Process Analysis and Problem Solving - Research Paper Example

 Process Analysis and Problem Solving . The role of Business Analysis within organizations and how it has evolved over the past thirty years. Abstract This article considers the history of business analysis, the present situation, and then how such analytical systems and skills may evolve and develop in the future. It suggests ways in which senior management must be aware of developments, as well as their own procedures, suppliers and markets, in order to ensure present and future success. Influential ideas such as ‘Lean Manufacturing ‘ and ‘Business Process Engineering ‘ and de Bono’s ‘6 Hats’( 1985) are discussed, together with their relevance for success in business. Introduction Business, and e-commerce in particular, is changing at a tremendous rate, as new products and new opportunities constantly emerge. In order to deal with such changes in the best way possible it becomes necessary to be able to look into the future using business analysis techniques. This means identifying a company’s needs, what its suppliers can and will deliver, as well as the changing demands of clients, and then determining possible solutions. Such an analysis will include the process of developing systems, as well as improving processing systems, making changes in an organization such as opening or closing branches, staff retention and training, as well as the planning of policies and resulting strategies that are flexible enough to cope with rapidly chaging situations. Aim To consider the role of business analysis in the past and present, and how its role has evolved to the present state, when it is involved with such things as the analysis of an organization and its design, looking at such things as strategic planning, policies and approaches to marketing and an analysis of the interpretation of rules of business with regard to technical systems. From this point to speculate, based upon sound research, as to how the role of business analysis may continue to evolve in future. The reason this approach has been chosen is that by considering the historical perspective first it should be possible to outline and measure changes that have already taken place in the role of business analysis, and then so build on this knowledge in order to better predict what is likely to happen in the future. Method A search of relevant literature using key words such as business systems, business analysis , business solutions, process improvement, business policy development and strategic planning. This will then be analysed and commented upon. Historical Perspective Enterprising business people, whether a small market trader thousands of years ago, or a modern day international multi million dollar organization, have analysed their businesses. One may have merely noted which products were selling fastest and thought ‘I must get some more of those’, while others, larger , more modern organizations, would keep careful accounts and measure cash flow daily, keep computer checks on exactly what is bought and sold, analyse which supplier is the best for particular materials at a certain time, while at the same time being aware of market trends and predicting new ones, knowing exactly what their rivals are doing, as well as recognising the changing needs of clients . Both these extremes are examples of business analysis. In the earliest times, as long ago as 35,000 B.C.E. calculations were made using marks on sticks. Later came the abacus in about 3,000 B.C.E. The concept of zero and the use of the decimal point, plus ideas such as fractions and percentages, lead on to the use of calculating machines of various kinds. Specialization came in with people following a particular trade or craft, often through an apprenticeship. The 18th and19th centuries of course brought huge changes in society with people flocking to the towns and the Industrial Revolution. Big business arrived and with it the need for more and more analysis of what was going in, what could be improved, what the possible markets were demanding etc. Anita desk top calculators were introduced by Bell Punch in 1961.( Tout 2010) In about 1970 the first computers that could fit onto a desk top became widely available. At long last paper methods could be replaced with electronic ones and repetitive tasks were made easier. All of these innovations were all needed before modern day business analysis could come into play. By the 1980’s the Information Age had arrived. The business analyst’s role by that time was to comprehend what data was needed in to order to produce the information needed, what would now be described as system analysis. He could then use the gathered information to analyse what was going on. Now in the new millennium so much more data is available to him and his role has consequently expanded especially in view of new ways of looking at things.. Toyota introduced the term ‘Lean Manufacturing.’ in the 1990s. (Becker 1998) This can be defined as a production practice that takes into consideration the fact that it is wasteful to expend resources in order to achieve any goal that does not add value for the final customer. It is a systematic approach that identifies and eliminates waste through a process of continuous improvement. Expenditure of time, materials or man power, that does not fit into this process is therefore defined as wasteful and so an object for elimination. Taiichi Ohno, a former chief engineer at Toyota, named 7 such areas of possible waste.:- Overproduction i.e. producing more than what is actually required or even something that is not required at all. . On the shop floor, this can occurs because changeover times are high, or because the equipment or process is unreliable. The main reason for overproduction however is lack of or bad communication. At its simplest if