The purpose of Analyze Current State is to understand the reasons why an enterprise needs to change some aspect of how it operates and what would be directly or indirectly affected by the change.
The starting point for any change is an understanding of why the change is needed. Potential change is triggered by problems or opportunities that cannot be addressed without altering the current state. Business analysts work to help stakeholders enable change by exploring and articulating the business needs that drive the desire to change. Without clearly understood business needs, it is impossible to develop a coherent strategy, and the resulting change initiative is almost certain to be driven by a mix of conflicting stakeholder demands.
Change always occurs in a context of existing stakeholders, processes, technology, and policies which constitute the current state of the enterprise. Business analysts examine the current state in the context of the business need to understand what may influence proposed changes, and what will be affected by them. The current state is explored in just enough detail to validate the need for a change and/or the change strategy. Understanding the current state of the enterprise prior to the change is necessary to identify what will need to change to achieve a desired future state and how the effect of the change will be assessed.
The scope of the current state describes the important existing characteristics of the environment. The boundaries of the current state scope are determined by the components of the enterprise and its environment as they relate to the needs. The current state can be described on different levels, ranging from the entire enterprise to small components of a solution. Creating a model of the current state might require collaboration throughout or outside the enterprise. For small efforts, the scope might be only a small component of an enterprise.
The current state of an enterprise is rarely static while a change is being developed and implemented. Internal and external influencers, as well as other organizational changes, can affect the current state in ways that force alterations in the desired future state, change strategy, or requirements and designs.
- Elicitation Results: used to define and understand the current state.
- Needs: the problem or opportunity faced by an enterprise or organization often launches business analysis work to better understand these needs.
Figure 6.1.1: Analyze Current State Input/Output Diagram
.1 Business Needs
Business needs are the problems and opportunities of strategic importance faced by the enterprise. An issue encountered in the organization, such as a customer complaint, a loss of revenue, or a new market opportunity, usually triggers the evaluation of a business need.
A business need may be identified at many different levels of the enterprise:
- From the top-down: a strategic goal that needs to be achieved.
- From the bottom-up: a problem with the current state of a process, function or system.
- From middle management: a manager needs additional information to make sound decisions or must perform additional functions to meet business objectives.
- From external drivers: customer demand or business competition in the marketplace.
The definition of business needs is frequently the most critical step in any business analysis effort. A solution must satisfy the business needs to be considered successful. The way the need is defined determines which alternative solutions will be considered, which stakeholders will be consulted, and which solution approaches will be evaluated. Business needs are always expressed from the perspective of the enterprise, and not that of any particular stakeholder.
Business needs are often identified or expressed along with a presumed solution. The business analyst should question the assumptions and constraints that are generally buried in the statement of the issue to ensure that the correct problem is being solved and the widest possible range of alternative solutions are considered.
A solution to a set of business needs must have the potential to generate benefits for the enterprise or its stakeholders, or avoid losses that would otherwise occur. Factors the business analyst may consider include:
- adverse impacts the problem is causing within the organization and quantify those impacts (for example, potential lost revenue, inefficiencies, dissatisfied customers, low employee morale),
- expected benefits from any potential solution (for example, increased revenue, reduced costs, increased market share),
- how quickly the problem could potentially be resolved or the opportunity could be taken, and the cost of doing nothing, and
- the underlying source of the problem.
Business needs will drive the overall analysis of the current state. Although it isn’t necessary to fully detail all aspects of the current state before further developing the change strategy, this exploration will often uncover deeper underlying causes of the problem or the opportunity that triggered the investigation (which then become additional business needs).
.2 Organizational Structure and Culture
Organizational structure defines the formal relationships between people working in the enterprise. While communication channels and relationships are not limited to that structure, they are heavily influenced by it, and the reporting structure may aid or limit a potential change.
