Problem & opportunity

Susan L. Albin

INFORMS President
Susan L. Albin

INFORMS has a developing problem and a rich opportunity. The problem is finances; the opportunity is analytics. And the opportunity doesn’t just help solve the problem, but it also helps us broaden our influence, embrace fellow practitioners, develop our member base and better serve the broad community.

First, the problem: With all the talk these days of unbalanced budgets, deficits and declining revenues, you might think that INFORMS too is having financial difficulty. Well, that isn’t quite the case. We are in good shape with reserves to buffer us through these difficult economic times. However, like many universities, businesses and even states, over the last few years our annual operating expenses have exceeded expectations while our yearly income has not. We have to bring this operating shortfall under control. No organization can safely sustain an unlimited number of deficit years.

An area of particular concern is publications. Traditionally we depend on publications for about 60 percent of our revenue. However, the scientific and non-scientific publications markets are dramatically changing. (For example, consider the plight of many mainstream newspapers and magazines.) It is already becoming clear that we cannot continue to depend on publications to subsidize our many non-revenue producing activities.

The necessary and obvious is clear: Increase revenue for the future and decrease expenditures starting now. The INFORMS Board and staff have been working hard to do just that.

First, the relatively (only relatively) easy step – reducing expenditures: For the 2011 budget, this means cuts and reductions in some programs and services, as well as diminished resources available to our dedicated volunteers. Each of us is, of course, most concerned about reductions that directly affect our own projects or programs or communities. However, reductions were made in virtually all areas of operations – publications, meetings, membership, Board and committees, support services such as IT and marketing, and staffing.

Now for the harder step, and the opportunity I alluded to. Clearly, we have to increase revenues and our opportunities lie with the word “analytics.” It is a word accessible to everyone including the cousin who looks at you quizzically when you announce you do “operations research.” Analytics is recognized as a business function compared to O.R., which is sometimes seen as a collection of highly specialized tools.

Broadly, analytics includes all the steps involved in making rational enterprise decisions. The first step is typically descriptive, generating reports and analyzing historical data to identify patterns and trends. The second step is predictive, using models to predict future trends. The last step is prescriptive where specialized tools like optimization and simulation are used to identify new and better ways to run things. What kind of analytics practitioners would be a good fit for INFORMS? Let us call these practitioners of advanced analytics. Their work goes beyond the descriptive step, beyond simple Excel spreadsheets and reports.

So the idea for increasing revenue is this: Let us broaden the appeal of INFORMS and offer services and products that will increase the number of analytics practitioners who participate. The Board has commissioned an eight-week professional marketing study of what we can provide for this new group of members and what the costs and benefits would be. In particular, I thank Jack Levis, VP of Practice; Anne Robinson, VP of Marketing, Communications and Outreach; and Gary Bennett, Director of Marketing, for their leadership in this.

The study estimates that there are 100,000 analytics professionals in the United States, noting that INFORMS only has only 2,600 U.S. practitioner members. This is a tremendous opportunity – a market we can tap into. Further, the study identified the top sectors that analytics professionals work in, namely: manufacturing, financial services and the public sector. Analytics practitioners are interested in enhancing their skills within the context of their work. So our offerings should be organized around major sectors, not around particular techniques. Our offerings must be revenue producing for INFORMS and valuable to analytics practitioners and their companies.

It is important to me that INFORMS continues to attract and serve the academic community and the practice community that uses highly advanced methods. Of course, I want to keep the INFORMS that I know, and there is no reason why that shouldn’t be the case. The idea is to add a new group of participants and, at the same time, provide valuable services that could generate revenues for INFORMS.

Here are some examples of revenue producing services that INFORMS could provide: For companies that desire to develop or enhance their analytics capabilities, INFORMS could offer executive networking, corporate training programs and even boot camp-type programs by sector experts. INFORMS could offer practitioner certification in advanced analytics and the coursework to prepare for the certification. This would benefit the many companies seeking to recruit analytics practitioners, as well as individuals with assorted math, science and engineering degrees. INFORMS could offer practitioner publications and especially online initiatives including a “Consumer Reports” on analytics tools.

In summary, we can’t do business as usual. We can, however, be a powerful force in increasing the use of analytics and, of course, operations research in business and in the public sector for improved products, services and efficiency for all. What I’ve outlined here is an opportunity that can spread the use of analytics and at the same time begin to resolve the financial problems that are only growing bigger.