Business analysis helps an organization to improve how it conducts its functions and activities in order to reduce overall costs, provide more efficient use of resources, and better support customers. It introduces the notion of process orientation, of concentrating on and rethinking end-to-end activities that create value for customers, while removing unnecessary, non-value added work. The person who carries out this task is called a business analyst or BA.
Business analysis sub-disciplines
Business analysis, as a discipline, has a heavy overlap with requirements analysis, but focuses on identifying requirements in the context of helping organizations to achieve strategic goals through internal changes to organizational capabilities, including changes to policies, processes, and information systems.
As a discipline, business analysis can be broken down into six major knowledge areas, as defined in the Business Analysis Body of Knowledge®:
Enterprise 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.
Requirements planning and management involves planning the requirements development process, determining which requirements are the highest priority for implementation, and managing change.
Requirements elicitation describes techniques for collecting requirements from stakeholders in a project.
Requirements analysis describes how to develop and specify requirements in enough detail to allow them to be successfully implemented by a project team.
Requirements communication 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 verify the correctness of a proposed solution, how to support the implementation of a solution, and how to assess possible shortcomings in the implementation.
Roles of Business Analyst
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.
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".
3. Systems analyst
There is the need to align IT Development with the systems actually running in production for the Business. 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).
Business Process Improvement
A business process improvement (BPI) typically involves six steps:
1. Selection of process teams and leader
Process teams, comprising 2-4 employees from various departments that are involved in the particular process, are set up. Each team selects a process team leader, typically the person who is responsible for running the respective process.
2. Process analysis training
The selected process team members are trained in process analysis and documentation techniques.
3. Process analysis interview
The members of the process teams conduct several interviews with people working along the processes. During the interview, they gather information about process structure, as well as process performance data.
4. Process documentation
The interview results is used to draw a first process map. Previously existing process descriptions are reviewed and integrated, wherever possible. Possible process improvements, discussed during the interview, are integrated into the process maps.
5. Review cycle
The draft documentation is then reviewed by the employees working in the process. Additional review cycles may be necessary in order to achieve a common view (mental image) of the process with all concerned employees. This stage is an iterative process.
6. Problem analysis
A thorough analysis of process problems can then be conducted, based on the process map, and information gathered about the process. At this time of the project, process goal information from the strategy audit is available as well, and is used to derive measures for process improvement.
Goals of Business Analysis
Ultimately, business analysts want to produce the following outcomes:
- Reduce waste
- Complete projects on time
- Improve efficiency
- Document the right requirements
One way to assess these goals is to measure the ROI or return on investment for all projects. Keeping score is part of human nature as we are always comparing ourselves or our performance to others, no matter what we are doing. 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 score is also 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 really understanding the underpinnings of where value is created or destroyed is putting the cart before the horse.
Reduce waste and complete projects on time
Project delays are costly in three different dimensions:
- Project costs – For every month of delay, the project team continues to rack up costs and expenses. When a large part of the development team has been outsourced, the costs will start to add up quickly and are very visible. For internal resources, the costs of delays are not as readily apparent as labor costs are essentially ‘fixed’ costs.
- Opportunity costs – Opportunity costs come in two flavors – 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 impacts are greater and longer lasting.
Improve project efficiency
Efficiency can be achieved in two somewhat related dimensions by reducing rework or extra work needed in a project to fix errors due to incomplete or missing requirements and by shortening project length.
Rework is one of the largest headaches facing CIOs and it has become so common at many organizations that it is actually built into the project budget and timeline. Estimates of rework on typical projects ranges between 20% and 30% of total project budget. Rework impacts the entire software development process from definition to coding and testing. One of the reasons for rework is that the requirements gathering and definition process is broken in most organizations and there is a huge disconnect between the business and technical sides of a project. While various technical solutions have helped make developers, coders and testers more efficient, very few solutions have been targeted at the business analysts who are tasked with delivering the requirements.
Shortening project length produces two outcomes. For every month that a project can be shortened, the cost of the project resources can be avoided and released to work on other projects. This actually produces a double-whammy effect – savings on the current project and accelerating the start of future projects resulting in more project output. The other side of this equation is to achieve project benefits faster. It does not matter whether the project benefits are based on revenue enhancements or cost reductions, shorter projects mean benefits will be reached faster. Similar to what was already discussed earlier for the line of business executives, being able to reap the project benefits earlier can produce very large returns.
Document the right requirements
Business analysts want to make sure that they define the application in a way that meets the 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 above. 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 unwanted 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.