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Friday, January 4, 2019

Considering value both good and bad


If we consider that the ultimate goal of the business analyst is to add value to the organization, and we accept that as our basic premise, then it would seem that our primary job is to define value, and especially the value that we are intending to deliver.
And if we are "adding" value to the organization then clearly we have to have a mechanism to measure the value as it is before we make a change and again afterwards so that we can determine what has been added.
Since "value" is somewhat nebulous and what is valuable to one person may not be valuable to another, being very specific about the value we are adding becomes important both in terms of goal achievement, and also general politics.
Where is value derived? Lower cost of operation without reduction in productivity. Increased sales without additional costs to achieve those sales. Increased market share. Clearly the common "value" for an organization revolves around the bottom line. The value received from the project or program can be measured with ROI or other financial assessment.
However there are other value assessments: increasing the morale of the employees through various programs which makes the organization a more valuable place to work and attracts high-value employees. Successful programs that enhance the reputation of the organization which increases the value of that organization. Projects and programs that are cognizant of the community and the environment which also enhance the organization's reputation with the general public.
And sometimes these different value assessments are in conflict. For example a project that is intended ultimately to reduce cost thus providing a significant ROI, might cause workplace unrest and lower the value of the organization as a destination for new employees and in fact might cause current ways to leave thus reducing the value of the organization by each employee that departs.
What would be the ratio of bottom-line value lost employee value? Clearly there is some kind of relationship, and decisions need to be made based on the increase in value on one side of the scale and the decrease on the other.
What is the business analysts role in all this? Impact analysis. Not only do we have to examine what is impacted, both positively and negatively, as a result of any value increasing project, but also the measurements of the impact on the organization so that management can do a valid comparison. In other words if there is a 3% increase in sales, that value can be clearly understood. But if there is a loss of seven employees as a result of changes be made to increase the sales, what numbers can we use to compare?
Perhaps we need some kind of analysis called "Value on Investment (VOI)"
as the business and mostly would also have to take into consideration the long-term effect of a change to the organization. The ROI or Cost Benefit Analysis or other assessments focus primarily on the initial project or program cost and the benefits that are accrued, without much concern with the long view. Costs are certainly factored in, such as long-term costs of a new facility, but what about the continuing erosion of value over time?
For example if the program has a negative effect on the employees that negative effect may not be noticeable immediately since most employees will take time before they actually depart, and it will take time to find a new place, however the dissatisfaction will continue to grow and increased turnover rate will be the result perhaps some time down the line, and it will continue. Then the organization is in a vicious cycle of trying to deal with the turnover rate, making various employee related changes which do nothing to address the original issues that occurred when the programmer project was executed.
Employee retention is not the only value item that they deteriorate over time such that it may not be related directly in the corporate find to a specific project. The organization's reputation may take an immediate hit and then recover, but then we see that the reputation deteriorates over time as the lingering memory of the ill advised project stays with the general public.
Clearly this is not an easy job to do: prognosticate what the impact will be immediately and then over the course of time. However, just the exercise of stepping back and evaluating all of the impacts of a given project or program both now and in the future adds value to the organization by making the decision process that much more rational. And remember, if the results turn out that the project will generate a negative value in excess of the positive value and the project or program is canceled, the business analyst adds value to the organization in terms of saving money which can be redirected to something more valuable.