Mastering stakeholder analysis is a key skill for business analysts who want to excel in their careers. Explore the essential techniques and best practices for conducting effective stakeholder analysis, and learn how to leverage these insights to deliver exceptional results.
Introduction #
“That’s surprising. We did not expect it. You should have consulted with us before making this change.”
Have you encountered such a statement from stakeholders of your project? It’s great if you did not.
KYS (Know Your Stakeholders) is very crucial for a business analyst and project manager because identifying and engaging the right stakeholders at the right time is the key to success.
A stakeholder is an individual or group associated with the project either directly or indirectly.
“32% of Project failures are due to poor stakeholder management, according to a study by the Project Management Institute (PMI).” (Source: PMI’s Pulse of Profession)
Hence stakeholder analysis and management play a vital role in the success of a project. Stakeholders can make or break projects.
It’s a critical skill for business analysts to perform a thorough analysis of all the associated stakeholders, devise stakeholder engagement strategies, maintain good relationships with stakeholders and continuously monitor the changes in stakeholder roles and responsibilities that may affect the project.
A business analyst collaborates with many different internal and external stakeholders of the project almost every day for various tasks such as requirements elicitation, requirement prioritization, validating solutions and validating implementations. No other member of the project collaborates with stakeholders as frequently as a business analyst.
Due to this extensive collaboration with stakeholders, a business analyst has a great opportunity to understand the stakeholders’ likes/dislikes, ideas, attitudes, power and interests as well as business products and services better than anyone else in the project. A business analyst can tap this opportunity by mastering stakeholder analysis skills and that would certainly be a secret weapon for a business analyst to achieve success in the project as well as success in the career.
Understanding Stakeholder Analysis #
In a typical IT or Software Development Project, the following is the extensive list of stakeholders that are associated with the project.
- Project Sponsor
- Domain Subject Matter Expert (Product Specialist or Product Manager)
- IT Business Analyst/Product Owner
- Project Manager
- Implementation Subject Matter Experts (Software Development Team)
- Quality Assurance (QA) Team
- Operational Support Team (Production Support Team)
- Regulator
- Supplier
- End Users
- Customer
Stakeholder Analysis is the process of identifying all relevant stakeholders of the project and understanding their roles, interests, influence and level of authority.
A business analyst is going to deal with stakeholders for various analysis tasks, hence it is important for a business analyst to do stakeholder analysis for the following reasons:
- No important stakeholder is missed
- Understand stakeholder’s expectations of the software solution and potential conflicts
- Develop stakeholder engagement strategies to maximize project success and minimize risks
- Improved decision-making
- Enhanced Stakeholder Relationships
Key Elements of Stakeholder Analysis #
The following are the key elements of Stakeholder Analysis that should be taken care of.
1. Stakeholder Identification
When you join a new organization or a new project within an organization as a Business Analyst, the first step should be to understand the project objective and identify all the relevant stakeholders that are associated with the project. This identification should include both internal as well as external stakeholders (if any).
2. Stakeholder Assessment
It’s required to assess the following information about each identified stakeholder:
- Role in the Project
- Responsibilities in the Project
- Influence level or Power to make or change key decisions in the project and organization
- Interest level in the Project
- Main expectations from the Project and concerns if any
Assessing this information will help you better understand each stakeholder and you’ll be able to develop effective engagement strategies for the stakeholders or a group of stakeholders.
3. Stakeholder Engagement Strategy
Engaging the right stakeholders at the right time is important.
Based on the stakeholder assessment, you can create different engagement strategies tailored to specific stakeholders and start engaging them in business analysis activities.
Engagement strategy means when to involve whom, the purpose of involvement, information that needs to be obtained or provided, and the desired outcome of involvement.
The following are the various engagement methods that you can follow depending on the project environment and organizational policies.
- Interviews
- Workshops
- Brainstorming sessions
- Surveys
The modes of engaging stakeholders can be one or more of the following:
- Virtual (through online conference)
- Face-to-face meeting in a physical meeting room
- Using tools such as Email, Survey Forms, Internal Group Chat, etc.
Benefits of Effective Stakeholder Analysis #
Enhanced Communication
Knowing the background of a stakeholder enables you to communicate effectively with the stakeholder. For example, if a stakeholder belongs to a business department, it will be beneficial if you speak in a business language to better understand the stakeholder’s requirements. And if a stakeholder belongs to an IT department, you can use technical terms while talking to that stakeholder. The bottom line is to fully understand stakeholders’ interests, motivations, requirements, and concerns and deliver them the expected results.
