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Business Analysis is all about ROI

by Peter Tsisinevich
in on May 21, 2015

To some readers it may seem counter-intuitive that adding a business analyst on an IT project development team will save money. But the numbers back up this claim. Business analysis pays for itself by helping sponsoring organization and the development team to focus on business value & appropriate goals throughout the project.

The graph below (familiar to many of you) shows the cost of changing requirements at various phases of a software development project.

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Clearly, the cost of changing or adding requirements is lowest when done in the earliest project phase – analysis. If you do not begin a project with good business analysis, it will come back to haunt you at greater and greater expense down the line. The toll of poor or no BA work is very high:

  • 71% of failed software projects can be traced to poor requirements – CIO Magazine, 2006
  • 40% of effort in an average software project is spent fixing errors, and requirement defects account for 56% of that re-work – Butler Group, 2005
  • In 2010, the International Institute of Business Analysis estimated that poor requirements account for annual global losses of $250 billion in software development projects

According to the U.S. Bureau of Economic Analysis, $194.4 billion was spent on software development in 2008. If you apply the same formula – 40% of that spending goes to rework, and 56% of this 40% is due to defects in requirements – you get about $44 billion spent on fixing requirements errors. So nearly a quarter of all software development spending in the U.S. is done on rework associated with incomplete or incorrect requirements! Poor requirements, questionable strategic alignment and inadequate focus on the business can all be addressed with better business analysis.

How business analysis pays off

When done right, business analysis can substantially increase the ROI on a software development project in two major ways.

Increased value of the solution

The graphic below shows how proficient analysis contributes to the value of a solution and project success.

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Business analysts are skilled at:

  • Discovering business needs and requirements, hidden behind expressed desires, that contribute directly to the value of the solution
  • Keeping the development team and stakeholders focused on implementing requirements with the most potential benefit
  • Eliciting the actual problems the business is trying to solve to eliminate requirements with minimal value or purpose

Reduced implementation costs

The following graphic illustrates how business analysis outcomes can significantly reduce development costs.

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Business analysts are trained to:

      1. Reduce rework by:
        • Clarifying and focusing on the right requirements
        • Eliminating unnecessary changes
        • Tailoring and aligning solutions to business needs
      2. Create a shared vision by:
        • Painting understandable pictures of the current and future states
        • Building consensus among stakeholders on the problems and solutions
        • Drawing the roadmap for getting from the current to the future state
      3. Prevent late requirement changes by:
        • Facilitating logical, orderly decision-making
        • Tracking and communicating unresolved issues
        • Thoroughly documenting discussions and meeting results
      4. Discover more cost-effective solutions by:
        • Engaging the right people at the right time in the process
        • Facilitating brainstorming sessions
        • Enabling the free exchange of information

The importance of good business analysis to a software development project can hardly be overstated. When thinking about return on your investments, you should consider having business analysis before, during & after the life cycle of the project.

Peter Tsisinevich

Peter Tsisinevich

Head of User Experience Design

Petr established the BA Department at Coherent and current heads the company's UX/UI department. He has been actively involved in the development of Coherent's design methodology. He loves new challenges and sees opportunities everywhere. He is energized by involving and engaging people in the process of achieving their goals, helping them to get better at what they do, discover new potentials.

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