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Business analysis is a research discipline of identifying business needs and determining solutions to business problems. Solutions often include a software-systems development component, but may also consist of process improvement, organizational change or strategic planning and policy development. The person who carries out this task is called a business analyst or BA.
Business analysts do not work solely on developing software systems. Those who attempt to do so run the risk of developing an incomplete solution.
- 1 Business analysis sub-disciplines
- 2 Steps involved in business analysis
- 3 Business analysis techniques
- 4 Roles of business analysts
- 5 The Business Analysis Function within the organizational structure
- 6 Goal of business analysis
- 7 See also
- 8 References
Business analysis sub-disciplines
Business analysis as a discipline includes requirements analysis, sometimes also called requirements engineering. It focuses on ensuring the changes made to an organisation are aligned to its strategic goals. These changes include changes to strategies, structures, policies, business rules, processes, and information systems.
Examples of business analysis includes:
Enterprise analysis or company analysis
Focuses on understanding the needs of the business as a whole, its strategic direction, and identifying initiatives that will allow a business to meet those strategic goals. It also includes:
- Creating and maintaining the business architecture
- Conducting feasibility studies
- Identifying new business opportunities
- Scoping and defining new business opportunities
- Preparing the business case
- Conducting the initial risk assessment
Requirements planning and management
Involves planning the requirements development process, determining which requirements are the highest priority for implementation, and managing change.
Describes techniques for collecting requirements from stakeholders in a project. Techniques for requirements elicitation include:
- Document analysis
- Focus group
- Interface analysis
- Reverse engineering
- User task analysis
- Process mapping
- Observation/job shadowing
- Design thinking
Requirements analysis and documentation
Describes how to develop and specify requirements in enough detail to allow them to be successfully implemented by a project team.
The major forms of analysis are:
- Architecture analysis
- Business process analysis
- Object-oriented analysis
- Structured analysis
- Data warehouse analysis, storage and databases analysis
Requirements documentation can take several forms:
- Textual - for example, stories that summarize specific information
- Matrix - for example, a table of requirements with priorities
- Diagrams - for example, how data flows from one structure to the other
- Wireframe - for example, how elements are required in a website,
- Models - for example, 3-D models that describes a character in a computer game
Describes techniques for ensuring that stakeholders have a shared understanding of the requirements and how they will be implemented.
Solution assessment and validation
Describes how the business analyst can perform correctness of a proposed solution, how to support the implementation of a solution, and how to assess possible shortcomings in the implementation.
Steps involved in business analysis
Listed below is a typical sequence of events that business analysts have to handle while conducting a comprehensive business analysis.
Business strategy and objective
This involves strategy analysis of the internal capabilities of a business and how it can respond to any changes in the external environment. Analyzing how to deal with changes that are predicted to arise within the external operating business environment is also an integral part of this step.
The result of the internal and external environmental analysis are summarized and consolidated to scrutinize the situation that the business faces and identify possible courses of action. Once the strategy is defined, the range of business areas is shortlisted that need to be coordinated for its successful implementation to meet the desired goal.
Investigate business conditions
At this stage, detailed information is gathered about the issues, problems, or gaps that needs to be addressed. This data is important as it is used to examine any specific situation and get a good reference point on which the entire process can be analyzed. Some common methods to gather data include:
Having the necessary data at hand will help contextualize the problem and the prospective solution’s practical application within the business.
Identifying the stakeholders and considering their perspective is a key element in business analysis. Though the stakeholders may vary from project to project, they will typically include customers, regulatory officials, suppliers, external auditors and financial reporting experts. The final conclusion should be based on what is important to the stakeholders and what factors would take precedence over others, in order to meet the immediate goals of the project and department/division as well as that of the company’s objectives.
A range of techniques including risk analysis, cost-benefit analysis, heptalysis investment appraisal techniques etc are used to analyse the defined options and evaluate an option effectively. There are also other factors such as Fair market value, economic conditions that plays a major role in the evaluation process.
