Business analysis is the discipline of identifying business needs and determining solutions to business problems. Solutions often include a 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

Business analyst

A Business Analyst analyzes the organization and design of businesses, government departments, and non-profit organizations; BAs also assess business models and their integration with technology.-Levels:...

 or BA.

Those BAs who work solely on developing software systems may be called IT Business Analysts, Technical Business Analysts, Online Business Analysts or Systems Analysts.

Business analysis sub-disciplines

Business analysis as a discipline has a heavy overlap with requirements analysis

Requirements analysis

Requirements analysis in systems engineering and software engineering, encompasses those tasks that go into determining the needs or conditions to meet for a new or altered product, taking account of the possibly conflicting requirements of the various stakeholders, such as beneficiaries or users...

 sometimes also called requirements engineering, but focuses on identifying the changes to an organization that are required for it to achieve strategic goals. These changes include changes to strategies, structures, policies, 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
  Business architecture
  A business architecture is a part of an enterprise architecture related to corporate business, and the documents and diagrams that describe that architectural structure of business...
  
  
• Conducting feasibility studies
  Feasibility study
  Feasibility studies aim to objectively and rationally uncover the strengths and weaknesses of the existing business or proposed venture, opportunities and threats as presented by the environment, the resources required to carry through, and ultimately the prospects for success. In its simplest...
  
  
• Identifying new business opportunities
  Business opportunity
  A business opportunity involves the sale or lease of any product, service, equipment, etc. that will enable the purchaser-licensee to begin a business. The licensor or seller of a business opportunity usually declares that it will secure or assist the buyer in finding a suitable location or...
  
  
• Scoping and defining new business opportunities
• Preparing the business case
  Business case
  A business case captures the reasoning for initiating a project or task. It is often presented in a well-structured written document, but may also sometimes come in the form of a short verbal argument or presentation. The logic of the business case is that, whenever resources such as money or...
  
  
• Conducting the initial risk assessment
  Risk assessment
  Risk assessment is a step in a risk management procedure. Risk assessment is the determination of quantitative or qualitative value of risk related to a concrete situation and a recognized threat...
  
  

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. Some techniques for requirements elicitation are:

• Brainstorming
  Brainstorming
  Brainstorming is a group creativity technique by which a group tries to find a solution for a specific problem by gathering a list of ideas spontaneously contributed by its members...
  
  
• Document analysis
  Content analysis
  Content analysis or textual analysis is a methodology in the social sciences for studying the content of communication. Earl Babbie defines it as "the study of recorded human communications, such as books, websites, paintings and laws."According to Dr...
  
  
• Focus group
  Focus group
  A focus group is a form of qualitative research in which a group of people are asked about their perceptions, opinions, beliefs and attitudes towards a product, service, concept, advertisement, idea, or packaging...
  
  
• Interface
  User interface
  The user interface, in the industrial design field of human–machine interaction, is the space where interaction between humans and machines occurs. The goal of interaction between a human and a machine at the user interface is effective operation and control of the machine, and feedback from the...
  
   analysis
• Interviews
  Interviews
  Interviews is:# the plural form of "interview"# a compilation album by Bob Marley & the Wailers, see Interviews # a C++ toolkit for the X Window System, see InterViews...
  
  
• Workshops
• Reverse engineering
  Reverse engineering
  Reverse engineering is the process of discovering the technological principles of a device, object, or system through analysis of its structure, function, and operation...
  
  
• Surveys
• User task analysis
  Task analysis
  Task analysis is the analysis of how a task is accomplished, including a detailed description of both manual and mental activities, task and element durations, task frequency, task allocation, task complexity, environmental conditions, necessary clothing and equipment, and any other unique factors...
  
  

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
  Architecture analysis and design language
  The Architecture Analysis & Design Language is an architecture description language standardized by SAE.AADL was first developed in the field of avionics, and was known formerly as the Avionics Architecture Description Language. It is derived from MetaH, an architecture description language made...
  
