6.2.3 Inputs

• Business Requirements: the problems, opportunities, or constraints that the future state will address.

Figure 6.2.1: Define Future State Input/Output Diagram

6.2.4 Elements

.1   Business Goals and Objectives

A future state can be described in terms of business objectives or goals in order to guide the development of the change strategy and identify potential value. Business goals and objectives describe the ends that the organization is seeking to achieve. Goals and objectives can relate to changes that the organization wants to accomplish, or current conditions that it wants to maintain.

• Goals are longer term, ongoing, and qualitative statements of a state or condition that the organization is seeking to establish and maintain. Examples of business goals include:
• Create a new capability such as a new product or service, address a competitive disadvantage, or create a new competitive advantage.
• Improve revenue by increasing sales or reducing cost.
• Increase customer satisfaction.
• Increase employee satisfaction.
• Comply with new regulations.
• Improve safety.
• Reduce time to deliver a product or service.

High-level goals can be decomposed to break down the general strategy into areas that may lead to desired results, such as increased customer satisfaction, operational excellence, and/or business growth. For example, a goal may be to "increase number of high-revenue customers" and then be further refined into a goal to "increase number of high revenue customers in the 30-45 age bracket by 30% within 6 months".

As goals are analyzed they are converted into more descriptive, granular and specific objectives, and linked to measures that make it possible to objectively assess if the objective has been achieved. Objectives that are measurable enable teams to know if needs were addressed and whether a change was effective. Defining measurable objectives is often critical to justify completing the change and might be a key component to a business case for the change. A common test for assessing objectives is to ensure that they are SMART:

• Specific: describing something that has an observable outcome,
• Measurable: tracking and measuring the outcome,
• Achievable: testing the feasibility of the effort,
• Relevant: aligning with the enterprise’s vision, mission, and goals, and
• Time-bounded: defining a time frame that is consistent with the need.

.2   Scope of Solution Space

Decisions must be made about the range of solutions that will be considered to meet the business goals and objectives. The scope of the solution space defines which kinds of options will be considered when investigating possible solutions, including changes to the organizational structure or culture, capabilities and processes, technology and infrastructure, policies, products, or services, or even creating or changing relationships with organizations currently outside the scope of the extended enterprise. Solutions in each of these areas generally require specific expertise from both the business analysis and the delivery team. The analysis for this might happen on different levels in the enterprise, and the scope of the solution space is not necessarily related to the size of the change. Even a small change might require looking at the enterprise-level business objectives to ensure alignment.

If multiple future states can meet the business needs, goals and objectives, it will be necessary to determine which ones will be considered. This decision is typically based on the value to be delivered to stakeholders and requires an understanding of possible change strategies. The critical considerations for the decision are dependent on the overall objectives of the enterprise, but will involve an understanding of the quantitative and qualitative value of each option, the time needed to achieve each future state, and the opportunity cost to the enterprise.

.3   Constraints

Constraints describe aspects of the current state, aspects of the planned future state that may not be changed by the solution, or mandatory elements of the design. They must be carefully examined to ensure that they are accurate and justified.

Constraints may reflect any of the following:

• budgetary restrictions,
• time restrictions,
• technology,
• infrastructure,
• policies,
• limits on the number of resources available,
• restrictions based on the skills of the team and stakeholders,
• a requirement that certain stakeholders not be affected by the implementation of the solution,
• compliance with regulations, and
• any other restriction.

.4   Organizational Structure and Culture

The formal and informal working relationships that exist within the enterprise may need to change to facilitate the desired future state. Changes to reporting lines can encourage teams to work more closely together and facilitate alignment of goals and objectives. Elements of the organizational structure and culture may need to change to support the future state. Describing the components of the future state provides insight into potential conflicts, impact, and limits.

.5   Capabilities and Processes

Identify new kinds of activities or changes in the way activities will be performed to realize the future state. New or changed capabilities and processes will be needed to deliver new products or services, to comply with new regulations, or to improve the performance of the enterprise.

.6   Technology and Infrastructure

If current technology and infrastructure are insufficient to meet the business need, the business analyst identifies the changes necessary for the desired future state.

The existing technology may impose technical constraints on the design of the solution. These may include development languages, hardware and software platforms, and application software that must be used. Technical constraints may also describe restrictions such as resource utilization, message size and timing, software size, maximum number of and size of files, records, and data elements. Technical constraints include any IT architecture standards that must be followed.

.7   Policies

If current polices are insufficient to meet the business need, the business analyst identifies the changes necessary for the desired future state.

Policies are a common source of constraints on a solution or on the solution space. Business policies may mandate what solutions can be implemented given certain levels of approval, the process for obtaining approval, and the necessary criteria a proposed solution must meet in order to receive funding. In some instances, a change to an existing policy may open up alternative solutions that would not otherwise be considered.

.8   Business Architecture

The elements of any future state must effectively support one another and all contribute to meeting the business goals and objectives. In addition, they should be integrated into the overall desired future state of the enterprise as a whole, and support that future state.

.9   Internal Assets

The analysis of resources might indicate that existing resources need to be increased or require increased capabilities, or that new resources need to be developed. When analyzing resources, business analysts examine the resources needed to maintain the current state and implement the change strategy, and determine what resources can be used as part of a desired future state. The assessment of existing and needed resources is considered when performing a feasibility analysis on possible solution approaches for the change strategy.

.10  Identify Assumptions

Most strategies are predicated on a set of assumptions that will determine whether or not the strategy can succeed, particularly when operating in a highly uncertain environment. It will often be difficult or impossible to prove that the delivery of a new capability will meet a business need, even in cases where it appears reasonable to assume that the new capability will have the desired effect. These assumptions must be identified and clearly understood, so that appropriate decisions can be made if the assumption later proves invalid. Change strategies in uncertain environments can be structured in order to test these assumptions as early as possible to support a redirection or termination of the initiative.

