What Is Impact Analysis?

by Eric Dontigney; Updated September 26, 2017

An impact analysis examines proposed changes in a business to expose any potential negative consequences of carrying out the change. The impact analysis helps businesses to mitigate the risks of unintended consequences and develop better change strategies.

What Impact Analysis Identifies

An impact analysis needs to identify all the possible risks across the organization, to the extent possible. For example, it cannot just address the probable length of time the change stands to disrupt normal business activities. It must also account for how that disruption affects customer satisfaction and influences the odds of customer defection. A comprehensive impact analysis addresses areas ranging from delays to current business plans and sales to any potential contract defaults and regulatory fines. The analysis also needs to provide a financial assessment for meeting minimal business obligations, such as outsourcing costs.

Approaches and Team Building

One common approach to impact analysis, the organizational approach, attempts to break down potential consequences into four primary categories: departments, processes, customer groups and groups of people. An alternative, the McKinsey 7 Ss Approach, breaks impacts across seven areas, including strategy, systems and staff. As organizational changes reach into so many areas of a business, an appropriate impact analysis team should draw from multiple departments. Experienced managers or supervisors with broad-based knowledge of their departments and a cross-section of skills often provide the most value in assessing the impact of change.