20 – Financial Analysis

Collaborative games or workshops aim at promoting cooperation within your team and provides it with a common goal so that all the members participating in the game can work together.

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Definition

Financial analysis is the evaluation of an investment option. It assesses its expected financial viability, stability, and benefits. It also takes into account the total cost of a change as well as the total costs and benefits of using and supporting a solution.

Financial analysis deals with uncertainty. As a change initiative progresses through its life cycle, the effects of uncertainties are better understood.

Why use financial analysis?

  • Allows executive decision makers to objectively compare very different investments from different perspectives. This is usually done by combining various analysis techniques.
  • Helps stating if assumptions and estimates, as well as financial calculations, may be challenged or approved. These assumptions and estimates are built into the benefits and costs.
  • Pinpoints and analyses factors influencing an investment. This reduces the uncertainty of a change or solution.
  • If the context, business need, or stakeholder require change during a change initiative, it allows the business analyst to objectively re-evaluate the recommended solution.

  • Some costs and benefits are difficult to quantify financially.
  • Because financial analysis is forward looking, there will always be some uncertainty about expected costs and benefits.
  • Positive financial numbers may give a false sense of security

  • How to conduct a financial analysis​

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