A mind-shift in thinking about driving impact for NGOs through technology — and what ISVs can learn from this

An interview with Erik Arnold, CTO for Tech for Social Impact, Microsoft

A mind-shift in thinking about driving impact for NGOs through technology — and what ISVs can learn from this An interview with Erik Arnold, CTO for Tech for Social Impact, Microsoft

Erik ArnoldA strong purpose typically leads successful services organizations. They’re incredibly customer driven, realize it’s their people that stand between failure and success, and invest strategically to drive sustainable impact.

In this blog, I’ll share a story of a mind-shift in thinking how NGOs can create a more significant impact through technology. The person behind the idea is Erik Arnold (https://www.linkedin.com/in/erikaarnold/), who at the time I spoke to him worked in the position of CIO for PATH (https://www.PATH.org), and now is the CTO for Tech for Social Impact at Microsoft. (https://www.microsoft.com/en-us/nonprofits/home)

PATH is an international health organization based in Seattle, WA who believe innovation can save lives. Their mission is to improve health by accelerating innovation across five platforms — vaccines, drugs, diagnostics, devices, and system and service innovations.

Eric, what drove you to the NGO world?

That’s simple: I started working for PATH for its cause — Driving transformative innovation to save lives.

So, when you joined, what did you see?

At the time I joined, eight years ago, PATH had 900 staff across 19 different countries and only five people in IT. In fact, there wasn’t an IT department before I joined. The small team were part of facilities and technology was just a tool, not a strategy. It was a necessary thing that people had to have, a computer. The organization what just starting to think about how digital technology could accelerate the impact of the mission.

When I joined, there were 47 different legacy systems supporting past business operations. Systems were disaggregated, there was no data or reporting strategy, and the cloud wasn’t on anyone’s mind. I found lots of legacy, tons of Excel and Access on local machines, and on-premise on old servers. The result: a very reactive, labor intensive organization characterized by manual re-keying of data. It took a long time to deliver basic reports, and leadership needed better visibility into the business performance of the organization.

In an environment where you have so much shadow IT and disaggregation in your financial tracking, you end up adding that labor into each one of your mission’s projects. That can diminish the impact, which in return could affect donor trust and the funding.

So, what did you do?

We knew we needed to make investments. So, I started to challenge the status quo.

The first thing I heard was “We need a new tool.” But I knew that wasn’t the whole answer. As a great mentor once told me, technology amplifies bad process. I knew we needed a new ERP, with all the requisite system rationalization, standardization of processes, and a focus on efficiencies to drive out the noise and create cost savings as an ROI. But even that wasn’t the right first answer.

Standardizing, cutting cost and increasing efficiencies only get you ‘so far.’

For nonprofits, it’s not only about driving bottom line savings, it’s also about managing the business performance of the mission-led projects. Nonprofits need to balance the need to direct donor investments towards impact against the need to build and run an effective organization. Too much cost cutting actually creates inefficiency, and too much bureaucracy slows down innovation. At PATH, it was about driving lives-saved and program impact. To understand impact, we had to look at the health of our individual grants and awards. We had to look at program delivery against milestones. As a data-driven organization in a data-driven world, PATH needed better quality data faster. The project had to focus on getting the best information to our analytics teams to make sure that smart, information based decisions became the norm.

Here’s why: PATH was about 97 percent grant funded when I joined. And the organization ran approximately 200 concurrent projects at any one time. If PATH wasn’t spending to plan for a project, we needed to know as soon as possible and see if we need to tune, mobilize other resources, or work with our partnerships in different ways to make sure our programs and our goals stay on track. It wasn’t about only about saving cost, it was also about lives.

This funding cycle, the tendency to underinvest in nonprofit operations, is a vicious circle that needs to break. The world of today is not the world of tomorrow…. Funding strategies are changing. Business models are changing and shifting from centralized international funders to local organizations. The volatility of the economy and politics introduces uncertainty. Natural disasters seem to be happening with more regularity. Donor compliance criteria is getting more complex. Competition is getting fiercer and fiercer.

So, it’s about constantly challenging the status quo. Changing the norms about why nonprofit organizations should invest in themselves. Today it’s too often about efficiency when sometimes you have to make a big bet to drive transformation and delivering the most impact.

So how did you approach that shift?

Start with the end in mind — and rephrase the question. For our particular project that was: “How can an ERP be a great thing for a maternal child health program in Uganda?”

