is influencing and shaping the "situation" and need for the system to
adapt? Why the system exists and what it should be doing.

Owner normally one owner the person or group who can make decisions about the
business system often a senior role

Environment can be more than one, the conditions and rules under which the system must
operate.
What is the first step in creating a root definition (business
perspective) for the business system?

Performing the CATWOE analysis

What is the Root Definition?

The six CATWOE elements are then formed into one or two sentences describing the system in a
very rich, comprehensive, but concise way. Each sentence is called a Root Definition. In other words,
the sentence defines the business system.

How do you resolve conflicts between different views?

Conflicts between stakeholders differing viewpoints can be resolved using the following:

Laws and regulations if one viewpoint is more compliant than others, it wins.

Objectives and scope if one viewpoint appears to deliver business or project objectives
better than another, it wins.

Internal and industry Standards if one viewpoint complies with industry or internal
standards, it wins.

Feasibility: cost, technical, resource if one viewpoint is more feasible in terms of cost,
resource and technology, it wins.

Impact: perform impact analysis if one viewpoint has less negative impact than the others,
it wins.

Negotiate once all the necessary information has been gathered, if the conflict has not yet been
resolved, stakeholders discuss and negotiate.
Analysing and Modelling Business
Activities
What is the starting point for creating a conceptual business activity
model (BAM)?

The starting point for a conceptual Business Activity Model (BAM) is an examination of the CADWOE
analysis/ Root Definition (a BAM is created for each perspective or CADWOE analysis/ Root
Definition).

The transformation part of the CATWOE analysis forms the basis of the BAM. It may form the title of
the BAM or become one of the doing activities on the BAM. The aim is to draw a model of all the
activities required to perform the transformation stated in the Root Definition.

How do you decide what activities will form the BAM?

All businesses can be described in terms or five types of business activity, these activities are:

Plan: make decisions, set performance targets and define resourcing needs such as staffing
criteria and requirements.

Enable: ensure that resources and facilities are in place allowing the primary task to be
carried out.

Do: these are the activities associated with the primary tasks and relate to the
transformation part of the CATWOE analysis.
 Monitor: Enabling and doing activities are monitored to track performance to ensure that
targets are met.

Control: the results from the monitoring activities may lead to actions taken within the
business. If targets are not being met changes will be made within the business system or
the targets may be reviewed.

How do you add the dependencies to the BAM?

Dependencies provide a guide to the sequence on the diagram. For one activity to occur another
activity must have occurred or at least started. Dependencies on the diagram are shown as arrows
between the activities. These arrows do not necessarily show sequence in the same way as arrows
on process diagrams. For example one activity may happen weekly even though the activity on
which it depends only happens monthly.

How do you create the Consensus BAM?

The consensus BAM is created by amalgamating all the conceptual BAMs. There will be a conceptual
BAM for every Business Perspective (CADWOE/Root Definition). To arrive at a consensus the analyst
must resolve any conflict between the various views that have lead to the creation of different
BAMs. To do this we combine the activities that are agreed by the stakeholders into a consensus
model.

What is a business event?

A Business Event is something that triggers one or more business activities.

There are three types of event to consider:

External

These events originate from outside the boundaries of the business system. An external event may
be a customer telephoning with an order.
Internal Decision Points

These events are usually internal decision made by managers. For example giving a discount ot
products that are purchased within the next two weeks. This event would be because of an internal
decision rather than an external occurrence.

Scheduled Points in Time

These are events that occur regularly at scheduled points in time. For example every morning a
specific event will occur.

What are Business rules/constraints?

There are two types of business rule:

Constraints legal and regulatory constraints, for example VAT rate. Can include industry
standards or fixed internal policies. Depending on the boundary of the business system in
question, a constraint may come from outside the boundary but within the organisation, e.g.
having to buy products from a preferred supplier.

Operational Guidance internal rules or localised procedures; for example how to deal with
a product that has been returned or a booking which is to be cancelled.
Identifying Potential Solutions

What is the purpose of conducting a Gap Analysis?

The Gap Analysis compares the ideal system with the existing system. You compare the conceptual
BAM with the real world activities. This provides the following information:

Activities in place and satisfactory. Little needs to be done about these activities.

Activities are in place but are not satisfactory. Look closely at what is wrong with these
processes. Possible problems are: the processes are poor, there are organisational issues
with the processes (carried out by the wrong department for example), problems with the
people involved or the processes are poorly supported by the current information system.
Whatever the cause this is an area for possible business improvement.

Some activities are not in place at all. In this case also there will be opportunities for
introducing a business improvement.

How do you define a new business model?

You need to decide what changes are needed focussing on processes, people and the organisation
structure?