  
• Business process
  Business process
  A business process or business method is a collection of related, structured activities or tasks that produce a specific service or product for a particular customer or customers...
  
   analysis
• Object-oriented analysis
• Structured analysis
  Structured analysis
  Structured Analysis in software engineering and its allied technique, Structured Design , are methods for analyzing and converting business requirements into specifications and ultimately, computer programs, hardware configurations and related manual procedures.Structured analysis and design...
  
  

While requirements documentation can be in either form:

• Textual
• Matrix
  Traceability matrix
  A traceability matrix is a document, usually in the form of a table, that correlates any two baselined documents that require a many to many relationship to determine the completeness of the relationship...
  
  
• Diagrams
  Use case diagram
  A use case diagram in the Unified Modeling Language is a type of behavioral diagram defined by and created from a Use-case analysis. Its purpose is to present a graphical overview of the functionality provided by a system in terms of actors, their goals , and any dependencies between those use...
  
  
• Models

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.

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:

PESTLE
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)

HEPTALYSIS
This is used to perform an in-depth analysis of early stage businesses/ventures on seven important categories:

Market Opportunity

Product/Solution

Execution Plan

Financial Engine

Human Capital

Potential Return

Margin of Safety

MOST
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 4 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)

SWOT
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

SWOT

SWOT may refer to:* Surface Water Ocean Topography Mission, a proposed NASA mission to make the first global survey of Earth’s surface water* SWOT analysis, a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or business venture,...

:

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)

CATWOE
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, emotional

Yellow: Bright, optimistic, positive.

Black: Negative, devil’s advocate.

Red: Emotional.

Blue: Cold, control.

Not all colors / moods have to be used

Five Why's
Five Whys

5 Whys

The 5 Whys is a questions-asking method used to explore the cause/effect relationships underlying a particular problem. Ultimately, the goal of applying the 5 Whys method is to determine a root cause of a defect or problem.- Example :...

 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.

MoSCoW
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.

MoSCoW

Moscow

Moscow is the capital, the most populous city, and the most populous federal subject of Russia. The city is a major political, economic, cultural, scientific, religious, financial, educational, and transportation centre of Russia and the continent...

 comprises:

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

VPEC-T
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

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.

Strategist

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

Senior management

Senior management, executive management, or management team is generally a team of individuals at the highest level of organizational management who have the day-to-day responsibilities of managing a company or corporation, they hold specific executive powers conferred onto them with and by...

 on suitable policies

Policy

A policy is typically described as a principle or rule to guide decisions and achieve rational outcome. The term is not normally used to denote what is actually done, this is normally referred to as either procedure or protocol...

, and the effects of policy decisions.

Architect

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

Business process reengineering

Business process re-engineering is the analysis and design of workflows and processes within an organization.According to Davenport a business process is a set of logically related tasks performed to achieve a defined business outcome....

), or improvements (BPI

Business process improvement

Business Process Improvement is a systematic approach to help an organization optimize its underlying processes to achieve more efficient results. The methodology was first documented in H. James Harrington’s 1991 book Business Process Improvement. It is the methodology that both Process...

) could be made. Particular skills of this type of analyst are "soft skills", such as knowledge of the business, requirements engineering

Requirements engineering

Requirements engineering is a systems and software engineering process which covers all of the activities involved in discovering, documenting and maintaining a set of requirements for a computer-based system...

, stakeholder analysis

Stakeholder analysis

Stakeholder analysis in conflict resolution, project management, and business administration, is the process of identifying the individuals or groups that are likely to affect or be affected by a proposed action, and sorting them according to their impact on the action and the impact the action...

, and some "hard skills", such as business process modeling

Business process modeling

Business Process Modeling in systems engineering is the activity of representing processes of an enterprise, so that the current process may be analyzed and improved. BPM is typically performed by business analysts and managers who are seeking to improve process efficiency and quality...

. Although the role requires an awareness of technology and its uses, it is not an IT

Information technology

Information technology is the acquisition, processing, storage and dissemination of vocal, pictorial, textual and numerical information by a microelectronics-based combination of computing and telecommunications...

