Business problem and opportunity analysis are essential techniques in the world of business. They aid in identifying issues within a business, understanding the cause of the problems, and pinpointing potential opportunities for growth and improvement. These techniques are significant in the PMI Professional in Business Analysis (PMI-PBA)® exam, where a business problem or opportunity needs to be defined systematically.
1. Defining the Business Problem/Opportunity
Every business problem or opportunity starts with a clear definition. The PMI-PBA® exam requires a specific approach to this definition. Rather than being vague or broad, it should be concise, specific, and measurable. A well-defined problem should indicate the area of the business that is affected and the impact it has on business performance.
For instance, a business operating in the food industry could have a problem like: “The manual processing of orders in our restaurant results in an average of 15% order errors and a 25% customer dissatisfaction rate.”
2. Problem/Opportunity Analysis Techniques
There are several techniques for problem and opportunity analysis. Here are a few key examples:
- SWOT Analysis: This technique involves identifying Strengths, Weaknesses, Opportunities, and Threats within a business. It helps in understanding the internal and external factors affecting a business.
- Root Cause Analysis: This technique is about identifying the primary cause of a problem. It helps understand the underlying issues that contribute to the bigger problem.
- Gap Analysis: This technique involves comparing the current business performance to its potential or desired performance. The difference identified is the ‘gap’ that needs to be addressed.
3. Developing Solution Scope Statement
The solution scope statement provides an understanding of what is included and excluded from the proposed solution. It offers an inclusive view of the objectives, key features, functionalities, interfaces, and boundaries of the solutions.
An example of a solution scope for our restaurant problem could be: “The implementation of a digital order processing system that includes features for order entry, processing and delivery management, integrating with the existing CRM needs to be developed. It should be able to handle 500 orders simultaneously. The current manual order system will be phased out, and the digital system does not include inventory management.”
4. Creating a Business Case
A business case provides justification for undertaking a project or program. It contains a detailed analysis of the business problem, proposed solution, expected benefits, risks, resource requirements, costs, and return on investment.
In the case of our restaurant problem, a business case might include details like the cost of the digital ordering system, the expected reduction in order errors, improvement in customer satisfaction, and potentially increased sales. It might also discuss how the solution aligns with the business’s strategic goals of optimizing operations and providing superior service.
Whether you’re studying for the PMI-PBA® exam or looking to hone your business analysis skills, understanding how to define a business problem and analyze opportunities can increase your value to your organization and boost your career. Always remember, a thorough definition of problems/opportunities, effective use of analysis techniques, and careful development of solution scope and business case are key to success in business endeavors.
Note: PMI Professional in Business Analysis and PMI-PBA are registered marks of the Project Management Institute, Inc.
Practice Test
True or False: Problem and opportunity analysis techniques are not used in developing a solution scope statement.
- True
- False
Answer: False
Explanation: Problem and opportunity analysis techniques are crucial in defining and reviewing a business problem or opportunity. They are essential in developing a solution scope statement.
Single Select: Which of the following is NOT a common problem and opportunity analysis technique?
- A. SWOT Analysis
- B. Cause and Effect Analysis
- C. PESTEL Analysis
- D. Agile Methodology
Answer: D. Agile Methodology
Explanation: While agile methodology is a widely used technique in project management and software development, it is not necessarily a problem and opportunity analysis technique.
True or False: A solution scope statement is used to define what is inside, and what is outside, the scope of a solution.
- True
- False
Answer: True
Explanation: A solution scope statement is a document that outlines the project’s deliverables and the work required to complete these deliverables.
Multiple Select: Which factors should be considered during the problem and opportunity analysis phase?
- A. Business environment
- B. Project requirements
- C. Result of stakeholders’ meeting
- D. Risk factors
Answer: All of the above
Explanation: All these factors are crucial for the problem and opportunity analysis phase in order to provide a comprehensive and achievable solution scope statement.
True or False: Creating a business case is not necessary when defining a business problem.
