11 August 2017 | Knowledge Management and Research unit | Research article
Whether your business is driven or enabled by technology, and whether Corporate Social Investment (CSI) is central to your business or not, the end result is that these are both considered as integral and unavoidable components of doing business in South Africa.
As technology advances and CSI plays a more prominent role in doing business in South Africa, there is no better time than now to take the opportunity and merge the two to create both business and social value.
The number of Business Intelligence (BI) platforms available have boomed over the last two decades and BI functions have become commonplace in many organisations for analytics and reporting purposes. This is largely due to the developments made in this area that sees BI platforms moving from the hands of the few to the hands of the many, providing a trusted, user friendly, and scalable platform for data interrogation, reporting and the delivery of insights.
This paper discusses the role of CSI in South Africa as well as some of the benefits on how BI functions can support CSI decision making that lead to better social investment decisions and positive quality changes.
CSI seeks to assist, benefit, and empower marginalised individuals and communities with the purpose of social upliftment and improved quality of life. Within the South African context, CSI plays a pivotal role in contributing to the social development sector and has become an integral and strategic part of doing business in South Africa.
There are a number of contributing factors that may influence a company’s decision on where, what, and how much to invest in, such as alignment with business strategy, level of risk associated with social initiatives, and the level of social impact the organisation seeks to create.
In addition to this, a company’s decision can also be influenced by Broad-Based Black Economic Empowerment (BBBEE) regulations, as well as other national and global imperatives such as the National Development Plan (NDP) and Sustainable Development Goals (SDGs).
|Broad-Based Black Economic Empowerment||According to the Codes of Good Practice issues in terms of the Broad-Based Black Economic Empowerment Act, the average annual value of all socio-economic development contributions made by the sector must be equivalent to a minimum of 1% of net profit after taxes (NPAT).
|National Development Plan||The NDP aims to eliminate poverty and reduce inequality by 2030. According to the plan, South Africa can realise these goals by drawing on the energies of its people, growing an inclusive economy, building capabilities, enhancing the capacity of the state, and promoting leadership and partnerships throughout society.
|Sustainable Development Goals||The Sustainable Development Goals (SDGs), otherwise known as the Global Goals, are a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity.
The SDGs work in the spirit of partnership and pragmatism to make the right choices now to improve life, in a sustainable way, for future generations.
Table 1 Corporate Social Investment Influencers
Making an informed decision in any business essentially comes down to having the right data and information at the right time and having the ability to analyse and act on it effectively.
The same can be said when it comes to making a social investment decisions, as ideally, all data related to past and current programmes and projects would be available, and decision makers would be able to make informed decisions faster and with more confidence about future initiatives.
Funders of CSI initiatives have traditionally been interested in ad hoc philanthropic gestures, however, the evolution and shift in CSI sees this as a much more inclusive process. Not only does this support the strategic goals of the business, but has led to funders placing a greater emphasis on the decisions made for social investment and the impact delivered as a result of their initiatives.
However, one still needs to be aware of external influences such as change in legislation and policy, volatility of the economy, political instability and other related factors when making a social investment decision.
Having an effective BI function in your organisation is a natural next step for those who want to become better leaders at CSI. With effective BI practices in place, organisations will be in a better position to launch, promote, and sustain CSI programmes and projects.
As with any system, the quality of its output is only as good as the quality of data and information that is input into it. With quality data and information being captured and made available for BI purposes, it provides organisations with the opportunity to turn data into something that is insightful and actionable.
Value is created through these insights as it allows organisations to monitor programme and project performance, respond and act on key trends, make better decisions, as well as to develop and advise on CSI strategies that address real social needs.
A number of opportunities exist for BI to support CSI initiatives, not only from the quality management of data, but also ensuring that programme and project reports show accurate, relevant, and trustworthy information that can be used to solve problems and make decisions.
Below lists some of the benefits that can be derived in relation to BI practices for CSI decision making:
- Respond faster to social development trends,
- Predict future performance of programmes and projects,
- Revise social investment strategy for greater impact,
- Identify new opportunities for social investment,
- Combines historic and real time data, and
- Provide for competitive advantage.
The scenarios and examples listed below do not represent a comprehensive application and use of BI in relation to CSI practices, it identifies potential opportunities in the way in which BI can be applied for these purposes.
