James Cadle Business Analysis Techniques: 72 Essential Tools for Success
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Identifying the stakeholders is extremely important if conflicts are to be avoided
later in the project. Many initiatives have been derailed when an alternative
point of view has emerged, sometimes at a late stage. Identifying the interested
parties early on will help analysts to understand the range of views, and, where
necessary, handle the differences.
Stakeholder analysis (Techniques 26–29)
Stakeholder analysis is concerned with examining all of the stakeholders or
groups of stakeholders and categorising them according to factors such as their
level of influence and their areas of concern. It is important to carry out this
analysis, since this will provide a means of deciding the stakeholder management
strategies to be adopted.
There are four major techniques that are used to analyse stakeholders:
the power/interest or power/impact grid;
CATWOE, VOCATE or PARADE;
business activity modelling;
RACI or RASCI.
Analysing stakeholders is the key to working well with them. This is essential if
business analysis work is to be successful in delivering business improvements.
Early analysis of stakeholders can prevent the occurrence of many problems, in
particular:
late (too late!) emergence of conflicts;
misunderstandings about business needs;
implementation of poor solutions;
communication problems;
resistance or even antipathy.
Stakeholder management (Techniques 30–32)
Stakeholder management provides the basis for ongoing work with the
stakeholders during a project. It involves identifying and implementing
management strategies that enable analysts to deal with a range of stakeholders.
These management strategies are based upon the categorisation that has been
carried out during stakeholder analysis. They have to be supplemented by
additional techniques that help during the stakeholder management process.
These techniques assist with influencing stakeholders, negotiating with them
and managing conflict between them.
Three techniques that help with managing stakeholders are covered in this section:
stakeholder management planning;
the Thomas–Kilmann conflict mode instrument;
principled negotiation.
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STAKEHOLDER IDENTIFICATION
Technique 23: Stakeholder nomination
Description of the technique
It is relatively easy to identify an initial set of stakeholders, and this is done
mainly through stakeholder nomination. The project sponsor is a key stakeholder,
and is usually one of the first individuals to interview in order to engage in
discussion about the project. During this interview the sponsor should be able to
specify the key managers and business staff who need to be involved in the
business analysis work.
Using stakeholder nomination
This approach usually works in a hierarchical fashion: the sponsor identifies key
managers, all of the managers identify key members of their teams, and so on.
A hierarchical approach is helpful because the managers are able to identify the
individuals they feel would best fulfil the role required by the analyst, and they
can also give permission for their staff to spend time working on the project.
Relying upon individuals who have been identified by the sponsor or another
senior manager can be extremely risky, however. Sometimes the sponsor or
managers will identify people who are sympathetic to their views and ideas,
resulting in a limited analysis with the risk that important details are omitted.
Furthermore, a more systematic approach, such as the Stakeholder wheel
described below, helps to ensure that all stakeholder views are considered – even
those stakeholders who, at first sight, do not appear to be relevant.
Technique 24: Background research
Variants/Aliases
This is also called report analysis or background reading.
Description of the technique
There are many reasons for initiating a business analysis project. These include
a change in business strategy, a request from a senior manager, changes to a
related business area, and legal or regulatory changes. One may even follow on
from a feasibility study. This usually means that documentation exists to explain
why the business analysis is required. There may also be a Terms of Reference
statement for the study, or formal project documentation such as a Project
Initiation Document. Examining such documentation will often provide
information that will help the analyst uncover a wide range of stakeholders,
including those working outside the area under investigation. For example, a
feasibility study might have included discussions with managers and staff from
areas of the organisation that, at first sight, appear to be unrelated to the project,
or the source of the original idea might be an external stakeholder such as a
major customer or supplier. Any individuals or groups identified when examining
background documentation should be entered on the list of initial stakeholders.
Using background research
It is important to locate the documents that could be helpful in identifying
stakeholders, and sometimes these are not obvious. If there are pre-project
or project documents then they should be made available to the analyst.
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However, sometimes work has been done by a different team or under the
authorisation of a different sponsor, and it can be difficult to find the related
documents. The key approach here is to find out if there have been any other
studies looking at similar areas, and obtain copies of the documentation that was
produced.
Other documents that are often found within organisations and can be useful
when identifying stakeholders are Organisation Charts or Project Structures.
The Organisation Charts will show where stakeholders sit in the organisation,
and can be the source of valuable information. For example, there may be
work areas that have not been mentioned previously but are potentially linked
to the business situation under investigation, or may be affected by any
recommendations. Any such stakeholders need to be identified and
categorised during stakeholder analysis.
