What is business analysis and why is it needed?

* Disclaimer – All the concepts in this article are written from an Estonian point of view. Some words have different official definitions in English (like Business Analyst, Business Consultant etc.) but in this article they and their meaning have been translated from Estonian.

In Estonian there is only one word for business analysis, “Ärianalüüs” and it is used for both business analysis and business intelligence. This can create a bit of confusion when talking about business analysis in Estonian, because quite a lot of people think you are talking about business intelligence. However, there is a difference between these two. Basically, the goal of business analysis is to map and describe processes and business needs. On the other hand, the goal of business intelligence is to find the numbers that are important for a business and to analyze these numbers. In this article and overall in this blog we will specifically be referring to business analysis.

The confusion between analysis and analytics is one of the reasons why I wanted to write about this topic. The other reason is that during my career, I have not had much chance to see proper business analysis. Something has been done for quite a lot of the cases, but without the understanding of what should have been analysed, in most cases the result is the description of the software system that is wanted. Business analysis however does not mean that the end result has to be software, quite the opposite. It might be concluded that the processes themselves should be changed and no additional IT systems are needed.

What is business analysis?

So, what exactly is business analysis? There is a short description of it in ITBAC blog What is IT and Business Analysis?, but to summarize, business analysis is discovering and mapping the needs for changes in the organization. The article also mentioned that there can be two different roles responsible for it, namely Business Consultant and Business Analyst. A Business Consultant will be mapping the general needs and a Business Analyst will look into the detailed processes connected to each need. Both roles are doing business analysis but on different levels. Business Consultants look at things from an overall point of view while Business Analysts go more into detail.

We will not go into too much detail about what Business Consultants do. In general they sit down with the stakeholders and help put together the overall vision and goals for the company. They describe the internal and external influences, pain points and risk factors. As a result goals and KPIs (Key Performance Indicators) can be decided on, which in turn might be the catalyst for change.

ITBAC focuses mainly on the Business Analyst role and it’s activities. Business Analysts are called in when the need for change has been determined. Their job consists of looking into the connected process and how change should be realized. For example, needs for change can be following:

• Our online store has very low sales, we need to find ways to raise the sales numbers.
• Clients are not happy that our feedback process is slow and they are going to competitors. We need to find ways to improve the process.
• Laws changed and our company is not compliant with them. We need to go over the processes and software systems and describe the places that need changing.

Business Analysts take the problem description, start to investigate it methodically and after documenting the results they can also offer different ways to solve the issue.

There is no definitive process for doing business analysis, in some cases it is necessary to do things that are not needed for other cases. But there are some general things that are necessary most of the time:

• Stakeholder mapping (internal, external etc.)
• Description of the current situation (process diagrams, requirements etc.)
• Proposed solution and expected results (process diagrams, requirements etc.)
• Solution value estimation

It is important to mention that the proposed solution can not be a description of a software system. The result of Business Analysts’ work can be that an online store is needed and that it must be possible to put the products into a virtual shopping cart, but there should be no more details about the software itself. For example the following text is not a very good business analysis result: 

“After opening the online store, the user should see the list of products with pictures. After clicking on the picture product page is shown. On the product page it is possible to click on the shopping cart icon to add the product to the shopping cart.”

Why is that description bad, if we leave out the wording and how superficial it is? Because the person who wrote it does not have a lot of knowledge about the technical side of online stores nor best design options. This might be how they are used to shopping online and so that is what they describe. There might be lots of better options available, for example most of the stores have the option to add products into the shopping cart in the product list, without the need of an additional page and click.

To summarize, Business Analysts start their activities when the need for change has been identified and they will describe the stakeholders, processes and whatever other things that are necessary for that specific situation. When the current situation has been described in enough detail, then it is possible to decide on what the requirements for the new solution are, how it should work, and what is the expected value for the company. With this information it is possible for the IT Business Analyst to start designing the needed software, if it is necessary of course.

Why is business analysis needed?

Why is business analysis needed? A simple way to find the answer is to ask yourself, do you want to use or be involved in a software system development process where the stakeholders are not known and the requirements have not been described or decided on? If business analysis has not been done beforehand (at least to reasonable extent, I am not talking about the long business analysis process as described in Waterfall methodology) then the most common result is that during the development process new stakeholders and requirements are found and the scope, duration and cost of the project will change. In the worst case the project will be cancelled and there is no result at all after a sizable expenditure of money and time.

Another important reason for business analysis is to find how much value will be provided as the result of the change. Will it affect the internal processes and save money and time for the company? Will it raise the customer satisfaction and sales? If those things are not known then it is possible that money and time will be used on an unnecessary solution, and after completion it will not be used. The reasons for not using the software might be different, but doing business analysis and evaluating the value of the change will help to avoid quite a few of them.

Life has shown that during the development process, new things are always discovered, no matter how well you prepare beforehand. What is important is, how many of those unexpected things will you find? No matter what methodology is used, all the new things that need to be added will cost time, money or other functionalities. If business analysis is done before the development, then it will lessen the amount of changes that need to be done during development, and as such will save money and time. Overall, it will result in a better, more comprehensive solution.