A credit union attempting to chart its future financial course no longer has to rely on gut instincts, educated guesses or even a crystal ball. Increasingly, CUs are delving into the world of what’s called business intelligence.

The term business intelligence, or BI, was coined by a computer scientist at IBM over 50 years ago. In an article in the October 1958 issue of IBM Journal, the German-born Hans Peter Luhn defined “intelligence” as “the ability to apprehend the interrelationships of presented facts in such a way as to guide action toward a desired goal.”

In the case of credit unions, the “desired goal,” particularly in these difficult economic times, is to be able to make faster, better business decisions.

That’s something many experts say spreadsheets are increasingly unable to help with.

“You get a lot of perspectives when you mention ‘business intelligence,’” says Patricia Valentino, senior vice president and general manager at CUES Supplier member FIS, Jacksonville, Fla., one of the many companies offering software solutions for credit unions seeking to better understand financial data. “It really boils down to the concept of being able to take data, create information and answer questions about your business.”

The questions BI applications can be used to help answer can be as varied as the institutions offering or using them. Some credit unions have created entirely new departments while others have used the data supplied by BI processes to measure the success of a particular product. BI can also be used to deepen the relationship between the CU and its members.

Excel: No Longer Does

Financial institutions have used Microsoft Excel and its predecessor, Lotus 1-2-3, to cull data from their systems for some 25 years. But Excel’s days as a useful utility for credit unions are winding down, say experts.

William Soward, president/CEO of Adaptive Planning, maintains that business has gotten too intricate for financial institutions to continue to rely on a spreadsheet when attempting to understand their “cash positions.”

He cites the example of a finance department employee creating a spreadsheet only to see the document undergo numerous revisions. “Time is passing with multiple revisions. Increasingly, the objective is to get your key stakeholders involved in the process in as close to real time as possible. So, if someone makes a change, it’s automatically replicated through the rest of the model. At some point, that business becomes too complex in terms of multiple products, branch locations, changing business models and adding or subtracting people over the past 18 months. It’s those kinds of things that drive people crazy in Excel today. It takes too long. In 2010, the stakes are too high and time is too valuable to do things the old-fashioned way.”

Adaptive Planning, founded in 2003, is a Northern California-based company offering software alternatives to spreadsheets like Excel.

$1 billion/88,000-member Westerra Credit Union in Denver saw its reliance on Excel begin to wane in the summer of 2009 when the credit union acquired programs from Adaptive Planning.

“The Excel model we were using was somewhat cumbersome and slow,” says Jennifer Myers, VP/finance at Westerra CU. “It had a lot built into it and was powerful. However, it was reaching the end of its capability.”

According to Myers, “We wanted to move away from being collectors and managers of data that was coming in from our various branches to being able to be more like business partners and being able to analyze that information.”

It didn’t take long for Westerra CU executives to note the positive changes. “On the capital side, they were able to more quickly see how the capital items were impacting the operating and personnel decisions,” explains Myers. “So, instead of waiting for someone to input that data, they could immediately see the results if they made a change in, for example, the personnel budget and how that would affect the operating budget. I’ve already seen improved efficiency in terms of my ability to work with the team to review, analyze and summarize budgets for executive and board approval,” she adds.