a baker’s shop does not tell the bakery that no one is buying chocolate éclairs then they may continue to produce numbers of highly perishable and expensive cakes which will be wasted. In information technology terms it could mean continuing to produce a product which a rival has superseded with updated technology, and which is more attractive to the somewhat fickle buying public, whether because it is just highly advertised, or is a genuine improvement and offers something new. The business will be left with quantities of expensive merchandise they cannot place, and which cannot easily be adapted to become something more readily saleable. Transport. Moving products about does not increase their value and can be expensive in itself, both in terms of staff required, the hours taken, the means of transport and the fuel costs. In fact in some cases it may cause deterioration because of such things as the time taken or mishandling. Careful selection of locations is important in order to minimise waste, and should be based upon consideration of how best to optimize the value in its entirity, rather than concentrating on only a single aspect such as packing costs or plant rents. Taking unnecssary inventories. This takes staff time and therefore costs money which will ultimately be passed on to the final client in the form of higher unit prices, even if the cost can at first seemingly be absorbed into planned budgets.. Processing that is inappropriate. This can refer perhaps to using inappropriate suppliers or a process that is not the most effective, may be in time taken or in waste of materals, or one which requires extra purchasing for little measurable benefit. Waiting. This can apply to such things as lack of equipment so that staff waste time waiting for it to be free to use. It could mean using equipment that is out dated and/or inefficient. It could be due to using staff who waste time, possibly because of lack of supervision or training. It can also apply to using suppliers who do not deliver on time or do not supply first time exactly what is required. It can apply too, especially if outside agencies are used for delivery, to the time clients are required to wait unecessarily for goods they require.. Defects. This can refer to waste in the production of faulty goods ( Seconds) that must either be discarded or sold underprice. It can also refer to bad communication as when instructions are badly translated, or in ultra technical language, so that clients are frustrated and so are unlikely to return. It could also mean that staff receive faulty instructions. Excessive motion. This refers to such things as staff having to move away from production in order to obtain necessary equipment or materials. This was followed by James Womack’s identification of an 8th waste in 1996. This he stated was the under utilization of employees. He was considering not so much their physical labors, but their ideas and minds. Others have considered that this point could be extended to include under-utilization of suppliers and /or clients. A supplier for instance may come across new materials, or have ideas for new products to be made. A client may have particular needs that a company’s present production is not satisfying. A vacuum cleaner for instance may be considered very efficient by the manuafacturer, but the client knows it will not get pet hairs off settee cushions. This example can be extended to a company producing financial software that does not do exactly what a client requires. Michael Hammer in 1990 claimed that using technology and IT to automate existing work processes was of less value than identifying and eliminating non-value work. Out of this idea came the idea of Business Process Reengineering, as described by Peter Carter in 2005. Carter says that it is a way in which an organization can change itself in ways that will affect its performance in a positive way. It is concerned with both processes and the people involved. Carter points out how making quite minor changes in processes used can have huge effects on a companies cash flow, or its delivery service , and so adds to customer satisfaction. He claims for instance that documenting business processes could typically improve the efficiency of an organization by 10%. Present Situation A large modern company has people with many different, but linked roles. Instead of one person having sole responsibility for analysing an organisation this has now devolved into many related tasks. The individual roles of system analyst, data analysis, financial analyst, project manager and business analyst must interact in order to ensure success. The systems analyst will obtain data in order to evaluate present and any proposed systems, identifying possible problems and new requirements. He looks at thing that cannot be analysed using purely mathematical methods of analysis such as the present skills or training requirements of staff, or new developments in the field..The data analyst discovers which data is required within a company and models how data moves from one department to another. The finance analyst has the task of transforming financial data into a construct that can be used in order to evaluate and monitor the company’s position financially so as to allow sound future financial planning. There should be a market analyst whose skills would be directed towards predicting future markets. Business intelligence looks at past performance and the current situation current, and then produces viable predictions about the future. The project manager has a particular concern within a company and is responsible for planning it, implementation, monitoring and controlling progress and also finally closing particular projects. Modern day practise in business analysis includes the following:- Creating a mission statement that defines the