Analyse business needs
This step involves an analysis of the needs of the department, division, product etc. The business analysts take an in-depth look at how each activity is supported by the resources and systems available, they spot activities that may benefit from reviewing, and change the priority list of activities based on four factors – cost, time, quality and risk.
Once the activities that need addressing are decided upon, business process maps based on the ‘as is’ model are crafted. Next, ‘to be’ process maps are created and gaps between both these process maps are analysed. A list of potential solutions are documented that would help reduce the variables responsible for the gaps (cost, time, quality and risk).
Without concise, clear, detailed and actionable requirements, those charged with implementing change will often fail to deliver the required solution. Some standard requirement types are Business Requirements, Functional Requirements, User Requirements, Quality of Service Requirements, Implementation requirements and Assumptions and Constraints. With detailed requirements, the implementation team gets the information they need to implement the solution.
Business analysis techniques
There are a number of generic business techniques that a business analyst will use when facilitating business change.
Some of these techniques include:
This is used to perform an external environmental analysis by examining the many different external factors affecting an organization.
The six attributes of PESTLE:
- Political (current and potential influences from political pressures)
- Economic (the local, national and world economy impact)
- Sociological (the ways in which a society can affect an organization)
- Technological (the effect of new and emerging technology)
- Legal (the effect of national and world legislation)
- Environmental (the local, national and world environmental issues)
This is used to perform an in-depth analysis of early stage businesses/ventures on seven important categories:
- Market opportunity
- Execution plan
- Financial engine
- Human capital
- Potential return
- Margin of safety
This is used to perform an internal environmental analysis by defining the attributes of MOST to ensure that the project you are working on is aligned to each of the four attributes.
The four attributes of MOST
- Mission (where the business intends to go)
- Objectives (the key goals which will help achieve the mission)
- Strategies (options for moving forward)
- Tactics (how strategies are put into action)
This is used to help focus activities into areas of strength and where the greatest opportunities lie. This is used to identify the dangers that take the form of weaknesses and both internal and external threats.
The four attributes of SWOT analysis:
- Strengths - What are the advantages? What is currently done well? (e.g. key area of best-performing activities of your company)
- Weaknesses - What could be improved? What is done badly? (e.g. key area where you are performing poorly)
- Opportunities - What good opportunities face the organization? (e.g. key area where your competitors are performing poorly)
- Threats - What obstacles does the organization face? (e.g. key area where your competitor will perform well)
This is used to prompt thinking about what the business is trying to achieve. Business perspectives help the business analyst to consider the impact of any proposed solution on the people involved.
There are six elements of CATWOE:
- Customers - Who are the beneficiaries of the highest level business process and how does the issue affect them?
- Actors - Who is involved in the situation, who will be involved in implementing solutions and what will impact their success?
- Transformation Process - What processes or systems are affected by the issue?
- World View - What is the big picture and what are the wider impacts of the issue?
- Owner - Who owns the process or situation being investigated and what role will they play in the solution?
- Environmental Constraints - What are the constraints and limitations that will impact the solution and its success?
de Bono's Six Thinking Hats
This is often used in a brainstorming session to generate and analyse ideas and options. It is useful to encourage specific types of thinking and can be a convenient and symbolic way to request someone to “switch gears". It involves restricting the group to only thinking in specific ways - giving ideas & analysis in the “mood” of the time. Also known as the Six Thinking Hats.
- White: Pure facts, logical.
- Green: Creative.
- Yellow: Bright, optimistic, positive.
- Black: Negative, devil’s advocate.
- Red: Emotional.
- Blue: Cold, control.
Not all colors / moods have to be used
Five Whys is used to get to the root of what is really happening in a single instance. For each answer given a further 'why' is asked.
This is used to prioritize requirements by allocating an appropriate priority, gauging it against the validity of the requirement itself and its priority against other requirements.
