Business Analysis For Dummies
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The data flow diagram is a helpful diagram for business analysts that shows the parties and systems involved with a particular process, as well as the data and interfaces involved when dealing with external agents (those parties or systems that exchange information with the project but over which your project has no control). It’s most commonly used for the project level context diagram (or scope diagram).

Although the data flow diagram is a graphic, as the name suggests, you can also use a text-based version called the external interaction textual template.

You use these techniques to analyze and communicate. If text communicates better to your stakeholders, use the textual template rather than the diagram.

Introduction to data flow diagrams for business analysis

The data flow diagram consists of three basic symbols: circles, curved lines, and rectangles. Each symbol represents something different:
  • Circles: The circles represent the process (or the function) that actually works to transform inputs into outputs. In the example below, the process involves taking in all the information from the guest (input) and sending it off to the reservation system (output).

  • Curved lines: The curved lines represent the data flowing into and out of the process. These bits of data aren’t detailed data elements but rather a conglomeration of data called net flow. In the example, dates coming from the guest into the process are arrival and departure dates (including times), but instead of getting that detailed, the diagram simply summarizes them as “dates.”

  • Rectangular boxes: The rectangular boxes represent external agents that are sources or recipients of data. Your project has no control over how these sources execute their internal processes (their work), and the project can only send data to and receive it from them.

    For example, you have no idea how the reservation system processes its data, but based on what you send the system, you get the availability and price information from it.

    [Credit: Illustration by Wiley, Composition Services Graphics]

    Credit: Illustration by Wiley, Composition Services Graphics
Here are some examples of when you should apply this technique:
  • When identifying stakeholders (those external agents!)

  • When scoping your project and figuring out your boundaries

Like any analysis method, data flow diagrams have advantages and disadvantages. In the advantages column is the fact that the diagram is a very clear way to show the scope boundaries for the project so that everyone is on the same page with regard to the area being analyzed (the scope). It also highlights the items that aren’t part of scope and can be documented as “out of scope.”

The disadvantages primarily have to do with reader understanding:

  • The diagram doesn’t show sequence, so some businesspeople may have a hard time following it.

  • The diagram presents the data flowing into and out of the project at a rather high level. It doesn’t show all the data elements, which may be problematic for detail-oriented folks.

  • The data flow has kind of fallen out of favor because, outside the scope diagram, businesspeople don’t relate to the many levels of the data flow diagram. They prefer a workflow.

Here’s how to create a data flow diagram:
  1. Identify the process you’re documenting (the circle in the middle of the diagram).

  2. Identify all the parties and systems (the rectangles) involved in the process.

  3. Elicit from the stakeholders the data (the curved lines) flowing among the parties, the systems, and the process.

  4. Have the stakeholders validate your diagram.

The external interaction textual template for business analysis

An external interaction textual template may sound complicated, but it’s really not. You use the same information you’d use for a data flow diagram but present it in a text table rather than a graphic. A textual representation may be preferable when your stakeholders don’t understand the diagram or when teaching them how to read it takes too much time.

You can see that the left-hand column lists the external agents (the rectangles on the data flow diagram), and the middle and right-hand columns list the data itself (the curved lines on the diagram).

[Credit: Illustration by Wiley, Composition Services Graphics]

Credit: Illustration by Wiley, Composition Services Graphics

About This Article

This article is from the book:

About the book authors:

Paul Mulvey, CBAP, Director, Client Solutions, B2T Training, has been involved in business analysis since 1995. Kate McGoey, Director, Client Solutions, B2T Training, has more than 20 years' experience in application development and life cycle processes business. Kupe Kupersmith, CBAP, President of B2T Training, possesses more than 14 years of experience in software systems development. He serves as a mentor for business analysis professionals.

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