April 10, 2004

If you picked up any IT magazine in the past six months, you undoubtedly came across the latest “fad” in today’s business world — business intelligence. Like many of the buzzwords we’ve witnessed in internet economy, business intelligence (BI) has fallen victim to much “techno-hype,” causing considerable confusion among those who are hopeful of what BI promises. But who don’t 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.

An association executive client told me 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.

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 a 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.

Core questions

If you carefully examine the issues surrounding the recent hype about BI, which are: business process management (BPM), business activity monitoring (BAM), and “balanced scorecards”, a single theme appears among every buzz-topic — measuring and implementing strategy.

Here are the three core business questions that illustrate the aforementioned theme as it applies to today’s association and non-profit executives.

1. 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. BI provides the unified metrics framework needed to align your organization’s strategy with its behaviour.

2. How do I drive communication, integration and alignment?

Organizations typically base their decisions on key performance indicators (KPIs) that originate from multiple, disparate sources, such as CRM systems, accounting systems, and enterprise 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.

3. 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 can’t 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.

Basic values

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:

1. 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:

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: “ABC person, 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 ABC person, 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!”

2. 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.

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.

3. 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 and Campaign Software, donation software, and Association Management Systems (AMS). The best-of-breed strategy creates and actually perpetuates “information silos” (as I 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.

4. Information at all levels: 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 ad-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.

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, and can easily provide collaborative sharing of information. This brings us to the final business value of Business Intelligence: lowering operating costs.

5. Lowering 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.

The writer is an IT professional

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