- Must have - or else delivery will be a failure
- Should have - otherwise will have to adopt a workaround
- Could have - to increase delivery satisfaction
- Would like to have in the future - but won't have now
This technique is used when analyzing the expectations of multiple parties having different views of a system in which they all have an interest in common, but have different priorities and different responsibilities.
- Values - constitute the objectives, beliefs and concerns of all parties participating. They may be financial, social, tangible and intangible
- Policies - constraints that govern what may be done and the manner in which it may be done
- Events - real-world proceedings that stimulate activity
- Content - the meaningful portion of the documents, conversations, messages, etc. that are produced and used by all aspects of business activity
- Trust - between users of the system and their right to access and change information within it
The SCRS approach in business analysis claims that the analysis should flow from the high-level business strategy to the solution, through the current state and the requirements. SCRS stands for:
- Current State
Roles of business analysts
As the scope of business analysis is very wide, there has been a tendency for business analysts to specialize in one of the three sets of activities which constitute the scope of business analysis, the primary role for business analysts is to identify business needs and provide solutions to business problems these are done as being a part of following set of activities.
- Organizations need to focus on strategic matters on a more or less continuous basis in the modern business world. Business analysts, serving this need, are well-versed in analyzing the strategic profile of the organization and its environment, advising senior management on suitable policies, and the effects of policy decisions.
- Organizations may need to introduce change to solve business problems which may have been identified by the strategic analysis, referred to above. Business analysts contribute by analyzing objectives, processes and resources, and suggesting ways by which re-design (BPR), or improvements (BPI) could be made. Particular skills of this type of analyst are "soft skills", such as knowledge of the business, requirements engineering, stakeholder analysis, and some "hard skills", such as business process modeling. Although the role requires an awareness of technology and its uses, it is not an IT-focused role.
- Three elements are essential to this aspect of the business analysis effort: the redesign of core business processes; the application of enabling technologies to support the new core processes; and the management of organizational change. This aspect of business analysis is also called "business process improvement" (BPI), or "reengineering".
- IT-Systems analyst
- There is the need to align IT Development with the business-system as a whole. A long-standing problem in business is how to get the best return from IT investments, which are generally very expensive and of critical, often strategic, importance. IT departments, aware of the problem, often create a business analyst role to better understand, and define the requirements for their IT systems. Although there may be some overlap with the developer and testing roles, the focus is always on the IT part of the change process, and generally, this type of business analyst gets involved, only when a case for change has already been made and decided upon.
In any case, the term "analyst" is lately considered somewhat misleading, insofar as analysts (i.e. problem investigators) also do design work (solution definers).
The Business Analysis Function within the organizational structure
The role of Business Analysis can exist in a variety of structures within an organizational framework. Because Business Analysts typically act as a liaison between the business and technology functions of a company, the role can be often successful either aligned to a line of business, within IT or sometimes both.
- Business Alignment
- When Business Analysts report up through the business side, they are often subject matter experts for a specific line of business. These Business Analysts typically work solely on project work for a particular business, pulling in Business Analysts from other areas for cross-functional projects. In this case, there are usually Business Systems Analysts on the IT side to focus on more technical requirements.
- IT alignment
- In many cases, Business Analysts live solely within IT and they focus on both business and systems requirements for a project, consulting with various subject matter experts (SMEs) to ensure thorough understanding. Depending on the organizational structure, Business Analysts may be aligned to a specific development lab or they might be grouped together in a resource pool and allocated to various projects based on availability and expertise. The former builds specific subject matter expertise while the latter provides the ability to acquire cross-functional knowledge.
- Business analysis center of excellence
- Whether business analysts are grouped together or are dispersed in terms of reporting structure, many companies have created business analysis centers of excellence. A center of excellence provides a framework by which all business analysts in an organization conduct their work, usually consisting of processes, procedures, templates and best practices. In addition to providing guidelines and deliverables, it also provides a forum to focus on continuous improvement for the business analysis function.
