The choices not-for-profits need to make about collecting and using data

The choices not-for-profits need to make about

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The choices not-for-profits need to make about collecting and using data

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IntroductionData is a bit like wind: there’s an almost unlimited supply of it. And the question is through what method, how efficiently and for what reason you should harness it.

Let’s imagine that organisations are sailing boats. The wind helps them to get where they’re going, but consideration needs to be given to how much is captured and how efficiently it is converted into forward motion. For some (usually the biggest boats with the richest owners) the response is to buy enormous sails and capture every bit of wind they can, no matter whether they know what they’re going to do with it or whether they even have the capability to do anything with it.

For not-for-profit organisations the challenge is a bit different: their main sail is quite small and probably has holes in it, and their deck hands are inexperienced so they’re unable to make the best use of the wind they’re already capturing. What’s more there’s a guy on the dock trying to convince them to buy a new spinnaker (one of those big sails that billows out at the front of a boat). It would be a simple decision – fix the main sail and train the deck hands – but the spinnaker is new and shiny and captures more wind than the main sail can, even if it didn’t have holes in it and the deck hands were well trained.

What should they do, given limited financial resources? Fix the main sail and train the deck hands, or buy the new spinnaker? Make sure they’re making good use of the data they do have, and the systems they have to capture it, or invest in capturing new data?

Buying the spinnakerThe fact is that the amount of data which is now available creates opportunities for not-for-profits that simply weren’t available even five years ago. Harnessing that data can mean increasing their ability to better understand their target population in order to more effectively meet their needs, to engage more effectively with funders, or to assess the impact of their activities. But is anyone actually making use of all this extra data?

Based on the number of times the example was mentioned, one big boat in the not-for-profit world might well be Cancer Research UK with its Consumer Insight team. According to Luba Kassova1, head of the team when speaking in a 2012 interview, “Our purpose is to deliver high quality, objective and inspirational insights to support decision-making. We partner with our internal stakeholders to develop new consumer-centric products and to maximise value from existing products. We identify unmet consumer needs and help Cancer Research UK to develop ideas in order to meet them. If the Consumer Insight team did not exist, CRUK would not be able to target the right audiences, with the right products and messages, through the best channels.” The team’s research has radically changed the organisation’s way of thinking about some issues: “We showed that the target audience who purchase from retail stores are very different from the conventional ideas of who we thought they were” continues Kassova. “We also found that there was a significant profile overlap between the target audiences who were buying and those who were donating stock. This led to the organisation changing its approach to the kind of stock it needed to get for CRUK’s shops.”

The opportunity, then, is clear. And yet the harsh reality is that the reason the CRUK example crops up again and again is because it’s the exception. Most not-for-profit organisations aren’t making use of all the additional data that’s now available to them. The wind blows by unharnessed.

1 Quotes taken from interview with research and business intelligence organisation MRS; https://www.mrs.org.uk/article/item/5

The potential to access data has definitely increased. There is plenty of public data around that can be used – and members and supporters, who already trust commercial organisations such as Amazon, are usually very ready to provide lots of data about themselves.

Iain Pritchard, Adapta Consulting

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Data about finances

Data about employees

Data about members or supporters

Data about service users or projects

Data about effectiveness of marketing campaigns

Data about effectiveness of your organisation

19%

31%

32%

55%

58%

65%

Fixing the main sail and training the deck handsNo doubt one reason is that the opportunity is being missed is that organisations are struggling to make good use of what they’ve already got. In December 2013, we surveyed members of the UK not-for-profit sector and 96% told us that they could make better use of the data they already have access to.

Many told us that their organisations do not have single accurate sources of data about organisational effectiveness, marketing effectiveness, service users or projects, members or supporters, employees and even finances.

We delved deeper and asked survey respondents about signs that processes aren’t as efficient or effective as they might be. From their responses it is clear that there are plenty of opportunities out there to make better use of what they’ve got. A full 98% of organisations have processes in place that require the use of Microsoft Excel and 92% use Excel as a standard reporting tool. This is a sign that organisations either don’t have the right technology in place or don’t know how to use that technology to deliver the reports that they need.

