What is a Business Analysis? Definition, Process and Tools
Business Analysis: this article explains the concept of business analysis in a practical way. The article begins with a general definition of business analysis, followed by an example of the process of conducting business analysis and information on specific methods and techniques to support business analysis. Enjoy reading!
What is a business analysis?
business analysis definition
Business analysis is defined by the International Institute for Business Analysis (IIBA) as “the practice of enabling change in an organizational context, by defining needs and recommending solutions that deliver value to stakeholders.”
It helps stakeholders achieve a shared understanding of the needs of the organization and enables the organization and manager to articulate the motives for change and develop solutions that can bring significant value to the organization.
Business analytics is so important that it is often a strategy and discipline in itself. It is used to initiate and manage change at the corporate level, be it commercial organizations or non-profit and government agencies.
Business Analysis and the role of Business analysts
Often, business analysts work full time identifying and developing solutions that provide greater value to stakeholders. They analyze the efficiency of the company, consider whether there is a better way of doing things, whether rules are being followed, whether rules need to be changed and much more.
The analysts work at all levels of the organization. Whether it’s product management, software development, project management or quality assurance, analysts work on opportunities for improvement. Below you will find an overview of various functions that fall under the heading of business analyst.
- Business architects
- Business intelligence analysts
- Business systems analysts
- Data scientists
- Enterprise analysts
- Management advisors
- Process analysts
- Product managers
- System analysts
- Investment analysts (financial analysts)
A career in business analysis can thus take on different forms. Business analysts and aspiring business analysts sometimes work with the BABOK guide, developed by the IIBA as a global standard for business analysis.
Analysts often write a business case for a project they have developed. This is important because such a document presents information about the time and resources required to carry out the project. Part of the business case is the cost-benefit analysis. An ROI can be drawn from this analysis. In many cases, this is the decisive factor in whether or not to carry out a project or improvement initiative.
So it is important to weigh the pros and cons before making any major decisions. The project is unlikely to be profitable if a strong business case cannot be developed.
In addition to advantages, disadvantages and the cost-benefit analysis, technological limitations and time schedules or planning are also included in the business case. These parts are considered by many to be just as important. They describe the challenges the organization faces.
The process of business analysis
It is clear that there are many different forms of business analysis. It is therefore not possible to describe the process that represents reality in all these forms. The IIBA does describe some generally accepted steps in the business analysis process. The context in which this process is carried out is different for almost every organization and therefore there will be major differences.
Some basic steps are explained below.
The first step in the process is to clarify the role of the business analyst. Ensure that all stakeholders are identified and that their needs, wishes and requirements are clear. In addition, familiarize the business analyst with the history of the company and of the project.
2. Name business objectives
After the first orientation, identify and elaborate the expectations of primary stakeholders. Ensure conflicting expectations are resolved and everyone’s objectives are achievable and clearly executable.
3. Define scope
The next step in the business analysis process is to define the scope of the project. A clear and complete statement of the scope of the project is needed, including an overall step-by-step plan for project participants to follow.
4. Draw up a plan
The business analysis plan and project execution includes timelines, a step-by-step plan and an overview of the main results and deliverables.
5. Define requirements
The requirements of a project must also be clearly stated and written down in requirements documentation. These should be based on analyzing the information collected on the execution and implementation of the projects.
6. Support the technical implementation where applicable
Implementing a project often involves technical requirements, such as software. That is why many analysts regularly have to work together with parties such as IT teams and engineers.
7. Support further implementation
Supporting the implementation of projects includes training and supporting end users, for example, and keeping clear documentation.
Assessment after implementation is also part of the business analysis process. Did the project deliver the desired results? Are further steps required?
Tools, Techniques and Methods to create a Business Analysis
Various methods and business analysis techniques can be used to support the process described above. The most popular are listed below. Use these to overcome hurdles and obstacles.
MoSCoW (must or should, could or would)
The MoSCoW method prioritizes requirements by using a framework in which questions are graded individually compared to other requirements. Is this a must-have? Or a could-have? Is it something that improves the product, or is it something that is really necessary?
Many people are familiar with the SWOT analysis. This method is ideally suited for a business analysis because it identifies strengths and weaknesses of an organizational structure. These strengths and weaknesses are then translated into opportunities and threats. The knowledge gained from performing this analysis is very valuable and helps to efficiently allocate resources to work and projects.
The PESTLE analysis is also a well-known and popular tool for conducting a business analysis. This mainly concerns the external environment of an organization. The acronym PESTLE stands for political, economic, sociological, technological, legal and environmental. Analysts use the model as a framework for assessing external factors that can affect the business and how best to handle them.
The MOST analysis is suitable for supporting a business analysis because it contains the right elements to perform a detailed and complete internal analysis of an organization. The acronym stands for mission, objectives, strategies and tactics. The method specifically examines the goals of an organization and how these can be translated into concrete actions in business operations.
CATWOE (customers, actors, transformation process, world view, owner and environmental constraints). This method identifies the key parties and processes affected by the company’s actions. The technique helps business analysts carefully assess the impact of a particular action.
Six Thinking Hats
The Six Thinking Hats method guides group thinking by using brainstorming techniques to evaluate alternative perspectives and ideas. The Six Thinking Hats are white, red, black, yellow, green and blue. White represents focus and logic. Red represents emotions and gut feelings. Black represents potential negative outcomes and what can go wrong. Yellow represents focus on positives and an overall optimistic attitude. Green represents creativity and blue represents process control, or focus on the bigger picture.
The 5 why method can also be valuable for business analysts at different levels. The methods include asking 5 why questions and is used in combination with Six Sigma techniques. It helps analysts get to the root of a problem by asking why a certain situation exists, followed by a new why question to the answer, and so on.
Now it’s your turn
What do you think? Do you recognize the explanation about business analysis? Do you perform business analyses or have you come into contact with this in a different type of business analysis in the past? What other methods and techniques do you know to support conducting a business analysis? Do you have tips or comments?
Share your experience and knowledge in the comments box below.
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- Cadle, J., Paul, D., & Turner, P. (2010). Business analysis techniques: 72 essential tools for success. BCS, The Chartered Institute.
- Palepu, K. G., & Healy, P. M. (2013). Business analysis and valuation. South-Western, Cencage Learning.
- Palepu, K. G., Healy, P. M., Wright, S., Bradbury, M., & Coulton, J. (2020). Business analysis and valuation: Using financial statements. Cengage AU.
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Published on: 01/24/2023 | Last update: 01/24/2023
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