Buying - The Business Analysis Way

Many professionals have a notion that business analysis is something that is only applicable
in information technology industry. To some extent their understanding is justifiable as we all
know that business analyst positions were first created in IT industry. But subsequently, other
industries understood the contribution of business analysis and started using those skills and
techniques. Today, business analysis is being leveraged by corporates in almost all verticals,
wherever or whenever they encounter on major decisions or embark on large projects.

In this article, I would like to introduce you to one such area where business analysis (BA) is
tremendously helpful and have potential to save millions of dollars i.e. buying decisions in
corporates. Let us first look into a typical purchasing process that happens in a company and
then review the "BA way of Buying".

Typical Purchasing Process:

1. The user department identifies a need for software, hardware, machinery or in general
assets.
2. The user department either gets the budget allocation from the finance department or
already have the budget.
3. The user department identifies the vendor based on the companys approved list of
vendors or by calling tenders.
4. Once the vendor is identified, the user department places a purchase request with the
purchase department and subsequently a purchase order is issued to the vendor to
supply, install and commission the asset.
Purchasing Process using Business Analysis:
1. As soon as the user department identifies the need for an asset, this will be made as a
business analysis project and will be handed over to a business analyst (BA).
2. The role of a BA in this project will include

Working with the stakeholders (users plus others affected by this new asset) to
define the need as business and stakeholder requirements. At times, user
departments think only their requirements and not the other departments. An
asset acquired with these partial requirements can never be put to best use.
Finding out what capability will be added to the organization by getting this asset
and its alignment with the goals and objectives of the organization in short term
and long term. A construction company is planning to buy about USD 25 MM
worth of machineries which will last for the next 15 years. In this case, they have
to think about their required capabilities that are needed for the next 15 years
before making a decision.
Check whether the capability under discussion is already available anywhere
within the organization, so that the unused capacity can be used without buying a
new one.

Ensure whether the excess capacity requested is certainly not available in your
organization. In one of our project for a medical equipment company, we advised
them not to buy a new machine costing USD 500,000 as we found that the
required capacity is available in the existing setup itself.

Develop use cases detailing how the proposed system will be used to perform the
required tasks to fulfill the need of the organization.

Design acceptance and evaluation criteria to screen and rank the vendors
respectively.

Prepare the business case to present the argument towards why such an asset is
required or not required for the organization to enable the management to make a
decision.

3. Once the user department and the management is convinced with the business case
then the purchase department will take care of the rest.
Though the BA way of buying involves elaborate work before the buying decision is made,
the time spent is worth rather than buying an asset,

what you already have.

that is not meeting your requirements.

which is incompatible to your goals and objectives.

from a wrong vendor.

that is meeting only part of the stakeholder requirements.

When do I need to use this approach?

The asset in question is costing more than USD 2,000.

The asset adds an important capability to your organization.

A critical asset which will be used by several functions within your organization.

Anything that deals with security, safety, risk, business sustainability, privacy etc.

If your proposed asset qualifies under any of the above criteria, please use the BA Way of
Buying.
About Author
Mr. Venkadesh Narayanan is the Principal Consultant at Fhyzics Business Consultants Private
Limited. He is a Mechanical Engineer and an MBA with over 20 years of experience in
Consulting, Business Analysis and Process Improvement. Mr. Narayanan is a former member of
Indian Civil Services [IRAS 2000 Batch] and served at Indian Railways, Larsen & Toubro
ECC, Siemens (USA), Euro-Pro LLC (USA) and Latex International (USA) prior to joining
Fhyzics. LinkedIn Profile: http://in.linkedin.com/in/venkadesh
He is also a member of several professional bodies and holds the below certifications:
Certified Business Analysis ProfessionalTM (CBAP), IIBA, Canada

Certified PMI - Professional in Business AnalysisSM (PMI-PBA), USA

Certified Professional in Requirements Engineering (CPRE-FL), IREB, Germany
Certified Business Process Professional, ABPMP, USA
Certified in Lean from Society of Manufacturing Engineers, USA
Certified in Six Sigma from Motorola University, USA
About Fhyzics:
Fhyzics is a leader in providing business analysis services and business analysis training. Fhyzics
helps organizations to establish Business Analysis Centre of Excellence (BACoE) and to build
business analysis capability. We are an Endorsed Education ProviderTM of International Institute
of Business AnalysisTM (IIBA), Canada and Registered Education Provider of International
Requirements Engineering Board (IREB), Germany.