One of the major goals of the analyst when starting any new analysis and design activities, regardless of whether the user area is familiar or not, is the acquisition of information about the current state of the firm environment, the user, what the firm does, and the place of the user and the user's organization within the body politic of the firm.
This chapter discusses the concept of business knowledge and its importance and relevance to the analytical process.
What Is Business Knowledge
One of the major goals facing the analyst when starting any new analysis and design activities, regardless of whether the user area is familiar or not, is the acquisition of information about the current state of the firm environment, what the firm does, the user, and the place of the user and the user's organization within the body politic of the firm.
The term "firm" will be used to identify the organization as a whole. In some cases the term will represent a discrete business unit or division which can be examined as if it were a freestanding firm. This information, necessary for any analyst, is usually termed "background information." It can be obtained from experience in the firm, from the user, from user documentation, from a "briefing" by the analyst's manager or other knowledgeable source, or from a variety of similar sources.
Whatever it is called and however it is obtained, in reality this knowledge of the firm and user's role within that firm is called "business knowledge." Business knowledge is defined as a thorough understanding of the general business functions and the specific areas under analysis. The accuracy and completeness of this knowledge are crucial to the development of the foundation upon which the analyst can build an understanding of the user and the user's problems and requirements, and design new and more efficient methods of accomplishing the primary tasks of that user.
The task of gathering business knowledge includes acquiring a detailed understanding of the firm's functions, the processes and tasks which are employed to accomplish those functions, and the relationship of those functions, processes, and tasks to each of the functions, processes, and tasks performed throughout the firm.
The development of the analyst's business knowledge, regardless of the level at which the analysis is being performed, begins with the identification and description of each of the functions of the firm and of the user's function, or role, within the firm. This analysis, called functional analysis, usually includes a firmwide organizational chart and narrative descriptions of the functions and subfunctions which make up the business.
Generally the information gathered is collected into a set of documents which become the first stage of the analysis process. The collection of documents resulting from this process may be called a general business description document, a client functional description document, or another similar title.
The development of business knowledge is an integral part of the analytical process. In fact, the acquisition, documentation, validation, and evaluation of business knowledge is the core of analysis. By its very definition, business knowledge is knowledge about the business, what it is, what it does, why and how it does what it does, and how those activities can be performed more efficiently.
Business knowledge can be developed at any level; however, the higher the level at which the analyst begins, the more comprehensive and meaningful that knowledge becomes.
To use an analogy, it is possible to understand how an automobile works by studying its component parts: the engine, the transmission, the braking system, the steering mechanism, or the exhaust system. However to gain a better understanding of how an automobile works, it is more meaningful to understand how the various parts interact with each other; e.g., how the exhaust system ventilates the engine and how power is transmitted to the drive wheels by the transmission.
At a higher level, it is more meaningful to understand why each component is necessary and what the engineering principles are behind the internal combustion engine, the principles of physics behind the gearing in the transmission, and the chemical principles behind both the internal combustion engine and the exhaust system.
At a lower level, one can examine how the parts are put together and how the various subassemblies of the engine, the pistons, the carburetor, the manifold, the cooling system, the lubrication system, and the fuel feed mechanisms work.
Each approach is valid, and depending upon what you are trying to do, it may be possible to ignore all the other considerations and concentrate on the part which is faulty. For instance, one does not need to be an automotive engineer to change a tire or fill the fuel tank. However, if you were going to write a column on car repair or a book on automotive design, you would obviously need a greater depth of knowledge.
To use an earlier analogy, that of the medical profession, the surgeon specialist needs a deep background in anatomy, physiology, immunology, pharmacology, and related topics. The family doctor, while needing some background in these subjects, has less need in these areas but needs depth in diagnostic procedures and minor surgery. The nurse has less need than the family doctor for these subjects, but more need than the paramedic, and the least knowledge is needed by the first aid technician.
Analysis in a business environment deals with business components. These business components are the units into which the organization is divided, the functions of those units, the processes and activities associated with those functions, the tasks associated with those activities, and the data or information associated with those tasks.
If we can view the organization as an organism, then those organizational units are its internal organs, and their associated functions, processes, and tasks are their reason for being. Each unit and its activities serve a purpose. The data entering the firm can then be likened to the body's sensory inputs, and the information and decisions made by the firm are the thought p processes based upon those inputs. Through its own actions the body uses the materials around it, gathered by it, or sent to it, as well as its thought processes, to produce other materials and products. The firm can be viewed in this manner as well. See Figure 11.l.
