The Importance of Impact Analysis in Business Analysis: Understanding the What and the Why

The Importance of Impact Analysis in Business Analysis: Understanding the What and the Why

Business analysts often face complex and challenging situations that require them to analyze the impact of proposed changes. This analysis is crucial in ensuring that the change is feasible, practical, and can be implemented successfully. Impact analysis enables business analysts to identify the potential risks, benefits, costs, and impacts on stakeholders of a proposed change. In this article, we explore the what and why of impact analysis and how it is essential to the success of business analysis.

What is Impact Analysis?

Impact analysis is a technique used in business analysis to assess the potential effects of a proposed change. It involves examining how a proposed change will impact people, processes, systems, and technology. The analysis takes into account various aspects, such as:

Stakeholders

Identifying who or what will be affected by the proposed change is the first step in impact analysis. This means looking at all the individuals, departments, and external entities involved directly or indirectly in the change. The analysis could help to determine the management of expectations and communication strategies.

Processes

Analyzing how the proposed change will affect existing business processes is essential in impact analysis. Business processes could be affected in various ways, such as reduced efficiency, increased productivity, or additional workload. This analysis forms part of the business process re-engineering necessary with most change projects.

Systems

If the proposed change involves system or application updates, the impact on the existing technology environment needs assessment. Business analysts analyze the compatibility, upgrade cost or process, and size of the proposed changes. The analysis also includes how technical configurations will affect the system or application.

Costs

Impact analysis looks at the financial implications of the proposed changes. This process identifies the costs, ranging from hardware to software, testing, training, and maintenance. Business analysts need to be aware of any operational and staffing requirements and estimate their cost.

Why is Impact Analysis Essential?

Impact analysis is critical to the success of business analysis. Here are some reasons why:

Identify Risks

Thorough analysis of the impact of proposed changes helps business analysts to identify risks that might arise. Risks might be related to the proposed changes or to the company’s internal or external environment. If these risks are not identified or mitigated, they could result in considerable losses to the organization.

Effective Communication

Impact analysis also helps business analysts communicate the proposed changes to stakeholders accurately. Effective communication is essential in reducing resistance or negative feedback from stakeholders. If properly executed, the analysis could create an opportunity to offer insight and guidance to stakeholders.

Efficient Resource Allocation

When the organization is investing in change projects, understanding the impact analysis assures proper allocation of resources. The analysis helps the organization to identify potential benefits and potential drawbacks. It ensures that the best approach of execution is carefully selected, contributing positively to the return on investment.

Conclusion

Impact analysis is a crucial part of business analysis essential to the success of any organization. It enables business analysts to identify potential risks, benefits, costs, and impacts of a proposed change. Properly executed analysis provides information for decision-makers, reduces resistance and negative feedback from stakeholders, provides guidance, and creates an opportunity for effective communication of proposed changes. In conclusion, when business analysts adhere to the principles of impact analysis, they increase the chances of successful change management.