People: What will be the impact of the change on skills, recruitment, training, career,
incentives, appraisal.

Organisation: What will be the impact on department/team/function structures, roles,

resources, service level agreements.

Business Processes: What will be the impact on process definition, description, metrics, IT
support, outputs?

How can the BAM be used as a starting point for looking at IT requirements
of the new system?

Processes are often partially or fully supported by Information Technology (IT). Initial general or
business requirements can be identified from the Business Activity Model, particularly the enabling
and doing activities.
General requirements relate to the entire business system. An example of a general requirement
could be:

A system to handle job scheduling, bookings, tracking and to provide management

information on resourcing mechanics and parts usage.

An example of a business requirement could be:

We need a system to help us manage our car service bookings.

Initial high level data and reporting requirements can be identified from the monitoring activities.
Making the Business Case

What sections would you expect to find in a Business Case document?

You would expect to find the following section in a business case:

Executive Summary

Background

Business Objectives - The measurable goals, e.g. increase sales?

Current situation and description of proposed change or requirement. This is a description

of the current business system and the problem or opportunity. A root definition (formed
from CATWOE) could be included here.

Scope - This defines what is in and out of scope for this business change. If useful, the
POLDAT technique:

o P Process what processes are in scope

o O Organisation which departments and teams are in scope
o L Location which locations are in scope
o D Data which data is in scope.
o A Applications which applications are in scope
o T Technology which technologies are in scope
Key stakeholders - main stakeholders identified and additional stakeholders will be
identified and added as the project progresses.

Key timescales - high level outline project plan is included here.

Options at least two options: the suggested solution and do nothing. Further options can
be included.

Cost benefit analysis Covered later

Impact analysis - Covered later

Known risks, assumptions, issues and dependencies - Covered later

Constraints - what factors limit the project

Recommendations recommended course of action

What section of the business case would justify the money required to
develop the solution?

The Cost Benefit Analysis is where you would justify the money to be spent on the solution.

This will include the following:

Costs

Once only costs - system development staff, analysis, design, coding, testing,
implementation

Ongoing costs - annual license fees, support, maintenance

Tangible costs - tangible costs can easily be converted into monetary terms hardware cost,
software cost.

Intangible costs - difficult to convert into monetary terms - Examples are: disruption, low
morale

Benefits

Once only benefits

Ongoing benefits

Tangible benefits

Intangible benefits

What is the main focus of an Impact Analysis?

The main areas an impact analysis focuses on are:

Structure - What impact on staffing levels? Will departments be closed or opened or changed in size.
What staffing roles are required within the departments? Will this change? Will we have the right
resources and tools?

Processes - Will we need to define new processes? What impact will this have on other processes?
Who will define them and how will they be measured and communicated? Will the processes be
supported appropriately by IT?
Personnel -What skills will be required and what do we already have? Who will perform the training
needs analysis? How will we motivate, appraise and reward staff?

How will we document and manage the risks?

As this is still at the early stage of the project a comprehensive risk register/log is not required. But
principal risks around areas of un certainty should be identified.

What information should be included about risks?

Description the cause and impact of the risk should be described For example uncertainty over the
future could lead to the resignation of key staff.

Impact assessment this should attempt to assess the scale of the damage that would be suffered if
the risk occurred. If quantifiable measures can be given then so much the better.

Probability how likely is it that this risk will materialise. Again calculate probability or use a scale of
low medium or high.

Countermeasures this is the really important part, showing what can be done to reduce the
likelihood of the risk occurring or to minimise the impact of the risk.

Ownership for each risk we need to decide who would be best placed to take the necessary
counter measures. This may involve asking senior managers within the organisation to take
responsibility.

What possible actions can be taken to mitigate risks?

The following actions can be taken to mitigate risks:

Prevention install countermeasures

Reduction reduce the likelihood or limit its impact

Transference pass the impact on, e.g. insurance

Contingency put a plan in place which will come into effect if the risk occurs.

Acceptance accept the risk and do nothing.

How do you show a simple cash flow?

To produce the cash flow forecast for a business case:

Decide lifespan of the system being developed. For example, a billing system will remain in place for
five years.

Start at year zero. Year zero only includes development and implementation cost .

What is the Payback Period for a project?

This is the period of time required to pay back the initial development and ongoing costs. In the
What is the above example it is years one and two and part of year three.

What is the Breakeven point for a project?

The breakeven point is the end of the payback period where benefits can start to outweigh the
costs. It is often presented in the form of a graph. The breakeven point is where the costs and
benefits lines cross.
What is the Present Value Analysis

A simple cash flow does not take into account the time value of money. In five years time 55,000
will not be worth 55,000. In order to model the value of this sum, the management accountant will
apply a factor, called a discount factor. This will convert the future 55,000 to the present value of
money. This is called Present Value Analysis (PVA) and produces the Net Present Value (NPV). The
investment is only good if the NPV is positive.

