The Current Business State

As mentioned earlier, you need to evaluate the current business state to achieve your eventual goal of the desired business state. To do this, you need to focus on these seven areas of your organization:

• Analysis of business processes

• Organizational structure

• Industry position

• Vertical market position

• Personnel and training

• Political climate

• Regulatory requirements

Analyzing Business Processes

When analyzing the current business state, the best place to start is analyzing the business processes. A business process is a set of work activities designed to produce a specific output for a particular customer or market. The output of a business process is a product or service.

The purpose of the business process analysis is to aid in understanding the way a business unit fulfills its mission. A business unit is the collection of all functions needed to bring a product line to market. Business processes are also analyzed to determine the location of system problems or other potential problems. This analysis is crucial for later steps in the system development life cycle, when the emphasis is on developing solutions that are more reliable and efficient. Without the information gathered during the business process analysis, developing workable solutions that can fulfill the organization's business goals would be difficult. The business process analysis can also identify which business processes are effective so that they can be replicated in other systems. Another reason the business state analysis should occur at this phase of the project's life cycle is to help reduce the risk of not including beneficial aspects of existing business processes in the documentation.

Analyzing the current business processes can also be useful for identifying the gaps between the current state of a business and the desired state. As you might remember from Chapter 1, "Envisioning the Solution," identifying these gaps in the processes is called gap analysis, and performing this analysis helps identify a path to the desired state of a business.

After completing the business process analysis, some organizations undertake the task of business process reengineering. Business process reengineering is the process of studying current business practices and procedures to find methods for improving existing business processes. The methods for improving the business might be radically different from the current processes.

The task of business process reengineering focuses on the following steps:

1. Conduct a comprehensive review of the currently operating business processes.
   
   
2. Gain an overall understanding of the business operations.
   
   
3. Identify all tasks that are part of these business processes.
   
   
4. Review these tasks to determine which ones can be improved through reengineering.
   
   
5. Develop strategies to radically improve the effectiveness and efficiency of these processes.
   
   

Organizational Structure

During the analysis of the current business state, one area that needs a through review is the current organizational structure. Organizational structures define the roles and activities required of people so that business objectives can be met. For an organization to be successful, its organizational structure must be aligned with its strategic vision.

These are the four main objectives for an effective organizational structure:

• Providing a defined method for allocating tasks, roles, and responsibilities

• Coordinating efforts and tasks among departments or functional units

• Establishing a clear reporting structure

• Providing a clear path for distribution of information

An effective organizational structure must be in place so that the organization can achieve its goals and objectives. To achieve this effectiveness, an organizational structure must work within the organization's political environment and be able to eliminate barriers to productivity as they occur.

Organizational structure is extremely important when an organization changes its strategic direction. Without a strong organizational structure to help management implement the required process changes, the attempt to change strategic direction will likely fail.

The major source of information about the organizational structure is the organization chart. This chart shows several important details about the organization, such as the levels of authority, span of control, the division of labor within the organization, and formal communication channels. Remember that organization charts have several weaknesses as a means of explaining organizational structure. The chart might not be current, and it could imply a formality that does not really exist. It's possible to have a formal organizational structure reflected in the organization chart and an informal structure that reflects reality.

Assessing the current organizational structure during this part of the system development life cycle makes a good deal of sense. The need for a new computer system is probably triggered by the need to enter new markets, produce new products, or some other change in the company's focus. The long-term success of this computer application could depend on a change in the organizational structure.

It's also possible that the organizational structure has become ineffective, and the process of analyzing the current business situation can be the catalyst for reevaluating the organizational structure. Besides new organizational strategies, there are several warning signs that changes to the organizational structure might be needed. Some of these warning signs include the following:

• Redundant efforts between departments

• Too much conflict

• Overloaded managers

• Low morale

• Additional operations or divestitures

• Slow decision making

• High personnel costs

• Downsizing

These organizational structure assessments can be made at the senior management level or deep within the organization by functional objective. Assessments can also be made for specific organizational units or across organizational unit lines.

When assessing the organization's current structure, knowing what type of structure model the organization follows is important. The current structure usually falls into one of these common structure types:

• Functional A functional organizational structure usually organizes itself around skills or other resources. This structure type is most effective in single-business firms, in which key activities revolve around a well-defined set of processes.

• Matrix The matrix structure is organized with two or more chains of command and has a complicated network of reporting relationships. Usually the most complex of the organizational structures to manage, the matrix structure does allow a company to be flexible and respond quickly to change.

• Geographic The geographic organizational structure is usually organized specifically for the market being supported. This structure works well for organizations pursuing different strategies in different geo graphic markets.

• Decentralized business units In a decentralized business unit organizational structure, each business unit is operated as a standalone profit center. This type of organizational structure works well for diversified organizations and allows an organization to make strategic decisions closer to the environment of the business unit.

• Strategic business units The strategic business unit organizational structure is usually set up to focus on addressing strategic issues immediately. This structure can work well for highly diversified organizations that still want to enforce strategic coordination across related businesses yet have more cohesiveness among business units than a decentralized business unit structure has.

An organizational structure can be a hybrid of one or more of these structure types. During the assessment of the current organizational structure, it might become obvious that just adjusting the current organizational structure to follow the new strategic direction isn't going to offer enough improvement. An organization might determine that the best way to align the organization strategically is abandoning the current type of organizational structure and following a new structure. For example, although the current functional type of organizational structure worked in the past, it might not be the right approach to follow when the organization decides to expand into new markets.