Percentage of respondents who say they do not have a single accurate source of:



48%

55%

54%

59%

57%

59%

60%

57%

31%

17%

14%

18%

19%

24%

24%

28%

35%

67%

No integration between front and back office

Difficulty in understanding data or reports from different parts of the organisation

Decisions being made without sufficient data

Conflicting data or reports

Difficulty in producing reports that require data from different systems

A temporary fix to a process has become permanent

Identical data entered in more than one place

Excel used as standard default reporting tool

Processes that require the use of Excel

Happens in places Happens often

Mirroring the lack of single accurate records, 87% of organisations are entering data in more than one place, 80% have difficulty producing reports that require data from different systems, 78% have conflicting data or reports, 69% have difficulty in understanding data or reports from different parts of the organisation and 66% see examples of no integration between front and back office. Given these challenges we should perhaps be surprised that only 72% of organisations believe that decisions are being made without sufficient data.

Doing bothIt’s worth being clear that the choice between the two options (fix what you’ve got or invest in something new) is, of course, essentially a false one. Although most organisations will feel they have to make a choice, the reality is that the boat will move forward fastest when it fixes its main sail, trains its deck hands and buys the new spinnaker. Each of these complements each other, and a failure to do any one of them means, quite plainly, that the boat isn’t being sailed properly. Failing to work out how to make better use of existing data (to use what you’ve got) may necessarily be the priority, but if it’s not allied to an investment in harnessing and using new data then even a charitable view would say that half the opportunity is being missed. A less charitable view would say that half the job is being done.

Starting with what’s likely to be the highest priority though, what’s stopping people from fixing what they’ve got?

Thinking about your organisation’s use of data, do you see signs of any of the following:



37%

42%

70%

61%

13%

18%

27%

23%

We have chosen individual systems without considering the bigger picture

There was no over-arching plan for the entire organisation

Solutions were implemented over time – not all at once

Some systems, on implementation, haven’t been well integrated with others

Agree Strongly agree

Finance, planning and business intelligence

Procurement

Human resources

Document management

CRM and marketing

More than 20 11-20 6-10 5 or fewer 1

2%

2%

1%

2%

1%

2%

2%

1%

4%

1%

15%

6%

5%

7%

10%

71%

39%

45%

61%

51%

10%

52%

49%

27%

37%

System complexityOur research in 2013 with 230 mid-sized organisations in the UK found that the average organisation had 7 systems for finance, planning and business intelligence, 6 in the front office, 4 in each of procurement and HR, and 4 for document management. And looking at the results for not-for-profit organisations, the average not-for-profit is not so far behind. Adding to the problem is poor integration: according to 84% of not-for-profits, at least some systems haven’t been well integrated with others.

Whether profit-focused or not, the issues this complexity causes are very similar. According to Mark Hill at Hitachi Consulting, “The most significant issue is that most organisations with complex systems find it difficult to view accurate organisation-wide information; decisions are being made without real insight into the facts.”

Quite often the issues arise because systems are implemented over time and 97% of respondents agreed this was the case in their organisation. Often there has been no overarching plan for the organisation (60%) and individual systems have been chosen without considering the bigger picture (50%).

Thinking about your organisation’s use of data, do you see signs of any of the following:

Thinking about the following functions, approximately how many different systems/solutions does your organisation use?



But it’s not just the technologyConsultants at a recent roundtable highlighted an issue they see again and again in mid-sized organisations: organisations buying the best technology but failing to reap the rewards due not paying enough attention to the people and processes. Dennis Horner at BDO summed up the sentiments of the group when he said: “It’s rather like putting a Formula One engine into an old Fiesta driven by someone with no race training – and then wondering why you’re not winning any races.”

“In some ways the easy part is the technology,” said Duncan Hare at Experienced Management Consultants. “But before implementing any new technology, organisations really need to ask if they know how the part of the business it fits into should look, and if the relevant processes are actually adding value. There’s no point spending good money automating something that doesn’t really need to happen in the first place. It sounds obvious but it happens all the time.”

“A real issue is getting people to stop doing what they were previously doing,” added Stewart Johns at Prederi. “Our natural instinct is to carry on doing what we were doing before, but organisations need to be quite aggressive in ensuring that unnecessary manual work has been stopped. In an organisation I was working with, the technology had been put in place to automate a process but I discovered that the people who used to do the process were now using that time to check that the system was producing the correct result!”