organizational aim or aims and which also describes what it is that makes a company individual and different from others in the field. Working on a vision statement which defines the organization’s direction, and clearly shows its desired future position e.g. the largest supplier of cream cheese in Carmarthen, in Wales, or in the world, or the highest selling producer of financial analytical software in Europe. Going on to build these ideas into a clear business plan which sets out project objectives. Defining the kind of positive behavior patterns that will enable the company to achieve its stated aims and fulfill its vision. In order to do this it is necessary to use data provided by other allied workers such as project managers, financial and market analysts among others. Track progress by taking note of such things as measured performance, customer sales, costs of materials versus total sales etc. . Relating efficiency improvements to the culture of the organization Identifying further initiatives that will in their turn improve performance. There are many different in which the points described above can be reached. One is by using ideas such as Porter’s 5 Forces. ( Porter 1980) These are :- Supplier power. Suppliers can easily drive up prices. Analysis will reveal how this is happening. If there are only few suppliers and they offer unique products they are in a powerful position, but if there are more potential suppliers then it is possible to move from one to another. Buyer Power. Buyers have the ability to keep prices low. If there are few large buyers, as when a supermarket chin is buying from a small manufacturer, the buyers are in a very powerful position. They may also need to be switched from dealing with some other supplier and this requires knowledge, commitment and enterprise on the part of the company involved. Rivalry from Competitors. The important point is how many competitors there are and what they are offering that makes them attractive to buyers. Most buyers will shift to another supplier if they think they will get a better deal. However, if a company’s project is unique, if they are the only people selling bicycles in Holland, then they have huge power. The threat of substitution. This is controlled by the way in which a company does things and its client’s ability to find other ways to do the same thing as when the cutler found his clients want food processors instead of kitchen knives. A technology company may produce new software, but clients could develop software for themselves that better fits what they want, or source this elsewhere. The threat of new entry. If the business is a market stall it does not take much capital for someone to set up in competition, but the same wouldn’t be true of a group setting up a car making factory in an area of the world they have not worked in before. Possibilities for the Future The Business Analysis Conference of September 2010 came to the conclusion that, because the world is changing, as are available supplies and the products required, then innovation is needed. This involves fresh thinking about the processes and systems in a business organization. This may well mean coming up with innovative techniques, using lateral thinking, just as when business men long ago moved from making tools in bronze to those in iron, or later when the industrial revolution made mechanical processes out of what had been done by hand. So there is change required, but at the same time nothing changes as this has always been required. It is the time scale of necessary change that has increased in speed, and it seems will continue to do so as an ever evolving process. This being so organizations need, and will continue to need, to ensure it has staff with the appropriate skills to deliver successfully, and rapidly, the complex innovative business solutions in order to meet 21st century needs. It is about more than competency, because this must be coupled with capability. A man may know how to bake a wonderful loaf, but if he doesn’t have a supply of flour, yeast etc and an oven to bake it, then his competence is wasted. This example also works if he is an I.T. specialist and his company doesn’t give him time to develop new systems, or provide the software required to do so. If there are gaps, in either knowledge or capabilities, then these need to be dealt with in a positive way so that such deficiencies are in the past. Conclusion As can be seen from the above discussion there are a number of managerial issues that are key to future success. The specialist magazine ‘Modern Analyst .com carries a number of pointers about how not to do things e.g. do not use outside consultants, don’t have a clear strategy, but it is necessary to take a more positive approach. In order to be successful in the modern world, both now and in the future, a company needs to be organized from the top down. Senior staff, including business analysts, must take into view the whole organization, including the people involved, staff, suppliers and customers, and the complete processes involved , from beginning to end, whether production or otherwise, however complex this process is. Modern analytic tools are needed in order to enable the easy tracking of the various processes, and the analysis of them and their results. In a large company this can necessitate managing a huge amount of information about the processes involved, the data involved and the various systems in use. Ways of doing this have changed over time, and will continue to do so. It is up to business leaders to be aware of such tools as are available and to select those that are most appropriate for their particular situation and organization. Whether considering requirements management, the elimination of waste both in product and effort, the analysis of systems or project management, opportunities