What Is Business Analysis?

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Business analysis is an essential component of any company’s ongoing growth and strategic plan. By carefully considering how business is being conducted, what is going well and what could be going better, an organization’s leadership is setting itself on the path toward future success. Business analysts must be critical thinkers, as well as diplomatic and effective communicators. They will work with all levels of a company to identify current processes and find solutions for improving those things that could be done better. Though members of an organization can complete business analysis, it’s ideal if an outside agent is used, as they may be better able to provide holistic and objective strategies for moving forward.

What Is Business Analysis?

Business analysis can be defined as the examination of an organization’s current processes and the subsequent definition of needs and recommendation of solutions to enhance the existing structure. The act of analyzing a business does not employ rash decision-making or ill-conceived plans. Instead, it involves careful, even painstaking consideration of how the company runs at present and the development of innovative strategies for making things better.

Members of an organization can conduct business analysis. This approach may provide helpful since the employees are intimately familiar with the company’s inner workings and could have better ideas as to how it might be improved. However, there are drawbacks to this technique. Employees are not specifically trained as business analysts, and they, therefore, might miss certain key indicators that professional analysts would pick up on. Additionally, the workers of a given company could be too close to the action to provide a holistic opinion or see the big picture.

Business analysts are specifically trained to step in from the outside, evaluate the company as a whole and suggest strategies for improvement. They work closely with company leadership to get a sense of the organization’s goals and long-term plans. They also interact with workers at every level to gain greater knowledge of the processes at work and how they might be changed or improved.

Business Analysis Techniques

As with many subjective tasks within the corporate world, there are many strategies a business analyst may use when approaching a new organization. Some analysts could use a combination of these strategies overall but pick and choose the best one for each company they work with. Alternatively, some analysts may believe in only one such strategy, and others may create hybrid models to use with all of their clients.

The first such business analysis technique is called MOST. This acronym is used to refer to the company’s mission, objectives, strategies and tactics. The idea behind this technique is that by identifying these elements, an analyst can best understand what the organization is attempting to achieve and determine a roadmap for doing so.

Another business analysis technique uses the acronym PESTLE, which stands for political, economic, sociological, technological, legal and environmental. This strategy calls for examining the external factors that may impact a business and creating appropriate responses that will yield business growth.

The SWOT technique, which stands for strengths, weaknesses, opportunities and threats, helps analysts identify strengths and weaknesses in a business. They then translate these into opportunities and threats so that staffing and funding can be properly allocated.

MoSCoW, which stands for must or should, could or would works a bit differently from the other techniques. This analysis strategy requires that you rank certain drains on a company’s resources relative to their respective importance. In this way, you can prioritize where efforts should be primarily focused.

CATWOE, an acronym which stands for customers, actors, transformation process, worldview, owner and environmental constraints helps analysts to key in on who would be impacted by a business decision and how they would be impacted. Then, which steps should be taken can be evaluated accordingly.

The “5 whys” is an analysis technique in which a series of questions are asked about each aspect of a business’s process. Each question is followed up by another “why,” leading ultimately to a bare-bones strategy that leaves only the most important aspects of a company’s organizational structure.

Finally, the “six thinking hats” is a strategy that encourages consideration of alternative ideas about the business. These ideas are categorized into the following colors: white (logical or data-driven thinking), red (emotional), black (adverse thinking), yellow (positive thinking), green (creative) and Blue (holistic).

By employing some combination of the above strategies, business analysts and company leadership can work together to identify priorities and techniques for moving forward and improving their business. It’s essential that a holistic approach is applied to steer the company toward future success.

Business Analysis Skills

The skills required by a business analyst are worth a careful review before you determine whether you’d like to proceed with this as a career path. Also, it’s essential that companies familiarize themselves with these characteristics when they are hiring an analyst to help with their growth or strategic plan. You’ll want to be sure that whoever you bring onboard has these traits.

Excellent communication skills are essential to an effective business analyst. Analysts work closely with company leaders, the staff at every level, accountants, tax professionals and outside contractors. It’s critical that they can extract necessary information politely and succinctly from individuals at all levels. In addition, they need to be able to clearly convey the suggestions that they have and work to implement them.

