Business Analysis Tools and Techniques
Table of Contents
- What is a Business Analysis Process?
- Business Analysis Tools and Techniques
- Elicitation Techniques
- Planning Techniques
- Group Decision Making Techniques
- Prioritization Schemes
- Estimation Techniques
- Valuation Techniques
There are 110 individual business analysis tools and techniques in the PMI Guide to Business Analysis. Some are used once in the project, and some appear many times across multiple business analysis processes within the project. In this article, we will cover the commonly used business analysis tools and techniques in the project management industry.
What is the Business Analysis Process?
Business analysis processes describe the activities performed to conduct business analysis. Every business analysis process produces one or more outputs from one or more inputs by using appropriate business analysis tools and techniques. A process is defined as a systematic series of activities directed toward causing an end result such that one or more inputs will be acted upon to create one or more outputs.
An input is defined as any item that is required by a process before that process proceeds. In practice, if there are better inputs available, then the process can be tailored to use them. It is important to note that organizational process assets, enterprise environmental factors, expert judgment, and the business analysis plan are commonly used as inputs into all business analysis processes.
Business analysis is accomplished through the appropriate application and integration of logically grouped business analysis processes that are linked by the outputs they produce. Business analysis processes apply globally across industry groups.
Processes may be used in parallel, contain overlapping activities, and occur multiple times throughout the product life cycle. While business analysis processes are not required, each process is recommended to varying levels of detail under different conditions.
A business analysis process group is a logical grouping of business analysis processes. As per the Standard for Business Analysis published by PMI, there are six business analysis process groups. Each Process Group is independent of the application area or industry in which it is performed.
Process Groups are not project life cycle phases; sequence and timing are not prescribed. Process Groups are revisited as one or more processes within the Process Group can be repeated on an ongoing basis throughout the project life cycle. The Executing Process Group is one such example. The processes for elicitation are ongoing and are performed for each iteration in an adaptive life cycle.
Business Analysis Tools and Techniques
Business analysis tools and techniques describe different ways for performing a particular business analysis process or activity. There are hundreds of BA tools and techniques in use. Some techniques are specifically used when performing business analysis, while others are common and used by many disciplines.
The standard of business analysis published by PMI describes business analysis activities for all project life cycles, the business analysis techniques, too, are universal, regardless of the chosen delivery approach. While some techniques may be more helpful in one life cycle than another, most of this tools and techniques are beneficial regardless of the life cycle chosen or industry in which they are performed.
Within each business analysis process, a small sample of tools and techniques is listed as guidance to highlight possible techniques a business analyst may apply when performing the process. Those performing business analysis are always encouraged to learn new techniques or adapt current techniques to new situations; therefore, the BA tools and techniques available to a practitioner are always changing and growing.
Business analysis tools and techniques have been grouped by their purpose: Elicitation, estimation, prioritization, valuation...etc. The group name describes the intent of what needs to be done and the tools in the group represent different methods to accomplish the intent.
For example, prioritization schemes are tools and techniques grouped with the intent on prioritizing portfolio components, programs, projects, requirements, features, or any other product information. Multi-voting, timeboxing, and weighted ranking are among the business analysis techniques that can be used to prioritize.
BA technique used to draw information from various sources, below are some of the commonly used ones:
Prototyping is a method of obtaining early feedback on requirements by providing a model of the expected solution before building it. Prototypes are also known as proof of concepts (PoC).
Because prototypes are tangible, stakeholders are able to visualize and possibly experiment with a model of the product rather than discussing abstract representations of the requirements. A prototype can be a mockup of the real result, as in an architectural model, or it can be an early version of the product itself. A few common kinds of prototypes are the following: Storyboarding, wireframe, and evolutionary.
Brainstorming is an elicitation technique that can be used to identify a list of ideas within a short period of time—for example, a list of risks, stakeholders, or potential solution options. Brainstorming is conducted in a group environment and is led by a facilitator. o Output generated from the group is often greater than the output that could be received from the same group if ideas were recorded individually.
This technique provides a direct way of obtaining information about how a process is performed or a product is used by viewing individuals in their own environment performing their jobs or tasks. observation is usually performed with the observer viewing the process worker performing the work, but it can also be performed with the observer experiencing or performing the task firsthand. The objective of observation is to uncover information that stakeholders are not able or willing to provide and to use the information in the formulation of product requirements.
Focus groups bring together prequalified stakeholders and subject matter experts (SMEs) to learn about their expectations and attitudes about a proposed solution. Focus groups provide an opportunity to obtain feedback directly from customers and/or end users.
Business analysis echniques used to plan business analysis work in the project, below are some of the commonly used ones:
Product backlog is the list of all product backlog items, typically user stories, requirements, or features, that need to be delivered for a solution. Individual items in the backlog are estimated as part of selecting, in prioritized order, those items that the team is about to commit to deliver in an upcoming iteration.
The business analysis effort for any product backlog item focuses on making sure that product backlog items meet the definition of ready. Making a product backlog item ready helps the team refine its business understanding of that item to the point where it has enough information to begin development.
In an adaptive life cycle, the timing of work done by a team to plan and commit to what is going to be delivered depends upon which adaptive approach the team uses. When using an adaptive approach, backlog management and Kanban boards may be used as part of planning.
Rolling Wave Planning
This is an iterative business analysis planning technique in which the work to be accomplished in the near term is planned in detail, while the work in the future is planned at a higher level. From the perspective of business analysis, business analysts working as part of a predictive life cycle could be responsible for or could work with the project manager to create rolling wave estimates for business analysis tasks at intervals specified within the overall project schedule.
