Even the most seasoned Product Managers and Business Analysts don’t know what these are…
Although the digital consulting community (i.e., Product Managers, Product Owners and Business Analysts alike) uses this phrase every day in their professional lives, even the most seasoned practitioners among them are totally confused about the real meaning of the phrase is.
Hey, what the f*** are Business Requirements?
To a learner (and honestly, also to a lot of practitioners), the confusion appears to be seeded by the holy book — the BABOK by the International Institute of Business Analysis’s.
Here’s what BABOK says about Business Requirements:
The Confusion
As you can see, the BABOK defines Business Requirement as statements of goals, objectives and outcomes.
And herein lies the confusion.
Are Business Requirements same as Business Goals and Objectives? If yes, they why have multiple phrases with the same meaning?
Let’s see…
BABOK defines Goals as longer term, qualitative statements. Goals are not specific; they are vague.
Objectives are derived by decomposing goals into SMART statements.
What’s the distinction, then?
The definition of Business Requirement has a part beyond statements of goals, objectives and outcomes. That part is “…that describe why a change has been initiated.”
So, Business Requirement is to be interpreted in the context of why a change has been initiated.
This means that Business Requirements exist in the problem space.
On the other hand, Business Goals & Objectives have nothing to do with the problem space. They are developed and declared by the company’s senior management.
Let’s take an example
Consider an Insurance Company.
Let’s say the board room decides that they wish to see a continuous increase their market share over the next decade.
This is the Business Goal — long term, ongoing, qualitative statement describing the end that the insurance company seeks to achieve.
This goal gets decomposed into SMART Objectives.
Let’s say an objective is: Become the second in the market in terms of new policies sold by 2004.
This meets SMRT criteria. And assuming it is achievable also, this is a SMART objective.
Yes, I’ve intentionally chosen 2004. You’ll see why in just a minute.
When this objective percolates down the hierarchy, their President of their life insurance business is worried because of their high lapse rate: 60% of their life policies lapse in year 1 itself. And, 90% of the policies don’t survive beyond year 5.
This is a pickle for the company.
The company must make changes to address this problem. If not, the business objectives cannot be achieved.
But how?
Enter Business Analysis. Investigate. Seek to understand the WHY.
Root Cause Analysis
The company engages in deep investigation to understand the underlying reasons for high lapse rate of their policies.
They discover many root causes. One of them is the company needs its customers to pay renewal premium in the same branch office where they bought their policy. Customers are not interested to do that. They’d rather let their policy lapse.
I know, this is so last century! This is just an example to understand Bus Req. And notice that the situation is 2004, last century
The company decides that to retain their customers, the company needs to CHANGE. They need to build a capability where their customers can pay their bills remotely.
That is your Business Requirement - *Ability to pay premium remotely*
See…this is completely different from the Business Goal and Objective.
Bottom Line
Business Goals and Objectives are defined by the senior management indepedent of any CHANGE.
Business Requirement exists within the context of a CHANGE
