In this paper, a practical method of process identification based on Prony's method, a kind of exponential analysis, is discussed. This method uses step input as an identification input. Thus, it is very practical, but at the same time it decreases the accuracy of identification at high frequency area because of the luck of the high frequency components in the step input. Here, we propose a new exponential analysis method based on the rectangular-wave input. In this case, optimal degree of identified transfer function is also examined by using IAE (Integral of Absolute Error) and AIC (Akaike Information Criterion).