Organizational culture is the beliefs, values, and norms shared by the members of an organization. These beliefs drive the actions taken by an organization. Business analysts perform a cultural assessment to:
- identify if cultural changes are required to better achieve the goals,
- identify whether stakeholders understand the rationale for the current state of the enterprise and the value delivered by it, and
- ascertain whether the stakeholders view the current state as satisfactory or if change is needed.
.3 Capabilities and Processes
Capabilities and processes describe the activities an enterprise performs. They also include the knowledge the enterprise has, the products and services it provides, the functions it supports, and the methods it uses to make decisions. Core capabilities or processes describe the essential functions of the enterprise that differentiate it from others. They are measured by performance indicators that can be used to assess the benefits of a change.
Business analysts may use:
- A capability-centric view of the enterprise when looking for innovative solutions that combine existing capabilities to produce a new outcome. A capability-based view is useful in this situation because capabilities are generally organized in a functional hierarchy with relationships to other capabilities, making it easier to identify any gaps.
- A process-centric view of the enterprise when looking for ways to improve the performance of current activities. A process-based view is useful in this situation because processes are organized in an end-to-end fashion across the enterprise to deliver value to its customers, making it easier to ensure that a change does in fact increase performance.
.4 Technology and Infrastructure
Information systems used by the enterprise support people in executing processes, making decisions, and in interactions with suppliers and customers. The infrastructure describes the enterprise’s environment with respect to physical components and capabilities. The infrastructure can include components such as computer hardware, physical plants, and logistics, as well as their operation and upkeep.
Policies define the scope of decision making at different levels of an enterprise. They generally address routine operations rather than strategic change. They ensure that decisions are made correctly, provide guidance to staff on permitted and appropriate behaviour and actions, support governance, and determine when and how new resources can be acquired. Identification of relevant policies may shape the scope of the solution space and may be a constraint on the types of action that can be pursued.
.6 Business Architecture
No part of the current state should be assessed in complete isolation from the rest. Business analysts must understand how all of these elements of the current state fit together and support one another in order to recommend changes that will be effective. The existing business architecture typically meets an assortment of business and stakeholder needs. If those needs are not recognized or do not continue to be met by a proposed transition or future state, changes are likely to result in a loss of value.
.7 Internal Assets
Business analysts identify enterprise assets used in the current state. Resources can be tangible or intangible, such as financial resources, patents, reputation, and brand names.
.8 External Influencers
There are external influences on the enterprise that do not participate in a change but might present constraints, dependencies, or drivers on the current state.
Sources of external influence include:
- Industry Structure: individual industries have distinct ways in which value is created within that industry. This is a particularly important influencer if a proposed change involves entering a new industry.
- Competitors: the nature and intensity of competitors between enterprises within an industry can be significant. The entry of a new competitor may also change the nature of the industry or increase competition.
- Customers: the size and nature of existing and potential customer segments can provide influences such as negotiating power and a degree of price sensitivity. Alternatively, the emergence of new alternative ways that customers can meet their needs may drive the enterprise to deliver greater value.
- Suppliers: the variety and diversity of suppliers might be an influencer, as can the power that suppliers have over their customers.
- Political and Regulatory Environment: there is often influence from the current and potential impact of laws and regulations upon the industry.
- Technology: the productivity enhancing potential of recent and expected technological innovations might influence the need.
- Macroeconomic Factors: the constraints and opportunities that exist within the existing and expected macroeconomic environment (for example, trade, unemployment, or inflation) might influence the need.
Some of these sources might use different terminology, based on whether the enterprise is a for-profit corporation, a non-profit enterprise, or a government agency. For example, a country does not have customers; it has citizens.
6.1.5 Guidelines and Tools
- Business Analysis Approach: guides how the business analyst undertakes an analysis of the current state.
- Enterprise Limitation: used to understand the challenges that exist within the enterprise.
- Organizational Strategy: an organization will have a set of goals and objectives which guides operations, establishes direction, and provides a vision for the future state. This can be implicitly or explicitly stated.
- Solution Limitation: used to understand the current state and the challenges of existing solutions.
