The Link Between Business Analysis & Needs Analysis

Needs Analysis can help a company determine the needs of its customers, which in turn can help it improve its efficiency and performance. A common misconception is that Needs Analysis is carried out only in the initial stages of the business but in reality, it is a continuous process. Implementing new strategies or policies; training or hiring employees; hardware, software or other equipment purchase, etc. all require a proper implementation of needs analysis. If your business deals with clients who have varying or conflicting needs, then needs analysis is particularly important because if you do not keep account of what these clients ask for, your business will eventually suffer.

To gain better clarity on the concept of needs analysis, let’s look at an example. Suppose a huge number of orders are being cancelled or returned to online shopping giant, Amazon. Worried about losses, Amazon could then investigate the real cause of the high number of orders being returned. Late delivery, damaged products, delivered products not as described, absence of guarantee/warrantee cards, etc. could be possible causes. Finding the real ‘culprit’ can only be done by asking the right questions to customers. Different customers might highlight different issues with their purchases but the majority will often point to one or more specific reasons which the company has to look into. We have seen that the identification and rectification of the problem can only be done by analyzing the needs or problems faced by customers.

Needs Analysis is similar to business analysis especially in the sense that it is used to determine the needs (requirements) of the business, and is centred on understanding the issues and opportunities faced by the business with the objective of finding resolutions, defining approaches to resolving issues and exploiting opportunities. Strategy Analysis is one of the Knowledge Areas described in BABOK Guide V3, and it defines what needs to be done in order to collaborate with stakeholders to identify a need that is of tactical importance (the business need). In summary, needs analysis is about:

  • Determining what the needs of customers are
  • Understanding the changes required by the business in order to meet those needs and create greater value for stakeholders.

The process of needs analysis also describes what business analysts do during requirements elicitation as it involves asking questions in order to learn about the business and the issues they face. The technique can be used across a wide range of domains ranging from education to engineering, whether or not software development is involved.

Needs analysis isolates what should be done in order to arrive at a desired future state and according to McKillip in 1998, involves the following steps: 

  1. Identify the audience and purpose of the analysis. For example, a business may have concerns about why they are losing sales. An investigation can be launched to understand what needs customers have that are not being met.
  2. Describe the stakeholders (this should include customers and those who contribute to the delivery of the service/product) and the service environment. Needs analysis should also be done keeping in mind that different target groups will have different needs
  3. Conduct needs identification – This is where descriptions of the problems and their solutions are generated. Each solution should be evaluated based on its perceived outcome and estimated costs should be outlined.
  4. Communicate the results of the analysis

These needs are basically of two kinds, one being external, as discussed in the above example; the other - ‘internal’ needs, also require attention. Jotting down the internal needs is more prominent at the initial or the starting stages of the business. Groups of people sit down and discuss the raw materials needed, workforce, logistics, land/factories transportation, utilities, etc. required to carry out the business plan. To move forward, qualified personnel are identified to take part in brainstorming sessions. Relevant questions are put forward and those with the expertise recommend possible solutions. In this way, the different aspects of the business that need to be defined or addressed come to light and the company prepares itself beforehand. 

Needs Analysis is a valuable technique, which aims at identifying the requirements of a business. Once the needs and goals of the business are established, the results of the analysis are further used to find solutions to the problems that occur.

There’s a clear distinction between needs, wants and demands and the analyst should always keep this distinction in mind when conducting needs analysis. Approaches to solving problems or exploiting opportunities should also be kept separate from the outcomes we expect to achieve. The outcome of the needs analysis exercise should be used as a basis of taking action for positive improvements in the business.


McKillip, J. (1987). Need Analysis: Tools for the Human Service and Education. Applied Social Research Methods Series, Volume 10. Sage Publications: Thousand Oaks, CA.

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