Business Analyst Profit Center


Kevin Brennan recently posted his presentation from BA World Toronto (hat tip to Ryan). It’s a great presentation, with compelling imagery. Kevin raises an interesting point – are BA’s doomed to obsolescence?

Kevin cites outsourcing and agile as two developments that might make BA’s irrelevant. With outsourcing, your company risks eliminating the need for internal business analysts. With agile processes, the developers bypass those BA-gatekeepers and get customer inputs directly. This eliminates the need for business analysts who aren’t also developers. Neither market force eliminates the need for a business analyst, but both jeopardize the role of the traditional business analyst.

That Isn’t The Awesome Part, Though

OK, what is really gripping is the notion that the problem is that business analysts are perceived as costs – by playing the stereotypical role as translator between the business and IT. I’ve been guilty of using that soundbite to describe the role in the past. I won’t any more.

Kevin suggests that we eliminate the perception of BA’s as costs, and reinforce the idea that BA’s generate value.

Help your stakeholders find solutions that they couldn’t have come up with by themselves.

Cost Centers and Profit Centers

In the engineering world, I remember a former plant manager talking about how the corporation thought about operations and departments. Every department was either a cost-center or a profit-center. Cost centers did stuff that cost money, but did not directly produce revenue. Profit centers did stuff that directly produced revenue.

That manager provided the example that human resources was a cost center – their costs were allocated across the profit centers. This was interesting because of the goals, motivations, and pressures that affected the diffferent departments.

Cost centers were continually being asked to do the same (or more) with less. Cutting costs was always the priority.

Profit centers were occasionally pressured to cut costs, but were more frequently asked to increase revenue and profits.

You can argue that on paper, these are the same things. But corporate management “pressure” is never on paper – its emotional. People who ran cost centers looked for ways to reduce their costs (instead of increasing the value they provided to the profit centers without increasing costs). It was a direct, but unimaginative response to the message “cut costs.” People who managed profit centers took any of a number of approaches, but the succesful ones focused on top line growth strategically, and cost-cutting occasionally. You can’t cut your way to long term growth.


They say great ideas are obvious after you hear them. Thanks Kevin – a really great idea!

5 thoughts on “Business Analyst Profit Center

  1. It’s amazing how naming something almost completely defines it.

    I never agreed with the name “cost center” – it’s just way too negative. Now “profit center” I like very much (shoulda thought of it myself!). Might be a bit of a stretch for some departments, but you never know… just calling them “profit centers” will focus minds the right way.

  2. Thanks Richard, for reading and commenting. I much prefer “profit center” too. I think anyone can apply a profit center style motivation, even if they don’t directly sell stuff.

    HR, for example, can say “we want to reduce the time our employees spend managing their benefits by 30%” The key shift is “save costs for our (internal) customers” – not “save costs within our department.”

    Looks like you’ve got some good stuff going on at your blog too – more reading for me :)

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  4. Yes I agree on that, it is the Business analyst in software development company who suggests things which are really business relevant, I have seen many programmers they can program well but can not think about business, at that time business analyst is the person who add value to their program and because of that stakeholders are benefited.

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