- Solution Performance Goals: measure the current performance of an enterprise or solution, and serve as a baseline for setting future state goals and measuring improvement.
- Solution Performance Measures: describe the actual performance of existing solutions.
- Stakeholder Analysis Results: stakeholders from across the organization will contribute to an understanding and analysis of the current state.
- Benchmarking and Market Analysis: provides an understanding of where there are opportunities for improvement in the current state. Specific frameworks that may be useful include 5 Forces analysis, PEST, STEEP, CATWOE, and others.
- Business Capability Analysis: identifies gaps and prioritizes them in relation to value and risk.
- Business Model Canvas: provides an understanding of the value proposition that the enterprise satisfies for its customers, the critical factors in delivering that value, and the resulting cost and revenue streams. Helpful for understanding the context for any change and identifying the problems and opportunities that may have the most significant impact.
- Business Cases: used to capture information regarding the business need and opportunity.
- Concept Modelling: used to capture key terms and concepts in the business domain and define the relationships between them.
- Data Mining: used to obtain information on the performance of the enterprise.
- Document Analysis: analyzes any existing documentation about the current state, including (but not limited to) documents created during the implementation of a solution, training manuals, issue reports, competitor information, supplier agreements, published industry benchmarks, published technology trends, and performance metrics.
- Financial Analysis: used to understand the profitability of the current state and the financial capability to deliver change.
- Focus Groups: solicits feedback from customers or end users about the current state.
- Functional Decomposition: breaks down complex systems or relationships in the current state.
- Interviews: facilitate dialogue with stakeholders to understand the current state and any needs evolving from the current state.
- Item Tracking: tracks and manages issues discovered about the current state.
- Lessons Learned: enables the assessment of failures and opportunities for improvement in past initiatives, which may drive a business need for process improvement.
- Metrics and Key Performance Indicators (KPIs): assesses performance of the current state of an enterprise.
- Mind Mapping: used to explore relevant aspects of the current state and better understand relevant factors affecting the business need.
- Observation: may provide opportunities for insights into needs within the current state that have not been identified previously by a stakeholder.
- Organizational Modelling: describes the roles, responsibilities, and reporting structures that exist within the current state organization.
- Process Analysis: identifies opportunities to improve the current state.
- Process Modelling: describes how work occurs within the current solution.
- Risk Analysis and Management: identifies risks to the current state.
- Root Cause Analysis: provides an understanding of the underlying causes of any problems in the current state in order to further clarify a need.
- Scope Modelling: helps define the boundaries on the current state description.
- Survey or Questionnaire: helps to gain an understanding of the current state from a large, varied, or disparate group of stakeholders.
- SWOT Analysis: evaluates the strengths, weaknesses, opportunities, and threats to the current state enterprise.
- Vendor Assessment: determines whether any vendors that are part of the current state are adequately meeting commitments, or if any changes are needed.
- Workshops: engage stakeholders to collaboratively describe the current state and their needs.
- Customer: makes use of the existing solution and might have input about issues with a current solution.
- Domain Subject Matter Expert: has expertise in some aspect of the current state.
- End User: directly uses a solution and might have input about issues with a current solution.
- Implementation Subject Matter Expert: has expertise in some aspect of the current state.
- Operational Support: directly involved in supporting the operations of the organization and provides information on their ability to support the operation of an existing solution, as well as any known issues.
- Project Manager: may use information on current state as input to planning.
- Regulator: can inform interpretations of relevant regulations that apply to the current state in the form of business policies, business rules, procedures, or role responsibilities. The regulator might have unique input to the operational assessment, as there might be new laws and regulations with which to comply.
- Sponsor: might have context for performance of existing solutions.
- Supplier: might be an external influencer of the current state.
- Tester: able to provide information about issues with any existing solutions.
- Current State Description: the context of the enterprise’s scope, capabilities, resources, performance, culture, dependencies, infrastructure, external influences, and significant relationships between these elements.
- Business Requirements: the problem, opportunity, or constraint which is defined based on an understanding of the current state.