If you’ve picked up a technology
magazine in the past six months, you’ve undoubtedly
come across the latest “fad” in today’s business
world – Business Intelligence. Like many of the
buzz-words we’ve witnessed in the Internet economy,
Business Intelligence has fallen victim to much
“techno-hype,” causing considerable confusion among
those who are hopeful of what BI promises, but who do
not want to bother with clumsy catch-phrases and
unfounded assertions. This confusion is magnified in the
association community, which has traditionally adopted
cutting-edge technologies at a slower rate than its
private-sector counterparts. Often, by the time a
technology penetrates the association and non-profit
community, the number of vendors offering the technology
has reached a critical mass, causing executives to have
a difficult time discerning one promise from another,
because they all sound the same.
The purpose of this article is to
mitigate this trend and provide you, the association
executive, with practical information on Business
Intelligence and how it can potentially improve your
bottom line. Amid all of the hype, one thing is for
certain – associations can be consumed by data, given
all of the information they can potentially track with
members, potential members, subscribers, and partners.
As one association executive client of ours told us
recently, “We are data rich but information poor.”
That’s where Business Intelligence comes in – if
properly implemented, it can be an eye-opening tool to
help you see your business in a whole new way.
Business Intelligence: Defined
First, let’s start by defining
Business Intelligence. Business Intelligence, or
simply, “BI,” is the act of capturing raw data, then
transforming and combining that data into information
that can be proactively used to improve business.
The goal of BI is to empower decision-makers, allowing
them to make better and faster decisions. Better
decisions make better business!
For your Association or Non-Profit
Organization, “improving business” might mean
increasing membership numbers, adding value to existing
memberships, lowering your operating costs, increasing
the effectiveness of your marketing campaigns, or, in
some cases, all of the above.
3 Core Business Questions
If you carefully examine the core
questions and issues surrounding the recent hype about
Business Intelligence, Business Process Management (BPM),
Business Activity Monitoring (BAM), and “Balanced
Scorecards”, a single theme appears among every
buzz-topic. Measuring and implementing strategy.
The following three core business
questions illustrate this theme as it applies to
today’s association and non-profit executives.
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How can I align my organization’s
strategy with its behavior?
A strategy cannot be successful unless
it is made relevant to everyone in the organization.
As an organization or its membership grows in size,
numbers, and complexity, the gap between strategy and
execution grows larger. The only way to control
this gap is to clearly define and measure the strategy,
the goals that achieve that strategy, and the desired
behavior needed to meet those goals.
Figure 1. Gap
between an organization’s strategy and its behavior
Business Intelligence provides the
unified metrics framework needed to align your
organization’s strategy with its behavior.
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How do I drive communication,
integration, and alignment
Associations and Non-Profit
Organizations typically base their decisions on Key
Performance Indicators (KPIs) that originate from
multiple, disparate sources, such as CRM systems,
accounting systems, and association management systems.
Each system is “isolated” from the other, and each
system reports data differently. Different
managers use different metrics, and different executives
use different reports. There is no mechanism to
visualize the entire organization’s performance, or
correlate metrics from one system to another. As a
result, an organization’s data isn’t collected,
shared, or even defined in a consistent manner
throughout the organization. A single, shared, BI
solution will allow an organization to align and
communicate performance results and actions at all
levels.
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How can I respond more quickly to
performance results?
The Association and Non-Profit market is
extremely competitive. Organizations that aren’t
capable of quickly and accurately measuring performance
cannot respond and adapt to severe or abrupt changes in
the market. This lack of agility costs the
organization untold dollars in lost revenue, comparably
poor value, and higher operating expenses. Quality
BI solutions allow near-real-time performance
measurement, and are proactive in nature. This
means that the BI system is always “watching” your
organization’s performance, and will actually notify
decision-makers when a performance measure has reached a
predetermined threshold.
5 Values of Business Intelligence
At this point, you should understand the
high-level definition of Business Intelligence, and some
of the core business problems that Business Intelligence
can solve. Let’s continue to clarify Business
Intelligence by examining the business value that a BI
solution can add to your Association or Non-Profit
Organization. There are five major values of
Business Intelligence:
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Previously isolated information is
“liberated."
