How Much Money Have Business Analysts Saved You This Year?

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Dec 14, 2020
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Business Analysts save their companies money, in big and small ways, every day. Is your organization aware of the savings your Business Analysts (BAs) have provided? Few BAs brag about their successes, most are toiling away inside departments and projects, without a direct line of communications to their executives. But executives would be wise to search out these individuals and their managers to quantify these successes and use them to upskill others within their organizations.

Drawing on our experience with our consulting clients, large and small, we will share some specific examples of the business analysis value proposition. Thinking as a Business Analyst is something everyone in your organization can learn; the more people you have thinking like a BA, the more success your organization will achieve. The operating efficiencies listed include typical financial savings experienced regularly by our clients. How much has your Business Analysis practice saved you this year? Take the time to find out. It may encourage you to develop and hire more people who serve this critical role in your organization.

These examples are brief descriptions of typical situations and do not describe or breach confidentiality of any particular company. 

Example 1: Acquisition of software applications.

Most organizations buy or license software applications to provide automation support for business processes which are well understood, follow industry standards, and are not part of your core business. Examples include accounting, payroll, billing, and office automation functions like word processing, spreadsheets, and email. Buying or licensing these applications is much more cost effective than building and maintaining software internally. But not all applications will meet all needs or meet them well. We frequently work with clients who recognize they need an application, hear about one and set up a demo with a vendor. Unfortunately, they often do not analyze their unique needs before selecting a package. Many times, projects to implement vendor solutions are initiated without including a business analyst. Choosing the wrong package results in thousands, if not millions, of dollars of lost productivity for IT and business resources trying to implement a solution that doesn’t meet the business need.

An experienced business analyst will first understand the current business processes and ask business experts for a list of needs rather than starting with slick, marketing descriptions of features available in a particular package. Choosing the right package and the right set of features, saves your organization thousands of dollars up front, and more importantly, ongoing support costs for the life of the application.

Typical cost: $11,000 (2 months (420 hours) of business analysis work at annual salary $100k)

Minimum savings: $100,000-200,000 (avoid costly conversions, loss of data, and manual workarounds)

Payback: $89,000-189,000 in the first year for one application!

 

Example 2: Customer Contracts

In organizations which build products or services for their customers, setting the right price for the product or service and creating a fair contract determines the profit margin of each transaction. If a customers’ needs are not well understood when the contract is signed, companies often end up spending significantly more money than planned to satisfy the customer. This unexpected cost cuts into profits and may even turn a seemingly lucrative deal into a net loss. Business development and sales professionals are anxious to close the deal and often underestimate unique customer needs which might push costs higher than expected.

Having an experienced business analyst involved in contract details, which are customer requirements, improves the understanding of customer expectations and allows for more accurate contract negotiations. Almost every conversation between a business analyst and a customer representative reveals a detailed requirement which will clarify a specific customer request. Knowing as many of these details as possible, before, the contract is signed increases the profit potential. Sales professionals may be hesitant to allow these detailed conversations before the deal is done, fearing too much information might jeopardize the agreement. Rather, most of your customers will feel better about your company and your agreement if an analyst takes the time to really understand their needs. Rushing to get a contract signed, often leaves the impression you are more interested in getting the deal than in fulfilling the needs. In addition, having your business development professionals listen to and watch a business analyst ask detailed questions and listen carefully to customer needs, will make them better salespeople on future contracts.

Involving a business analyst in the vendor selection process will set the vendor up for success to provide the right solution and price the contract according to what is needed. It is also important for the business analyst to help ensure the contract includes the features needed so that the solution includes what the business expects. Salespeople have the best intentions, but without analysis details can be missed.

Typical cost: $5000 (2 weeks (80 hours) of business analysis work at an annual salary $100K)

Typical number of requirements revealed: 4-6 significant requirements missed during sales process

Payback: $35,000-55,000 per requirement (average price $10K per requirement)

 

Example 3: Saying No

An amazing number of requests from external customers and internal business users to an IT department are not good ideas! But most organizations are hesitant to say no to their customers and users. Ask any of your employees if they have ever worked on a project which didn’t make good business sense, and they will all be able to tell you too many stories. Business analysts are focused on customer service and helping find better ways for processes to be completed. They love to recommend changes and identify new efficiencies. However, they are also very good at identifying bad ideas. The more experienced a BA, the more quickly they can intuitively identify an idea or request which would not be worth completing. And the great skill of business analysis is the careful, clear explanation to the requestor of why the idea should not be pursued. Every project involves hundreds of conversations with hundreds of ideas, requests, and suggestions from users, technical people, managers. Most of these ideas are not feasible or cost justified. BAs routinely assess these suggestions, do research and analysis as necessary, and explain why the idea should not be recommended. Business Analysts have the viewpoint to assess a request in context of the whole organization, not just the requesting department.

