Real Time Means Real Change

More companies are striving to be round-the-clock, round-the-globe businesses that support their customers, suppliers, and employees with real-time data. The Web, global operations, offshore outsourcing, and other technology-enabled functions have given companies—whether they're financial-services firms, retailers, or manufacturers—the means to operate 24 hours a day in real time. However, this kind of performance doesn't come without challenges. This month, Gap Analysis explores the reality of real-time business operations. We set out to discover how effective IT is as the key enabler, and how important business processes are to companies' 24/7 efforts.

What's new? Conventional wisdom says emerging, specialized technologies, such as utility computing and executive dashboards, will help companies achieve real-time operation in the future.

The Gap: Vendors have been touting technologies that give enterprises greater flexibility and the capability to respond rapidly to marketplace changes and customer demands. But many companies seem to favor getting the most out of the technologies they've already invested in. When asked which method has proven more effective in achieving real-time operation in their companies, only 16% of the 52 business and technology executives surveyed by Optimize Research cited investments in new, specialized technology solutions, such as grid or utility computing, which enable more distributed, flexible computing.

By comparison, nearly half of the respondents said the more effective method has been to increase the efficiencies of existing IT solutions. Another 19% said both methods have proven equally effective, and 17% said neither has been effective.

Web services and data warehouses/data marts (54%) are the most significant technology investments companies have made in the past 12 months to reduce the time it takes for operational data to reach managers' desks. Other technologies that ranked fairly high include data-analysis tools and EAI. Much lower on the list were inventory-management tools (26%), CRM software (22%), supply-chain management tools (20%), call-center software (20%), and instant-messaging software (4%).

With IT spending still tight, many companies have had no choice but to squeeze the most out of existing systems. But avoiding new technology investments could mean lost opportunities to speed business processes.

Education Management Corp., Pittsburgh, which owns and operates colleges and universities in North America, is striving to give students, faculty, and others access to information such as grades and attendance data in real time. The company is building these capabilities by combining legacy systems and newer IT investments, such as business-intelligence software and mobile/wireless computing devices, says Christopher Kowalsky, senior VP and CIO. "We're moving more and more into real-time delivery," including providing online courses and access to virtual student and faculty communities, Kowalsky says.

Time warp: A big part of being a real-time business involves monitoring business and IT processes and collecting data in real time.

The Gap: Clearly it's important that people in key positions get fast access to data related to business operations. For example, about 60% of the executives said it's a high priority for decision makers and managers within their enterprise to access information gathered in real time. And a huge majority—88%—said senior executives have asked IT management to reduce the amount of time it takes for key operational data to reach their desks.

But not many companies in the survey are doing much real-time monitoring or data collection. Executives were asked which processes or data types their company monitors in real time rather than by batch processes. (See table here.) The only response selected by a majority of the executives—58%—was Web site traffic/E-commerce activity. Fewer companies monitor real-time data on sales, customer interactions, inventory, customer shipments, output (products/services), and performance of individual software applications. Fewer than one-third collect information provided by business partners, data on incoming supplies, or product pricing information in real time. Only 19% of the executives rated their companies as extremely effective at monitoring real-time operations, while 75% said they were somewhat effective, and 6% not at all effective.

Companies that are collecting and acting on data in real time are seeing benefits. Aerospace manufacturer Lockheed Martin Corp. in Bethesda, Md., had been relying on a mostly manual process of gathering data from multiple legacy applications for the procurement of materials for certain products, says CIO Joseph Cleveland. The cycle time for gathering data and making a procurement decision took weeks, and sometimes months, he says. To speed up the process, Lockheed Martin deployed EAI software to integrate the multiple systems used for materials management. Because workers can access and act on relevant data more quickly, the same process now takes only days.

Process problems: Always-available, rapid-response companies must have business processes in place to benefit from real-time data.

The Gap: That seems obvious. After all, how can a company consider itself a real-time operation if its business processes don't gain the fullest possible benefit from information as it's gathered from the Web and other IT resources?

Yet, only one-quarter of the executives in the survey said their companies have business processes in place to take full advantage of real-time information. For the other three-quarters, even having the latest technology to gather and analyze data in real time likely won't pay off fully, because the business processes aren't in place to generate gains from this information (see Real-Time Information Blows In).

Telus Corp., a telecommunications company in Vancouver, British Columbia, deployed an enterprise business-intelligence suite and integration software from Information Builders to speed the process of getting information to its field-service workers throughout Canada. The move has led to operational cost savings of about $1 million per month, says Kevin Lam, manager of business performance at Telus.

But along with the technology rollout, the company implemented a process change that included the consolidation of all its field-maintenance workers into a single unit, Lam says. That process change, with the technology deployment, let Telus respond to customers more quickly.

Culture shock: Corporate culture plays a significant role in the creation of a real-time business.

The Gap: The importance of corporate culture in the real-time enterprise shouldn't be understated. If employees—and business partners such as consultants and other service providers—aren't called upon to deliver rapid response to customers, or if strategic initiatives don't emphasize the importance of flexibility and availability, companies will have a hard time delivering real-time performance.

A majority of the executives—56%—said their corporate culture isn't designed to accommodate real-time interaction with customers and partners. Part of the challenge is getting employees and managers to buy into the strategy. More than 40% of the executives said their company consistently encounters resistance among staff and management in developing a real-time corporate culture.

It's up to executives at the highest levels—including the CIO—to drive home the importance of developing a culture that promotes rapid response to customers and others when appropriate. "We approach [real-time response] with a people, processes, and technology kind of mantra," says Cleveland of Lockheed Martin. "Culture and process have to be changed, and people have to know how to leverage the benefits" of real-time information.

Work in progress: Competition and Web-based technology are making the real-time organization a reality.

The Gap: That's true, but it's not happening overnight. Of the executives surveyed, only 10% said their companies have built an information architecture or network capable of delivering real-time information or data inputs to managers. About half the executives said they've partially implemented this kind of architecture, and another 40% said it's still only a goal. More than 40% of the executives don't consider their companies to be global, 24/7 operations with remote employees and partners accessing data in real time.

In the future, it looks as if developing a real-time business will be a priority as companies spend more on IT. Nearly three-quarters of the companies will have significantly higher or somewhat higher total investments in real-time operations in 2004 compared with 2003. A mere 4% said they will spend less this year than in 2003.

What's spurring companies to improve the speed and quality of the data they provide? Among the key drivers: business agility and responsiveness to changing conditions, cost reductions, improved operational performance, customer retention, and visibility into key business-performance metrics.

Share your experience

Is your company striving to become a 24-hour, real-time enterprise? What's IT's role and what are some of the biggest hurdles to building a real-time business? Let us know by participating in our Optimize forums at www.optimizemag.com/forums.htm.—Bob Violino