A Business Analyst Who Is a SME
Can Cost You Millions - per Project!

Assumption: A Business Analyst Must Be a Domain SME to Be Effective

It is a widely held belief that a business analyst must a subject matter expert (SME) in a domain in to be effective in discovering and documenting requirements that domain. It turns out that this assumption is usually false.

An IAG study, Business Analyst Benchmark – 2008 (opens in new window), identifies the following types of business objectives from the least risky to the most risky with the average failure rate for the 2/3 of companies without high BA skills in ( ):

1. Regulatory compliance (27%)
2. Information and access to information (41%)
3. Communications with employees, suppliers or customers (46%)
4. Launch new products (47%)
5. Reduce direct costs (59%)
6. Significantly re-engineering the business processes surrounding application (67%)
7. Reduce transaction and indirect costs (68%)

The rate of failure correlates to the type of the project without regard to whether the BA is a business domain SME or not.

In other words, using a BA who is a SME in a domain on a regulatory compliance project (type 1) would fail an average 27% of the time. However, using the same BA with the same SME knowledge in the same domain would fail an average 59% on a project to reduce direct costs (type 5). Being a SME does not help a business analyst reduce risk for a direct cost reduction project.

Subject Expertise vs.
Professional Requirements Discovery

IAG defines two approaches for BAs to mitigate risk:
May rely on personal subject expertise
Must rely on professional requirements discovery techniques

Personal subject matter expertise can be effective for the first two business objective types, regulatory compliance and data access.

Professional requirements skills expertise should be used to mitigate risk for business the other five objectives, types 3 – 7.

In other words, a business analyst SME can be advantageous for only the two least risky of the seven types of business objectives.

Business Domain Knowledge Can Actually Hurt Projects

When a BA is too familiar with a domain the BA will share the same thought processes and concepts as the rest of the team for better or for worse. However, a BA with expert level skills who is new to the domain is much more likely to ask the “dumb” question that will uncover misaligned assumptions early – when they can be addressed at the lowest cost.

Additionally, expert level BAs are much more likely to enable development of an innovative project that delights stakeholders and helps the company succeed in the marketplace. Their projects result in higher customer satisfaction.

Financial Impact

IAG states that:
• Companies using best requirements practices will estimate a project at $3 million and better than half the time will spend $3 million on that project. Including all failures, scope creep, and mistakes across the entire portfolio of projects, this group will spend, on average, $3.63 million per project.

• Companies using poor requirements practices will estimate a project at $3 million and will be on budget less than 20% of the time. 50% of time, the overrun on the project both in time and budget will be massive. Across the entire portfolio of successes and failures, this group with poor requirements practices will spend, on average, $5.87 million per project.

Companies without high level requirement skills spend $2.24 million more per project than companies with high level requirement skills.

Unfortunately, many companies recruit BAs primarily because of their business domain knowledge and use the same BAs for all projects. Those companies pay a heavy price for that decision.

Recommendation

BAs can rely on subject matter expertise for only projects with the least risky types of business objectives. However, projects seldom have only one business objective.

Rate the relative importance of each relevant objective to determine the overall project risk and determine which skill level the BAs should have. If the optimal expertise is not available in-house, consider getting outside resources.

The rewards for using rightly skilled BAs are high – over $2 million per project. It is an understatement to say that you could reap significant financial benefits by rethinking how your company discovers and documents requirements.

How to Develop Professional Requirements Discovery & Documentation Skills

Building Requirements Consensus™ is designed to help business analysts become more professional in their ability to discover and document requirements. Please follow the link below for an overview.

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