The management accountant will select a discount rate, e.g. 12% = 0.12 and, using a discount factor
table, will apply the discounted factor as follows:

How do you calculate Return on investment (ROI)?

The return on investment is a performance measure. It is used to evaluate the efficiency of an

investment or to compare the efficiency of a number of different investments. The management
accountant can use this ratio to compare different business cases or compare the options within one
business case. The investment with a positive ROI or the investment with the highest ROI may be
chosen. The return on investment ratio is normally expressed as a percentage. The calculation is as
follows:
Accepting the Business Case

What is the purpose of User Acceptance Testing (UAT)?

The purpose of UAT is to ensure that the system is fit for purpose. It tests the systems functions with
the users business processes.

UAT should be planned and managed. Outline plans should start at project initiation stage,
becoming more detailed as the project progresses. However, since the business analyst will build a
thorough working knowledge of both the current process and the future process and also will build
relationships with the users, the project manager may delegate the planning to the business analyst.
In any case, as custodian of the requirements, the business analyst should be available throughout
the UAT process to provide advice by confirming and clarifying requirements.

What should be taken into account in a UAT plan?

The UAT plan should take into consideration the following:

Internal Standards - Does the organisation have a standard approach to UAT depending on
the size and type of system to be implemented?

Scope - What is the scope of the testing e.g. which processes will be included?

Process - What is the test process? E.g. how will testers report faults manually write on
test scripts, or email, or use a specially devised application? Will a tool be used e.g. Quality
Centre? Should faults be saved until the end of the day or reported as they are found? When
defects are collected together, how will they be assessed and prioritised? Who fixes the
defects? Who monitors progress?

Roles and Responsibilities - Who is responsible for: running the tests, defining the test
process, supporting the test process, supporting the system if (when) it crashes, writing test
scripts, providing the test data.

Timescales and Test Cycles - What are the dates of the tests? What are the test cycles e.g.
test on Monday and Tuesday, fix defects Wednesday to Friday. The following Monday and
Tuesday run the same tests again etc.

Location and Environment - Where does the test take place? In dedicated test room, at
testers PC? Who will book the test environment with IT?
 Equipment - Is the necessary equipment available? Is there a PC available? Is it of the
necessary spec? Will testers use their own PC?

Test Scripts - A test script is a set of instructions defining what the tester should input and
what the expected result should be. Will these scripts be adequate and available in good
time?

Testers names, numbers and access? And who will remove the access after the testing?
Will the testers need any specific training prior to the testing?

Data - Do we have access to sufficient, appropriate test data both on the system and
available for the tester?

Defect categorisation - How do we categorise a defect, e.g. severity 1, severity 2 etc. How
do we define each of these?

Entry Criteria - How do we know if we are ready to start UAT? E.g. we will not start UAT until
System Testing is complete with no severity 1 defects.

Exit Criteria - How do we know when we have finished UAT? E.g. we will not finish UAT until
there are no reported severity 1 or 2 defects.

What are the considerations when implementing a new system?

Implementation of a new system should be planned and managed. Carry out an initial analysis of the
impact of the implementation during business case phase. Outline implementation plans should
start at project initiation stage becoming more detailed as the project progresses.

The approach to the implementation will reflect the approach of the project big bang, phased
implementation, pilot, installing a package.

The IT department will plan implementation of the code into the live environment and ensure that
the handover to support is completed. The role of the business analyst is still to act as facilitator
between the business and IT and to assist the business in managing the implementation of the
change. The business analyst may check that all the necessary changes are in place and offer to
assist if appropriate, e.g.

Communication
Who in the business is responsible for the communication plan? Are the compliance department or
auditors involved where necessary?

Process
Is the new process understood? Have the detailed procedures been written and understood? Have
any new templates been designed? Is any new stationery required>
Service Level Agreements (SLAs)
Have these changed? If so, are they documented and understood?

Staff / Teams
Can the business analyst help with training or writing training material? Have new staff been
recruited into any new roles? Has any necessary restructuring taken place?

Customer
Has the business communicated to the customer where necessary, e.g. changes to the website,
downtime of the website, changes to the Interactive Voice Response (IVR) menus, changes to
customer literature?

Cutover
Is there a temporary process for the users to follow during the cutover period? If so, who will define
and communicate it? Who will users contact for support during this period?

Data Conversion
Data requirements will have been analysed during the analysis phase. Has IT been engaged to ensure
the data from the old system will be converted into the new system?

Support
When the system is up and running, do the users know what the support process is?