A business analysis technique used in planning for projects that use an adaptive life cycle. Story mapping is used to sequence user stories, based upon their business value and the order in which their users typically perform them, so that teams can arrive at a shared understanding of what will be built. o From the perspective of planning for business analysis, story mapping can help suggest when more effort may need to be spent on analysis.
Group Decision Making Techniques
BA techniques used in a group setting to bring participants to a final decision on an issue or topic under discussion, below are some of the commonly used ones:
The Delphi technique is an information-gathering technique used as a way to reach consensus from experts on a subject. Experts on the subject participate in this technique anonymously. A facilitator uses a questionnaire to elicit ideas about the important points related to the subject. The responses are summarized and are then recirculated to the experts for further comments. Consensus may be reached in a few rounds of this process. The Delphi technique helps to reduce bias in the data and prevents any one person from having undue influence on the outcome.
Business analysis techniques used to prioritize portfolio components, programs, projects, requirements, features, or any other product information, below are some of the commonly used ones:
A BA technique that categorizes each requirement into one of the following groups: Must have (fundamental to solution success), should have (important, but the solution’s success does not rely on the requirement), could have (can easily be left out without impacting the solution), or won’t have (not delivered this time around).
Buy a feature
A type of collaborative game used to enable a group of stakeholders to agree on prioritization by providing each stakeholder with an amount of pretend money to buy his or her choice of features, splitting the money received across features, however desired.
The features are prioritized by counting the total money spent per feature by all stakeholders. The features that receive the most money from the participants are considered the most valuable and highest prioritized features.
Purpose alignment model
A business analysis technique> that provides a framework for categorizing business options by their purpose. It supports aligning business decisions with business purposes. The purpose of each option is identified by considering how mission critical it is and how much competitive advantage each will provide to the organization.
While this technique is primarily intended as a basis for making strategic or high-level product decisions, some organizations also use it to analyze and facilitate discussions about product requirements and the value each provides, which, in turn, becomes a springboard for prioritization discussions about product features and requirements.
Business analysis techniques used to provide a quantitative assessment of likely amounts or outcomes, below are some of the commonly used ones:
A form of relative estimation, in which team members organize product backlog items into groups where each product backlog item is about the same size, or where team members use the notion of T-shirt size—e.g., small, medium, large, and extra-large—as an estimation scale.
A collaborative relative estimation technique in which there is an agreed-upon scale used for the relative estimates. Each person participating in estimation poker is given a series of cards with the agreed-upon scale. Team members typically will converge upon a reference estimate for one of their project’s product backlog items, often using a Delphi or wide-band Delphi approach.
The reference estimate is then used as a basis for subsequent relative estimates for each additional product backlog item that is to be estimated. Team members hold up cards that represent their estimates of the level of effort required in the context of their agreed-upon reference estimate, expressed within the chosen scale. Those who created the highest and lowest estimates explain their rationale, following which everyone estimates again. The process repeats until convergence is achieved.
A technique for creating estimates that are derived from performing a comparison against a similar body of work rather than estimating based on absolute units of cost or time. o Relative estimation is similar, but not identical, to analogous estimation, which is usually based on historical data. For relative estimation, a team agrees on some way to represent an estimate for one product backlog item and then estimates other product backlog items in comparison to that agreed upon estimate.
Business analysis technique used to quantify the return or value that an option will provide, below are some of the commonly used ones:
Internal Rate of Return
The internal rate of return (IRR) is the projected annual yield of a project investment, incorporating both initial and ongoing costs. IRR is the estimated growth rate percentage that a given project is expected to attain. Hurdle rates are often established, such as a projected IRR, and need to exceed a particular level in order for a project investment to be considered
Return on Investment
The return on investment (ROI) is the percentage return on an initial project investment. ROI is calculated by taking the projected average of all net benefits and dividing them by the initial project cost. This valuation method does not take into account ongoing costs of new products or services, but is still a widely used metric. Organizations often have “hurdle rates” that an expected ROI needs to exceed before a project is considered for selection.
Net Present Value
The net present value (NPV) is the future value of expected project benefits expressed in the value those benefits have at the time of investment. NPV takes into account current and future benefits, inflation, and it factors in the yield that could be obtained through investing in financial instruments as opposed to a project.
Any NPV greater than zero is considered to be a worthwhile investment, although a project with an NPV less than zero may be approved if the initiative is a government mandate, for example. The expected benefits listed in the cost-benefit analysis will be valuable measures to use when evaluating the outcomes of the program or project.
During needs assessment, the business analyst may highlight key evaluation measures as part of the recommendation. If these measures are not captured during needs assessment, these are documented during business analysis planning.
As a conclusion, there is a long list of business analysis tools and techniques that the business analyst can use to perform business analysis processes and tasks. A tool is a specific, tangible item such as a template or software program, used in performing an activity to produce a product or result. A technique is a defined systematic procedure to produce one or more outputs, which may also use one or more tools.
As a business analyst practitioner, you can refer back to the PMI guide to business analysis whenever you want to know more about the variety of available business analysis tools and techniques that you can use in your project while conducting business analysis activities.
If what we explained in this article is part of your day-to-day job, or if you are interested in improving your knowledge in the business analysis field, we highly recommend you read about the PMI PBA certification exam through the link here. Also, you can have a look at the curriculum of our PMI PBA exam perpetration workshop through the link here.