1300 words (12 minutes reading time) by Colin Weatherby

Source: ChatGPT

I am trying a new approach with this post and using ChatGPT to provide a summary with short and long versions to match your reading appetite. It might be a little repetitive if you read them all but it will reinforce the key points! Your feedback will be appreciated.

Summary

Business intelligence (BI) is a set of techniques and tools used to analyse data and make informed decisions. It is widely accepted in the private sector but is still evolving in local government where data collection is mainly driven by performance reporting requirements. However, with the financial challenges faced by councils, many are starting to adopt a ‘BI approach’ to understanding their financial position and improving decision-making. Councils can benefit from a BI approach that is tailored to their specific challenges and priorities to support performance monitoring, decision-making, and service delivery to the community.

Short version

Recently, I was talking with a colleague about the financial information they were using to understand the impact of rate capping on the financial sustainability and resilience of their council. This led us to discuss what kind of business intelligence councils need.

Business intelligence, or BI, is defined in the image above. In the private sector, BI is widely accepted and standardised, and there are consultants who provide these services to companies. Companies know what decisions they need to make and that the data to support those decisions is available, they just need it to be discovered, collated, and analysed. However, in the council sector, access to data and data collection is typically driven by performance reporting requirements, rather than a the need for improved data in decision-making.

Businesses use BI for various purposes, including decision-making, performance monitoring, trend analysis, data-driven planning, competitive advantage, and fraud detection. Councils, on the other hand, may have different priorities and challenges. While competitiveness may not be a high priority, customer satisfaction and loyalty can still have a significant impact on the council. The recent financial crunch due to rate capping and high inflation has prompted some councils to start using BI to understand their financial position over time.

Therefore, it’s beneficial for councils to adopt a BI approach that incorporates their specific challenges and priorities to support decision-making and performance monitoring. This can include data analysis, performance monitoring, requirements gathering, process improvement, and budgeting and financial analysis. The goal of BI in local government is to improve decision-making, increase efficiency and effectiveness, and enhance the delivery of services to the community.

Keep going if you are interested in a more detailed discussion.

Long version

I was recently talking with a colleague about the financial information they were using to understand the impact rate capping is having on the financial sustainability and resilience of their council. It raised the question of what ‘business intelligence’ councils need.

‘Business Intelligence (BI) refers to the set of techniques and tools used to gather, analyse and present data for the purpose of making informed business decisions. It involves the use of data analytics, data visualization, and reporting to help organizations turn data into actionable insights and drive strategic outcomes. BI can help organisations identify trends, track performance metrics, and make data-driven decisions to improve their operations and gain a competitive advantage.’

Source: ChatGPT

The use of business intelligence (BI) in the private sector is accepted and standardised to the extent that there are consultants able to provide this service to companies. There are established methodologies and uses for it. In discussion with a friend who leads a BI consultancy, companies (at least the well managed ones) know what decisions they need to make and that there will be data to support those decisions somewhere – they just need it to be accessed, collated, analysed and reported. Developing a statement of requirements is the logical starting point.

This is the basic challenge, and I think most councils know they need to access their data (and possibly data belonging to others) and improve data collection. Often this is driven by performance reporting requirements rather than a compelling need for data in decision-making. In businesses, BI is typically used for more than just performance monitoring. 

Companies use BI for several purposes, including:

• Decision Making: BI provides organizations with the data and insights needed to make informed decisions, such as identifying new market opportunities, improving operations, and enhancing customer experiences.
• Performance Monitoring: BI helps organizations track key performance metrics and key performance indicators (KPIs), such as sales, revenue, customer satisfaction, and production efficiency.
• Trend Analysis: BI enables organizations to identify trends and patterns in data, such as sales patterns, customer behaviour, and market trends.
• Data-Driven Planning: BI provides organizations with data-driven insights and forecasts to support planning and decision making.
• Competitive Advantage: BI helps organizations gain a competitive advantage by providing data-driven insights into their operations and the market, enabling them to make informed decisions and respond quickly to market changes.
• Fraud Detection: BI can help organizations detect and prevent fraud by analysing data from multiple sources and identifying suspicious patterns or anomalies.

Source: ChatGPT

Interestingly, the financial ‘crunch’ brought on by the rate cap and high inflation has prompted some councils to start creating graphs showing trend data and projecting forward. Someone told me recently about the ‘whale’ diagram circulating in their organisation that showed it now takes $120 to get $100 worth of value compared to 5 years ago, whereas council’s rate-capped dollar has only increased to $110 compared to 5 years ago. It was the first time they had seen anything useful showing what is happening to the council’s financial position over time. It is Council BI.

I accept that every council has different economic drivers and services that they deliver. Looking at the list of purposes companies have for BI listed above, ‘competitive advantage’ stands out as one that may be important for business but not high on the list for most councils – most council executives would say that there are no market share or profitability imperatives.

I would argue that there are still competitive pressures at work, and while councils don’t lose customers easily to other councils, we do lose the satisfaction and loyalty of our customers. No business wants a deeply unhappy customer to stay because they will cost you money. In local government, customer dissatisfaction plays out as vocal resistance to rate increases, opposition to council decisions, and service complaints that create failure demand and drive up costs.

It could be argued that companies are interested in optimising profit for investors. Ken Miller would say that a council has investors in the form of land owning ratepayers. They want to see a return on their investment in land in the municipal district (typically capital appreciation) and the money they pay each year in rates (typically value for money).

If you accept that councils have a need to use data, it would be beneficial for Councils to adopt a BI approach that incorporates local government’s specific challenges and priorities and supports decision-making and performance monitoring in a way that is relevant and useful to their operations.  These activities could include:

• Data analysis: Collecting, cleaning, and analysing data from various sources to identify trends, patterns, and insights. This can involve using advanced analytics tools and techniques such as predictive modelling and data visualisation in asset management.
• Performance monitoring: Monitoring KPIs and other metrics to assess the effectiveness of programs, services, and initiatives. This can help local governments identify areas for improvement and make data-driven decisions on where to allocate resources to meet community needs.
• Requirements gathering: Working with stakeholders to understand their needs and requirements, and to identify opportunities for improvement. This may involve conducting interviews, surveys, and workshops to understand customer demands and how best to respond to them.
• Process improvement: Analysing and optimising existing processes to improve efficiency, reduce costs, and enhance service delivery. This can include the use of tools such as process mapping and process reengineering to increase the value work and reduce waste.
• Budgeting and financial analysis: Assisting with budget preparation and monitoring, and conducting financial analysis to inform decision making and identify areas for cost savings. This can be aligned with requirements gathering to ensure resources are allocated where they provide the greatest value.

Ken Miller, 2006 ‘We Don’t Make Widgets – Overcoming the Myths That Keep Government from Radically Improving’