Cause and Effect in Business Analysis

cause & effect

No business runs smoothly without any problems and issues, either minor or major. If this is not the case for you then count your blessings, or wake up from your dream. Problems have, and always will be, a part of every business. In reality, businesses exist to solve other businesses or people’s problems or needs.

Successful businesses are the ones that deal best with the problems and grow from the experience.

The role of the Business Analyst is relatively new but the function of analysing business operations has been around for a very long time, they just didn’t have that title.

Business Analysts are typically positioned to quickly identify problems and issues, the underlying cause  and the effects that follow when it persists. After establishing causes of problems and their effects, business analysts can tackle problems better by proposing viable solutions. In this regard, the need to undertake cause and effect analysis is vital for business success, be it analysing why a certain product line is failing, determining the best production methods, or implementing the right management policies. Cause and effect analysis is effective in achieving desired business outcomes by identifying and addressing the root cause of the business problem faced. Below we give a brief overview of how cause and effect analysis can help you find viable business solutions and how using technology is essential in the process..

At the very least, this analysis involves the following major activities:

Looking Backward – Business Intelligence

Looking backward involves analyzing past mistakes and problems. The rationale for looking backward is to identify where issues have come from, so that they can be avoided in the present course of business. A lot of Business Intelligence/visualisation tools are predominantly used for looking backwards. They collect historical information and display it in very useful ways that make it easier to identify problems or worrying trends. This is certainly a step in the right direction, although in isolation is a bit like driving somewhere looking in the rear vision mirror.

Looking Forward – Corporate Performance Management

Cause and effect analysis should also be carried out for future planning, with the causes and effects derived from your backward looking analysis. It can be used for making an inquiry into the possible future state (or states) of affairs of a business and identifying the path and options that could or should be taken in the present for a better future outcome. In that sense, it can be used as a planning tool. Corporate Performance Management tools are designed for this purpose. They make it easy for analysts to conduct what-if analysis and also perform scenario planning, whilst at the same  time incorporating a backward looking analytical function into the process. This makes it easier to use your historical performance, causes and their effects, to plan for future causes and effects.

You should be every which way … up, down and across

Whilst it is pretty basic stuff and not rocket science, like most things the devil is in the detail. To perform any sort of cause and effect analysis you need the basic ingredients, the main one of which is data. Every organisation, large or small, and everything in between, collects an abundance of data every day. The difference between successful business and not so successful ones is how they use this data. The more successful businesses make better use of this data, and as such are more often and likely to quickly identify problems and then perform cause and effect analysis. Being able to not only drill down to different levels of aggregation, but to be able to drill across to underlying data which may exist in a totally different system, is critical to perform effective analysis, as sometimes more detail is required in order to fully understand the problem, it’s implications, and how to resolve them.

Integrating disparate data across the business is a fundamental but often overlooked element of this process. Every part of a business is in someway connected to every other part, and the only way to get a complete view is to connect that data in a ‘single source of the truth’. This source should contain data that is validated and updated regularly, so that business analysts and executives can be confident the information they are dealing with is correct and current.

Today’s leading CPM and EPM (Enterprise Performance Management) tools are all underpinned by multi-dimensional data sources that facilitate this function. Every business has multiple dimensions, so it makes logical sense that the data that is used to measure and monitor the business is stored multi-dimensionally. It might seem like just another confusing IT term, but when you think about it, the way you ask questions about your business is about the dimensions; customers, products, employees, divisions, days/months/qtrs, areas, and the ‘facts’; who, how many, where, when?

When your key decision making data is organized in such a way, and is validated and updated on a regular basis it is so much easier to not only see trends and undertake cause and effect analysis using what-if and scenario planning, but also to plan and forecast more effectively.

At bi5 solutions we have been working with modern budgeting, forecasting, and reporting systems for over 10 years across many different industries. If you want to have a chat please contact us


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