.11  Potential Value

Meeting the business objectives alone does not justify the transition to a future state; the potential value must be evaluated to see if it is sufficient to justify a change.

When defining the future state, business analysts identify the potential value of the solution. The potential value of the future state is the net benefit of the solution after operating costs are accounted for. A change must result in greater value for the enterprise than would be achieved if no action was taken. However, it is possible that the future state will represent a decrease in value from the current state for some stakeholders or even for the enterprise as a whole. New regulations or increased competition, for example, might need to be addressed for the enterprise to remain operating but could still decrease the overall value captured.

While determining the future state, business analysts consider increased or decreased potential value from:

• external opportunities revealed in assessing external influences,
• unknown strengths of new partners,
• new technologies or knowledge,
• potential loss of a competitor in the market, and
• mandated adoption of a change component.

Business analysts identify the specific opportunities for potential alterations in value, as well as the probability of those increases for the individual components of the proposed change. Business analysts estimate a total potential value by aggregating across all opportunities.

The potential value, including the details of the expected benefit and costs and the likely result if no change is made, is a key component to making a business case for the change. Relating descriptions of potential value to measures of actual value currently being achieved enables stakeholders to understand the expected change in value. In most cases, the future state will not address all of the opportunities for improvement. Any unaddressed opportunities might remain valid after the solution is implemented and should be noted for future analysis in other changes.

In addition to the potential value of the future state, this analysis should consider the acceptable level of investment to reach the future state. While the actual investment will depend on the change strategy, this information guides the selection of possible strategies.

6.2.5 Guidelines and Tools

• Current State  Description: provides the context within which the work needs to be completed. It is often used as a starting point for the future state.
• Metrics and Key Performance Indicators (KPIs): the key performance indicators and metrics which will be used to determine whether the desired future state has been achieved.
• Organizational Strategy: describes the path, method, or approach an enterprise or organization will take to achieve its desired future state. This can be implicitly or explicitly stated.

6.2.6 Techniques

• Acceptance and Evaluation Criteria: used to identify what may make the future state acceptable and/or how options may be evaluated.
• Balanced  Scorecard: used to set targets for measuring the future state.
• Benchmarking and Market Analysis: used to make decisions about future state business objectives.
• Brainstorming: used to collaboratively come up with ideas for the future state.
• Business Capability  Analysis: used to prioritize capability gaps in relation to value and risk.
• Business Cases: used to capture the desired outcomes of the change initiative.
• Business Model  Canvas: used to plan strategy for the enterprise by mapping out the needed infrastructure, target customer base, financial cost structure, and revenue streams required to fulfill the value proposition to customers in the desired future state.
• Decision Analysis: used to compare the different future state options and understand which is the best choice.
• Decision Modelling: used to model complex decisions regarding future state options.
• Financial Analysis: used to estimate the potential financial returns to be delivered by a proposed future state.
• Functional  Decomposition: used to break down complex systems within the future state for better understanding.
• Interviews: used to talk to stakeholders to understand their desired future state, which needs they want to address, and what desired business objectives they want to meet.
• Lessons  Learned: used to determine which opportunities for improvement will be addressed and how the current state can be improved upon.
• Metrics and Key Performance Indicators (KPIs): used to determine when the organization has succeeded in achieving the business objectives.
• Mind Mapping:  used to develop ideas for the future state and understand relationships between them.
• Organizational Modelling: used to describe the roles, responsibilities, and reporting structures that would exist within the future state organization.
• Process Modelling: used to describe how work would occur in the future state.
• Prototyping: used to model future state options and could also help determine potential value.
• Scope  Modelling: used to define the boundaries of the enterprise in the future state.
• Survey or Questionnaire: used to understand stakeholders' desired future state, which needs they want to address, and what desired business objectives they want to meet.
• SWOT Analysis: used to evaluate the strengths, weaknesses, opportunities, and threats that may be exploited or mitigated by the future state.
• Vendor Assessment: used to assess potential value provided by vendor solution options.
• Workshops: used to work with stakeholders to collaboratively describe the future state.

6.2.7 Stakeholders

• Customer: might be targeted purchasers or consumers in a future state who might or might not be ready or able to consume a new state.
• Domain  Subject Matter Expert: provides insight into current state and potential future states.
• End User: expected to use, or be a component of, a solution that implements the future state.
• Implementation Subject Matter Expert: provides information regarding the feasibility of achieving the future state.
• Operational Support: directly involved in supporting the operations of the enterprise and provides information on their ability to support the operation of a proposed future state.
• Project Manager:  might have input on what is a reasonable and manageable desired future state.
• Regulator: ensures that laws, regulations, or rules are adhered to in the desired future state. Interpretations of relevant regulations must be included in the future state description in the form of business policies, business rules, procedures, or role responsibilities.
• Sponsor:  helps determine which business needs to address and sets the business objectives that a future state will achieve. Authorizes and ensures funding to support moving towards the future state.
• Supplier: might help define the future state if they are supporting delivery of the change or deliver any part of the future state operation.
• Tester: responsible for ensuring an envisioned future state can be sufficiently tested and can help set an appropriate level of quality to target.

6.2.8 Outputs

• Business Objectives: the desired direction that the business wishes to pursue in order to achieve the future state.
• Future State  Description: the future state description includes boundaries of the proposed new, removed, and modified components of the enterprise and the potential value expected from the future state. The description might include the desired future capabilities, policies, resources, dependencies, infrastructure, external influences, and relationships between each element.
• Potential Value: the value that may be realized by implementing the proposed future state.