The single most common information-issue
facing an association or non-profit executive is their
inability to “connect and combine” data collected
from one system to the data collected in another system.
At first, this may sound like an integration issue, but
don’t be fooled! Often times, true two-way
integration between systems isn’t necessary at all.
Just because two systems can suddenly “talk” to one
another doesn’t necessarily mean your organization is
going to benefit from more or better information.
In this context, information isolation isn’t an
integration issue at all, it’s an information issue,
and information may be isolated in many different ways:
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Security. Only the
people with proper access and authentication to the
information can access it. This is common, and
often necessary. Security can also come in the
form of a particular tool. For instance, data
kept in a SQL Database isn’t readily accessible to
the public, generally, a database administrator or
programmer must use a special software tool to query
and retrieve information from the system.
-
Structure. The data is
in an unreadable format, such as a delimited file.
Raw data may also contain information that is not
relevant to the business issue being addressed.
Common business entities, such as “people” are
represented in a data structure that is not easily
understood by non-technical people.
-
Process. Consider this
familiar example: “Joe Smith, from
accounting, is the only person in the organization
who knows how to retrieve the data. When we
need something, we call or email him, and he sends
it to us. We have no idea what he does or how
he does it. If something ever happened to Joe,
I’m not sure what we would do.” In this
example, the process of retrieving the information
is the inhibitor. The information may be
easily interpreted, and in the correct format, but
nobody in the organization can “get to it”
without following an arduous process.
-
Time. Systems,
Departments, or Business Partners don’t always
produce business information in real time, or on
demand. For instance, a fulfillment company
may send only monthly reports containing order data.
Marketing departments often receive campaign
performance reports after the campaign has ended!
Surprisingly, many association and non-profit
executives consider this time-lag “as good as it
gets!”
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The quality and timeliness of
information is improved.
Almost every business or business unit
has strategies, which are measured in some tangible way.
Without tangible, measurable goals, how would you know
if you were successful? Businesses call these
measurable goals “Key Performance Indicators”, or
KPI’s. KPI’s don’t necessarily have to be
monetary in nature. Customer Service Departments,
for instance, might want to measure how many service
complaints they receive.
|
Key Performance Indicators
|
|
Business Unit / Department
|
Measurable Goals
|
|
Marketing
|
Campaign Return Rate
|
|
Sales
|
Product Sales
|
|
Customer Service
|
Service Complaints
|
|
Quality
|
Product Returns
|
Table 1. Common Key
Performance Indicators
Business Intelligence allows
organizations to visualize KPI information in a
multitude of ways. A good BI solution allows
near-real-time visualization of this information.
Furthermore, good BI solutions should proactively
monitor KPI information, and notify decision makers when
a predetermined threshold has been reached.
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Existing investments are leveraged.
In today’s extremely competitive
marketplace, implementing competitive technology
solutions quickly - and with minimal cost - is critical
for success. Additionally, the continued economic
downturn has forced many organizations to cut their IT
spending to record lows within the industry. As a
result, nearly all Association and Non-Profit
Organizations have adopted a “best of breed”
technology strategy. This strategy allows
organizations to quickly implement feature-rich
technology, but at a cost. Common best-of-breed
enterprise solutions are Enterprise Resource Planning (ERP),
Customer Relationship Management (CRM), Accounting,
Content Management Systems(CMS), E-Commerce,
Fund-Raising & Campaign Software, Donation Software,
and Association Management Systems (AMS). The
best-of-breed strategy creates and actually perpetuates
“information silos” (as we described in the first
value of BI, information isolation). Best of breed
strategies almost always result in an organization
having multiple, disparate systems which don’t
communicate with one another. Obviously, the lack
of communication among major enterprise technology
systems prohibits business decision-makers from
“viewing” their overall business performance.
In this environment, aligning business strategy with
behavior is nearly impossible.
A quality Business Intelligence solution
recognizes that significant investments have been made,
and does not require costly modifications to existing
systems or processes. Similarly, a quality BI
solution should allow new best-of-breed systems to be
added to the organization, and existing best-of-breed
systems to be replaced or modified without affecting the
overall BI solution.
