This paper helps understand the Business Impact Analysis (BIA) which is a medium, a tool that helps understand the impact of change on businesses and formulate a plan to drive a smooth transition from As-is to To-be state. Change management consultants need to understand how to carry out a BIA and utilize it to succeed in a changing organization.
We have divided this topic into four parts:
- Use of Business Impact Analysis (BIA) in Change Management
- BIA Approach – Part A – Process, Preparation, Know your Stakeholders
- BIA Approach – Part B – Types of Impact, Recommendations, Leadership/Sponsor Alignment, Conducting Interviews
- Analysis of the inputs received to implement BIA
Use of Business Impact analysis (BIA) in Change Management
Benchmark studies suggests nearly 66% of organizations realize less than 50% of anticipated business benefits from their ERP implementation. This means organization change management is critical as ERP projects are about people, not technology. In Enterprise Resource Planning (ERP) implementation projects, most change models move from design phase directly to implementation. An ideal practice is to conduct a thorough impact analysis of the desired state design. This enables awareness of the implementation planning and confirms the effective implementation of the design without contingent ramifications.
What is Business Impact Analysis in relation to Change Management?
Change Impact Analysis and Business Impact Analysis/Assessment are terminologies used alternatively in different journals related to Change management. One of the huge challenges that change practitioners face these days is to translate an organization-level change to the individual-level. For example, in a typical ERP implementation project,which is an org-level massive change what is critical is to identify a day-in-life of a line manager, a team lead, a developer and so on and so forth.
A BIA equips the organization to bring a change impact into focus. It is only then that the organizations will start to surface those issues that are often missed out and are critical success factors in enabling change. We keep telling our fellow team members that a technological change is more about people than technology. This is understood when an organization adopts a new technology, with proper knowledge transfer, trainings, pilots done but resulting in an unsuccessful change management. Because, after everything is done, the question that comes from the employees is “What am I supposed to do next?” Organization’s success is a combined effort of all its employees. So, if the focus is on the enterprise level, we risk losing people along the way. The personal transition will not be successful leading to the failure of the entire organization.
It is a document that collects information to drive decisions and action needed for readiness in each business area to implement and receive the things being delivered by the program.
Business Impact Analysis can be developed at a high level but is best at the detailed level based on solution detailed designs. Detailed level BIA are executed based on solution design: This level of detail really identifies the new ways of working required and its related effects on other ways of working. It is used to make sure that each stakeholder group has a specific idea of what to get ready for and more than just the training required.
Why do we conduct a Business Impact Assessment (BIA)?
Essentially, BIA is the heart of an organization’s disaster recovery plan as it identifies the impacts of the risks occurring out of operational interruptions or disruptions. The importance of conducting BIAs in a change scenario is listed as follows:
Reduce surprises: Reduced surprise helps in a smoother launch. It lowers the risk associated with the changes. The equation is – more transformational, the greater the change; the greater the change, the greater the risk
Faster adoption & quicker ROI: BIA helps make the change objectives transparent to the employees, stakeholders and change sponsors. It helps create buy-in hence developing a faster adoption of the change and we see a quick ROI of resources involved
Reduce Resistance: Transformation brings a lot of unknown and uncertainty. Uncertainty about the future leads to resistance. If you have a better visibility of what the change is about, the level of uncertainty reduces, resulting in lower anxiety and resistance from stakeholders
Increase Support: This is one thing which lot of change practitioners miss about, what a good impact assessment does. We face the problem of alignment. They say everybody is aligned and all agree, but when the reality of the program starts to emerge, people say, “Well; I don’t think you meant that” and then the alignment falls apart and one of the big reasons for this is, people don’t have a sense of ownership. A good impact assessment gives the opportunity to put your fingerprint on the solution. It doesn’t mean that we decide the solution, but we can have a genuine interest in it and that gives us a stake and true ownership and that deepens the alignment.
Is BIA and Risk assessment the same thing?
Now that we have extensively understood about what the BIA does, what are the types of impacts and the process to conduct a BIA, many consultants are unable to draw a line between risk assessments and BIAs.
Risk assessments identifies the potential operational risks. It seeks to quantify both the impact and the forward likelihood of potential events. The core difference between the two is that BIA does not directly focus on likelihood of events. It assumes the worst-case scenarios.
As part of strategic impact assessment, we do a risk analysis and come out with a RAG scale, however; BIA is completely different than a risk assessment
BIA Objectives
- Identify business and organizational impacts brought about by a solution.
- Identify the people and work implications of changes in business rules, processes, tools information and structure to business departments and practices.
- Provide a high-level overview or ‘big picture’ of the major organizational issues that need to be addressed
- Identify at a detailed level the organizational impacts brought about by the introduction of the change
- Identify the impacted positions and assess the level of change to the current ways of working.
- Gather the necessary information to support the following activities:
- Support the development of a Transition or Rollout Plan
Use of BIA
Impact Assessments helps in understanding how will ‘Capability Release 1’ affect the people in X Department? In other words, it simplifies the impact of change on individuals affected by the change. The use of BIA can be segregated into different verticals and horizontals.
- The Project Management Office:
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- Provides a helicopter view or ‘big picture’ of the major organizational issues that need to be addressed
- Understand the potential risk to be managed through implementation
- Provide some structure and definition of benefits that can be realized with implementation
- Communications and Change Management:
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- Provide input and actions for key communication messages to be delivered to specific audiences
- Understand what stakeholders will have to be involved with and prepare for in order to better adopt upcoming changes
- Organizational impact and alignment – validation of the role, responsibility and job transitions needed
- Derive KPIs to understand the required skills to achieve the goals assigned
- Set up governance structure
- Benefits articulation – Realistically define the benefits that can be gained from the release
- Training:
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- Validation of training needs
- Identifying specific content requiring additional emphasis or reinforcement
- Planning out knowledge transfer methodology and creating knowledge capture documents, mechanism of retaining tribal knowledge
- Understanding Levels of Preparedness:
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- Input on actions required to support implementation.
- Input to understand what rollout and support activities will be required for specific groups to maximize the use of new ways of working.
- Input to understand the level of preparedness to deliver and change readiness
- Business:
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- Simplify and clarify the changes that they specifically must deal with
- Input on accessing, the capacity required to handle the upcoming changes
- Provide actions for business area leads to implement needed adjustments
- Understand what support will be needed and what help to ask for, if needed
BIA is a tool that is used by organizations in different phases of the change implementation. Now that the concept is discussed in this section; we will elaborate the approach of a Business Impact analysis in our next section named – Business Impact analysis (BIA) Approach – Process, Preparation, Know your Stakeholders.