One tool that can be extremely useful for stakeholder identification is the
Organisation Diagram (Technique 35). It is described in full in Chapter 4, ‘Analyse
needs’, since its primary use is in the analysis of business process improvements.
This diagram includes an analysis of the external suppliers of resources to the
organisation, and the customer groups that receive products, services and
information. The breakdown shown for these groups can provide a great deal of
insight into these stakeholders and their perspectives. In addition, the diagram
shows the organisations that are competitors, some of whom may be stakeholders
for a particular business analysis assignment.
Technique 25: The stakeholder wheel
Description of the technique
As mentioned earlier, a systematic approach to identifying stakeholders can
yield great benefits, particularly when used in conjunction with the personal
identification and background research described above. The primary technique we
favour to help with systematic stakeholder identification is the stakeholder wheel.
The wheel identifies the range of stakeholder groups, and adds structure to the
process of identifying them. Without this structure, the stakeholder identification
activity usually involves identifying individuals or groups through discussions
with other individuals or groups. While this can generate knowledge about many
stakeholders, there is a danger that the focus will be on the internal ones, and
that some stakeholders may be missed and, as a result, their viewpoints might
not be considered.
The stakeholder wheel is shown in Figure 3.1. It defines the groups within which
we need to look for stakeholders, and includes both internal and external ones.
The groups in the wheel are:
Owners: Depending on the sector in which the organisation operates,
these could include, for example, shareholders, trustees or
government ministers.
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Managers: These are the senior and middle managers with responsibility
for running the organisation, monitoring progress and
delivering the results required by the owners.
Employees: These are the operational staff, with responsibility for delivering
the products and services of the organisation.
Regulators: This group covers external bodies that set and enforce
regulations to which the organisation must adhere.
Suppliers: External organisations or individuals that provide products and
services to the organisation are listed as suppliers.
Partners: These are other organisations that work with the organisation
being analysed, to deliver complementary or supplementary
products and services.
Customers: The recipients of the organisation’s products and services are
listed as its customers.
Competitors: This group consists of other organisations that deliver their
version of the products and services to the same set of
customers.
Using the stakeholder wheel
The wheel is used by looking systematically at each group and checking for the
stakeholders that may exist there. Within each group it may be possible to use
the earlier techniques of personal identification and background research
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Suppliers
Regulators
Employees
Managers
Owners
Competitors
Customers
Partners
Figure 3.1 The stakeholder wheel
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(Techniques 23 and 24) to find the stakeholders. It is likely that several of
the stakeholders in the groups identified in the wheel will not have been
found initially. In essence, the wheel is a form of checklist that helps the analysts
ensure that stakeholder groups are not missed. It also prompts the analysts to
consider the different constituencies with an interest in the project, and the nature
of that interest – an aspect that is vital when analysing stakeholder views. This
topic is discussed in the later sections of this chapter, under ‘Stakeholder analysis’
and ‘Stakeholder management’.
The internal stakeholders – the managers and the employees – may be identified
by the sponsor or other managers, or by examining documentation such as the
Terms of Reference or a Feasibility Study, or even an Organisation Chart.
While, initially, the BA will focus on the internal stakeholders, it is important
that analysts look beyond the internal organisation and consider external
stakeholders.
The external stakeholders are often less obvious to identify, and this is where
the stakeholder wheel can help enormously by setting out the key groups to
examine. It is vital that each of these groups is considered in the light of the
organisation’s activities and the area under particular examination. For
example, the suppliers might seem obvious – the other organisations that
supply products and services to ours. However, we need to consider the
specific areas of supply: raw materials, products, advisory or consultancy
services, finance, potential employees, IT services. If, for example, an
organisation is involved with arranging conferences, the suppliers could be
varied and numerous – including suppliers of food products, keynote speakers
and venues. When planning changes to the organisation one would have to
consider whether these suppliers would be impacted by those changes, and
how interested they would be in them. A high impact is likely to ensure a high
level of interest. It is possible that some impacts might mean the loss of
particular suppliers, and if there is the potential for this to happen, it is vital
that it be taken into account as early as possible. The loss of an excellent
conference venue would cause a great deal of additional work for the
organisation in our example.
STAKEHOLDER ANALYSIS
Technique 26: Power/interest grid
Variants/Aliases
Aliases for this technique are the influence/interest grid and the P/I grid.
A variant is the Power/impact grid.