Monitoring and Evaluation Indicators
Monitoring and Evaluation (M&E) in CSI seeks to gather information, measure performance, and create an in depth understating of programmes and projects through the use of performance indicators.
It ensures that CSI programmes and projects are achieving the intended change and often recommendation is provided to correct actions if needed.
With many BI platforms, there are features that can predict trends based on historic data. With data collected through M&E indicators, this can assist in organisations maximising their investment in terms of creating positive social impact.
A CSI programme that looks at improving health care conditions in a community has been running for the past three years with all performance indicators remaining constant over the period.
Indicator reporting is required every month to ensure the programme remains on track and is achieving its anticipated goal. Data collected through these reports is interrogated and analysed through the BI platform.
After the first year, the programme manager quickly identifies a deterioration in the results of one of the indicators, and through the predictive capabilities of the BI platform sees that the programme will not meet its required goals if similar results are reported.
Through having a comprehensive view of all data available that has led to this trend being discovered, and having the ability create future predictions via the BI platform, the necessary steps and interventions can be taken to ensure the programme completes successfully and delivers the social impact as intended.
Understanding financial performance at all levels of the business assists in playing a crucial role in the budgeting, allocation and optimisation of resources.
Within the CSI context, funds will be allocated to support one or more CSI programmes and/ or projects. Like any project, budgets will need to be established and it is important to detail all associated costs required to complete project tasks.
Similar to the example above, monthly tracking of financial indicators will give insight into CSI programme and project performance. Here, budgets can be drawn up and forecasts can be created based on future projections made through features of BI platforms.
A financial forecast allows organisation to use resources effectively and allocate them where they are needed most. This is however only representative of what could be needed in the future based on historic data.
More specifically, finances associated with CSI related programmes and projects assists decision makers in maximising spend for greater impact and reach to beneficiaries. Budgeting and forecasting allows those in charge of CSI initiatives to monitor the financial indicators associated with the various programmes and projects.
The organisations BI application will be able to determine (through some minor configuration) the balance funds available for distribution, current allocation of funds, as well as surplus of funds.
While there are many benefits listed in this paper on what can be achieved with BI for social investment decision making, one needs to realise that not all organisations necessarily have the resources to implement this type of function.
With this in mind, and considering this in the general business context, we should be asking ourselves, what are the missed opportunities in BI?, and what will happen to my business if I don’t have this type of function?
Business Intelligence delivers much more value than gathering insights from disparate sources of data and presenting them in a visually appealing format.
Should organisations decide not to introduce a BI function, here are some of the opportunities that will be missed:
As part of an effective BI function, specific processes and methods need to be followed. The most common of these follows the Extract, Transform and Load (ETL) process.
The ETL process is composed of retrieving data from the original data source (extraction) manipulating the data into an appropriate form (transformation) and storing it in data warehousing (loading).
Through this process, data governance and quality standards are introduced which can be seen as a pre-requisite to ensure quality data is used in the reporting and decision making processes.
As we have seen, BI can be used in a social investment setting for a number of different applications. However, through more generalist business practices, a number of opportunities exist in the organisation to introduce operational efficiencies.
In terms of understanding the organisations current strategies, a BI function can assist in measuring organisational performance and progress, as well as creating organisational benchmarks to remain relevant in competitive markets.
Additionally, through implementing workflow and automation components, reports can be published in a timely manner and allows for data and information to be accessed in real time.
Although there are a number of different factors that determine how CSI programmes and projects are identified and implemented, the CSI landscape and readiness for social investment in South Africa shows immense potential.
The reality is that organisations are no longer investing in social good causes for so called “tick box” exercises. They are instead applying themselves strategically in terms of the data and information available to them, data and information that can be managed through business intelligence platforms that create value, add insight and can result in a sustainable positive change in the South African development sector.
Organisations are becoming more reliant on the data and information they have in their possession for problem solving and decision making.
As this data and information is being created at volume, there are very few ways of managing it and making sense of it meaningfully.
Technology is seen as an enabling function in many institutions and is seen to support business operations and add value. In the same sense, technology can assist in supporting CSI initiatives as well as providing insights that will create and add value to social investment initiatives in South Africa.