What Is an Impact Analysis? (With Definition and Types)

By Indeed Editorial Team

Published June 1, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Making changes to a business, engineering process, or software code can present unforeseen consequences that can create issues for a company. Analyzing a potential change or considering possible challenges to procedures can help a business anticipate and mitigate these challenges. Learning about impact analysis can help you understand this important concept and consider how to conduct an analysis yourself. In this article, we define impact analysis, discuss the importance of the concept, examine the different types, and share steps for performing such an analysis.

What is an impact analysis?

An impact analysis (IA) is a process that involves examining the possible consequences of a potential change to a business. An IA, also known as a change impact analysis, can help a business identify issues that a change may bring or prepare for the risks of an unexpected event or changes to a process or procedure. IA is common in software and engineering disciplines but can also help a business prepare for changes to operations. It helps a business plan for the future and anticipate issues.

An IA can help a software company consider how changes to an element of code can affect the larger coded infrastructure. Equally, a business can use IA to anticipate unforeseen challenges to operations and develop plans to prepare for such events. This type of analysis helps a company consider how different operations connect and how disruptions in one area can affect another.

Related: Understanding How to Complete a Risk Analysis

Benefits of analyzing impact

Conducting an analysis of change impact can benefit a business in several ways. Using IA helps to:

Understand interconnectedness

IA can help you achieve a more in-depth understanding of how a company operates. Modern businesses can be complex, with different departments following unique procedures and using multiple computer programs to work on separate aspects of product development. An IA can help you understand how parts of a business influence one another and how a change to one aspect can influence another. In the case of software code, using such analysis can indicate how elements of the code relate to each other and reveal potential issues concerning updating the code.

Increase efficiency

Conducting an IA before making changes can result in a more efficient company. You can use this type of analysis to anticipate potential issues, saving time and money. It can take time to analyze a business or software code as you conduct an IA, but dealing with the potential issues of doing otherwise can be more time-consuming. IA can help a business make more informed choices in their operations and thereby increase efficiency.

Prepare for the unexpected

You can use IA to prepare a business for unexpected challenges. If you consider the impact of potential issues before they occur, you can have plans in place to deal with such issues and quickly resume operations. You can use IA to consider the effects of disruptions to software, the power supply, data, and the supply chain. When you've already considered the possible consequences of unforeseen complications and have plans in place, the situation becomes more manageable.

Types of impact analysis

There are three types of IA you can employ, depending on the goals of the analysis and the nature of the business. They are as follows:

Traceability analysis

Traceability analysis considers the connections between different aspects of software or processes to provide clarity for the overall system performance. This analysis might consider the relationships between requirements, design elements, specifications, and tests to examine how they relate to one another. Through traceability analysis, you can gain an understanding of the scope of a potential issue and view the links between parts of software or steps in an engineering process. A company might use custom software to conduct a traceability analysis on its code.

Dependency analysis

Dependency analysis can help to reveal the depth that the impact of a potential change or difficulty can impose on the system. By considering which parts of the system rely on others, you can identify areas for improvement and determine how a change can have a greater effect than anticipated. This analysis can involve the use of algorithms to model how a change might impact the system.

Experiential analysis

Experiential analysis involves using past experience to predict how a system might respond to changes or anticipate challenges. An experiential analysis might use information from similar systems to predict how a change might impact a piece of software or a process. If a company keeps accurate records, they can look back at previous events to predict the potential impact of changes.

How to conduct an analysis of impact

The nature of an IA can vary depending on the industry, the scope of the issue, and the desired outcome. Here are some steps to follow to conduct an analysis of impact:

1. Determine the scope

Before you undertake an IA, try to determine the parameters of the analysis and the systems you wish to include. If your IA has a specific purpose, it can return more accurate results and can lead to more effective decision making. You can focus your IA on a change that you're planning to make, or you can use it to try to identify possible issues for a business. If you have a clear idea of the scope and purpose of the analysis, you can start to gather data.

2. Consult with a team

Try to consult with a team to clarify the purpose, procedure, and goals of the IA. Many successful IAs involve multiple levels of an organization. You might try to coordinate between management, engineers, and other staff to develop a plan for conducting the analysis. Ask other team members for feedback to identify any issues before the analysis begins and ensure that everyone understands the project and is ready to provide assistance. Consider also consulting with outside agencies who might specialize in conducting an analysis of code and searching for vulnerabilities.

Related: 7 Analysis Questions to Ask (With Example Answers)

3. Gather information

When you begin the IA, gather as much data as you can. This ensures that you have enough information to produce accurate results. Data gathering might involve using custom computer software to run tests on code to search for issues, or it might entail conducting a thorough review of business practices to identify any vulnerabilities. Some computer programs might allow you to simulate changes to your code to reveal any unintended consequences.

4. Analyze the results

Once you collect data and run tests, analyze the results and consider the impact of possible changes. If a test reveals that changing an element of code affects other sections of the project, try to determine how much additional time this might take to implement. If an IA reveals that an unexpected event might create challenges for a business, attempt to determine how much this might cost the company in reduced revenue. If you can quantify the impact of any changes, you can determine a plan for moving forward.

Related: How to Write an Analysis (With Importance and Tips)

5. Make recommendations

After you conduct an IA, make recommendations for changing business practices or adjusting code. Try to base your recommendations on the data you collect and the analysis of the situation. If the data indicates that a change to the code can cost the company a significant amount of time, you might recommend retaining current practices. If an IA reveals that a company is vulnerable to a cyberattack, you might recommend increasing your cybersecurity measures. You might discuss recommendations with senior management and try to provide them with a clear understanding of the situation.

6. Implement changes

Once an IA is complete, a business might decide to make changes in accordance with the recommendations. This might mean making updates to software code or changing organizational behaviour to avoid business disruptions. An effective IA can help you anticipate issues and make changes more efficiently. If you are aware of potential issues before you start the process of making changes, you can avoid unexpected delays and pivot to new procedures.

7. Continue observing

If you continue observing and compiling data, you can make IA more effective in the future. Try to persist in building experiential knowledge and learn from any oversights. As you continue to write new code, try to anticipate future updates to make it easier to manage. If you consistently consider the potential impact of decisions, you can make a business more resilient to challenges.

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