As the events of the last few years have demonstrated, businesses need to be prepared to face disruption. While there will always be events outside your control, what you can prepare for you should.
Business Impact Analysis can make impacts obvious and deliver some tolerance to ensure you stay in business. And don't forget, disruptions can come from several sources: social, technological, economic or political – or a combination of all four. Even for items closer to home, disruption can emerge from simple process changes, organization upheaval or new product shifts.
So, BIA is always looking for visibility into:
- Crucial business systems and functions
- People and technology resources needed
- Time frames for functions to be recovered
- When a disruptive event could occur (for example, the end of the financial year or run up to sales peak or holiday periods).
Its aim should be to restore operations to business-as-usual as quickly, safely and economically as possible.
So, what makes up Business Impact Analysis?
BIA is there to predict the consequences of disruptions to a business. Its bedrock is the process and systems needed to collect business data. Without the tools that deliver this, you can't develop strategies to recover from disruption – which is why we would argue that managing technological disruption is crucial to business impact analysis overall. But more of this later.
While a list of potential disruptions will be long, and the options to address them even longer, it's crucial to explore all of them to best evaluate risk. By recognizing and assessing as many scenarios as possible, the business can develop a layered strategy for avoidance, mitigation, or prevention.
The majority of businesses would tend to focus on the impact on finances, but an effective analysis will usually look at many areas. For example, Gartner recommends five main impact areas to examine:
- Financial
- Reputation
- Regulatory and social
- Production output
- Environmental
Casting the net this wide is important. Only by doing so can you ensure you have the best chance of identifying known unknowns – as Donald Rumsfeld put it.
What's at stake?
The list is endless: lost or delayed sales and income, increased expenses, regulatory fines, contractual penalties, loss of customers or their dissatisfaction, and a delay in new business plans. This can be boiled down to:
Reputation: In 2016 TalkTalk was given a record fine over a security breach that led to the data theft of nearly 157,000 customers. The company shed over 100,000 customers during the next quarter.
Revenue: According to a 2014 Gartner analysis, IT downtime can cost companies $5,600 per minute and up to $300,000 per hour in web application downtime).
Business failure: Kodak was disrupted by the digital revolution despite having invented digital cameras. Blockbuster dismissed video on demand due to its cost.
Business success: But let's not be all doom-and-gloom. You can succeed in disruptive times by pursuing new opportunities. This approach is at the root of successes like Nespresso or Renault's Dacia car division.
Where do you start?
BIA has to look at each product, service, process, and activity. To understand the effect of disruption, here are some questions a business needs to be able to answer:
- What is the significance to the business?
- What is the impact over time that would result?
- What resources need to be involved
- What products and services are required to meet these objectives of the organization?
- When do we need to do it?
These questions are pretty standard business analysis questions. Only in BIA does the last question – relating to time – play such a crucial role. This is where your Enterprise Architecture tool becomes vital. When speed is of the essence, you need all the data at your fingertips for good situational analysis and fast decision making.
Bringing Enterprise Architecture to Impact Analysis
Impact analysis is based on two fundamental truths:
- Every part of the business relies on the continued processes of the other parts of the company.
- Some parts of the business are more significant than others, requiring more distributions when disruptions occur.
We at Orbus have found that technology-led Business Impact Analysis is the key to delivering the two truths.
Many businesses do not have a clear understanding of their technical architecture and operational dependencies. It is rare to see any department within an organization with a full grasp of what is required during disruption and the implications if the organization cannot meet its obligations.
An EA-led approach enables the organization to understand its responsibilities thoroughly. It ensures you're not missing any information and that data collected is concise and clear. Any stakeholder would be able to understand the process and the essential information about it.
Your EA tool will help you create a prioritized list of processes and recovery sequences so that you can make a quick determination about how to prioritize recovery in the event of any business disruption.
Most importantly, it can highlight the ideal recovery timeline for bringing the process back to operation. For example, suppose there is a process that needs to be up and running within 6 hours to keep your company in business, and your EA tools show that you can only get it operational within 12 hours. In that case, that needs to be addressed urgently.
EA software is a vital Impact Analysis tool
Naturally, we would recommend Orbus's award-winning iServer365 enterprise architecture tool as your go-to for Impact Analysis. As to why, here are a few of the standouts:
The central data repository: Store assets as intelligent objects with metadata and relationships to help understand dependencies, impacts and risks, and effectively manage and visualize your transformation initiatives.
A single source of truth: Due to its central repository, information and analysis, are accurate without any variance or doubt. Vital in a time of disruption.
The right level of control: identifying and managing business disruption involves large teams with input from many stakeholders. Standardization of approach and dashboards help both speed of response and levels of shared understanding.
Enterprise Architecture is much more than IT planning and rationalization. It drives digital transformation and the ability to manage disruption. Such a response involving people, process and technology can only be delivered best by EA tools.
You can read more about how iServer365 can deliver business impact analysis here. And if you are already convinced, why not book a demo.