How a Business Analyst Cuts Software Development Costs

Maria Boyarko

Maria Boyarko

Head of the BA Department at Andersen

Business Analysis
Sep 22, 2021
7 minutes to read
  1. How a Business Analyst affects the project profitability
  2. How a Business Analyst reduces the total cost of a project
  3. Conclusion

According to the consulting company McKinsey, 17% of IT projects are such failures that they lead to the companies’ collapses, 7% are finished behind schedule, and 45% exceed their budgets. To avoid all this, managers include Business Analysts in their development teams. Let's consider facts and figures showing how a Business Analyst can help in reducing the total cost of a project at all stages of a software development life cycle.

How a Business Analyst affects the project profitability

Engaging additional experts in projects means financial costs for companies. But this is not true for the participation of a Business Analyst in the development of a software product. This specialist’s work is aimed at ensuring that the costs invested in the development pay off and bring additional benefits:

  • an increase in the number of users,
  • the popularity of the product in the market,
  • the growth of the company’s income.

The result of the impact of a Business Analyst's work on the project profitability can be calculated as a return on investment (ROI). To explain simply, an ROI is the difference between the value of a solution and its cost.

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In a typical project, good business analysis affects both sides of the above ROI equation. A Business Analyst not only increases the value achieved by solving the business problem but also reduces the project implementation cost.

Most projects have a certain completion date, budget, and scope of work. This trio of time, budget, and scope is often called the project management triangle because when one element is changed, the other two change as well. alt text

Although all three elements are equally important to a project, there is usually one of them, depending on the priorities, which has the greatest impact on the others. In this article, we are interested in how a Business Analyst reduces the cost of a solution - namely the cost of developing, building, and deploying a product.

How a Business Analyst reduces the total cost of a project

Let's consider the five ways a Business Analyst can reduce product development costs.

1. Performing high-quality requirements elicitation

Poor-quality and constantly changing requirements and inaccurate specifications complicate the project. Much of its success depends on well-written documentation.

According to data by Forrester, poorly defined business goals and product requirements result in 66% of projects failing and $30 billion in annual costs for US firms. If the requirements are defined poorly, this can undermine the competitiveness of an enterprise. Organizations that don't have clear documentation spend way more time, money, and resources than companies with well-defined requirements.

Business Analysts have the professional skills of extracting and documenting requirements that are validated with stakeholders. These activities are essential to properly elaborate the future solution and meet the needs of end-users in the best way.

In his book called Software Requirements, K. Wiegers named the following causes of failures at the stage of working with requirements:

  • insufficient user involvement,
  • skipped user classes,
  • escalation of user requirements,
  • ambiguous requirements,
  • gold plating
  • heedless planning,
  • minimal specifications.

A proper business analysis mitigates these risks by helping developers create a product that users need and significantly improves project success rates. Alt text

2. Reducing redevelopments

According to statistics, the cost of rebuilding a project can reach up to 40% of its original cost. In 70% of cases, this is associated with poorly written requirements. If Business Analysts formulate the requirements correctly, there will be fewer unnecessary alterations to the project.

Ensuring that requirements are carefully collected and documented and that all project stakeholders, both the customer and the development sides, participate in these processes from the earliest stage will result in fewer redevelopments.

The golden rule of testing is that the cost of fixing bugs at the early development stage is several times lower than at later stages. Experts from Carnegie Mellon University estimate the cost of rebuilding programs at 25-40% of the total project costs. A Business Analyst helps to avoid losses at the early stage of collecting and analyzing requirements - this specialist clarifies the software-related functionality with stakeholders and checks the documents for correctness.

The diagram of the cost of reworking a solution at different stages of development shows that fixing errors at the stage of collecting and documenting requirements is the cheapest.

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This data is confirmed by the results of international studies. According to Business Analysis Benchmark research, companies that implement effective processes of working with requirements enjoy the following benefits:

  • increase the likelihood of delivering their projects on time by 87%,
  • reduce the likelihood of exceeding their budgets by 75%,
  • increase the likelihood of delivering the systems that their business needs (hitting the business goals and user demands) by 75%.

3. Revealing redundant functionality.

Industry research shows that up to 40% of developed functionality is never implemented or used. Such wastefulness leads to higher development and maintenance costs o