How Does Business Analysis Create Value?

If you are considering a business analyst role, you might be wondering how exactly does the business analyst create value for their organization? Why do we still see so many organizations operating without a business analyst function? And how, as business analysts, can we be sure to create the most possible value from our activities?

(This article is a chapter summary from Professional Development for Business Analysts: How to Achieve Your Career Goals.)

Using an ROI Calculation to Evaluate Business Analysis

The essence of value in a business context centers around Return on Investment (ROI). ROI is the weight of the business value or benefits, typically captured as increases in revenue or decreases in cost, over the cost of implementation the change. The variables of ROI can be picked apart to no end.

When it comes to cost, many organizations focus on technology costs and forego the other business-related costs, such as stakeholder involvement, in determining ROI. In a more mature organization they may look at the total cost of ownership which takes into account the cost of owning the solution throughout its entire product lifecyle.

If we look at the ROI formula, there are really only two components that a BA can impact.

Return on Investment = [Value achieved through the solution] – [Cost of the solution]

As business analysts, we can impact both of these variables. We can increase the value achieved through the solution to the business problem and our activities actively reduce the cost to implement the solution.

How a Business Analyst Reduces Costs of Implementation

At a basic level, business analysis reduces the overall costs for the project. This concept is often counter-intuitive for managers unfamiliar with business analysis. At first blush, adding a business analyst and producing additional project documentation appears to be an additional cost. If you are managing without a business analyst today and you introduce one, the cost may appear to increase, especially at first.

However, as business analysts, we are actively focused on reducing costs. This could be measured in the following ways:

  • Reduction in rework — if you help focus the team on the right requirements, then there should be reduced amount of unnecessary change. There will always be some change, as implementation encourages learning. But many projects are plagued by change because requirements are not well understood. And this kind of change is waste.
  • Reduction in requirements churnStakeholder time is valuable, but without someone in the business analyst role, stakeholders might spend excess time in unproductive discussions. An analyst can help drive a logical and efficient decision-making processes, track open issues, and document discussions, reducing the amount of time spent rehashing previous discussions and going down rabbit holes.
  • Discovering more cost-effective solutions — When the business analyst is licensed to find any number of solutions to a problem, specifically solutions that may not involve information technology, the business analyst actually might help reduce costs by finding more cost-effective solutions.

How a Business Analyst Increases the Potential Benefits

The business analyst can also help the project team increase the potential benefits yielded by the solution. Some key areas come to mind.

  • New business needs or requirements are discovered — A business analyst does not just pick up or “gather” the requirements. Most often a business analyst must actively mine for or discover the requirements. By actively discovering requirements, the business analyst helps the business come to an improved understanding of what is needed from the solution to be successful
  • Prioritization ensures focus on value — Our stakeholders are reluctant to prioritize. By using various prioritization techniques and prioritizing at several stages in the requirements lifecycle we help ensure our own and our stakeholder efforts are invested in the requirements with the most potential benefit.
  • More effective implementation of new solutions by the business — Even without formal change management practices, focusing on the business analyst principles of clarity and alignment help the organization prepare for change.
  • Providing a framework in which an IT team can scale — as an organization grows, so does the number of stakeholders, projects and implementers. As this happens, the natural patterns of communication that worked for a smaller team tend to fall apart. Business analysis is a key component in enabling a small team to scale to a larger one, thereby increasing the benefits realized because more projects can be successful investments.

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