Business analysis for decision making

November 2017

People sharing ideasHassan Mohamed, a London-based analyst specialised in financial operations and credit management, explains how business analysis can shape the outcome of any decision making.

Nowadays, we are experiencing a very fast-paced business world and it’s becoming harder than ever to cope with such speed. In order to gain a competitive advantage in today’s market, businesses are advised to build a long-lasting strategy.

As the American Enterprise Institute’s report reveals, 88 per cent of firms appearing on the Fortune 500 list in 1955 were not on it in 2014. A proactive strategy was the pathway for the remaining 12% per cent of firms.

In the business world, it should be agreed that clients are not buying a strategy, but indeed buying a product placed by a strategy. To keep a client buying it is not enough to have a passive strategy, one needs to develop a new niche market and create value; it is vital to have a proactive strategy.

A proactive strategy has a borrowing base shaped by insightful conclusions and delivered by business analysts. If strategists are the visionaries then business analysts are the enablers. Business analysts (BAs) are certified or qualified by experience to apply business analysis practices. Business analysis is an investigation discipline that includes a range of tools, techniques and models to deliver solutions, execute a business change or introduce process improvements.

In 2013, Ernst Young published a research study about ‘The future of decision-making’1. The research revealed that 81 per cent out of 285 global executives across the consumer product industry agreed on the need to drive their decision-making backed by thorough analysis. If, hypothetically, three different companies are discussing one of the following strategies, business analysis will help shape the outcome for the right decision-making:

  1. Introduce a cost-cutting strategy (fast moving consumer goods (FMCG))
  2. Launch a new product (financial services sector)
  3. Identify new trends (IT industry)

In the first case strategists of a FMCG company agreed to better compete in a fast-paced market, therefore, agreed to adapt economies of scale during their production stage. Business analysts (BAs) started analysing the proposal by applying Porter’s Five Forces model, and found that adapting economies of scale would attribute to the company’s main product a higher competitive edge in a price war over other competitors.

Senior BAs found further insights by applying a SWOT (strengths, weaknesses, opportunities and threats) matrix that highlighted that one of the company’s strengths is to provide clients with exclusive products and different flavours, which other competitors fail to produce.

By introducing a cost-cutting policy in the production phase, the organisation will increase profits in the short-term. However, in the long-term this policy will impact the company’s strategy to provide clients with exclusive products, and therefore, a market share decline will probably materialise.

The conclusion presented to the board was not to implement the cost-cutting strategy as gains would only be made in the short-term and would harm the company’s long-term profits. Business analysts recognised that the strategists needed to introduce a cost saving and hence recommended another option: introducing artificial intelligence (AI) technologies in the packaging line. Such a proposal might be considered as an extra cost in the present, but as an investment for the future it would save in overhead costs further down the line. Business analysts provided a data-driven answer; indeed, the AI technology introduction was positively evaluated based on the Net Present Value formula.

In this case, business analysts were to prove the functionality of a strategy seen by the board as an opportunity. Business analysts were able to manage all independencies and found an alternative way to grant the original strategists purpose. The business analysis approach helped executives to deliver a suitable strategy.

In the second case, the board was discussing the launch of a new online payment platform, assuming it to be highly profitable. Business analysts test new hypotheses and not just to confirm the current assumption sponsored by the strategists. The business analysts used the Four Ps model, market analysis and competitor analysis to support their investigation.

According to the business analysts’ findings it was proven right that launching a new product would be profitable enough for the organisation. The experienced BAs at the organisation adapted the 7-S model, developed by McKinsey & Company, to help implement the strategy approved by the board.

And another team of BAs started using Balanced Scorecard to monitor the new product launch strategy and control any potential discrepancies from the original plan. Business analysis was involved in every possible extent in this case, from an initial idea to full execution. Business analysts processed their analysis without any bias; indeed, they are action-oriented in their findings.

The third case might be the most challenging one as the strategists worked in a leading IT company that specialised in CRM software involved with identifying new market trends. In the information era, mobile phones are widely used in the business world, therefore, the strategists were considering implementing a mobile app to satisfy their clients’ needs. Business analysts were told to visit all high-end clients and find out what their expectations would be from a potential implemented mobile app.

The business analysts were facing the biggest dilemma as they had to figure out what the clients would expect from a mobile app and not from a desktop version. A mobile app can’t be as functional as PC-based software, therefore, the BAs needed to include only the necessary functions that clients would use in their mobile devices.

The business analysts gathered all the information, analysed all the requirements, and documented all details that needed to be approved by the board, then passed it over to the IT engineers to build the new mobile app.

While gathering information the BAs identified a new function (big data reports) that was not required by any client, but it could represent an opportunity for the organisation in the near future. Therefore, the BAs recommended that the board implement a function that can run algorithms to generate automatic reports and capture new trends, and thus advising sales managers regarding new repetitive consumer behaviour in a specific region.

The strategists approved their mobile app modelling document and agreed to implement their proposed new function.

In this case business analysts were doing their job and became ‘temporary’ strategists by finding a new customer insight for their company and co-piloted a growth strategy before other competitors could.

This demonstrates that business analysis can be used as a means to crack the code of the future and to develop a strategic growth plan. After all, a strategy is not just about gaining whatever’s left of profits, but to create new ones. To have the latter is necessary to process the right decision-making backed by data quality.

Business analysis can deliver consistently on data quality and help businesses to switch from being the ‘disrupted’ to becoming the ‘disruptors’.

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Image: iStock.com/Georgijevic

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