Problem-solving skills are equally crucial to a role as a business analyst. Analysts will likely be presented with a large amount of information and then be tasked with making sense of it all with little to no direction. They must compile the data and responses they receive from all involved stakeholders into something that will lead the company down the proper path. Being able to see through extraneous information, get down to the core of what’s presented and make sense of it is critical.

Business analysts must be excellent negotiators. They are tasked with finding a middle ground between a company’s leadership, operation staff, bookkeepers and other advisors. Many suggestions made by an analyst might truly be in the best interest of the company as a whole but might not impress or satisfy particular groups within the organization. For instance, to effect the greatest change and ensure profits indefinitely, an analyst might suggest that the company downsize its IT department. Surely this determination will not be a pleasant one for members of that department to hear. However, it’s the job of the analyst to present facts independent of emotions. This is part of the reason an outsider is best-suited to the job.

Critical thinking skills are also essential to a business analyst’s success. A careful review of all the data presented, interviews conducted and processes observed must be conducted, and the analyst then needs to consider the best approach for the company moving forward.

A strong work ethic, close attention to detail and the ability to be extremely diplomatic are also essential qualities in a business analyst. Leadership skills can be hugely helpful, as analysts are usually brought in when the company’s management needs direction and is unsure of how to proceed on their own. Being able to analyze the situation, provide well-conceived solutions and effectively convey how the new processes can be put into practice is critical for successful analysts.

Business Analysis Certification

According to the International Institute of Business Analysis, analysts who are certified in their field can expect to earn an average of 16 percent more than those who are not. Additionally, certification can lead to personal and professional recognition, making it easier to land clients. The certification adds value and depth to your resume and sets you apart as a thought leader in your industry. Furthermore, a 14-percent growth is expected before the year 2024 for those with a certificate in business analysis.

To obtain a certificate in business analysis, you can turn to institutes offering business analyst programs. Also, a variety of colleges and universities offer programs in business analysis that may be well-suited to your needs.

What is the RTM in Business Analysis?

The concept of RTM, or a requirements traceability matrix, is an essential aspect of business analysis. This tool is used to track components of a project throughout its life cycle. It may be part of a business requirements document, or it may be a separate document. The RTM should identify the necessary steps that need to be taken to complete a project and verify that they are being met as the project progresses.

Sometimes, an RTM is displayed as a written list. In other cases, it may be a flowchart or graph. The format for the document very much depends on the sort of business that is being analyzed, its size and its unique needs.

The RTM should be created so that different players in the process can easily follow and report on their role in the project. For instance, the task items for all departments involved should be represented in the initial requirements list. If the business analyst identifies 30 tasks, there should be 30 assignments distributed among members of the company. In this way, there is accountability and the assurance that nothing will be missed.

BRD Versus FRD in Business Analysis

If you are familiar with business analysis, you might have heard the terms BRD and FRD. A BRD is a business requirements document, which lays out the needs of the business and what the end goal is. It’s a holistic look at the purpose of the analysis and what the company hopes to gain from the process. A BRD might contain information such as an ideal outcome, the participating stakeholders, functional requirements, the scope of the project, dependencies and assumptions. This document is used to illustrate high-level business needs and answers the basic questions of what the business is hoping to do.

An FRD, on the other hand, is a functional requirements document. It answers basic questions about the functions required to fulfill a business’s needs and speaks to how things should be done. It describes the intended outcome for a process or a system and explains how all of the stakeholders and processes should behave. This document is similar to a BRD, but it is written in more detail and attempts to capture every aspect of a requirement. In this way, it presents a more technical and holistic plan for the company’s growth. Things like user interface requirements, dependencies, assumptions, constraints and product context would typically be included on an FRD.

Many business analysts will complete both a BRD and an FRD before moving forward with a particular organization. These documents go a long way toward dictating the data that must be collected to shape the successful future of the organization. When used together, a BRD and an FRD can help to present a clear path for the company’s growth.

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About the Author

Danielle Smyth, MS, is a writer and content marketer from upstate New York. She has been writing on business-related topics for nearly 10 years. She owns her own content marketing agency, Wordsmyth Creative Content Marketing (www.wordsmythcontent.com), and she works with a number of small businesses to develop B2B content for their websites, social media accounts, and marketing materials. In addition to this content, she has written business-related articles for sites like Sweet Frivolity, Alliance Worldwide Investigative Group, Bloom Co, and Spent.