Which brings us neatly to the subject of people. “There are two aspects to this,” said Parry Jenkins at B2E Consulting. “There’s the very practical detailed training that is required to use any new technology and then the cultural aspect, getting people’s buy in to a new system. The time required for both is often seriously under-estimated.”



What is stopping organisations from fixing the problem?We asked not-for-profits what prevents them from improving the way in which they collect and analyse data – whether from the perspective of making more of existing data or new data sources.

The majority of respondents recognise that the benefits are significant enough (only 35% disagreed with this statement) but a lack of time and resources get in the way: organisations don’t have the spare capacity to make changes (81%) because of the demands of day-to-day challenges or because they are too busy making other changes (72%), and they don’t have spare money either (71%). Iain Pritchard at Adapta highlighted the challenges, “Organisations in this sector are remarkable for being able to punch above their weight; they often have a huge impact in comparison to the funding they receive. But sometimes charities do take on more than they are capable of and try to do too much at the same time. In addition, many not-for-profits have an organisational culture that supports extensive consultation and whilst this does have important benefits it also means that change can be glacial. Also, charities especially are often uncomfortable spending money on the back office; they’re embarrassed about spending on areas other than delivery – it’s seen as unnecessary expenditure. In a way, people in fund-raising expect to be ill-equipped.”

27%

33%

31%

44%

43%

44%

44%

46%

41%

56%

55%

5%

3%

8%

6%

8%

10%

11%

14%

31%

15%

25%

Our IT leader is focused on fixing day-to-day issues

The benefits are not significant enough

Senior leaders in the organisations are not interested

We don’t know what our options are

The benefits are not understood

We don’t have the skills or expertise to make changes

We operate in silos and don’t share data

We don’t have skills or expertise in generating insights from complex data

We don’t have the money to invest

We are too busy making other changes

We don’t have the spare capacity to make changes

Somewhat of a barrier Significant barrier

Do any of these factors prevent your organisation from improving the way in which data is collected and analysed?



In the experience of Anthony Flack at IndigoBlue Consultancy Limited, technology is simply not a high enough priority for many organisations and is not seen as a key component of delivering the organisation’s vision. “If I ask the CEO what the IT manager is working on, he typically won’t know. And if I ask the IT manager if his work is relevant to the organisation’s strategy, he won’t know. In my experience, senior leaders quite often just want technology to be no trouble. It’s only when it breaks that they do something.”

Part of the challenge is finding the right person to head IT. Anthony Flack notes: “Often, the IT Manager is not part of the top team and the reality is that they are sometimes not strong enough to be on the top team. This does not help an organisation align the provision of technology to support business objectives. They might be an expert in some specific aspect of technology but they’re often not looking at the bigger picture. It is quite typical to find someone strong in networks or servers but lacking with respect to how to support the critical business systems.”

As the survey respondents recognised, many not-for-profits don’t have the necessary skills lower down the organisation either: 60% acknowledged that they don’t have skills or expertise in generating insights from complex data. According to Anthony Flack, “The not-for-profit sector hasn’t got the expertise to make best use of data – from both a technical and end-user point of view. If I compare the situation with my experience working in a bank, people in the bank knew what to do with numbers, albeit they would look at too many. In the not-for-profit sector, those skills are seldom found except maybe in finance – but then finance is only taking a certain perspective. At the moment the approach is to collect and store everything. But, what do you actually need to know? What will make a difference?”

And as not-for-profits consider novel analysis of new data sources, the capability challenge becomes even more of an issue. A recent report from Booz Allen2 argues that a Data Science team should have domain expertise (to provide understanding of the reality in which the problem exists), computer science (to provide the environment in which data products are created) and mathematics (to provide the theoretical structure in which problems are examined). And, if that’s not enough, Data Scientists need curiosity, creativity, focus and attention to detail. Finding this combination of skills and aptitudes is difficult enough for private companies but, for not-for-profits with limited budgets, the task is almost herculean.

“Capability is a big issue,” said Tim Power at Booz & Company. “People often come up through service delivery and programme management. Not-for-profits are typically very good at delivering against their core mission but they’re often not as strong in areas such as analytics. Further, people with strong analytics skills can typically earn a lot more in the private sector, making recruiting difficult. Hence, not-for-profits can often benefit from engaging external organisations to provide targeted help and solutions.”