Informed Decision-Making
By understanding the key stakeholders that have the power to make or change decisions, you can design appropriate solution options that they would like to consider and as a result, the decision-making process will be more effective and conclusive.
Conflict Mitigation
Conflict is obvious when multiple stakeholders with different perceptions and backgrounds come together in a project. They have positive or negative or mixed attitudes towards a change being done in the system.
Understanding stakeholders’ attitudes and interests would enable you to proactively identify the chances of conflict between particular groups of stakeholders and you can mitigate those conflicts by having proactive engagement with them before they escalate.
Improved Project Outcomes
Bringing all interested and relevant stakeholders on the same page is key to having the desired outcomes from the project.
Stakeholder Analysis plays a significant role in delivering improved project outcomes since it enables the involvement of all relevant stakeholders to prioritize changes, provide consensus on selecting a solution option, validate the solution and provide feedback on the implemented solution.
Practical Steps for Conducting Stakeholder Analysis #
Here is a practical step-by-step guide to conducting stakeholder analysis.
Step 1: Identify stakeholders through various methods #
You can identify the stakeholders using one or more of the following methods:
- Refer to the Project Charter or Business Requirement Document (BRD)
- Observe and make note of all the participants in a project kick-off meeting
- Talk to the Project Manager or Project Sponsor and get the list of project stakeholders
Once all the stakeholders are identified, collect the following information for each stakeholder:
- Name
- Designation/Job Title
- Role in the Project
- Contact Information
- Department
Step 2: Assess their influence and interest levels #
In this step, it’s required to collect the following information for each stakeholder or stakeholder group.
- Responsibility
- Level of Interest
- Level of Influence
- Expectations
- Concerns
To collect this information, you can either have a 1-1 interview with the stakeholder or refer to any recent project documentation, organization chart or a register that has this information.
At this stage, you have complete information about all the relevant stakeholders of the project. Using this information, create a Stakeholder List in an Excel or Google Sheet as shown below.
This stakeholder list will become your ultimate guide in analysing, engaging and managing stakeholders of your project hence always keep it up to date.
Step 3: Create a RACI Matrix #
RACI stands for the 4 types of responsibilities that a stakeholder may hold on the project or initiative:
- Responsible (R) – the stakeholders who will work on the project’s tasks
- Accountable (A) – the stakeholder who is ultimately held responsible for the successful completion of the project/initiative and is the decision maker. Only one stakeholder receives this assignment.
- Consulted (C) – the stakeholder or stakeholder group who is an expert in business or technology and will be consulted to provide an opinion or information about the requirements and tasks of the project. It’s a two-way communication.
- Informed (I) – the stakeholder or stakeholder group who will be informed and kept up to date about the outcomes of the project. It’s a one-way communication from business analyst to stakeholder.
Prepare a RACI Matrix as shown below based on the information from the Stakeholder List as prepared in the previous step.
The RACI matrix is very helpful in preparing the communication plan to engage with stakeholders i.e. what information to be communicated to whom and when.
Step 4: Create a Stakeholder Matrix – Impact vs Influence Matrix (aka Power-Interest Grid) #
It’s a very useful technique to do stakeholder analysis. It’s also called Stakeholder Mapping since it maps the stakeholders’ influence (power) against the stakeholders’ interest level or impact on stakeholders.
Here, again refer to the Stakeholder List to understand each stakeholder’s influence and impact and refer to the following Impact vs Influence matrix to map the stakeholders or a group of stakeholders to the appropriate quadrant based on their impact and influence levels.
Step 5: Develop an engagement strategy tailored to each stakeholder group #
Once all the stakeholders or stakeholder groups are mapped to the Impact vs Influence matrix, define the engagement strategies for each stakeholder group as follows.
- High Influence/High Impact: The stakeholders are key players in the change effort. The business analyst should focus their efforts and engage this group regularly.
- High Influence/Low Impact: The stakeholders have needs that should be met. The business analyst should engage and consult with them, while also attempting to engage them and increase their level of interest with the change activity.
- Low Influence/High Impact: The stakeholders are supporters of and potential goodwill ambassadors for the change effort. The business analyst should engage this group for their input and show interest in their needs.
