Innovations change the way how we interact with the world. But to do so, they should be profitable for businesses that introduce them to the market. And this is how business analysis refers to the new product development process. Its role is crucial for all innovations. Exactly at this stage, businesses realize whether the market is ready for their new idea, and therefore whether customers will get this new experience in their life.
NPD and its stages
At first, let’s briefly define what New Product Development or simply NPD is. This concept covers the entire way of a new product or service from an idea and to the marketplace. A new product may refer to both—a product that is new to a particular business and a product that is a true innovation and can change the market.
The NPD process normally consists of the following stages:
- Generating, screening, and testing ideas for a new product;
- Conducting business analysis for the chosen idea;
- Developing, testing, and launching the product to the market.
In this piece, we’ll closely consider the business analysis stage since business profit is a decisive factor for any big idea.
BA purpose and questions
Once you’ve selected the idea for your product and tested it on your prospective target audience, it’s time to carry out in-depth business analysis. Its purpose is to define the viability of your future product.
Will your new product find its audience and survive the competition? Maybe. Will it generate a sufficient amount of profit to support the entire business? Nobody knows.
Business analysis allows you to predict the success or failure of your product based on the collected data, not guesses.
The BA stage helps the company realize the following:
- Will the product be able to generate profit?
- How much will the product cost and what are its production costs?
- Is there a demand for your product? Is this demand changing or regular? Which market is interested in your product most of all?
- What about competitors? Does your product have any? Are they large or small, old or new?
- What customer needs do your product satisfy and how large is its prospective market? How are sales for similar products changing in time? Try to predict sales of your product through statistical or machine learning models.
- Does your product require significant investments in promotion and advertising?
- How big will your profit be? Will it be sufficient to cover the new product development and launching expenses?
This scope of questions helps you consider the product from the business point of view and understand its possible profits and pitfalls in the context of the market. And it’s after the BA stage, you will finally accept or reject the idea of a new product or service.
Business analysis process
Briefly, the BA process consists of the following stages:
- The starting point for any project is a thorough exploration of its background information. This includes new technologies and trends, as well as some external factors (political situation, laws, culture, etc.)
- Then you should identify all the people interested in the project—its stakeholders. This includes not only future customers, but also owners, competitors, partners, and even the developer team itself.
- The next step is to identify the business objectives of the project. This will allow you to formulate the strategy on satisfying your business needs.
- Next, the time for brainstorming comes! You should find as many ways to achieve your business objectives as possible. Then thoroughly consider each finding, its benefits and risks, and select the solutions that suit you best.
- By this moment, you have collected lots of requirements and limitations. It’s time to set main development goals (a list of items to develop and their integrations).
- The next step is to prepare the delivery plan. Remember to include some extra time for the unexpected.
- And finally, you should define requirements for developers. These include functional (prototypes, wireframes, storyboards, use cases etc) and non-functional (performance, security, and scalability) requirements. The entire product development will be based on these specifications.
Business analysis implementation
Above we have discussed the BA stage in product development, its purpose, and process. The understanding of the role of BA is deeply rooted in the business environment. However, the ways of BA implementation varies significantly. In general, it depends on the company size and the chosen approach to product development.
The main difference lies between the planning environment and the Agile approach. In the planning environment, there are qualified BA specialists in the team. They are responsible for business needs and requirements collection, analysis and communication. In the companies that use the Agile approach to NPD, the entire developer’s team is involved in the BA process on a regular basis.
However, the size of a company also matters. Even if businesses choose Agile, their needs differ:
- In corporations, it can be impossible to stick to a pure Agile method (even if it’s used in particular teams). There is always some long-term planning, and therefore certified business analysts are on board.
- In small and medium enterprises and businesses using the Agile approach, there still can be a BA professional to support the developer team.
- In startups, founders usually take responsibility for business analysis on themselves.
In all the mentioned situations, it may have sense to outsource business analysis. Since an unbiased approach to your business, its losses and profits can save you lots of money.
The bottom line
New product development is always risky whether it is based on technological innovations or simply means a new domain for a particular company. Business analysis helps minimize these risks and choose the most suitable ways to develop a particular product and introduce it to the market. Understanding the importance of this stage, choose your BA specialists thoroughly.