Just as the internal organs, sensory stimuli, and thoughts trigger actions by the body, so too data and the decision-making processes by the organizational units trigger business activities. Each body organ serves a purpose, and no organ operates independently of any other organ. So too, each business unit serves a purpose and no business unit operates independently. They are as interrelated and interdependent as the body's organs.
But again just as the body has some organs which have outlived their usefulness, which sometimes become diseased, or which cease to function properly, so too the organization has units which fall into the same categories. To extend the analogy a bit further, the body develops patterns of action and habits which, as time passes, may need to change, or which should not have been started in the first place. Sometimes external situations change, and the body must adapt its actions to those changes. Overeating, smoking, excessive reliance on drugs and alcohol, excessive exercise, or excessive dieting, to name a few, are all body actions which need to be changed.
Sometimes the persons relationships with others or their location need to change as well. Other changes are dictated by the aging process itself, such as the need to change diet because of disease, to wear glasses or a hearing aid, or to use artificial aids to move around.
The firm as an entity undergoes similar types of changes and a similar aging process. The analyst's role in the firm is similar to the physician's role with respect to the body.
But just as the body needs not only physical examination but also mental checkups and behavioral modification from time to time, all of which usually result in some change, so too the firm needs similar examination and modification if it is to remain healthy.
Just as the physician and behavioral specialists need a thorough understanding of the interaction between the physical body and its actions and motivations, so too the analyst needs a thorough understanding of the firm's "organs," actions, and motivations. Modification of the body and its actions requires an understanding of what the "correct" or "proper" actions or behavior should be and of what the body is capable of doing. This same logic and understanding also applies to the firm.
Bodily functions are fundamentally the same from person to person; yet each particular body is different, acts differently, and is differently motivated. So too firms are fundamentally the same in many respects, but each firm is different, acts differently and is differently motivated. The analyst must know and understand the fundamentals of the firm, and must uncover the differences in structure, action, and motivation. The process of obtaining this understanding, that is, the resultant uncovering of differences and problems, examination, and evaluation is the process of gaining business knowledge and analysis.
There are many modes of analysis and evaluation. Some are top-down, others are bottom-up. Some examine actions, stimuli, and environment and deduce motivation from them. Others aim at uncovering motivation and attempt to develop appropriate modes of action. Some work from stimuli to action, others from desired action to necessary stimuli.
As with our discussion of methodology, we will use the top-down approach and a motivation to mode of action approach. Again this is done with the recognition that there are many ways to accomplish the same result, but for purposes of discussion one needs to follow a consistent path to develop the ideas.
We will begin with a discussion of functional analysis and follow it by a discussion of process, task, and data analysis. We will follow a top-down general-to-specific approach, because we believe it is easier to take a complex object or idea and break it down into its component parts, than it is to build up complex ideas or objects from their component parts (see Figure 11.2).
Unless the reader is a watchmaker, in which case either mode is appropriate, it should be obvious that it is easier to take a watch apart and then draw a schematic of the watch, than it is to take a box of watch parts and try to build a watch from them while drawing the schematic at the same time.
If the watch does not work to begin with, unless one uncovers the symptoms and circumstances as to when it stopped working, the only way to fix it is to take it apart, look at all the pieces, fix or replace the defective items, and then put it back together again. If the process is done correctly and the break down is fully documented, you will fix the watch and there will be no left over pieces.
The larger, more complex, and unfamiliar the object, the more time must be spent in examination, documentation, and gaining understanding. We predicate the following discussion on the assumption that the analyst will probably not be familiar with the user business unit or its functions, activities, and tasks, and more probably will have only a vague understanding of the place of the user within the organization and an equally vague understanding of the structure, composition, and functioning of the business itself.
Analysis is a step-by-step process. It is relatively easy to discuss the process of gathering information, somewhat more difficult to explain the process of evaluation, and most difficult to discuss the process of arriving at appropriate recommendations. We will attempt to provide guidelines in the form of lists of questions, and discussions of the types of evaluation procedures which are available. We will present the advantages and disadvantages of various approaches where appropriate. The analyst should, however, realize that with most things and most situations there are no right and wrong answers, only better choices.
