The Complete Guide to: Business Impact Analysis

Business Impact Analysis is a tool used to measure the effects of a change on a firm’s operations, so that the firm can make decisions with confidence and avoid unnecessary changes.

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Introduction

In the modern world, changes in a business’s strategy can have radical implications. An organization must find a way to see the effect of a change before it takes place. Doing so will future-proof the organization against new innovations and enable a business to make the right decision at the right time.

This is where Business Impact Analysis (BIA) comes in. BIA is a widely used method for predicting the impacts that an action will have on a business.

What is Business Impact Analysis?  

Any firm would love to be able to predict the future, but in the absence of a crystal ball, firms need a way to ensure business decisions won’t have adverse effects on business function. This is where impact analysis comes in. The goal of business impact analysis is to see what would happen if a change occurs, which helps in making the right decision on the necessity of the change. There are typically sets of metrics that firms are seeking to improve upon, such as Recovery Time objectives (RTOs), recovery points objectives (RPOs), and Maximum acceptable outages (MAOs).

There are a variety of different areas that a firm may wish to analyze, though Orbus Software specifically focus on Technology-Business Impact Analysis. A firm might seek to answer questions like:  

  • What is the impact on my business processes if we change this database?   

  • What are the financial impacts of upgrading a technology component?  

  • A certain system software is going out-of-support by the vendor in 6 months’ time, what is the impact on our business operations?

Why perform Business Impact Analysis?

A business will never get anywhere if it does not prepare for risk. Whether it is the more mundane risk associated with supply chain issues, demand crises, and technological change, or more exotic dangers such as the recent coronavirus pandemic, the company that is prepared will be in a much stronger long-term position than one that isn’t.

While most businesses will have some capacity to deal with shocks and plan ahead, an impact analysis has crucial advantages. Formal analysis scenarios and reports can reduce the difficulties faced by novice firms and enterprise architects, while giving key stakeholders a much greater understanding of the process and its outcomes. Traditional business tools such as SWOT analysis are good starts, but a BIA report is clear, quantifiable, and detailed.

Challenges for Impact Analysis

Predicting the future is always going to be easier said than done. There are a number of common problems a firm may face when starting an impact analysis:

  • Picking the right question: Performing an effective business impact analysis will in part depend on the question you are trying to answer, and the data you have available. Questions with a very wide scope will be much harder to analyze.

  • Inaccurate or unavailable data: A prediction is only as good as the facts you are basing it on. Data issues can take a wide range of forms, from internal problems with a lack of documentation or poorly managed archives, to external issues relating to untrustworthy sources or a lack of research.

  • Lack of procedures: Though impact analysis sounds simple on the surface, creating reports and analysis with no experience is not easy. Having pre-defined templates and reports can speed up the analysis process massively.

  • Domain specific problems: Different business areas that are subject to impact analyses can have specific issues related to each area. For example, a technology impact analysis will struggle if cross layer links between IT and Business architecture are not clear.

Stakeholder buy-in: This can be an issue for any business initiative, and business impact analysis is no different. A properly conducted impact analysis can encompass an entire organization, and if any parts are not on board, this can cause issues for data collection, reporting, or even post-analysis implementations.

How to succeed with an impact analysis

Naturally, part of succeeding with a business impact analysis is having the right tools for the job, such as Orbus’s award winning iServer enterprise architecture tool.

More broadly, there are a few general actions that a firm can take to perform a successful impact analysis. Partly this will involve solving some of the common challenges described above; a lot can be solved by properly consulting stakeholders and maintaining control of IT architecture.

When addressing the scope of a business impact analysis, the widely used SMART method can help to rein in excessive analysis, notably with regards to timing and specificity.

Having a convenient and reliable method of collecting information is another wise choice. iServer solves this through the central repository model, but even without such a tool there are solutions such as cloud-based storage and automated data collection through forms.

Summary

As the events of 2020 have demonstrated, businesses need to be prepared to face a huge number of different challenges. While there will always be certain events outside of a firm’s control, what can be prepared for should be prepared for. Business Impact Analysis, whether for technological change, process change, organization change or product change, can offer protection from significant impacts and ensure business continuity. Read more about how iServer365 can a business perform impact analysis here.

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