Platt Perspective on Business and Technology

Standardization efficiency and their trade-offs 4 – complex operations and operational flows 1

Posted in nonprofits, strategy and planning by Timothy Platt on August 21, 2012

This is my fourth installment in a series on operational process standardization and efficiencies, and their trade-offs (see Business Strategy and Operations – 2, postings 301 and loosely following for parts 1-3.) I focused in Part 3: operational consistency and change, and underlying operational costs on individual process steps and on individual resources needed to carry them out, and on cost/benefits analysis of operational choices made at that level. But individual process steps and resource determinations always connect together into larger patterns and into larger process and goals-oriented operational flows. And the context that those more atomic level (functionally indivisible) operational components fit into, determines much of their value and in both a more abstract absolute sense and in a more functionally measurable relative sense when compared to alternatives. My goal in this installment is to discuss resource valuation at that organizationally higher level. And I do that by way of example with a working scenario drawn from the nonprofit sector.

A large nonprofit has operational processes in place for tracking fundraising achieved on a per-donor basis, with identification of high value donors. And fundraising results data is gathered and entered into this work flow and with multiple strategically defined objectives. Two of them that I would highlight here are:

• Identifying new high value donors and
• Identify where previous donors may have significantly changed their levels of support given, and either up or down.

Picking up on that second finding category, special attention would be brought to bear on a previously high level donor whose participation has significantly dropped off. Special attention would also be shown towards a smaller or mid-level donor whose contributions have been rising.

And all of this is data and empirical knowledge driven. And that is where this nonprofit’s fundraising system becomes an operational-process scenario here. All of this analysis and its follow-through depend on assembling fundraising reports and both within and across fundraising campaigns. And it is known that rapid response to donors as campaigns are carried out and concluded, is vital if those responses of acknowledgement are to carry any positive impact value.

A crucial step in making that happen resides in Finance, as a database driven tool for assembling donor data into individual donor and comparative, campaign-wide reports are initially assembled, for use by Fundraising. It is found that resources in place can produce those reports but that current systems take on average ten days to generate a workable report. And this report is primarily limited to assembling post-campaign findings and analyses. It is not designed to red flag unexpected and significant individual donor activity during a campaign, and either from the software involved per se, or in how it is operationally and procedurally used.

An alternative cloud-based approach is identified and proposed as a next generation update and replacement for this, and with an initial assessment that this can actively, easily support red flag exception capture, for out-of-pattern, and quicker individual response and follow through. And concluding reports should be available within four days instead of that ten day average. And data available suggests that this speed-up in follow through would significantly increase the likelihood that donors would not have simply moved on and set their relationship with the nonprofit aside – so they would not just see this follow-through as if unrelated to the campaign they had donated too, and would see it instead as positive acknowledgement.

Note that faster follow-through would not mean more rapidly asking for more money. In fact recognizing right away that a member of the supportive community had just made an unusually large donation, might be set to trigger their not being asked for more too quickly when they would more likely to still be in a refractory stage and less likely to want to donate at the time. But for both large donors and increasing value donors, identification and follow through would be important. And this might mean, as a possible example, inviting them to a post-campaign reception in thanks for their valued contributions.

Much of this scenario has been couched in terms of business model considerations and reasoning, and for a reason. That is where operational need and determination of operational value would be established, as alternative approaches for gathering and managing this data are considered. And this brings me to consideration of costs and benefits as they would connect and radiate through Finance and Fundraising, and Information Technology too with at least these three departments and lines on the table of organization directly impacted upon by this operational decision.

Donor development as national home office-based, and as carried out in more distantly located chapter offices would at least in principle all be able to tap into this new cloud based system, and in ways never previously possible for a local to the home office, single server with local backup solution. This means local chapters could develop and track reports based responses to donors themselves, and certainly for local fundraising events. And they could more rapidly identify their own local red flag donors, and for their own use of this information and to notify national headquarters. This certainly sounds like an effective way to create new revenue enhancement channels and capabilities, while strengthening bonds to members of their mission-supportive community.

Actual costs and benefits would have to be determined from overall impact though. For Information Technology, for example, this would mean no longer having to own and maintain server capacity for this, though due diligence and security risk remediation might very well require changes and new expenditures to the firewall and other IT-managed and owned security and risk limiting systems.

I am going to continue this discussion in my next series installment, on the overall impact of localized operational processes, resources and change. Meanwhile, you can find this and related postings at Business Strategy and Operations – 2 (and also see Business Strategy and Operations.) I have also included this installment in Nonprofits and Social Networking as the scenario I outlined here connects into discussions there too.

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