Manage-Wise

Enterprise analysis

Every IT application has to work within the context of an enterprise. A BA must therefore attempt to understand the larger context within which the application would have to work. A wide variety of factors within the enterprise can affect the way a business process and an IT application would work. For instance, designing a swipe card-based attendance would involve keeping attendance recording machines in hostile environment such as heat and dust at the gates of a factory. The impact of failure of such machines during a shift change could be a cause of discontent and distrust among workers. Such factors and indeed the effect of the larger environment within the enterprise is rarely mentioned by users while specifying requirements. And yet these very factors become a source of discontent and potential cause for failure of an IT project.

Another reason why enterprise analysis is important is that each function, person and level within an organization has a different perspective about a business process. Understanding these perspectives is important since it gives a holistic set of expectations about a process or IT application.

The question is which are these factors which a BA should study and how should he go about doing it. Let us see some of these factors.

• The overall business environment and the competitive position of the organization
• The core purpose, vision, mission and business strategy of the organization
• Enterprise architecture
• Information architecture
• Organizational philosophy and culture

Business environment

Knowledge about domain and business environment in general has attained a tremendous importance. Many software companies have actively hired senior people from the required domain such as banking, etc. to guide the development process and to interact with the customer from the point of view of requirements management as well as to provide consulting input to the client.

It is therefore obvious that study of the business environment in general and the industry sector to which the organization belongs helps identify key trends in that sector and the larger business environment which the organization belongs to.

Some of the factors to be mindful about and their implications to the BA:

• The nature of business: Typically large scale process oriented business (as opposed to people and physical activity oriented businesses) would tend to hold more prospects for IT applications. For example, a physical activity such as construction would certainly need software for project management, contract accounting, etc. however much of the activity is physical in nature. Hence the areas which are more amenable at a point of time for automation need to be inspected.
• The size, growth, profitability of the industry: A rapidly growing industry is buoyant in its approach. The focus is on rapid expansion and growth and hence anything which is likely to take away the time of its employees is seen as a potential area for automation. The focus on growth means that clients in this industry tend to be serious about the IT solutions which they decide upon and therefore pose less problems from an implementation standpoint. However many a time processes are in a flux in such high growth industries and therefore IT solutions developed need to be more flexible and need to be delivered effectively in a strict timebound manner. It may also be risky to take up very large-scale enterprise wide projects in such industries given the fact that processes are in a constant state of flux. However this comment may not apply to growth in established industries.
• The structure of industry
• Organized vs. unorganized sector
• Which are the organizations in this industry which account for over 50% of the business—are there a few dominant players or is it a wider base of players?
• The various subsectors and the distribution of the players across these subsectors
• What is the nature of the market for this industry—is it fragmented and localized or are all major players working at a national and perhaps at an international level
• The various players who form part of the industry and their competitive positioning in terms of market share, growth, profitability, brand image, etc.
• The various business models which seem to operate
• What are the products and services? What is the kind of product or service? Is it a durable product (white goods)? Is it a consumable (food items) one? or Is it perishable one? etc. The nature of product/service gives an idea of the nature of business processes and IT applications
• Who are the major customers (applicable in institutional sales)? In case of sale to end consumers, what are the characteristics of the consumers who buy products or services from this sector? What challenges are involved in the customer life cycle (from identifying a customer to bonding with the customer)? What kind of role is IT playing in this sector and what role can it potentially play? What is important in the context of the customer? Is there a high churn as in mobile telephone services? Who are the major suppliers to industry? What are the peculiar characteristics of the suppliers and the level of dependence or the level of supply chain integration which seems to exist?
• The study of the structure of the industry gives the BA an idea about the dominance of an enterprise in the industry. Good account management of such key accounts ensures good revenues with lesser marketing costs. In a fragmented industry, the ticket size of each project may be small. Also factors such as preference to regional vendors, etc. would come into play. For a mid-sized IT organization, however, a fragmented industry or small and medium businesses offer huge opportunity for several projects in that sector. Interestingly the SME segment often provides opportunity to create productized solutions and given the large number of SMEs in such a fragmented market it is possible to have a large customer base.
• The threats to the industry as a whole: Be it a substitute product, an ethical issue (e.g. pesticides issue in carbonated drinks industry), a health concern (tobacco industry) and environmental threat (e.g. agro-based and food processing industries), etc.

Excerpt from ‘Business Analysis’ by Pradeep Hari Pendse.