must be realized. Such items as revenue lost, perhaps because of customer dissatisfaction, as well as unrealized reductions in the various expenses involved, will, as far as possible, be eliminated. Leaders will be concerned with a variety of sub-topics such as legal matters, human resources , including employee/employer relationships, and health and safety issues, as well as the more obvious ones of suppliers, production and markets. They will use methods such as Edward de Bono’s ‘6 hats ‘( 1985), a model of thinking that can be utilized in order to explore various facets of complex situations. It involves being an observer, following hunches, being critical, looking for benefits, being creative and being in control. The individual roles of system analyst, business analyst, market analyst, business intelligence manager, financial analyst and project manager must interact in order to ensure success. The systems analyst will obtain data in order to evaluate present and any proposed systems, identifying possible problems and new requirements. The financial analyst studies available financial data and recommends appropriate actions. He is aware of trends and possibilities and writes reports which include his opinions. The marketing analyst is concerned with such matters as pricing, costs and customer requirements, as well as what competitors are doing. The role of the business intelligence manager is concerned with using information technology methods in order to discover data required from various departments and then using this to discover such things as costs, the sales of individual products and more detailed information. . The project manager has a particular concern within a company and is responsible for planning it, implementation, monitoring and controlling progress and also finally closing particular projects. Each of these people has a particular role, in some cases overlapping and yet distinct, and all concerned with using and analysing data and drawing conclusions from it which will affect future operations. The business analyst’s task is to co-ordinate all the knowledge and expertise available from the various departments. His work is to investigate the reasons for the results produced. In order to do this he not only needs to understand the way in which business processes work, but also knows the impact changes will have using processes such as predictive analytics. He documents and communicates requirements, so it is his efforts which actually make positive changes possible. ERP ( Enterprise Resource Planning) can be utilized patterns and functions from product planning to customer service, as described in the article, ‘Enterprise Resource Planning and Related Technologies.’ Analysts must be increasing aware of profits and returns on investments made, whether in stock, equipment or purely financial, as outlined in the Richard Berner article of January 2002 ‘Corporate profits: Critical for business analysis; and not just for Wall Street. According to Dominic Barton, writing in November 2010, ‘Today’s biggest challenge involves knowing how to respond to a world in which the frame and basis of competition are always changing.’ Meeting that continuous challenge will mean that business analysis will continue to evolve as it has done for over 5000 years or more. Then as now, as it states on the web page A.R.K. Business Analysis, “Good business research is hard to find. Useful business research is harder to find.” References 6 Thinking Hats,- Bono de, Edward, ( March 2010) Value Based Management.net., available from http://www.valuebasedmanagement.net/methods_bono_six_thinking_hats.html ( accessed 19th November 2010) A.R.K. BUSINESS ANALYSIS, Available from http://www.arkbusiness.co.uk/ ( accessed 13th November 2010) BARTON.D., Global forces shaping the future of business and society, McKinsey Quarterly, November 2010 , available from http://www.mckinseyquarterly.com/Global_forces_shaping_the_future_of_business_and_society_2701 ( accessed 22nd November 2010). BECKER,R., 1998, Lean manufacturing and the Toyota Production System, available from http://www.sae.org/manufacturing/lean/column/leanjun01.htm ( accessed 13th November 2010 BERNER, R. Corporate profits: Critical for business analysis; and not just for Wall Street, 1st January 2010,, available from http://www.allbusiness.com/accounting-reporting/reports-statements-profit/124973-1.html ( accessed 22nd November 2010 ) Business Process Engineering, 2010, available from http://web.progress.com/en/business-process-engineering.html ( accessed 13th November 2010) Business Process Reengineering, (2009) Encyclopaedia of Management, available from http://www.encyclopedia.com/doc/1G2-3273100032.html ( accessed 13th November 2010) De BONO,E. (1985). Six Thinking Hats: An Essential Approach to Business Management. London, Little, Brown, & Company. Enterprise Resource Planning and Related Technologies, Abouterp.com,available from http://www.abouterp.com/overviewerp/ERP_related_technologies.html ( accessed 18th November 2010 ) James P.Womack, Lean Enterprise Institute, available from http://www.lean.org/WhoWeAre/LeanPerson.cfm?LeanPersonId=1 ( accessed 13th November 2010) Modern Analyst.com, available from http://www.modernanalyst.com/ ( accessed 22nd November 2010). PORTER, M., (1980), Competitive Strategy, The Free Press, New York, Simon and Shuster READ, D. An interview with Michael Hammer, available from http://managers.emeraldinsight.com/change_management/interviews/pdf/hammer.pdf ( accessed 13th November 2010) THE BUSINESS ANALYSIS CONFERENCE OF 2010, September 2010, available from http://www.irmuk.co.uk/ba2010/ (accessed 13th November 2010) TOUT,N. 2010, Anita: the world’s first electronic desktop calculator, available from http://www.vintagecalculators.com/html/sumlock_anita.html ( accessed 13th November 2010 Read More