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Business Intelligence and Analytics for Social Service Nonprofits
Many executive directors of social service nonprofit agencies need to regularly compile data, create reports, and monitor the performance of their staff and resources. They also depend on the reports gathered, compiled, and presented from managers and service providers of the various departments throughout their organization. With this data, the directors can demonstrate to their board and all stakeholders how well they are doing and whether they are achieving the defined objectives of their missions.
But these tough economic times have presented even greater serious challenges to social service agencies that serve those with disabilities because of higher demands for service, slashed budgets, and requirements of more transparency. One solution for many chief executive officers has been to turn to methods employed in the corporate world, namely utilizing business intelligence strategies to make better decisions and keep their agencies solvent and sustainable.
What is Business Intelligence?
The use of the word “business” in business intelligence might preclude management from considering the concept, or the technologies that create it, because they are running a not-for-profit human services agency. However, the concept of using information to be more effective applies to more than for-profit enterprises. It might easily be considered “nonprofit intelligence” or “social services intelligence” but it is still the same principle.
What is business intelligence? A simply definition would be: to take a large amount of data and transfer it to useful information in order to make better business decisions.
It could be something as simple as recording monthly client payroll amounts into an Excel spreadsheet, seeing a total yearly increase in payroll spending amounts per client, creating a bar graph to represent the higher cost of labor, and emailing it to the executive director. That is business intelligence.
Processes are employed to help everyone gather key performance indicators (KPIs) based on up-to-date data and pass the information along to management. A software platform provides a source to enter and access this real-time data, a tool to allow users to query this data, and the ability to measure the results using analytic dashboards and report features. Using the processes and the software allows the organization to make the better decisions to not only help ensure their survival but allow growth even during difficult times.
The main problem that most organizations always face is a lack of resources to implement any structured business intelligence process or purchase any new major software solution. So they and their staff toil away, taking long times to gather information. It takes such long intervals because of the way agencies are structured, the disparate systems that are in place, the time it takes for staff to deliver data, and the isolation created by the department silos. Many executive directors end up discovering problems after-the-fact or even when it might be too late.
The Case for Utilizing Business Intelligence
Social service nonprofits must maintain their transparency and accountability in order to keep the doors open and continue to help those with disabilities. Utilizing technology designed to provide real business intelligence will allow managers and directors to monitor performance, analyze trends, and recognize issues before they become big problems. BI software gives the team access to timely and accurate reports at the executive, analytical, and operational level.
Business intelligence technology provides data management, dashboards, and customized reports to help measure the effectiveness of everything you are doing. It allows you to control budgets, improve (or remove) ineffective programs, survive budget cuts and audits, and keep everyone involved in the loop.
If your agency is planning to purchase new software or upgrade a legacy system to help manage your organization, make sure to ask your vendor to include a business intelligence application. This additional tool will help you tap vital information that can maximize productivity, reduce overhead expenses, eliminate waste, and increase transparency, accountability, and performance within your agency.
It is important to note that merely purchasing BI software is not the panacea to solve any and all of your problems. It is a tool. Like any tool, if it is used incorrectly or not at all it does your agency no good. The installation and implementation of a quality business intelligence system must be completed by experts. Management and staff must completely endorse the use of the BI software. And everyone needs to train on and use the software in order to receive the maximum benefits. Without this “buy-in” from everyone involved, it could cause your agency big problems and result in very little return on investment.
According to a Gartner paper entitled “Avoid the Five ‘Fatal Flaws’ of Business Intelligence and Corporate Performance Management”, it states several factors have combined to make BI a critical part of organizations’ preparations for economic improvement and a renewed focus on growth, including:
- The risks associated with failing to comply with government regulations for reporting.
- The competitive disadvantage to late adopters as BI becomes more widely used through various industries.
- The pressure to maximize efficiency from current resources.
Define Your Business Intelligence Goals
One of the first steps in employing business intelligence is to understand your goals, both program objectives as well as operational and business objectives. When you know what your goals are, you’ll know what key performance indicators you will need to monitor and measure. Your business intelligence process and software will provide the KPIs you need to gain insight and make the right decisions.
Business intelligence will help with decisions felt at every level of the agency, from a major decision by the executive director that affects the entire organization to a minor decision by one person in a department that only affects her.
 So, this is the time to stop making decisions based on a “gut feeling” or from data gathered on an independent Excel spreadsheet. Define the goals for your entire agency with the input of everyone involved in making decisions, major or minor. You can have brainstorming meetings with key players to help define what you would like to measure. Write down all your goals and you’ll be ready to set up customized queries in your BI system right away.
Goals should be set or reviewed for the long term (upper level management), the short term (mid-level management), and for the day-to-day operational term (service providers). This must be information that can be summarized by your BI process and technology. The summarization provides an executive-level view across all departments. This will allow for upper management to be able to see how decisions will affect the whole agency and make strategic choices toward the “big picture.” But BI programs also offer the ability to drill down into the information to help make more specific decisions that affect short term goals and the day-to-day operations.
Effective decision making starts with your goals. Business intelligence comes in to play when it is providing measurements to evaluate your progress toward those goals. And it will also give you the foundation to gain feedback on those measurements.
Finally, when it comes to these objectives you outline, consider the information you will be gathering. There are 4 criteria needed from your information in order for BI to truly help you. The information must be:
- Accurate
- Valuable
- Timely
- Actionable
The data used must be correct and include all related sources (if you ask for a report on all costs, it cannot exclude any data where costs were incurred.) The information must contain some value to the organization. It cannot have outdated details from previous months, quarters, or years if you need data from last week. And you must be able to make a decision that, based on provided information, will affect outcomes and help you meet your goals. Skip any of these and you will most likely be wasting your time.