Alternately, a bad idea could lead to a great idea if an analyst is given the time to brainstorm and collaborate with stakeholders across the organizations. A no could be a “Yes, there is a problem, and we should talk about how to address this”. This requires elicitation and facilitation skills with a focus on the context of solving a problem. It is impossible to measure the savings you experience from these day-to-day actions but ask your Project Managers to describe the way their business analysts lead polite, fact-based conversations with stakeholders, helping them see how some of their requests don’t make good business sense.

Typical IT request for a change to existing software: $40,000

Number of changes (politely) rejected by business analysts: 4/month

Savings: $160,000/month

 

Example 4: Prioritizing

Everyone has too many things to do and too little time to complete them. Few people in our organizations are focused on one task at a time. We have a culture of overcommitment and expectations that we do more with less rather than doing less and getting more done. And although we know that human beings really cannot multitask, we continue to add more work onto people who are already overwhelmed. Working on too many different things at the same time is inefficient because we are constantly task switching. Organizations fall into this trap all too often. Teams and departments are trying to work on several different projects or initiatives at the same time and each one only gets limited attention, and nothing gets done.

Senior level business analysts are very good at helping people prioritize and focus on the most valuable work. They do this by continually asking about value and choices.

  • What is the value you will receive when we finish Project A?
  • Is that value more important than Project B?
  • Which project has the highest risk?
  • How are these projects dependent on each other?
  • What is the cost benefit to implementing this feature?
  • Will my customer pay this?
  • Will this differentiate us in the market?
  • Is this a nice to have or a need to have?

The International Institute of Business Analysis (IIBA) calls this work Strategy Analysis: analyzing an organization (company, department, or operating unit) to help focus its work on a few key initiatives and get them done. Small business owners do this naturally because they are always focused on cash flow, payback, and building value and stability. Larger companies sometimes lose the intense focus needed to get things done, allowing projects to drag on for several quarters or even years. Successful organizations focus like a laser beam on their core goals and make quantifiable progress towards these goals.

Predictive Planning vs. Adaptive Planning - Deliver Value Early

Typical number of projects in process in one department at one time: 10-20

Typical number of projects assigned to employees at the same time: 10-20

Percentage of projects completed within 2 months of initiation: less than 10%

Early delivery of value when a project is completed within 2 months: $20,000

 

The examples shared come from companies in several different industries and typical savings are conservatively reported. You may find your savings are significantly larger than these. If you start measuring the savings you are receiving for each Business Analyst you employ, you will find they are the biggest bargain in the market today! BA salaries are rising because executives are starting to measure savings and finding that an investment in business analysis always pays off!

Catch the upcoming live webinar Why Building Business Analysis Capability is a Good Investment and get your questions answered by Barbara Carkenord, CBAP.”


Authors: Barbara Carkenord, Carkenord Consulting and Heather Mylan-Mains, BAs Without Borders

Barbara Carkenord, CBAP, is passionate about enabling people and organizations to succeed through analysis. She provides training and consulting to help companies improve their analysis maturity, consistency, and effectiveness. She combines her entrepreneurial and business analysis experience with her love of education to promote the development of the business analysis practice. During her career Barbara co-founded two successful companies and worked in varied industries including manufacturing, financial services, and software development. Barbara has worked as a leader, mentor, consultant, trainer, and instructional designer. She has written numerous books, articles, blogs, and training manuals all aimed at helping professionals enhance their skills including Seven Steps to Mastering Business Analysis. Barbara is on the board of directors for the International Institute of Business Analysis (IIBA®).

Heather Mylan-Mains, CBAP, has a passion for sharing the power of the Business Analyst role and promoting the importance of that role in every business. She is a natural collaborator and engages people at all levels in organizations. Heather has led teams in the financial services, insurance, and higher education industries to success through focusing on the organization strategy and understanding the real problems to be solved. Heather has been fortunate to work through all the processes of business analysis in the SDLC and be able to participate in many roles in projects, including new system development, process improvements, COTS implementations as well as assessing, leading, and coaching other business analysts. There is no part of the RACI matrix she has not been responsible for! Heather is on the board of directors for the International Institute of Business Analysis (IIBA®).

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