There is one last factor to consider, and it is a common theme in the rest of this chapter. If the assessment determines that the organizational structure needs to be changed, expect resistance at all levels of the organization. Most people don't like change, for a variety of reasons, and usually resist it as much as possible.

Industry Position

The requirements-gathering team should be aware of where the organization fits in terms of industry position. The current industry position and the desired industry position could be keys in justifying the purpose of the development project. For example, if your company is already the market leader in its industry, the focus of a new system might be to protect the market share the company already has. The organization might also believe it can take advantage of new technology to help chase competitors out of the market by producing a superior product at a lower price, or decide that the only way to maintain the current market position is to improve its business processes.

If the organization is not a market leader, the management staff members might have determined that they want to position themselves in a specific market niche, in which they can take advantage of technology to build market share. Management might see that developing a specific product or application could be the only way to effectively position the organization.

The industry's life cycle phase should also be considered during the requirements-gathering phase. If the industry is in a declining or, even more important, a growing phase, developing and implementing the system in a short time frame could be important. This way, the organization can take advantage of an opportunity that might not exist in the future if the project development life cycle is too long. Another phase of an industry's life cycle is when companies with most of the market share become stagnant in terms of attracting new customers. Previous barriers to entering this market might have eased, offering a major opportunity for an aggressive company to steal market share. Again, timing is critical, and the window might close if an organization is too slow to react.

Vertical Market Position

The vertical market position that your organization finds itself in is also an important consideration and helps drive the system requirements. A vertical market is a collection of common businesses that a company manages. They are usually businesses in a common industry that develop similar products or services and sell those products or services in a similar manner. An organization might have identified other vertical markets it wants to expand to, and implementing a new business system will improve its efforts. For example, in the Billington Pharmaceuticals case study, a future expansion scenario might be expanding its online prescription service to retirement homes and retirement communities. The ordering and refilling of prescriptions could be processed in bulk instead of individually, thus decreasing costs for retirement homes and communities. Much of the system infrastructure is already in place, but the system improvements needed to implement this project would still take a substantial effort. The key process in the system's requirements-gathering phase would be understanding the current system infrastructure that supports Billington's current vertical market position and the requirements that would be necessary to make expansion into these new markets a reality.

Personnel and Training

The next area that needs to be reviewed is the organization's personnel and training needs. When gathering the new requirements, it's also important to evaluate what additional employee skills are needed to make this new project a success. It might not be possible to develop the required skill level by training alone. This is especially true in the IT environment, where a certain level of experience is often needed to successfully implement a project. For example, if an organization is developing its first Web-based project, there might be no internal knowledge to rely on. A project of this type is usually too crucial to be trusted to an inexperienced staff. In these cases, the issue is not training, but a matter of "buying" the needed experience by hiring contractors. You can then leverage this acquired knowledge by having internal staff learn the required skills from the contracted personnel.

When training is enough to close the knowledge gap, however, a key deliverable from this phase is a thorough training plan, which must include a strategy and a plan for developing any necessary training materials for end users, administrators, and support personnel. The training plan defines training objectives for the identified group and describes the training methods to be used, the materials needed, and the resources required. If possible, the training plan should include a training schedule in the overall project schedule. A training schedule should consider the number of users who need to be trained and then schedule the first training sessions to begin right before system deployment so that users can retain their knowledge by immediately putting it to use. The training schedule can also help determine the training budget.

One way to develop a training plan is to conduct a training-needs analysis for the purpose of learning as much as possible about the group to be trained. During this analysis, you can determine the current levels of knowledge, attitudes, skills, and preferred learning styles to form the basis of your training plan. Knowing your users' preferred learning styles (visual, auditory, or kinetic) helps determine what training materials will be most successful for this user group. Other factors, such as education, age and previous experiences, also have an impact on how people learn.

By examining the results of your training-needs analysis, the training method you choose has a much better chance of successfully educating your user group.

Political Climate

You should not underestimate an organization's political climate when reviewing the current business state. Restructuring the distribution of information in an organization could also shift some of the political power in that organization. For example, a group within the organization might lobby for ownership of a particular application, arguing that it makes the most sense for the organization. However, the actual reason for wanting ownership of the application might be to increase the group's political power. For other groups within the organization, losing some of their power base could cause them to not support the project's development. These groups might take steps to disrupt, sabotage, or otherwise change the project's intended focus. When the system is ready to be implemented, these same groups might withhold support or use other methods to prevent a successful project implementation. Never dismiss the possibility that people may put their own interests or self-preservation ahead of the organization's well-being.

Regulatory Requirements

Many companies operate in highly regulated industries that affect product distribution. In some industries, regulatory agencies also control pricing policies. These regulations can create limitations at both the state and federal level.

Understanding these complex rules and regulations and converting them to business requirements can be challenging. For example, there might be rules limiting the distribution of some products in certain states. Other regulations for importing and exporting products at the international level, including tariffs, could add another level of complexity to the process. These regulations might also seem to conflict at times, so understanding not just current regulatory requirements but also any foreseeable potential modifications is important. Incorporating these potential changes into the business requirements is critical to increasing the application's future flexibility and maintainability.