Goal of business analysis
Ultimately, business analysis wants to achieve the following outcomes:
- Create solutions
- Give enough tools for robust project management
- Improve efficiency and reduce waste
- Provide essential documentation, like requirements document, project initiation documents and others.
One way to assess these goals is to measure the return on investment (ROI) for all projects. According to Forrester Research, more than $100 billion is spent annually in the U.S. on custom and internally developed software projects. For all of these software development projects, keeping accurate data is important and business leaders are constantly asking for the return or ROI on a proposed project or at the conclusion of an active project. However, asking for the ROI without sufficient data of where value is created or destroyed may result with inaccurate projections.
Reduce waste and complete projects on time
Project delays are costly in several ways:
- Project costs – For every month of delay, the project team costs and expenses continue to accumulate. When a large part of the development team has been outsourced, the costs will start to add up quickly and are very visible if contracted on a time and materials basis (T&M). Fixed price contracts with external parties limit this risk. For internal resources, the costs of delays are not as readily apparent, unless time spent by resources is being tracked against the project, as labor costs are essentially ‘fixed’ costs.
- Opportunity costs – Opportunity costs come in two types – lost revenue and unrealized expense reductions. Some projects are specifically undertaken with the purpose of driving new or additional revenues to the bottom line. For every month of delay, a company foregoes a month of this new revenue stream. The purpose of other projects is to improve efficiencies and reduce costs. Again, each month of failure postpones the realization of these expense reductions by another month. In the vast majority of cases, these opportunities are never captured or analyzed, resulting in misleading ROI calculations. Of the two opportunity costs, the lost revenue is the most egregious – and the effects are greater and longer lasting.
N.B. On a lot of projects (particularly larger ones) the project manager is the one responsible for ensuring that a project is completed on time. The BA's job is more to ensure that if a project is not completed on time then at least the highest priority requirements are met.
Document the right requirements
Business analysts want to make sure that they define the requirements in a way that meets the business needs, for example, in IT applications the requirements need to meet end-users' needs. Essentially, they want to define the right application. This means that they must document the right requirements through listening carefully to ‘customer’ feedback, and by delivering a complete set of clear requirements to the technical architects and coders who will write the program. If a business analyst has limited tools or skills to help him elicit the right requirements, then the chances are fairly high that he will end up documenting requirements that will not be used or that will need to be re-written – resulting in rework as discussed below. The time wasted to document unnecessary requirements not only impacts the business analyst, it also impacts the rest of the development cycle. Coders need to generate application code to perform these unnecessary requirements and testers need to make sure that the wanted features actually work as documented and coded. Experts estimate that 10% to 40% of the features in new software applications are unnecessary or go unused. Being able to reduce the amount of these extra features by even one-third can result in significant savings. An approach of minimalism or "Keep it Simple" and minimum technology supports a reduced cost number for the end result and on going maintenance of the implemented solution.
Improve project efficiency
Efficiency can be achieved in two ways: by reducing rework and by shortening project length.
Rework is a common industry headache and it has become so common at many organizations that it is often built into project budgets and time lines. It generally refers to extra work needed in a project to fix errors due to incomplete or missing requirements and can impact the entire software development process from definition to coding and testing. The need for rework can be reduced by ensuring that the requirements gathering and definition processes are thorough and by ensuring that the business and technical members of a project are involved in these processes from an early stage.
Shortening project length presents two potential benefits. For every month that a project can be shortened, project resource costs can be diverted to other projects. This can lead to savings on the current project and lead to earlier start times of future projects (thus increasing revenue potential).
- Cost overrun
- Data Presentation Architecture
- Enterprise Life Cycle
- International Institute of Business Analysis (IIBA)
- Operations research
- Real options valuation
- Requirements analysis
- Revenue shortfall
- Viability study
- cf. business analytics
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