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BI enables Information Workers.
People at all levels of an organization:
Managers, sales representatives, order-entry or
point-of-sale clerks, and supply-chain workers all work
with information. Business Intelligence allows an
organization to empower people to make decisions at
their point of maximum impact, accelerating the speed of
effective decision-making. This empowerment is
achieved by providing every knowledge worker with the
ability to visualize information. By providing
knowledge-workers with this ability, the
organization’s overall strategy can be fully
implemented in the form of goals with measurable
performance metrics.
Surprisingly, many associations and
non-profits have no mechanism to integrate real-time,
live transactional data into their decision-making
process. Ask yourself this question: “Do I
really know my customers?” If you have a
member-centric organization, this can be rephrased as,
“Do I really know my members?” If you answered
‘yes’ – how did you determine this? Most
organizations conduct market research, focus groups, or,
worse yet, simply “guess” in order to determine the
attributes that make up their “average” customer or
member.
Another important area of
empowerment/enablement is the value of data mining.
Data mining technologies allow organizations to discover
“hidden” patterns or trends within their data.
The reality is that the data often
exists in its original format in many different database
tables, and possibly even in different databases or
systems! It may be possible to produce detailed or
even an-hoc report for data but without applying a
classification algorithm (a common algorithm used in
data mining applications), trends and patterns would be
extremely difficult to find.
The “decision tree” in figure 2
illustrates how a quality BI solution can provide
visualization of trends and patterns in large amounts of
data.
Figure 2. Decision
Tree generated by Data Mining Algorithm
Data mining is very different than
reporting. Reporting scenarios typically begin
with a question, such as “how many”, or “how
often” – whereas data mining scenarios simply feed
large amounts of data into a complex algorithm, and the
system provides the knowledge worker with information.
Data mining technologies are often successfully used to
predict future performance, based on historical data.
As always, as more data is collected, more accurate
results are produced by data-mining algorithms.
In order to achieve this value, it is
imperative that the BI solution offer low-cost,
easy-to-use tools that can truly be employed at every
level within the organization. Apart from the
cost, the BI solution must be usable. If the
solution is not usable, it can never achieve an optimal
adoption-rate. This area, “where the rubber
meets the road,” is where most BI solutions and
vendors fall down. A quality solution is
highly-usable, highly available[1], and can easily
provide collaborative sharing of information. This
brings us to the final business value of Business
Intelligence: lowering operating costs.
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BI lowers operating costs.
Consider this common scenario: An
employee is tasked with providing an executive
“report” in preparation for an organization’s
board meeting. The employee solicits information
from multiple sources and departments within the
organization, such as the marketing department, the IT
department, and the membership department. The
information arrives in many different formats, including
paper, spreadsheets, electronic text-files. The
employee gathers and combines this data into a tool,
such as Microsoft Excel, and, after sorting and
“cleansing” the data, creates a “chart.”
This chart or other visual representation of business
information is typically copied into a presentation
software application, and then delivered to the
executive. Sound familiar?
Business Intelligence can virtually
eliminate the above scenario by providing low-cost,
easy-to-use tools that require minimal or no training,
and allow collaborative sharing among all knowledge
workers. With little or no training,
adoption-rates are high, and costs associated with
training are low. The lifecycles, or time spent on
common scenarios like the one we just examined are
drastically shortened, or even eliminated.
After reading this, I hope you have a
better understanding of what Business Intelligence is
and the value it can provide for an association when
implemented properly. Remember – a good BI solution
doesn’t have to cost an arm and leg to be effective.
People we talk to are often amazed at the cost relative
to the value it provides their organization in meeting
member needs and planning for the future.
Mike Steadman is Solutions Director
for Susquehanna Technologies, in Winchester, Virginia.
This article is an updated excerpt from Mike’s 20-page
white paper, “Practical Business Intelligence for
Associations & Non-Profit Organizations.” For more
information, or to request a copy of the white paper,
feel free to contact Mike at 540.665.3413 or mikes@susqtech.com.