In the final analysis, the business is what the user says it is and the best approach is whatever the user will accept. The user is the final determinant of what is acceptable, and in most cases the user is the one who pays for the analyst's efforts to begin with.
The corporate body acts or reacts in many ways. The corporate structure is hierarchical with functions being at the highest level and tasks being at the lowest. In between these are systems, processes, and activities, which are all greater or lesser aggregates of specific task sequences. The terms themselves are usually used interchangeably. (See Figure 11.3.)
Exceptions and Rules
Every business environment develops a vast number of business rules, which help guide the activities of its employees. These business rules are normally codified in the form of policies, procedures, standards, codes of conduct, manuals and user guides. These business rules affect every aspect of the business– how its employees are hired, treated and terminated, how its products are selected, designed, manufactured, and distributed, how its services are selected designed and provided, how its customers are treated, how its plants and equipment are maintained. and how its financial transactions are handled, accounted for and reported.
The companies with these extensive rules almost always require many layers of review and approval necessary for most actions
In many firms these rules are well codified and documented and in some cases they are rigidly enforced. In today’s rapidly changing economic and competitive environment, companies that cannot react quickly are at a distinct business disadvantage. Highly codified and rigidly enforced rules with many levels of review and approval limit the flexibility of a firm, and its capability to react quickly and decisively to new events and conditions.
At each level of almost every firm, there are exceptions to the rules. and processing which occurs outside of the rule framework. In some cases these exceptional condition and events occur frequently enough to have become an accepted part of the firm’s way of doing business and the exceptions to established procedures that arose to handle them have themselves become the rule.
Those firms which can accept and assimilate these exceptions into their established procedures and who have procedures which allow for and accommodate exceptions, can accommodate and adapt to change. Those firms which resist these exceptions, which rigidly maintain the rules and procedures, and which adhere to the formal processes of change, stagnate.
All rules and procedures change over time. The processes of updating the formal, written versions in many cases lags well behind the actual changes. The exceptions may not even be codified or formalized. The analyst must be aware of probable existence of these exceptions and seek to document them, or record them for later examination.
What if Games
Many managers have staff assistants who use personal computers to help analyze operational and financial data. One tool of management analysis is to develop alternative scenarios by playing what are know as “what-if” games. That is they will take a report, or more usually a spreadsheet, change one or more of the underlying assumptions and examine the results. For instance:
What would our payroll look like if we have everyone a 5% increase?
What if we gave them a 4% increase?
What is the incremental profit if we sold more product?
What would the profit be if we reduced the number of people we employee?
This examination of alternative approaches is a normal part of the management process.
These alternative scenarios can be very useful during the analysis phase because they allow for rapid evaluation of alternatives and selection of the most cost effective approaches. Heavy reliance on models, what-if scenarios and prototypes can help select the most effective alternative, this is especially true when the goals of the analysis are radical change and there (such as with BPR) and there are no existing models to examine.
The sophistication of modeling today has made this approach much more acceptable and prevalent than it was previous. The availability of data and the ease of acquiring data from other sources, coupled with the indeterminate origins of some of the data, makes this a risky process as well. The data files that support these models, and many of the personal computer systems may be local or remote, originally entered or copied from another system’s database. Unless the analyst is sure of the true source and meaning of the date underlying the reports obtained, all such models should be viewed with a degree of suspicion
Symptoms and Causes
The analyst must be aware that may of the activities and problems that will be uncovered during the analysis phase may symptoms rather than causes. It is tempting to alleviate the symptoms but much more difficult to uncover and alleviate the root causes. In many cases these root causes are deeply buried in procedure, policy, tradition or simply misunderstanding. "It is done this way because that is the way we have always done it.” The analysts must use all the tools at their disposal to ensure that they are attempting to fix the cause and not the symptom.
A problem with incorrect data, or data that is perceived to be inaccurate may be the result of differing assumptions or interpretation of the meaning of the data. Data inaccuracy may not be the result of local processing but of processing at the point where the data is actually captured.
This may mean expanding the scope of the analysis beyond the original boundaries to ensure that all loose ends are accounted for. It is easy during this phase to expand the scope so greatly that the project becomes undoable. This temptation should be resisted.
A Professional's Guide to Systems Analysis, Second Edition
Written by Martin E. Modell
Copyright © 2007 Martin E. Modell
All rights reserved. Printed in the United States of America. Except as permitted under United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a data base or retrieval system, without the prior written permission of the author.