2 The Field Guide to Data Science; Booz Allen



Advice from the experts

Commit to data and analysis from the top downIt’s clear, from talking to all our experts, that the organisations which are making the most of data have a board which understands the potential benefits and is committed to the cause. “This month,” says Luba Kassova at CRUK, “the Consumer Insight team is presenting the latest supporter story to CRUK’s Executive Strategy Board – highlighting the potential implications for the charity, be it strategic, organisational, or tactical.” When was the last time your board talked about data: how to collect it, how to analyse it or what it means?

According to Iain Pritchard at Adapta, “Even where organisations are doing data well, there might not be anyone listening. Trustees and senior management teams are not as interested as they should be and strategic decisions are not being led by data. Some organisations have lots of clever and dedicated people doing the analysis but if you could survey the senior management team you would find that other things are seen as more important in making decisions.”

Have a technology strategy that supports the organisation’s visionAlong with a commitment to data and analysis, boards need a very well thought through technology strategy which very clearly supports the aims of the organisation. And they need to be determined to make sure it gets delivered.

Focus on what will be reportedAccording to the experts, one of the best ways to motivate people around data is to give examples of the reports and analysis they could have if the right systems were in place. “Data is often a secondary concern – there is always something more pressing,” said Tim Power at Booz & Company. “You have to make the data relevant to the end user so that they can see the value. Mock up an example report to demonstrate what could be done if you got the investment you’re looking for. And show the return on investment: what impact might this data and analysis have, for example, on donor uplift?”

Ensure the right processes are in placeAccording to Ivan Wainewright at IT for Charities, the next step is ensuring that you have the right processes in place. And simplicity is the watchword. “Organisations often over-complicate something that is basic,” says Anthony Flack at IndigoBlue Consultancy Limited. “For example, I was working with an organisation running training for members; in terms of data and analysis, they needed to register members, check training had happened, record it and be able to analyse the data. And somehow they’d ended up with a 24-stage workflow.” And once organisations are clear about what ought to be done, by whom and how, they can decide what this means in terms of systems.



Consider sharing with other organisationsBut not everything needs necessarily to be done in-house. “What’s really interesting,” commented Anthony Flack, “is that not-for-profit organisations seldom collaborate with one another; they see one another as competition. Yet the reality is that they could save a lot of money by collaborating in the back office and sharing back office services.” And whilst it’s clear from our survey that some organisations are already doing this (35%), the vast majority say that they are ‘definitely not interested’. Another interesting option for organisations is to use cloud services: 28% already do (at least in some context) and another 46% are considering the option.

Using cloud services to collate and process data

Outsourcing some back office processes (e.g. finance, payroll)

Already do this Considering this Definitely not interested in this

28%

35%

46%

10%

26%

55%

Are you considering or do you already do any of the following:



Are there any quick wins?Our interviewees were somewhat hesitant to focus on quick wins as they didn’t want to dilute the message that a clear, top down vision and strategy, supported and enforced by the leadership, is vital to success. However, when pushed, they did have a few suggestions.

Bridge the obvious gapsSometimes it’s very obvious that two systems ought to be integrated to make life easier and data more accurate, and the gap can be bridged quickly and inexpensively. “For example,” said Anthony Flack, “the CRM system and the direct mailing tool may not be integrated and the direct mail people are using an Excel spreadsheet. It’s manual interventions such as this that lead to out-of-date and contradictory data.”

Clear log jamsOften there are obvious processes that are causing real headaches but could be easily fixed. “It might be a log jam in processing direct debits or standing orders,” said Iain Pritchard at Adapta. “Often there are simple solutions that allow these processes to be carried out more efficiently. A typical barrier is that ‘we’ve always done them that way’ but the reality is that technology has moved on. Get some experts in – from other organisations, suppliers or consultants – and you will suddenly see lots of quick wins.”

Train people to use the technology you already haveTraining was mentioned again and again as a potential quick win. Quite often, a lot of training happens when a new system is implemented but then there is very little further down the road. “Simply training people to make best use of what is there already can be a really significant quick win for an organisation,” commented Ivan Wainewright at IT for Charities.

Review reportingIvan Wainewright also highlighted a potential quick win with respect to reporting. “Sometimes there’s a fundamental issue, such as a lack of data or systems to analyse that data, stopping people from getting the reports they need. But sometimes it’s just a case of users not being able to articulate what it is that they need or not being heard by the technology people. If attention is focused on reporting, many organisations will discover that they could be getting more of what they need from the data they already have.”

