Stakeholder Analysis

Stakeholder analysis is the process of identifying anyone involved in a software development project and assigning them relevant duties based on their role and core competencies.

The creation of every product or service involves the participation of multiple people. They are collectively referred to as “stakeholders”. Stakeholders can be part of the product development team, marketing team, sales team, etc. Moreover, they even include the customers who will benefit from using the product.

In this glossary article, we talk about what stakeholder analysis is and how to do it effectively for your software development teams.

What is a Stakeholder Analysis?

It’s important to understand all the people whom your company’s strategies will potentially impact in order to inform your decisions. That’s where stakeholder analysis comes in.

A stakeholder analysis process involves asking various members of your organization (and target end-users) what a successful project would mean to them, in terms of KPIs or specific goals. Then it assigns stakeholders different roles and responsibilities within the product development project. Finally, it groups them according to the degree of influence they have over the project.

The stakeholder analysis process aims to identify what different stakeholders want from your product to align your strategies with their interests. This lets you maximize the amount of value the product creates for everyone involved.

Why Conduct a Stakeholder Analysis?

A product can only be successful if it meets the needs of the people it’s designed for. So, you should conduct a stakeholder analysis before any product development project begins to ensure product-market fit.

This analysis is important for two other main reasons: 

  1. It helps create a better picture of what various teams within your business need to do to deliver a successful product. 
  2. It helps improve decision-making for short-term actions (such as marketing campaigns) and long term strategies (such as future product development initiatives).

How to Conduct a Stakeholder Analysis?

There are three parts of the stakeholder analysis process: 

  1. Identify stakeholders
  2. Map their power
  3. Define their role in relation to the product development process 

These are the three key factors you must include in any stakeholder analysis. But there may also be more areas that you analyze in addition to these, depending on the needs of your product and market.

Let’s take a closer look at each stage of the process.

1. Identify stakeholders

In general, stakeholders are people or groups who will be affected by your business decisions. Whether they are internal or external to your company. Stakeholders include everyone from the CEO and Board of Directors, down to your management teams, internal business departments, suppliers, and even the local community.

Example of a stakeholder analysis based on context. Source: PMI

Here’s a breakdown of how the stakeholder identification process typically works:

Identify all those who will be affected by this decision in some way.

  • This includes not only customers, but also employees, investors, vendors and partners. 

If you want a simple approach to identify your stakeholders, ask yourself, “Who will benefit from or be negatively impacted by this action?” Anyone you list down is a stakeholder in the project.

Interview each of them.

  • By knowing what your stakeholders stand to gain or lose from a project, you gain insight into the likeliness of your product’s success. It will also help you identify any potential issues or challenges you need to address when planning your product development process. 

During stakeholder interviews, you should ask specific, open-ended questions to get as much information as possible about their relation to the project. Here are a few examples of things you can ask:

  • What do you like and dislike about the product?
  • What do you expect from this product?
  • Do you have any suggestions for improvement?
  • How do you think the completion of this product or service will benefit you?
  • Why did/would you choose to use it or buy from us?
  • Do you know of any stakeholders with whom you have a conflict of interest?

Categorise them according to how strongly your product development project will impact them

Primary stakeholders are those who stand to lose or gain the most from your product. Secondary stakeholders are those who won’t take a direct effect by it.

For example, if you’re developing cloud-based software for managing car manufacturing lines, your product development team and your target customers will both be primary stakeholders. However, your employees’ families and media agencies are secondary stakeholders. This is because they’re unlikely to be seriously affected by the project.

You’ll get different perspectives, depending on who you interview. It’s therefore essential to gather all of this information, as it directly impacts the development of your product. 

However, keep in mind which stakeholders are most critical when it comes to prioritizing their needs within your product development strategy. That’s where the second step in the stakeholder analysis process comes in.

2. Map stakeholder power

After you’ve identified your stakeholders, you can now gauge their impact on your project. Some stakeholders will have more influence and interest in your product development process than others. 

You can map this by arranging all stakeholders on a Power-Interest Grid during your analysis:

Example of a Power-Interest Grid.

From this grid, you can see the levels of priority you can assign to stakeholders: For stakeholders who have low interest and low power, you should monitor them in case they have any changes in either factor. 

For those who have a high interest and low power, you should keep them informed. This is because they’re still relevant to your product development process and may have further input to provide later down the road.

For those who have low interest and high power, you should keep them satisfied. For example, you can use testing and feedback to ensure you’re going to meet your target customers’ needs with the finished product. Then, report to other departments on your progress so they can align their efforts with the product development process.

Lastly, for stakeholders with high interest and high power, you should manage them closely. This is because they’re likely crucial to the product development process itself (like your Chief Product Officer or DevOps team). It’s also because they have the ability to negatively impact your project if they’re not aligned on working towards key milestones or targets.

3. Define Stakeholders’ Roles

Finally, the last step in the stakeholder analysis process involves determining which stakeholders should be responsible for specific activities within the product development project. When you’ve identified your stakeholders and their power/interest in your product, you can define their roles by asking:

  • What motivates them?
  • What other priorities do they have, and how can you align your product with their priorities?
  • How will this stakeholder view your product?
  • How will they contribute to the product development process?

Your aim is to identify all stakeholder groups and their respective interests. This lets you develop a strategic view of how these parties relate to one another, as well as what they care most about when it comes to developing your product.

Successful Stakeholder Analysis is one Step Closer To Your Success

In this article, we covered the first step of Stakeholder Management - conducting a thorough stakeholder analysis. If you can identify and understand your key stakeholders prior to commencing a product development process, you can ensure that all affected parties are satisfied with the choices your company makes when bringing a new product to market. 

This is why stakeholder analysis helps build better relationships with both internal stakeholders (like your sales, marketing, and development teams) and external stakeholders (like your customers).