Description of the technique
The power/interest grid is a two-dimensional matrix, and stakeholders are
plotted on the matrix. The simplest form of the grid uses a 2 2 matrix as shown
in Figure 3.2.
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The grid categorises stakeholders into the following four groups:
High power / The key stakeholders who need to be managed actively.
high interest: These are the people who need to be kept informed of each step
in the project, and whose views need to be taken into account.
They will be instrumental in achieving the project outcomes.
High power / The senior stakeholders who usually only need to be kept
low interest: satisfied that the work is travelling in the right direction.
If the analyst wishes them to become more active, they may
need prompting to exert their influence.
Low power / Typically the stakeholders who will have to operate the new
high interest: business system. This may lead to changes to their roles,
responsibilities and skill requirements. Consequently these
stakeholders are highly interested in the changes that they will
encounter – or even have imposed upon them. However, as
they are likely to be working at an operational level, they will
have little power as individuals to influence any decisions.
Low power / The stakeholders who are on the fringes of the study.
low interest: They might be external suppliers of commodity products or
infrequent customers, and as a result they do not exercise a
great deal of influence, if any, over the organisation. However,
these stakeholders, while being interested in the ways in which
the organisation works with them, are unlikely to be concerned
about, or even aware of, its internal operations.
A more complex version of the grid uses a 3 3 matrix and is shown in
Figure 3.3. It divides the stakeholders and the management strategies into
more categories.
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Level of power
High Power/
Low Interest
High Power/
High Interest
Low Power/
High Interest
Low Power/
Low Interest
Level of interest
Figure 3.2 Power/interest grid
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This version of the grid categorises stakeholders into six groups. These are
similar to the ones from the simpler version of the matrix, but some key areas are
different:
High power / These are the key stakeholders who require constant, active
high interest: communication and management.
High power / These are the stakeholders we need to keep satisfied, so that
medium they will not intervene – unless a situation arises where that
interest: is precisely what we require. Careful management of
stakeholders with this level of power is needed, so that any of
their interventions serve to support the work rather than add
further complication.
High power / These stakeholders may be far removed from the area of
low interest: study, or may be too senior for it to have reached their notice.
However, within organisations there are often incidents that
bring seemingly minor issues to the attention of more senior
stakeholders: for example, where a customer involves a
regulator or a solicitor, or where a senior manager is let down
by poor information. For these reasons it is important that
analysts be aware of the stakeholders in this category, and
ensure that they are not provoked into action where it is not
desired.
Medium These stakeholders often include middle managers from across
power /low to the organisation, or some of the more important customers and
high interest: suppliers. External regulators may also fall within this category.
The interest levels of the stakeholders in this group are likely to
fluctuate depending upon several factors, such as the direction
BUSINESS ANALYSIS TECHNIQUES
MediumLow High
Power/Influence
High Power/
Low Interest
High Power/
Medium Interest
Medium Power/
Low – High Interest
Low Power/
Low Interest
MediumLow High
Level of interest
High Power/
High Interest
Low Power/
Medium – High Interest
Figure 3.3 Extended power/interest grid
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the work is taking, the decisions that are being made, the
visibility of the study or even external factors, such as the
economic situation. It is important to be aware of these
stakeholders and keep a watchful eye on their interest and
opinions. As before, it may be that we want to manage their
level of interest such that they provide support when required.
Low power / These are the stakeholders who do not have a direct interest or
low interest: involvement in the business situation, so little effort needs to
be spent on managing them.
Low power / These stakeholders are the business staff who will operate any
medium to new processes and systems. They need to be kept informed, and,
high interest: if possible, kept on side. As the people who are often affected
most directly by a business change project, their interest is
likely to grow as the work advances. While they generally have
little power individually, their power can increase dramatically
if the analysts require assistance from them to obtain detailed
information, and the implementation of changes can be severely
compromised without their help. It has been said that in the
absence of information chaos develops; this should be borne in
mind with regard to these stakeholders, since their worries and
concerns may extend far beyond the reality. This can only be
countered by providing sufficient information to keep as many
of the fears as possible at bay.
Using the power/interest grid
Each category of stakeholders will need to be managed in a different way to
take account of their level of power and interest. In the power/interest grid the
stakeholders are grouped into either four (if the 2 × 2 matrix is used) or six
(if the 3 × 3 matrix is used) categories. Since the latter is an expansion of the
former, we will look at the six possible categories:
Manage These are the high power / high interest stakeholders. They
actively: need to be closely involved at all stages of the project and in
any key decisions. If a recommendation is to be made, these
stakeholders need to be aware of the recommendation, and
should have approved its inclusion in the list. They should
support any proposals made. The stakeholder management
strategy to be used here involves the analysts working
continuously and closely with these key players. Nothing
should come as a surprise to them in a public forum; all
recommendations should have been discussed with them, and
actions agreed, in advance.
