Analytic Techniques For Decision Support

1. Analytic Techniques For Decision Support ASMC – PDI Orlando, FL June 3, 2010 Ron Maccaroni rmaccaroni@cox.net

2. Decision Support Definition Enabling decision makers to make informed decisions that wisely and better utilize resources, and improve program and operational effectiveness. Why is this important?

3. Why Should We Care About Good Decision Support? • Huge annual deficits contributing to a $13+ trillion, and growing, federal debt. • Trillions in unfunded liabilities. • Medicare, Medicaid, and Social Security costs will increase dramatically. • Uncertain world climate can lead to future unexpected events that increase financial burden on Federal budget/programs. • Growing financial burden on the States and Localities for services and social needs.

4. What It Means To YOU! Today there are challenges in all areas of government. But! There are also opportunities for those who are prepared.

5. Objectives Of Presentation • Emphasize the need for relevant, data-driven analysis to support decision making. • Demonstrate the need and benefits of using a structured approach to analysis. • Discuss an example of a structured analytical approach.

6. The “Watchwords” • Accountability and Transparency • GAO changed its name from “General Accounting Office” to “Government Accountability Office.” • Accounting and auditing professions are now referred to as the “accountability professions.” • Many politicians, academicians, private sector leaders, and “citizen intermediaries” refer to both terms. • Laws passed that call for either or both.

7. What’s Different Today?The New Playing Field • Focus on achieving and measuring results! • Agencies must demonstrate they are getting results when preparing budgets and reporting annually. • Citizens are more interested in seeing results from public expenditures and meeting their expectations. • Greater use of the Internet for public access to information on government operations.

8. Working For The People! Budget of the U.S. GovernmentFiscal Year 2011 • The American people deserve a Federal Government that: • Respects their tax dollars, and uses them effectively and efficiently. • Is transparent, fair, and responsive. • Is constantly looking to streamline what works and to eliminate what does not.

9. Drivers Of Stronger Analysis To Support Decision Making

10. What Is The Focus OfDecision Making Starts The Mission . . • What should / needs to be done? • For whom? • Why is it important – what is the desired / expected impact? Which Drives Subsequent Decisions . . • How should it be done? • By whom? • When? • At what cost?

11. . . . Leading to Performance Management Decisions Execute Goal/Objective Programs • Outcomes – Results • Customers • Outputs – Products/Services • Activities • Inputs – Resources • Budget • Key questions: • Is resource use having intended results/impact? • Is the investment worth the results? • How good is the management process?

12. Typical Types Of Analysis Supporting Decisions • Problem/Issue • Budgetary Resources • Financial Condition • Business Processes • Cost / Benefit • Policy / Program Design Alternatives • Program Operations or Impact

13. How Was The Analysis Done? • A decision-maker should always know how an analysis was done in order to: • Know how solid it is. • Be comfortable with and be able to defend any decision made based on the analysis.

14. So . . . What’s In YOUR Analysis? • Inconducting analysis, how do you know: • What question / issue / concern / need you should focus on? • How reliable, verifiable, relevant, sufficient, and consistent the data you depend on are? • The best type of analysis to perform? • Are you at risk if you don’t know?

15. Basic Guidelines For Decision Support • Ask questions; be willing to wonder. • Define the problem / concern / question / need. • Examine the evidence -- data. • Analyze assumptions and biases. • Avoid emotional reasoning. • Don’t use either / or thinking, or over generalize. • Consider other interpretations. • Tolerate uncertainty / questions.

16. Structured Approach To Conducting Analysis • Objective and systematic way of collecting, examining / analyzing and reporting information to support decision-making. • Conceptual way of thinking. • Applies to all aspects of managing programs, finances, and operations.

17. Structured Approach To Conducting Analysis (cont’d) • To be effective, analysts must: • Understand organization’s business. • Understand how analytic “need” relates to the business. • Apply sound, thorough analytical methods specifically tied to the “need.” • Provide useful information to support decision-making. • Analysis for decision-making leads to continual line of questioning.

18. Five Step Structured Analytic Approach Step 1 - Define Questions Step 2 - Identify Data Sources Step 3 - Collect Data Step 4 – Conduct Analysis Step 5 – Present Results

19. Step 1Defining Questions • Critical starting point -- Question will drive the entire analysis. • Analysis must zero in on user’s need. • Critical considerations: • The user’s business and role in it. • What the user needs / wants to know and why. • How the results will be used for decision-making. • Thoroughness requires asking 6 key questions = “what,” “where,” “when,” “who,” “how,” and “why”

20. What Is The Question? • How effective is the highway patrol at increasing safety?

21. What Are The Real Questions? • How effective is the highway patrol . . . • Do resources used give adequate security? • Are fatalities per 100,000 miles going down? • Is ratio of convictions/violations going up? • . . . at increasing safety? • Is the number of accidents going down? • Are there fewer safety-related incidents? • Is there less crime on the roads?