This changes the requirement 180 degrees. It’s about focus. Every project you invest in should be a step forward to making the world a better place — it’s about impact. For NGO’s like PATH impact boosts their ability…:

  • …to discover new innovation opportunities
  • …to respond to new requirements, events and market opportunities quickly
  • …to transform opportunity into action
  • …to ramp up service delivery where it’s needed most
  • …to execute programmes effectively
  • …to drive project success consistently
  • …to swiftly recover from offsets

And that’s all about data and insights. In relation to our specific ERP project, it became clear every component in PATH’s architecture needed to add value to each other. They all needed to add value to all critical front-office components, and had to be built around agility or the weakest component would become the bottleneck and reduce the potential impact. In addition to ERP, it had to be about creating a single information architecture that combined operational data with institutional indicators, project surveillance data, climate data, census data, and disease burden information. It was about continually improving the data quality, as well as the speed of data.

Once you get that right, you can do fascinating things. You can spot innovation opportunities, you can spot over- and under performance, and so much more. That drives organizational transformation and programme impact — and as a result create the ability to save more lives, which in return attracts new funding to do even more.

What’s your conclusion after executing this?

My conclusion was that even commodity applications like an ERP could be the foundation for successful digital transformation. Yes, it’s about spending less donor money to manage business performance — the Efficiency & Cost saving story. Yes, it’s about transparency.

But more importantly it’s about information — to measure, understand and improve. Nonprofit success is defined by making smart decisions to free up money and to move the money towards innovation/intervention.

What’s your advice to another NGO?

There are five different aspects to my advice:

  1. Start with the end in mind. Spend time defining ‘the customer.’ Who is the customer for us in this? Is our customer our beneficiary? Is our customer our partners? Is it the government we work with? Is it internal staff? How do we deliver better to each of those ‘customers’ with this project?
  2. Approach your project as an investment, not a cost. Take a holistic approach — The whole value should be bigger than the sum of its parts. Projects like ERP are not sexy; therefore, they often don’t get funding. Work to translate the investment into impact terms. If this is just a story about efficiency and cost-effectiveness, it will put program staff to sleep. As far as donors are concerned, there’s no floor concerning how inexpensively a non-profit should be able to operate. But we all know we need to make some investments in our operations. Otherwise, we’re hideously inefficient.
  3. Be prepared to sell and market inside your organization. You have to have a crisp strategy that people can see and understand in programmatic terms and understand how a digital transformation strategy relates back to their work, and what it is they’re trying to do in the field. It’s a sales job in many ways.
  4. Nothing is predictable, i.e., change is a constant. Take into account that we, NGOs, are people and project centric. We’re data/information driven, not process driven. Nothing is repetitive. We’re not manufacturers.
  5. And embrace the cloud — That’s where the innovation happens to drive transformative impact. It’s fundamentally about the productivity of our people — all of them involved in the programmes we drive. Operating in the cloud unlocks so many things. That’s where vision and reality meet.

My takeaways for ISVs — What can you do differently to become remarkable (again)

The points Erik makes are not only of value to other NGOs — they have a broader significance. There’s a big lesson to learn for ISVs, i.e., the vendor side.

Here are three points to challenge yourself:

  1. Is the value of your solution really what you think it is? Too often communication is limited to ‘what’ the solution does (i.e., the features), thereby completely ignoring ‘the why’ a customer should care.
  2. Is your communication addressing the vision / broader ambitions levels of your customer, or is it limited to just the internal issues they need to solve? Remember successful organizations are the ones that can create a lasting, unique impact on their customers — and as such, all their investments should bring them a step forward to that. Imagine if you’d position your solution differently — what would that do to your win-rates and deal value?
  3. Is your product roadmap optimized to allow your customer to drive maximum value? I too often see roadmaps that are frontloaded with features that are about sub-optimisation, deliver sub-optimal value (at best). So challenge your roadmap — and work strategically with your customers to find those nuggets that help them to take the value they deliver to the next level. Technology advancements of the past years allow you to think big — so don’t ignore that opportunity. If you don’t take that chance, your competitor will.

Good luck!

And please share your experiences how you / your company is using technology to amplify the unique strengths of people to change the established rules, and deliver value unimaginable before. Value inspiration at its best is when it helps create a better world for all of us. That’s a cause worth aiming for. So share!