The 5 Levels of Business Analysis Every Analyst Must Know
As a business analyst, it’s essential to understand the five levels of analysis to conduct an accurate and comprehensive study of your organization’s operations. Careful attention to these levels will enhance your abilities to identify and analyze your organization’s strengths, weaknesses, and opportunities for improvement. With that said, in this article, we’ll discuss the five levels of business analysis that every analyst must know.
Level 1: Strategy Analysis
Understanding the strategy of an organization is essential when it comes to business analysis. Essentially, this level entails analyzing the mission, vision, and goals of an organization. It includes discovering the objectives and priorities of a company, outlining its operations model, and pinpointing ways to achieve its objectives.
For instance, suppose a company aims to increase its customer base by 20% within the next calendar year. In that case, the analyst’s job is to analyze the current processes and ways the organization is targeting potential clients and determine what changes or improvements are needed to meet the company’s goal effectively.
Level 2: Process Analysis
The process analysis level comes after the strategy analysis, focusing on the company’s processes or ways of conducting business. It mainly involves evaluating tasks and procedures at all levels of operation from beginning to end. A thorough process analysis will include these steps:
1. Identify all the processes involved in the project or scope of analysis.
2. Determine existing process inefficiencies or bottlenecks.
3. Suggest changes to improve the efficiencies of the processes.
4. Approved changes implementation and monitor results.
By doing a process analysis, an analyst will be able to identify areas that may need improvement in terms of efficiency or customer value. For example, suppose a company experiences a high number of customer complaints regarding delivery time-related issues. In that case, a process analysis might identify the need to improve the supply chain efficiency or to invest in a better inventory management system.
Level 3: Organizational Analysis
Organizational analysis involves an in-depth evaluation and assessment of the company’s organizational structure and design. Typically, this level of analysis involves identifying the organizational structure, hierarchical relationships, roles and responsibilities, and the communication processes within the organization.
The organizational analysis may identify system inefficiencies in operations or miscommunication between departments. Also, it can highlight workloads or issues related to the flow of information between employees and departments. A better understanding of the organizational design helps to improve operations, communication, and structure.
Level 4: IT or Technology Analysis
Information technology (IT) or technology analysis centers on evaluating the technology systems used by the organization and their efficiency. In this level of analysis, the business analyst examines the business processes, data storage and sharing systems, software systems, and digital devices utilized in the organization.
When performing a technology analysis, the analyst identifies the strengths and weaknesses of the current technology systems, makes recommendations on acquiring new technologies or upgrading existing systems to increase efficiencies or security levels.
Level 5: Financial Analysis
In this level of analysis, the analyst examines the financial aspects of the company, including assets, liabilities, revenues, expenses, cash flow, and other financial metrics. The financial analysis is aimed at identifying the financial health of the organization, identifying trends, and projecting future financial performance.
Through this analysis, an analyst can determine areas of the organization that may require prioritization of funding or financial support. It also allows them to evaluate the financial feasibility of implementing particular changes.
Conclusion
Business analysis can be a complex process, but it’s an essential aspect of managing organizations to achieve their goals. Understanding the five levels of business analysis discussed above is integral in developing an effective business strategy, enhanced communication, improved organizational efficiencies, and identifying areas that require further financial support and investment. With this in mind, a business analyst can help companies stay unyielding and prosper in today’s market.
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