22. Step 2Identify Data Required • Key question = “What data do you need to answer the question?” • Data collected from: • Primary sources = you collect • Secondary sources = others collected • Sources and quantity of data gather depend on: • The questions to be answered. • The availability of data. • The time allowed for the analysis. • If data doesn’t exist, revisit questions.

23. Consider Three Data Categories • Budgetary • Prospective • Retrospective • Program • Strategic and annual plans and performance • Program design, operation, and results • Financial • Cost of operations and financial position (assets, liabilities, net worth, revenue, expenses) • Cost data by office, program, function, output (product or service), or outcome (result)

24. The Data Quality Axiom Assumption = All decision are data driven. The quality of the decision can be no better than the quality of the data supporting the decision!

25. Step 3Collecting The Data (Sound like the easy step?) • Key questions in deciding how to collect data: • Where and how are you going to get the data? • Will it enable you to answer the questions? • Common data sources: • Records = reports, manual/automated files. • People = within and outside the organization. • Time available key to source and amount. • Verification important = reliability, completeness, accuracy, relevancy.

26. Data Collection Hierarchy TIME REQUIREMENT Standard Agency Reports Low Automated Systems Manual Files Personal Interviews Focus Groups Surveys High

27. Step 4Analyzing The Data • Analytic method = steps taken to understand, display, or interpret data. • Methodology dependent on question(s). • Methods numerous and varied. • Important to know purpose / function of each and when to use them. • Review results of analysis: • Did it address question(s)? • How sensitive is it to internal / external influences?

28. Analysis Axiom The rigor of the analysis must reflect the risk / significance of the potential impact of the decision!

29. Conduct Analysis Methods Screening There Categories - Which fits question(s)? • Descriptive = What exists? • How was the high-tech training program implemented? • Normative = What exists compared to what was expected? • Were job-placement goals of the high-tech training program met? • Impact = Did the initiative achieve the intended results? • Did the high-tech training program have an effect on job-placement rates?

30. Determining The Type Of Analysis • Primary Data Analysis • You collect, assemble, and analyze data. • Secondary Data Analysis • You use data gathered and in some cases analyzed prior to your own analysis. • Evaluation Synthesis • You use the combined results from two or more previous analysis.

31. Analytical Methods And Their Uses

32. Putting The Steps Together - Example Step 1 • Should $5M be added to inoculation program advertising for face-to-face contact to enhance its effectiveness? • Is current approach meeting its goals? • If not, why and what can/needs to be done? • If yes, can more aggressive goals be set/met? • What additional benefits are expected from face-to-face approach?

33. Putting The Steps Together – Example (cont’d) Step 2 • Program, budgetary, and financial Step 3 • Reports, systems, files, and interviews Step 4 • Normative and impact • Primary, secondary, and evaluation synthesis • Content, trend, statistical, case study, benchmarking, before-after, field experiment

34. Step 5Reporting Analytic Results • Important phase of process. • Impact decision-making; bring about change. • Reporting methods (written vs. oral vs. video) have different advantages. • Goal = convince audience that work done and results reported is reasonable, appropriate, and actionable. • Answering analytic objective, i.e. question, is most critical goal. • Remember what drove the analysis – customer’s need / interest / role, and planned use of results.

35. Structured Approach Steps Interactive And Overlapping

36. Revalidating Questions(Continuous throughout analysis!) • Regularly re-check and validate questions. • Questions may need to be modified, dropped, redefined or added. Analysis Feedback Loop Define Questions Identify Data Sources Collect Data Conduct Analysis Report Results

37. Key Points to Remember • Accountability expectations drive need for “hard” decisions, and therefore critical analysis. • Structured approach = objective/systematic way of collecting, examining, and reporting information. • Five step structured approach: • Identify question(s) • Identify data • Collect data • Analyze data • Report results • Steps highly interrelated – drives need to revisit results of each step throughout process.

38. Summary Analysis • Growing need = support difficult decisions. • Growing importance = support performance and financial accountability. • Best if: • Follows a structured approach. • Based on user’s/customer’s questions/need. • Impacts decision-making/results.

39. Remember . . . African Proverb Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up. It knows it must outrun the slowest gazelle, or it will starve to death. It doesn’t matter whether you are a lion or a gazelle. When the sun comes up, you’d better start running!