- Low Influence/Low Impact: The stakeholders can be kept informed using general communications. Additional engagement may move them into the goodwill ambassador quadrant, which can help the effort gain additional support.
Once the engagement strategies are developed, update them to the Stakeholder Matrix so that the Stakeholder Matrix becomes a single source of truth for everything about the stakeholders.
Follow the engagement strategies to engage with stakeholders and stakeholder groups during various phases of business analysis and software development lifecycle to ensure that each relevant and important stakeholder has participated, and their opinions and feedback are considered.
This way, you can ensure that all the requirements, solutions and implementation designs are fully transparent to all the stakeholders of the project leading to successfully delivering all the software increments as expected.
Step 6: Regularly review and update the stakeholder analysis as the project evolves #
Remember that the Stakeholder Analysis is an iterative process.
A business analyst should continuously monitor the incoming and outgoing stakeholders in the project context and revise stakeholder analysis as needed.
Continuous review of stakeholders enables you to be in full control of the project and stakeholders and saves you from unexpected situations.
Tools and Template to aid in Stakeholder Analysis #
Software Tools
The following software tools can assist you in conducting and maintaining the outcome of stakeholder analysis.
- Microsoft Excel
- Google sheet
- Miro
- Confluence
Templates
Based on my business analysis experience in hundreds of projects, I developed a Stakeholder Analysis Template that covers all the aspects of stakeholder analysis and it will help you in solidifying your process to conduct successful stakeholder analysis.
This Stakeholder Analysis Template is in editable Excel format as shown in the following screenshot.
Grab the Stakeholder Analysis Template Now to get inspired and solidify your stakeholder analysis practices.
Real-Life Examples of Successful Stakeholder Analysis #
Each project and its stakeholders are unique so the outcome of stakeholder analysis and engagement strategies remain specific to the project.
But it’s worth understanding the real-life experiences of the projects where the project became successful due to effective stakeholder analysis and the project suffered due to improper stakeholder analysis. These examples prepare us to face realistic situations and how to overcome them by conducting effective stakeholder analysis.
Let’s dive into real-life case studies.
Case Study 1: Effective Stakeholder Analysis #
This case study refers to an IT project within a bank that aimed to transition from a 20-year-old internal legacy web application to developing a new web application using the latest technologies.
The legacy application was being used in all the bank branches of the bank globally. It was used by around 400 internal users of the bank to service customers.
In this project, there are 2 main groups of stakeholders:
- A group of product managers responsible for making changes to the web application.
- A group of end users who use the internal web application.
Apart from this, there were other stakeholders such as the Head of the Customer Service Department (Sponsor), Portfolio Manager, Project Manager, Project Management Reporting Staff, External Regulators, Senior Business Analyst, Junior Business Analysts, Technical Architects, Software Development Team and QA team.
The Senior Business Analyst identified all the relevant stakeholders, connected with them, assessed their influence and impact levels and performed the stakeholder analysis as follows.
After talking to all the stakeholders, the senior business analyst learned that the product managers do not have complete knowledge of all the functions of the app but the end user representatives (bank staff) have complete knowledge of the application since they use the application daily.
The project objective was to develop a new web application with a new user interface, optimize processes (workflows to complete a task) and migrate all the data and end users from the legacy (old) application to the new application.
Challenges:
- (1) Since there are so many functionalities in the legacy application, first it was required to do a current state analysis of all functionalities and create solutions for the new web application to implement these functionalities with a new user interface and workflows. This was a challenging task for the business analysts because there was no functional documentation available for the legacy application.
- (2) Another challenge was that the project team that was going to work on a new application was completely new to the business domain and the application.
- (3) And the third challenge was that the end users who were working on the legacy app were not willing to move to a new application because they were so used to that application and they believed that the new application would make their tasks tough instead of easy.
The senior business analyst understood all the stakeholders, the challenges of the project, and developed the following engagement strategies and that worked well to complete the project successfully.
-
High Influence, High Impact Stakeholders: Sponsor, Product Managers
- Suggested Strategy: They are the key players in the change effort and they should be engaged regularly.
- Implemented Strategy: Always involve this group in all the project discussions, solution reviews, software requirements specification reviews, and decision-making instances and keep them in the loop for all the official email communications.
