Lesson 1.3: Types of Business Analysis

Learning Objectives

By the end of this lesson, you will be able to:

• Describe the different types of business analysis based on the focus and scope of the analysis
• Explain the advantages and disadvantages of each type of business analysis
• Identify the appropriate type of business analysis for a given situation or scenario

Introduction

Business analysis is a term that encompasses a wide range of activities, techniques, and tools that aim to understand and improve business processes, solve problems, and deliver value to customers and stakeholders.

Business analysis can be classified into different types based on the focus and scope of the analysis. Each type of business analysis has its own purpose, methods, and outcomes. The main types of business analysis are:

• Strategic business analysis. This type of business analysis focuses on the high-level vision, mission, goals, objectives, and strategies of an organization and its stakeholders. It involves analysing the external and internal factors that affect the organization’s performance and competitiveness, such as the industry, market, competitors, customers, regulations, trends, strengths, weaknesses, opportunities, and threats. The outcome of strategic business analysis is a strategic plan that defines the direction, scope, and priorities of the organization for the long term.
• Tactical business analysis. This type of business analysis focuses on the specific projects or initiatives that support the strategic plan of an organization and its stakeholders. It involves defining the problem or opportunity statement, identifying and managing the requirements, designing and evaluating the solution options, and assessing and validating the solution outcomes and benefits. The outcome of tactical business analysis is a project plan that defines the scope, schedule, budget, resources, risks, quality, and deliverables of the project for the short to medium term.
• Operational business analysis. This type of business analysis focuses on the day-to-day activities and processes that deliver the products or services of an organization and its stakeholders. It involves mapping, measuring, monitoring, and improving the efficiency, effectiveness, and quality of the operations. The outcome of operational business analysis is a process improvement plan that defines the current state, future state, gap analysis, improvement actions, and performance indicators of the process for the ongoing term.

Advantages and Disadvantages of Each Type of Business Analysis

Each type of business analysis has its own advantages and disadvantages depending on the context and situation. Some of these advantages and disadvantages are:

• Strategic business analysis Advantages: Provides a clear vision and direction for the organization and its stakeholders Aligns the organization’s activities with its mission and values Enables proactive decision making and planning for the future Disadvantages: Requires a lot of time and resources to conduct May involve uncertainty and ambiguity due to changing environments May face resistance or conflict from different stakeholders due to different interests or perspectives
• Tactical business analysis Advantages: Provides a specific solution to a specific problem or opportunity Delivers value to customers and stakeholders in a timely manner Enables effective project management and control Disadvantages: Requires a lot of coordination and communication among different project team members and stakeholders May involve complexity and risk due to technical or organizational challenges May face scope creep or change requests due to new discoveries or feedback
• Operational business analysis Advantages: Provides a detailed understanding of how things work in practice Optimizes the use of resources and reduces waste Enhances customer satisfaction and loyalty Disadvantages: Requires a lot of data collection and analysis May involve resistance or inertia from employees or customers due to habit or preference May face trade-offs or constraints due to cost or quality issues

Choosing the Right Type of Business Analysis

Choosing the right type of business analysis depends on various factors, such as:

• The purpose. What is the main goal or objective that you want to achieve with your business analysis? Is it to define your long-term vision or direction? Is it to solve a specific problem or seize an opportunity? Is it to improve your daily operations or processes?
• The scope. How broad or narrow is your area of focus for your business analysis? Is it related to your entire organization or industry? Is it related to a specific project or initiative? Is it related to a specific activity or process?
• The situation. What is the current state or context of your business analysis? Is it stable or dynamic? Is it simple or complex? Is it certain or uncertain?

Depending on these factors, you may choose one type of business analysis over another, or you may combine different types of business analysis to achieve your desired outcome.

For example:

• If you want to define your long-term vision or direction for your entire organization or industry in a dynamic and uncertain environment, you may choose strategic business analysis.
• If you want to solve a specific problem or seize an opportunity for a specific project or initiative in a complex and risky environment, you may choose tactical business analysis.
• If you want to improve your daily operations or processes for a specific activity or process in a stable and simple environment, you may choose operational business analysis.
• If you want to achieve a combination of these goals, you may combine different types of business analysis. For instance, you may start with strategic business analysis to define your vision and direction, then move to tactical business analysis to design and implement your solution, and then finish with operational business analysis to monitor and improve your solution.

Summary

In this lesson, you learned about:

• The different types of business analysis based on the focus and scope of the analysis
• The advantages and disadvantages of each type of business analysis
• The appropriate type of business analysis for a given situation or scenario

In the next lesson, you will learn about the core concepts and terminology of business analysis.