What is Business Analysis & Why is it Important?
Updated: Sep 25, 2020
With the rapid development of new and disruptive technologies, businesses are constantly being forced to adapt and change their ways in order to stay relevant and competitive in the market. Adopting new technology, changing existing processes and operating models is not an easy task and often requires significant investment of human and financial resources. In order to minimize the investment required to implement change and to maximize the efficiency of the change process, more and more businesses are turning to business analysis professionals to guide them through change initiatives.
Similar to project management, business analysis is a professional discipline that is growing in popularity and relevance. According to the International Institute of Business Analysis, business analysis is defined as the “practice of enabling change in an organization by defining needs and recommending solutions that deliver value to stakeholders”.
To better understand what business analysis is, one might break down the key elements of the definition of business analysis as outlined in the illustration below.
Who are Stakeholders in the Context of Business Analysis?
Stakeholders are those individuals who have a connection to a change. Stakeholders may be individuals or groups who raise the underlying need to change or may be those who are implicated in the outcome of the change effort. Typically, stakeholders are categorized or grouped according to their relationship to the change. For example, consider a scenario where an organization’s CEO establishes a strategic objective of increasing revenue by 20% for the coming year.
Who are some of the stakeholders implicated in this change? Surely, the organization’s sales function, as they will have certain needs that must be addressed to enable them to contribute to this goal. The organization’s customers would also be considered stakeholders in this change as their needs will have to be met in order to get them to purchase products and contribute to satisfying the strategic goal of increasing revenue by 20%.
What are Needs in the Context of Business Analysis?
Needs are the next core element of business analysis. Needs or requirements, as they are commonly referred to, represent the very essence of change and originate from stakeholders implicated in a change. Business needs when expressed, articulate the drivers for change. More specifically, business needs explain why change efforts are initiated.
Consider the need where the organization is seeking to increase revenue by 20%. Due to its high-level nature and origin (coming from the CEO of an organization), it would be classified as business need or business level requirement. In business analysis, needs or requirements are often segmented into different categories and are expressed at different levels of detail. To recap, business analysts work with stakeholders to understand and articulate their needs.
What are Solutions in the Context of Business Analysis?
When conducting business analysis, after sufficient work has been performed to understand stakeholder needs or requirements, the next step would be to analyze the relevant information with the goal of identifying solutions. A solution is the outcome of a change that will satisfy a need or requirement. Business analysis involves identifying a range of different solutions (sometimes referred as “solution options”) and recommending the solution that will provide the most value to the stakeholders.
Consider the business requirement of increasing revenue by 20%. What solution options might a business analyst identify while working with organizational stakeholders? Perhaps the Research and Development team will seek to develop new top of the line products to attract new customers and to increase sales. Perhaps the Sales team, will develop a new loyalty program to increase sales. Perhaps the Marketing team will develop new marketing campaigns to attract new customers and increase awareness of its products. These are all examples of high-level solutions that could potentially satisfy the goal of increasing revenue by 20%.
What is Value in the Context of Business Analysis?
The last core element of business analysis is value. Value represents something that is useful or important to stakeholders. The goal of business analysis is to recommend solutions that will yield the most value for stakeholders. Value can be both tangible and intangible. Tangible value is easily measured, quantified and expressed while intangible value is not easily measured. Some examples of tangible value are increased profit, revenue, and productivity. Some examples of intangible value may include improving reputation, decreasing risk or improving employee morale.
Business Analysis is Important
Business analysis is the practice of working with stakeholders to understand their needs, identify, analyze and recommend solutions that deliver value. Business analysis is an important function in the modern workplace as it seeks to maximize the efficiency and effectiveness of the change process to ensure that the right problems are being addressed through the delivery of the right solutions.