-
High Influence, Low Impact Stakeholders: Portfolio Manager, Project Manager, Technical Architects, Regulators
- Suggested Strategy: These stakeholders have needs that should be met. Engage and consult with them, and try to increase their level of interest in the change activity.
- Implemented Strategy: Make sure that all their needs are addressed. Provide regular status updates to them about the business analysis activities. Consult them to discuss solutions to complex functionalities where inputs from technical experts or regulators are required.
-
Low Influence, High Impact Stakeholders: End Users (Bank Staff), Project team members
- Suggested Strategy: These stakeholders are supporters of and potential goodwill ambassadors of the change. Engage this group for their input and show interest in their needs.
- Implemented Strategy:
- End Users Group: Involve the most experienced end users while developing solutions for the functionalities to make sure that their inputs are considered to make the new application more user-friendly and simplified than the current application. Also, confirm the results of the current state analysis with the experienced end users to make sure that it’s correct. Try to increase their interest levels in the new systems so that their willingness to use the new system is increased.
- Project Team Members: Since they are new to the domain and application, arrange a couple of knowledge-sharing sessions with them to get them up to speed with the domain and application. Validate functional solutions with them to make sure they are technically feasible. Take their feedback on the quality of software requirement specifications to make sure that they are clear and complete.
-
Low Influence, Low Impact Stakeholders: Project Management Reporting Staff
- Suggested Strategy: They should be kept informed using general communications. Monitor to ensure that their interest or influence does not change.
- Implemented Strategy: Keep these stakeholders in the loop for all email communications related to the status reporting. Monitor their roles and responsibilities to ensure that their interest or influence levels do not change.
The business analysis team were able to address all the challenges and was able to make this transition project successful by executing these strategies.
Case Study 2: Improper Stakeholder Analysis #
This case study refers to an IT project of a global bank that aimed to develop a new self-service portal for the bank’s corporate banking customers.
In this project, the important stakeholders were:
- Product Managers – Responsible for doing strategy analysis and providing business requirements for the new self-service portal.
- Customer Relationship managers of the bank – Responsible for onboarding customers to the new self-service portal and educating them about the new portal. Currently, these stakeholders perform the administration activities in the system on behalf of the customers i.e. the customers place an official request with them and they fulfil the request. Now, this project aims to replace this manual process with a self-service application so that the customers can perform these administration activities themselves.
- Customers – End users of the new self-service portal
The other stakeholders included: Head of the Department (Sponsor), Portfolio Manager, Project Manager, Senior Business Analyst, Junior Business Analysts, Software Development Team, QA Team, and Technical Architects.
Here, the senior business analyst did not conduct the stakeholder analysis properly. As a result, he missed the “Customer Relationship Manager” group of stakeholders to engage them while designing the functional solution for the new self-service portal.
The self-service portal was designed only based on the inputs from the Product Managers who have theoretical knowledge about how the manual process works but they do not know the challenges or complexities of executing the actual process by customer relationship managers.
Finally, when the demo of the self-service portal was shown to the customer relationship manager group’s representatives, they raised so many questions, spotted missing functionalities and raised serious concerns over the usability of the application. Eventually, the project was declared as failed and it was decided to redesign the application by taking inputs from the customer relationship managers. See, how much effort and money was wasted due to improper stakeholder analysis.
Lessons Learned: From this case study, the learning was that the “Customer Relationship Manager” group’s influence level was Low but the Impact was High. So, according to the standard stakeholder analysis practice, this group should be engaged in the requirement elicitation and analysis phase so that their inputs are considered and the resulting application becomes functionally strong, delivers expected value, and is finally releasable to the customers.
Conclusion #
A business analyst should have the knowledge and skill to do proper stakeholder analysis according to the proven methods that we discussed in this post. These methods are developed by the industry experts based on their experiences.
Whenever you join a new project as a business analyst, the first task should be to conduct proper stakeholder analysis by following the structured step-by-step approach and executing the engagement strategies. Do not forget to monitor the stakeholders and revise your analysis and strategies if any stakeholder’s or a stakeholder group’s influence or interest levels are changed.
Learning, developing and applying Stakeholder Analysis skills would become a business analyst’s secret weapon that helps win in challenging business environments and projects.
As a business analyst, if you experienced any inspiring case study related to Stakeholder Analysis, please share in the comments below. It will certainly help fellow business analysts in improving stakeholder analysis practices.