-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

Reengineering

Reengineering can refer to:* Trouble shooting* Business process reengineering* Reengineering * Reengineering * User reengineering...

".

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

Return on investment

Return on investment is one way of considering profits in relation to capital invested. Return on assets , return on net assets , return on capital and return on invested capital are similar measures with variations on how “investment” is defined.Marketing not only influences net profits but also...

 from IT investment

Investment

Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...

s, 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).

Organizational Structure of the Business Analysis Function

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 Analsysts 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 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 additional to providing guidelines and deliverables, it also provides a forum to focus on continuous improvement for the Business Analysis function.

Business process improvement

A business process improvement

Business process improvement

Business Process Improvement is a systematic approach to help an organization optimize its underlying processes to achieve more efficient results. The methodology was first documented in H. James Harrington’s 1991 book Business Process Improvement. It is the methodology that both Process...

 (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

Documentation

Documentation is a term used in several different ways. Generally, documentation refers to the process of providing evidence.Modules of Documentation are Helpful...

 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 are 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

Iteration

Iteration means the act of repeating a process usually with the aim of approaching a desired goal or target or result. Each repetition of the process is also called an "iteration," and the results of one iteration are used as the starting point for the next iteration.-Mathematics:Iteration in...

 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.

Identifying Business Needs

Includes the following steps:

1. Business definition


2. Understand business domain(s)


3. Organization goals


4. Core competence


5. Competitive stance

Goal of business analysis

Ultimately, business analysis want to achieve the following outcomes:

• Reduce waste
• Create solutions
• Complete projects on time
• Improve efficiency
• Document the right requirements

One way to assess these goals is to measure the return on investment

Return on investment

Return on investment is one way of considering profits in relation to capital invested. Return on assets , return on net assets , return on capital and return on invested capital are similar measures with variations on how “investment” is defined.Marketing not only influences net profits but also...

 (ROI) for all projects. According to Forrester Research

Forrester Research

Forrester Research is an independent technology and market research company that provides its clients with advice about technology's impact on business and consumers. Forrester Research has five research centers in the US: Cambridge, Massachusetts; New York, New York; San Francisco, California;...

, 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 two 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 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 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.

N.B. On a lot of projects (particularly larger ones) the project manager is the one tasked with 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 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 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.

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).

See also

• Cost overrun
  Cost overrun
  A cost overrun, also known as a cost increase or budget overrun, is an unexpected cost incurred in excess of a budgeted amount due to an under-estimation of the actual cost during budgeting...
  
  
• Enterprise Life Cycle
  Enterprise Life Cycle
  Enterprise Life Cycle in enterprise architecture is the dynamic, iterative process of changing the enterprise over time by incorporating new business processes, new technology, and new capabilities, as well as maintenance, disposition and disposal of existing elements of the enterprise.- Overview...
  
  
• International Institute of Business Analysis
  International Institute of Business Analysis
  The International Institute of Business Analysis is a non-profit professional association with the purpose of supporting and promoting the discipline of business analysis....
  
   (IIBA)
• Requirements analysis
  Requirements analysis
  Requirements analysis in systems engineering and software engineering, encompasses those tasks that go into determining the needs or conditions to meet for a new or altered product, taking account of the possibly conflicting requirements of the various stakeholders, such as beneficiaries or users...
  
  
• Data Presentation Architecture
  Data Presentation Architecture
  Data presentation architecture is a skill-set that seeks to identify, locate, manipulate, format and present data in such a way as to optimally communicate meaning and proffer knowledge.-Origin and context:...
  
  
• Revenue shortfall
• Spreadmart
  Spreadmart
  A spreadmart is a concept describing the tendency of spreadsheets to "run amok" in organizations. Typically a spreadmart is created by individuals at different times using different data sources and rules for defining metrics in an organization, creating a fractured view of the enterprise...
  
  
• Viability study
  Viability study
  A Viability study is an in depth investigation of the profitability of the business idea to be converted into a business enterprise.-Feasibility report:...