An Overview of the Underlying Competency of Business Knowledge


What is business knowledge?

Business knowledge is simply knowing your business—its facets, strengths, weaknesses, competition, challenges, positioning within the market, and readily available solutions to its daily problems.

BABOK[1] defines four key areas of business knowledge that every analyst should know:

  • Business Principles that apply to nearly every company
  • Industry Knowledge that applies specifically to your industry (whether its medical software, auto manufacturing, etc.)
  • Organization Knowledge of what makes your individual company tick
  • Solution Knowledge of what’s feasible and available for the challenges your company faces

We’ll get into each of these more later. But for now, let’s establish . . .

Underlying Competency of Business Knowledge


Why does business knowledge really matter to my work?

Strong business knowledge should inform everything you do. Suppose, for example, that your company’s management is considering launching a new product that they are calling, in development, Acme Widgets Excel Solution because it’s compatible with and primarily works with Microsoft Excel®. Changing the product name in your requirements document and listing the working product name as a risk would be helpful, or your organization may get a nasty letter from a law firm. In this case, general business knowledge may not be part of an analyst’s normal training, but it’s incredibly useful not only to the success of your work, but to your perceived value to the organization.

Opportunities (and potential problems) rooted in business knowledge are prolific for every analyst. Pointing out that your competition is building something that you can improve on is likely to make stakeholders happy. Writing your requirements to comply with the company’s stated goals for the year is likely to make managers happy. The application of business knowledge will save your organization time and money, impress your managers, and help you work well with other departments.

So, what you learn and hear in discovery should be filtered through your business knowledge. What you define in your requirements should also be informed by your business knowledge. As one business analysis writer puts it, “I’ve always been of the opinion that I’d like to know as much as I can about whatever I can because you never know when something you learned may come in handy.”[2] The following four areas are the ones, specifically, according to BABOK, that you’ll want to apply yourself to.

1. Business Principles

Business principles are general corporate methodologies that apply to nearly every organization. Many analysts work in or are at least related to their company’s IT group. And IT is an enormous part of any business. But a lot goes into running your organization’s business besides a client’s needs in software or systems—and to a lesser or greater extent, all of it affects your work. Human resources will want to know that you followed company policy when working late to complete a project. Accounting with look at the bottom line of material you requested to complete a software build. Legal will examine the end result for regulatory compliance. If you leave any of these business principles out of the equation of your work, it has the potential to be harmful. BABOK puts it this way: “Business analysts require an understanding of fundamental business principles and best practices, in order to ensure that they are incorporated into and supported by solutions.”

If you need to brush up on the specifics of any business principle (such as accounting), ask your human resources department for books and web sites that overview current requirements in that area. How do you know when you’ve got this one down? BABOK identifies some measures of effectiveness as understanding common business management practices, relevant regulatory requirements, security issues, auditing issues, and typical organizational structures and job functions.

2. Industry Knowledge

Industry knowledge is understanding what your competition is doing and what your customers are facing. According to BABOK, “Industry knowledge is the understanding of the competitive forces that shape an industry.” Industry knowledge is dynamic. Knowing, as best you can, what your organization’s competition is designing right now is crucial. You don’t want to build specifications for a system you’ll release in six months when your competitor is going to roll one out in three months. You don’t want to recreate something that’s already been done and isn’t successful.

To get more industry knowledge:

  • Read trade journals.
  • Go to trade shows or other industry events, or at least network with those who do. Find out what the buzz is—what people are excited about, concerned about, and what’s coming down the pike.
  • Don’t forget to examine what standards your industry may be pushing. If they’re pushing to get a standard size widget, the chances are that clients are having problems with various sizes of widgets and every company is looking for solutions and workarounds to that issue.
  • Although it may be a no-brainer, don’t forget to visit your competitors’ web sites. Check out their marketing, any product manuals they may make publicly available, and their brand positioning. This will help give you a sense of where the industry is and where it’s going.
  • You can get specified industry knowledge related to what you’re working on now by including customers in your discovery process through surveys and focus groups. Why do they prefer your product or service? What do they wish you would change? Why did they choose your product instead of your competition?

How do you know when you’ve got this one down? Some of the key areas of understanding BABOK identifies in this area are knowing who your competitors and partners are, industry trends, common products and services, industry standards and methodologies.

3. Organization Knowledge

In contrast to business principles that apply to nearly all businesses in general, organization knowledge applies specifically to your organization. Organization knowledge means you know how your organization makes money, its stated goals and missions, its organizational structure, how all of those segments inter-relate, who the key-decision makers are and their philosophies, the organization’s strengths and weaknesses in relation to the competition, and so on. It helps to know what your organization’s goals and challenges are, and how your leaders specifically define success. BABOK puts it simply, “Business analysis is significantly assisted by an understanding of the organization for which it is being performed.” BABOK also puts tactfully the fact that you need to understand your organization’s politics, because organization knowledge “requires understanding of the informal lines of communication and authority that usually exist in parallel with the formal ones, and the internal politics that govern or influence decision-making.”

Need more organization knowledge? Ask your human resources department for a handbook or primer on your organization’s design, if you haven’t already gotten one. Regularly read your organization’s intranet and newsletters. And for even better information that is probably written nowhere, befriend some veteran colleagues, stakeholders and subject matter experts, and go to lunch. No one knows an organization like its people.

BABOK lists some competencies of organization knowledge as understanding your organization’s unique terminology, products, and subject matter experts.

4. Solution Knowledge

Does a proposed solution really best fit your organizational and product needs? To know the answer to that, you have to know what other solutions are out there. BABOK notes, “A business analyst who is familiar with the workings of a solution may be able to more easily identify and recommend changes that can be implemented easily while still providing concrete benefits. Familiarity with the range of commercially available solutions or suppliers can assist with the identification of possible alternatives.” A simplified example is an organization that needs a project planning system, and is trying to build one from scratch. Basic solution knowledge would ask if there were reason Microsoft Project® wouldn’t be flexible enough for that need.

To learn more about solutions available to your specific industry, read trade magazines including IT magazines and talk a lot to the technical gurus about what they’re excited about in the IT world. How do you know when you’ve got strong solution knowledge? BABOK defines some areas of competence within solution knowledge as recognizing when a larger change is better than an easier, smaller one and knowing how to reach an end goal with less time and money involved.

The great news about business knowledge is that it’s not that hard to get (compared to certifications and degrees). Just read, build strong relationships within your industry and company, ask questions, and listen well. But remember it’s not to your advantage to poke your head in the sand. An active seeker of business knowledge benefits not only her company but herself.

Author: Morgan Masters, Business Analyst, Modern Analyst Media LLC

Morgan Masters is Business Analyst and Staff Writer at, the premier community and resource portal for business analysts. Business analysis resources such as articles, blogs, templates, forums, books, along with a thriving business analyst community can be found at 


  1. A Guide to the Business Analyst’s Body of Knowledge® (BABOK® Guide), Version 2.0, International Institute of Business Analysis, Toronto, Ontario, Canada, ©2005, 2006, 2008, 2009.
  2. Babcock, Jonathan. “Four Key Knowledge Areas for Business Analysts.” Practical Analyst. Accessed April 14, 2012.



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