- True
- False
Answer: False
Explanation: A business case provides a justification for a proposed business change or plan, and typically outlines the allocation of capital and resources required to implement the proposed business case.
Single Select: What is the main purpose of a business case?
- A. To identify a business problem or opportunity
- B. To provide a solution to a business problem
- C. To justify a business change
- D. To list down the business requirements
Answer: C. To justify a business change
Explanation: The main purpose of a business case is to justify a proposed business change, typically by outlining the background, presenting the solution, and estimating the cost and benefits.
True or False: A business case is always developed before defining a business problem or opportunity.
- True
- False
Answer: False
Explanation: A business case is generally developed after the business problem or opportunity has been identified and a potential solution has been proposed.
Single Select: What role does a PMI Professional in Business Analysis (PMI-PBA) play?
- A. Define or review business problems
- B. Provide solutions for business opportunities
- C. Develop a solution scope statement
- D. All of the above
Answer: D. All of the above
Explanation: A PMI-PBA can define or review business problems, provide solutions to business opportunities and develop a solution scope statement.
Multiple Select: The PMI-PBA plays a key role in:
- A. Developing potential solutions
- B. Defining project scope
- C. Identifying project risks
- D. All of the above
Answer: D. All of the above
Explanation: The PMI-PBA usually plays a key role in many areas including developing potential solutions, defining project scope, and identifying project risks.
True or False: The PMI-PBA only works until the problem is defined and does not participate in solution development.
- True
- False
Answer: False
Explanation: The PMI-PBA participates in the entire project cycle; from defining, analyzing, and documenting the project requirements to providing a roadmap to the solution.
Interview Questions
1. What is the purpose of conducting a problem and opportunity analysis in business analysis?
The purpose of conducting a problem and opportunity analysis in business analysis is to identify and define a business problem or opportunity in order to develop a solution scope statement and/or provide input to create a business case.
2. What are the key steps involved in problem and opportunity analysis?
The key steps involved in problem and opportunity analysis include identifying the problem or opportunity, conducting research and analysis, defining the scope of the problem or opportunity, and developing a solution scope statement.
3. How can a business analyst use problem and opportunity analysis techniques to develop a solution scope statement?
A business analyst can use problem and opportunity analysis techniques to develop a solution scope statement by clearly defining the problem or opportunity, identifying the stakeholders involved, and outlining the objectives and goals of the solution.
4. What are some common problem and opportunity analysis techniques used in business analysis?
Some common problem and opportunity analysis techniques used in business analysis include SWOT analysis, root cause analysis, brainstorming sessions, and stakeholder interviews.
5. Why is it important to define a business problem or opportunity before creating a solution scope statement?
It is important to define a business problem or opportunity before creating a solution scope statement because it helps ensure that the solution is addressing the root cause of the problem and meeting the needs of the stakeholders involved.
6. How can a business analyst gather input from stakeholders during problem and opportunity analysis?
A business analyst can gather input from stakeholders during problem and opportunity analysis by conducting stakeholder interviews, surveys, focus groups, and workshops.
7. What role does research and analysis play in problem and opportunity analysis?
Research and analysis play a crucial role in problem and opportunity analysis by providing the necessary data and information to understand the problem or opportunity, its causes, and potential solutions.
8. What are the benefits of conducting a thorough problem and opportunity analysis in business analysis?
Some of the benefits of conducting a thorough problem and opportunity analysis in business analysis include identifying potential risks and challenges, ensuring that the solution aligns with the business goals, and gaining stakeholder buy-in.
9. How can a business analyst prioritize problems and opportunities identified during analysis?
A business analyst can prioritize problems and opportunities identified during analysis by considering factors such as impact on the business, urgency, and feasibility of potential solutions.
10. How can problem and opportunity analysis techniques help in creating a business case?
Problem and opportunity analysis techniques can help in creating a business case by providing the necessary data and information to support the need for the proposed solution, as well as outlining the potential benefits and risks associated with the solution.
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