Keep These are the high power / medium interest stakeholders.
satisfied: They need be kept informed where necessary so that they do
not begin to develop an unhelpful interest in aspects of the
project – and possibly delay, or even reverse, progress.
Where there are any issues that will be of interest to them,
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the analysts need to ensure that they will support the approach
taken. This may require analysts to hold meetings with these
stakeholders, or at the very least talk to them, in order to
explain the desired course of action and take note of any issues
or objections.
Watch: These are the high power / low interest stakeholders.
These stakeholders are usually at such a senior level that the
business analysis work is of little interest to them. However,
care needs to be taken to ensure that they do not have their
interest aroused. This could occur if an issue becomes high
profile within the organisation, typically where another
stakeholder has decided to raise it, perhaps by harnessing more
powerful groups such as the organisation’s owners or even the
media.
Keep onside: These are the medium power stakeholders, with a range of
levels of interest from low to high.
Keep These are the stakeholders in the low power and medium to
informed: high interest category. These stakeholders are typically the
business staff who will apply the new processes and use the
new IT features. Although their requirements are discussed
early on in the project, it is usually the case that they have
change done to them and have little, if any, power to influence
decisions. Theirs is probably the least comfortable position
among all the stakeholders, so management of the relationship
is very important if changes are to be understood thoroughly
and implemented effectively. If people know change is coming
without any idea of the nature and extent of that change, then
the rumour mill can begin and all sorts of scenarios be
imagined. It is far better to ensure that there is regular
communication with these stakeholders so that they are kept
as informed as possible.
Ignore: These are the stakeholders with low power and low interest.
The changes are likely to have little impact upon them, and
hence they do not require a great deal of consideration at the
moment.
Stakeholder analysis needs to be carried out regularly throughout the project,
since stakeholders are liable to move around the grid. Some will become more
interested as the work progresses and they begin to perceive that the changes
will affect them. Others may become more powerful, possibly through internal
promotion or transfer. Another possibility is that some individuals acquire
influence through gaining the confidence of a key stakeholder.
Although individuals working at an operational or even middle-management
level can have little influence, they can achieve power by banding together. Some
stakeholders may gain influence by leveraging other organisations, for example
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trade unions or staff associations, or even by approaching the media. In other
situations they gain influence because there is strength in numbers. It is
important not to dismiss individual stakeholders as unimportant – you never
know when they have a good friend, or even a partner, in a more influential
position. With the advent of internet communication and the availability of
networking systems, it is all too possible for individuals to form a pressure group
and gain a lot more power very quickly.
A variant of this technique is the power/impact grid, which is used when
planning the implementation of change. This version of the grid helps to
identify how to manage the stakeholders by recognising the level of impact
the change will have upon them and the level of control (power) they have
over the situation. The understanding and insight this provides will help in
ensuring that stakeholders are managed effectively and the emotional impact
of change is considered.
Technique 27: CATWOE
Variants/Aliases
Variants include VOCATE (viewpoint, owner, customer, actor, transformation,
and environment), PARADE (perspective – or point of view, activity, recipient,
actor, decision-maker and environment) and Root definition (in the Soft
Systems methodology).
Description of the technique
One of the key reasons for managing relationships with stakeholders is to ensure
that we understand their ideas, priorities and wishes before we put forward
recommendations, or, even worse, implement business changes. Understanding
what the key players want is vital if the work is to go in the right direction. The
following quotation explains why this is so important.
‘Would you tell me, please, which way I ought to go from here?’
‘That depends a good deal on where you want to get to,’ said the Cat.
‘I don’t much care where –’ said Alice.
‘Then it doesn’t matter which way you go,’ said the Cat.
‘– so long as I get SOMEWHERE,’ Alice added as an explanation.
‘Oh, you’re sure to do that,’ said the Cat.
(Alice in Wonderland, Lewis Carroll)
One of the most important features of stakeholder analysis involves uncovering
the direction each stakeholder believes the organisation should take. As the
quotation above so eloquently explains, if you don’t know where you are aiming
to go, you are sure to get somewhere but that is all that can be guaranteed. The
question is, can we afford such a lack of direction in today’s business world?
The answer is surely ‘no’.
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