Should you use consultants?Not surprisingly, all of our interviewees recommended that whichever way organisations decide to approach the issue, they should seek outside help. And it would appear that many are already doing so: 41% of respondents have used consultants to both review current processes and current technology. However, over a third of respondents claim they are definitely not interested in using consultants. Why?



We decided to compare the results of our not-for-profit survey with a 2013 survey where we asked exactly the same question (with one exception in terms of responses) of the private sector. Two answers are top for all types of organisations: consultants are simply too expensive and we have the experience and knowledge that we need in house. However, for not-for-profits, the focus is much more heavily weighted towards the cost barrier and they’re less confident that they have the experience and knowledge they need in house. There’s a very clear challenge here for consultants who need to demonstrate that they can add enough value to ensure that it is absolutely the right thing to do for not-for-profits to spend funders’ or members’ money on consulting services.

Using consultants to review current technology

Using consultants to review current processes

Already do this Considering this Definitely not interested in this

41%

41%

25%

24%

34%

35%

0%

0%

16%

29%

32%

66%

41%

14%

20%

24%

24%

32%

41%

62%

We don’t know how to findsuitable consultants

My organisation is culturally averseto using consultants

Consultants don’t understand our sector

We have not had a positive experience of using consultants

We believe that consultantsdon’t add enough value

We have the experience and knowledge that we need in house

Consultants are simply too expensive

Not-for-profit Private





Top priorities

4%

12%

13%

15%

20%

24%

24%

39%

40%

44%

65%

Maintaining staffing levels

Improving our public image (PR)

Ensuring we meet all regulations (reporting & compliance)

Recruiting people with the right skills

Reducing costs

Increasing contributions from existing supporters

Increasing the scope of what we offer

Retaining supporters or members

Improving quality of service provision

Finding additional funding

Increasing supporter or member numbers

Organisation’s top three priorities:

Respondents told us what they see as their organisation’s top priorities and what is immediately clear is how important the collection, analysis and use of data is to achieving those goals. Take the top four: increasing supporter or member numbers, finding additional funding, improving quality of service provision and retaining supporters of members. None of these are likely to be achieved without data; all of them are much easier to achieve with very effective use of data.

But for many organisations, the opportunities to do more with data are no doubt somewhat overwhelming. Should they be making use of the many new sources of data and employing data scientists to delve deep? Or should they just focus on getting the basics right?

The advice from the experts is that, even for organisations that feel unable to do both to the fullest degree, the choice doesn’t have to be as stark as it might seem. So long as an overall plan is in place and the organisation is committed to making it work, it’s actually okay to do a bit of both, to return to our analogy, to patch up the main sail a bit, train the deck hands in some of the basics, and find a way to hire, rather than buy, the spinnaker. But they say that that the plan and the commitment are vital: senior leaders in not-for-profit organisations can’t afford to ignore data and how it is used any more than sailors can ignore the wind – it’s the key to future success.



Methodology

SurveyWe ran an online survey in December 2013 and collected 289 responses representing a wide range of organisations in the UK not-for-profit sector.

20%

19%

31%

28%

1% 1%

Top management team or board

Senior manager (but not top team)

Manager

Employee

Volunteer

Trustee

62% 26%

6%

3% 3%

Charity

Membership organisation

Arts or heritage organisation

Association

Educational organisation

Respondent’s level of responsibility

Respondent’s organisation



IntervieweesWe interviewed four consultants in January 2014 about the specific challenges of the not-for-profit sector:

Iain Pritchard Partner Adapta Consulting

Anthony Flack Senior Consultant IndigoBlue Consultancy Limited

Tim Power Principal Booz & Company

Ivan Wainewright Independent Database/CRM Consultant IT for Charities and Project Manager

In addition, we have used material from interviews and a roundtable we carried out in 2013 with:

Duncan Hare CEO Experienced Management Consultants

Mark Hill Vice President Hitachi Consulting

Dennis Horner Partner BDO

Parry Jenkins Principal B2E Consulting

Stewart Johns Managing Director Central Public Services Prederi

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Data & Analytics

The choices not-for-profits need to make about collecting and using data