Business Analysis: Definition, Process and Techniques

Business analysis is the practice of identifying business needs and finding business solutions to business problems. Knowing what is business analysis is absolutely vital for businesses thinking about new technology, systems, or processes. It assists organizations in understanding what they want to achieve, what they can do, what they do, and what they need.

In this article, we will outline the business analysis definition, its key concepts, processes, techniques, and role in today’s competitive market.

What is Business Analysis?

Business analysis is the set of tasks, knowledge, and techniques necessary to identify business needs and propose solutions that will help an organization achieve its objectives. Business analysts fill the gap between business stakeholders and technology. They analyze the business environment, understand the requirements, find areas for improvement, and suggest technology solutions to business problems.

In a nutshell, business analysis services are about ‘what’ the business does, ‘who’ are the customers and competitors, ‘why’ things happen the way they do and ‘how’ systems, processes, and people interact and fit into the organizational context. This understanding is then used to suggest improvements to operations, tactics, and strategies to achieve business goals.

Key Concepts in Business Analysis

Several core concepts are central to business analysis meaning and practice:

Requirements Elicitation and Analysis

It is the process of understanding business objectives and needs, starting with analysis, identifying the gap between the current state and the desired state, prioritizing by value and urgency and defining business, stakeholder and solution requirements.

Process Analysis/Modeling

Business analysts study the current state of business processes, model how things work and how entities like systems, information, and people interact. Process analysis identifies improvement areas.

Gap/Root Cause Analysis

By comparing the current and future/required states, analysts determine gaps. Further analysis brings out the root causes for these gaps.

Solution Evaluation and Recommendations

Business analysts work based on root cause analysis and provide possible solutions to this, evaluate them on cost, benefit and other metrics and present the business case to stakeholders.

Why Business Analysis is Important

What is a business analysis? It’s more about developing data-driven strategies to address problems than merely about identifying them. Most businesses deal with issues on several fronts given the fast speed of change and innovation, be it maintaining pace with technology changes, disturbance from new competition, dynamic customer expectations, or pressure to increase profits. Business analysis provides the means to chart strategy backed by data insights, ensure solutions map back to business goals, and implement changes smoothly across the enterprise.

Benefits of business analysis include:

• Risk reduction. Business analysts take a thorough look at what needs to change and assess potential pitfalls and lower risk when implementing large IT projects or process changes.
• Better ROI. Solutions grounded in business analysis have obviously well-defined business cases and KPIs connected to corporate goals. The result is better resource allocation and higher ROI.
• Improved efficiency. Processes, systems, data and metrics are analyzed to reveal bottlenecks, duplication of effort, inefficient models and gaps that, when fixed, can deliver substantial efficiency.
• Enhanced customer experience. Understanding the customer journey via business analysis helps businesses to provide the same constant and flawless experiences across several channels and touchpoints.

Business Analysis Process

The business analysis process offers a structure to find problems and find solutions. It comprises the following key steps:

Planning and Scoping

In this stage, the scope and limits of the business analysis are defined, important stakeholders are found, and assumptions, objectives, results, and restrictions are decided. The business analysis effort is planned.

Requirements Elicitation

In eliciting, requirements are collected from a variety of sources such as business documents, subject matter experts, surveys, site visits, current systems and user stories. Needs are what the solution must address.

Requirements Analysis and Documentation

During this phase, requirements are collected and organized, prioritized and analyzed using methods such as process modeling, root cause analysis, gap analysis, etc. at which point analysts document requirements formally, along with supporting diagrams and specifications.

Solution Evaluation and Business Case

It identifies potential solutions, evaluates them and weighs pros and cons, costs, and benefits. They size the solutions and present a business case that connects the chosen solution to business objectives and metrics.

Solution Implementation and Monitoring

Finally, the solution is implemented using project management techniques. Once implemented, analysts track solution performance and make the appropriate changes that are suggested.

