September 27, 2012

Analytics and Research Functions in Industry

Analytics is a growing function across all sectors and industries of the economy. DonorCast and Bentz Whaley Flessner are committed to harnessing and implementing the best analytics practices for the betterment of philanthropy and charitable giving. As many of our readers already know, we find that using analytics as a part of an organization's fundraising development program greatly increases not only the total amount of money that an organization can raise, but also the efficiency of the resources required to raise those dollars.

As proponents of analytics, we must explain what analytics is and where it fits as the third leg of a fundraising operation stool alongside front-line fundraising and prospect research. This post is the first in a two-part series regarding how we should think about analytics in fundraising and especially its relationship to prospect research.


I think that it will be helpful to look at how many other industries distinguish between "research" and "analytics". In consumer markets like packaged goods, financial services, and retail as well as the medical fields of toxicology, oncology, and epidemiology, research is the process of discovery, and is associated with proving a hypothesis. Research deals with specific cases, and generally, smaller, more manageable amounts of data that can be controlled and isolated in order to identify key relationships between independent and dependent variables. In terms of management, research is more project based, and when conclusions are found, or insights arrived at, then a research project is concluded.

Analytics, also referred to as Business Intelligence, is slightly different and is most accurately thought of as an ongoing management tool. Analytics is a program that constantly collects and measures data that can then be used by management to make decisions about, and adjustments to, strategy. Analytics is much more aligned with an organization's overall business needs – the allocation of resources, return on investment, and definition of success – than research. Many practitioners will say that as a phenomenon becomes better understood, it moves from being the subject of research questions to being a component of management analytics. Instead of understanding what something is or how it works, analytics focuses on the incremental changes that are needed to make a process as efficient and effective as possible. So while many of the tools that research and analytics use can be the same, such as quantitative methods and predictive modeling, their role in an on-going, enterprise system are slightly different.

In conclusion, analytics and research are both extremely valuable to all kinds of organizations but they play different roles and should be thought of as separate, essential functions. The next post, will discuss analytics and research in fundraising specifically and how they work together to accomplish institutional goals.                   

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