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External Environment Analysis

It’s often said that we live in a fast moving world.

The external environment that our organizations operate within appear to be in a constant state of flux and it is more important than ever that we have the ability to quickly spot and respond to environmental changes.   As someone who lives in the UK this feels especially relevant right now. As you may be aware, the UK is scheduled to exit from the European Union in just a couple of weeks, yet there is a lack of clarity on exactly how this will work or what it will mean for business. What is certain is that ‘Brexit’ will have a major impact on many projects that are in flight, but more importantly, on the ongoing processes and operations for many organizations. Wherever you are in the world, I am sure there are many external uncertainties that are relevant for your organization, and it’s likely that this leads to additional demands and pressures on your projects too. It’s crucial that we identify and respond to these factors.

External factors can be examined at many levels. When planning organizational strategy, it is crucial that they are considered and the chosen strategy either aligns with or seeks to influence them. It is equally crucial to consider them when deciding upon a change strategy for a project, and it is important that attention is paid to them throughout the project execution. At a project level, we can consider external environment analysis to be our ‘radar screen’ which enables us to see enablers or constraints that are beyond our immediate control. The earlier we can see them, the more time we have to consider how (or whether) to respond. Perhaps we spot a new emerging trend, enabling us to ‘pivot’ our project and deliver a prototype early to test the trends relevance for our product. Organizational agility hinges on our ability to detect these changes and have the capability to seize them when appropriate, and this is an area where business analysis can really help.


Looking Outside: The ‘STEEPLE’ Technique

There are many analysis techniques out there that can help us understand our external environment. One that is particularly helpful at both a strategic and project level is ‘STEEPLE’. I always think calling ‘STEEPLE’ a technique is a bit of a misnomer; it is really just a mnemonic. We can consider it a useful checklist of potential topics that we should pay attention to. STEEPLE stands for:

  • Social
  • Technological
  • Economic
  • Environmental
  • Political
  • Legal
  • Ethical

When conducting a STEEPLE analysis, it’s important to focus on factors outside of the immediate sphere of control of the project/organization.   Each of the categories is ultimately a trigger for discussion—it can help us to elicit information from stakeholders, or give us a direction in which to carry out document analysis, benchmarking and other types of research. There will inevitably be some factors that straddle more than one category, and depending on the context we might even decide to add other categories. As with any technique, its success relies upon its flexible application.

Items that appear on the STEEPLE list might help us ask questions that influence our requirements (e.g. ‘there’s an emerging trend for mobile payments—do we need to consider this for our product?’), might constrain requirements (e.g. ‘I notice that there’s a new piece of data legislation due to come into force soon—do we need to ‘future proof’ ourselves now?’), or even enable us to think about new solutions (e.g. ‘There’s a new type of technology that might be suitable, shall we compare it against our requirements to see if it’s an option?’).

Of course, external environment analysis is most useful when it is a collaborative activity—it is much less useful when done in a vacuum. We might find that this analysis has been undertaken by an executive or product owner. This is extremely positive, as we can ‘tap into’ that knowledge and perhaps add anything else that we discover. Whether we own it or facilitate it is less important than ensuring that the thinking takes place. As BAs we have so much to add to this thinking, involving ourselves in it pays dividends.

Adrian Reed

Adrian Reed is a true advocate of the analysis profession. In his day job, he acts as Principal Consultant and Director at Blackmetric Business Solutions where he provides business analysis consultancy and training solutions to a range of clients in varying industries. He is a Past President of the UK chapter of the IIBA® and he speaks internationally on topics relating to business analysis and business change. Adrian wrote the 2016 book ‘Be a Great Problem Solver… Now’ and the 2018 book ‘Business Analyst’ You can read Adrian’s blog at and follow him on Twitter at