Business Analysis Techniques

Business analysts use many techniques, models and methods to understand the business landscape and determine solutions. Common business analysis techniques include:

SWOT Analysis

Assesses the strengths, weaknesses, opportunities and threats facing an organization, line of business or proposition. It helps determine strategic positioning. A SWOT analysis provides a good snapshot of the internal and external factors that influence the company’s strategy and position. Conducting a SWOT analysis on a regular basis, for example, annually, enables companies to spot trends and patterns in the business environment and changing capabilities over time.

PEST Analysis

Evaluation of the external macro-environment using four perspectives – Political, Economic, Social and Technological. Reveals opportunities and threats. PEST analysis is useful for identifying how future trends in the broad environment might impact an organization. Some common factors considered include tax policies, trade tariffs, economic growth projections, demographic shifts, consumer attitudes and technological disruptions.

Porter’s Five Forces

It provides a framework to analyze industry competition using five determinants: competitive rivalry, supplier power, buyer power, threat of substitution, and threat of new entrants. This structured approach enables companies to analyze the competitive forces within their industry to identify areas of strength, weakness and opportunities to improve their position. For example, buyer power highlights the need to offer better value via targeted customer segments.

Value Chain Analysis

Maps out primary and secondary activities across the business to identify competitive advantage. Helps locate inefficiencies and optimization areas. The value chain breaks down the various activities within an organization to understand costs and value drivers. Companies can then restructure activities to maximize value and efficiency. For instance, the analysis may reveal outsourcing certain non-core functions as more cost-effective.

Process Modeling

Documents current state and analyzes future processes needed using methods like flowcharts, data flow diagrams, Gantt charts and swimlane diagrams. Visual process modeling shows interactions and relationships across people, systems and information flows. It identifies manual touchpoints, bottlenecks and disconnects that can then be streamlined.

Root Cause Analysis

Gets to the underlying reason for problems or failures using 5 Whys, Ishikawa diagrams, Fault Tree analysis and other tools. Enables fixing process shortfalls. Instead of applying quick fixes, root cause analysis reveals system weaknesses that give rise to recurring issues that can then be addressed more structurally. It prevents wasteful focus on symptoms rather than the real problem.

There are many more analysis techniques business analysts utilize based on the context and purpose of analysis. Applying the right techniques at the right time provides insights that form the basis of data-backed decisions and solutions tightly aligned to business needs.

Also check: How Data Science Crafts Smarter Business Decisions

Role of Business Analysts

Business analysts typically don multiple hats within the organizational context:

Strategists

They chart business goals, initiatives and objectives and guide executive decisions using data models and analytics. Business analysts serve as the link between business strategy and IT solutions.

Change Agents

Since business analysts routinely analyze processes and systems to determine better ways of doing things, they catalyze positive change within companies.

Governance Guardians

Analysts establish analysis frameworks, requirements traceability structures, and performance monitoring to govern and track solution success.

Project Managers

Though dedicated project managers carry out implementation, analysts manage analysis-related tasks by applying project management principles like scheduling, risk mitigation etc.

Customer Advocates

During analysis, solution designing and implementation, business analysts provide the voice of the customer. They articulate customer journeys and needs.

Efficiency Experts

By assessing processes, systems, data flows, metrics etc., business analysts recommend ways to eliminate bottlenecks, improve productivity, reduce costs and enhance efficiency.

Business analysts’ unique positioning at the intersection of business operations and technology solutions empowers them to improve processes, guide smart investments and drive change.

Conclusion

Within an increasingly disrupted marketplace, understanding business analysis ensures organizations remain adaptive and aligned with their goals. By leveraging analysis techniques to chart requirements, identify root causes, model future processes, assess solution options and monitor performance, business analysts enable companies to derive maximum value from technology investments in line with business priorities.

With its rigorous and integrated approach, business analysis reduces risk, boosts efficiency and positions companies to readily adapt – making it an essential business capability for today’s disrupted markets.