How Does Business Intelligence Work?
You are the director of an agency with a vocational workshop facility that manufactures products and provides janitorial and landscaping services. You want to track some of the expenses of the agency: client and staff payroll, raw material purchasing, transportation, and utilities. You want overall numbers and amounts per products. You also want to track revenues by contract, product line, and janitorial service hours delivered per month. For each variable, you’d like to drill down when you see a figure that looks odd (example – our revenues are down by 26% but your purchase of raw materials was up by 42% for the previous month.)
All of this data spans several different computer systems, applications, and databases. What business intelligence software can give you is one application to rule over all the data, from which you can get nice graphical and clickable data in an executive dashboard.
A business intelligence platform allows you to create queries and visualize the results. To put it simply, you extract chunks of data from various sources and create reports with useful numbers.
Where you would normally spend 80% of your time extracting this data and 20% analyzing it, your BI solution reverses this to give allow you to easily find out what you need and more time making the best decisions.
Typical uses of a BI solution for a midsize agency with vocational workshop contracts:
- Determine the inventory level of a product used on the assembly line
- Generate a report listing the accrued vacation of all staff, sorted and totaled by department.
- Identify customers that are cutting back on their orders so that new customers can be sought out in time to replace the work being done
- Implement dashboards so that executives and supervisors can quickly recognize operational exceptions or KPIs that fall outside of accepted ranges
- Establish and monitor production performance metrics and take corrective actions if these metrics are not going to be met
- Determine the current salary of one client and compare it to the previous 3 months and then previous 3 years
- Compare year-to-date revenues for this year with last year and forecast what sales are likely to be for the entire year
- Track customer orders and desired ship dates against finished-goods inventory and adjust the manufacturing production cycle and supply chain logistics to reduce inventory carrying costs
- Integrate operational, spreadsheet, and historic data for analysis to eliminate spreadsheet overload and give one, accurate picture of the agency
- Provide department supervisors with the ability to perform their own ad hoc analyses without having to involve scarce IT resources
- Align daily operations with strategic objectives and quickly recognize when they are not in agreement
It can be a difficult decision, as well as a transition, to move from a spreadsheet-oriented organization to a system-driven analytical agency. Many like the comfort of working with the numbers, spending time to dig out all the necessary details from 10 different systems, and being able to push the facts in the direction to give an outcome desired by the manager.
A properly implemented BI solution will only provide the proper and correct information for good analysis. It will save the time needed to prepare reports for audits or reviews. And the details cannot be tweaked to hide the truth or show something that isn’t there.
 Considering a Business Intelligence Solution?
In the past, BI solutions were typically too expensive and complicated for small and midsized social service agencies to consider. But technology has improved and software vendors have taken big steps to help make business intelligence systems more customizable, accessible and affordable.
Make sure you get an application or system that will work with the hardware and software you already have or are planning to upgrade to. For example, if you will be implementing an ERP solution based on Microsoft Dynamics to help run your whole agency then it would be wise to purchase BI software that is compatible. You’ll already have the hardware, SQL Server, and the Microsoft Office products needed for the BI application.
It’s also wise to find a BI system that can grow with you. As your agency becomes more effective and efficient, you’ll be taking on more programs and participants. You’ll have more data, more people to track, more remote information collection, and more query possibilities. All your systems should be able to expand capabilities and your business intelligence solution should be no different.
Look for a BI software vendor that has experience in the social service nonprofit industry. There are many business intelligence software companies that have always catered to businesses and do not understand the needs of the human services world. Experience and knowledge should mean shorter implementation times and cost as well as fewer problems, better training, better customization, and excellent support.
Business Intelligence Systems: 5 Dos and Don’ts
Do:
1. Choose one or two initial projects that will lead to biggest bang for the buck, to increase the buy-in from all parties involved. When they see it works, they won’t be afraid to get their feet wet.
2. Keep flexibility in mind – it’s the key to success when using a BI solution.
3. Be ready for those in the organization that resist change and don’t want to give up their processes. Let them know they won’t be giving up spreadsheets altogether; this is just a new powerful tool that will help them know more.
4. Know your systems that are in place when working with a vendor – you may already have hardware and software in place which could save you money.
5. Focus on the goals and end results you’re looking for and not just on the BI software and its functions. See the bigger picture to keep you on track.
Don’t:
1. Underestimate the costs and don’t overestimate the benefits. Have realistic goals and start out with baby steps. Once you see results, you’ll be able to justify the costs and quantify the benefits.
2. Assume that a business intelligence system has the same functionality and tradeoffs as other software applications.
3. Expect that a new software system for business intelligence will do it for you or be perfect right out of the box. Customization, implementation and training will always be required.
4. Assume that everyone in the company can use the tool without any training. Or assume they will know what they’re looking for once they’ve been trained.
5. Forget to ask questions of the software vendor on how to get the most out of the BI solution. Many focus on the financial reports or reports in their own areas of expertise and fail to look across all departments.
Business intelligence is all about collecting, organizing, analyzing, and then presenting the information in a clear way. It helps your agency and your staff to make well informed and better business decisions. This is how you will not only help keep your doors open but be able to grow and help more people.
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Vertex Systems, Inc.
440 Polaris Parkway
uite 150
Westerville, OH 43082
Toll Free: (866) 981-2600
Email: Info@VertexSystems.com
www.VertexSystems.com
Download the Whitepaper in Adobe PDF Format.
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