Timely Response

Real time, right time, whatever you want to call it, dozens of vendors are lining up to give your company information "at the moment you need it". Is it just more hype or does real time wait for no organisation?

Of all the treacherous adages that have imperilled human beings over the centuries, "What you don't know can't hurt you" just about has to take the cake. In business - as the whole business world must be aware - ignorance is not bliss, and what you do not know can actually cut you to the quick. Under the real-time demands of today's economy, many companies are recognising the only sensible way to compete is to ensure all potentially useful information is monitored in real time and distributed to interested parties the instant it is produced.

Neither radically innovative nor groundbreaking but decidedly challenging, the real-time enterprise (RTE) promises staggering efficiencies and high levels of service. And according to Barton Goldenberg, president and founder of the US-based CRM and RTE strategic advisory firm ISM Incorporated, and co-founder of the RTE Conference series, on the structural efficiency side, RTEs can expect to achieve sustainable, competitive leadership. Indeed when properly implemented, Goldenberg told the recent DCI Enterprise Analytics and Data Warehousing conference in Chicago, it is not unusual for RTEs to achieve oligopoly or even monopoly positioning within their industry.

Take Cleveland-based KeyCorp, one of the US's largest bank-based financial services companies with assets of approximately $US84 billion. Goldenberg told CIO in an e-mail interview RTE has helped KeyCorp achieve its strategic direction of offering integrated financial services nationwide and enabling customers to have all financial service needs fulfilled in real time. In fact the RTE has enabled KeyCorp to provide new bank products and functionality 12 to 18 months sooner than most peers, and to achieve higher Internet banking penetration into retail banking clients than its peers, giving it a sustainable, competitive leadership position.

"By the end of this decade, the majority, if not all organisations, will be RTEs because of the powerful value proposition that comes along with being an RTE," Goldenberg says. "This includes both execution efficiencies - such as reduced costs, operational excellence, enhanced productivity, better decision making and customer delight or loyalty - as well as structural efficiencies - such as sustainable, competitive leadership. If CIOs are concerned about helping their company to remain competitive and to stay alive, then they should already be actively investigating the RTE model. Companies that work in real time have a distinctive and measurable market advantage."

Almost all companies operate partly in real time, Goldenberg says, but few large organisations are operating in real time, all the time. The approximately 50 to 100 RTEs currently in existence include such prominent names as Amazon, Best Buy, Cisco, DaimlerChrysler, Dell, deNovis, eBay, FedEx, GE, GM Trucks, KeyCorp, Morgan Stanley, Motorola, NSA, PJM, The Limited, Tyco, UPS, US Steel and Wal-Mart Nerve Centre.

Slow Advance

In Australia, Gartner research director business applications Kristian Steenstrup says organisations are only creeping towards RTE, doing the work in a fragmented fashion because they are looking at real-time connectivity for individual transactions rather than adopting a holistic real-time approach. "I think they're still falling short of what the ultimate goal could be or should be," he says.

The barriers are twofold: organisational and technological. Steenstrup says without the incentive of "manic competitiveness", which is rampant in the US, Australian organisations have less incentive to introduce these types of business improvements and are less likely to recognise the value-add that exists. And he says although companies are capable of delivering greater customer satisfaction via an RTE, it is only worth doing if it stands to make the company more money.

Steenstrup expects RTE to gradually build for two reasons. Number one, the technology will become more accessible, cheaper, easier to use and more ubiquitous, so that the organisations will have a lower threshold of interest to implement it. "So [for ROI], the 'I' will get smaller and the 'R' will get bigger," he says. "The other thing that will happen is that the 'R' in the ROI will increase because as other companies step along this road, the competitive energy within an industry sector will build up. That competitiveness, which will influence customer loyalty, will prompt you to undertake the 'e' in e-CRM."

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Nerve Centre

In Goldenberg's upcoming book, Creating the Real-Time Enterprise, he notes that an RTE interconnects its entire operations via internal and Internet applications so that all information can be shared in real time. This allows the company to function like a 24-hour nerve centre, capable of instantly alerting individuals to changes in customer demand, inventory, availability of supplies, competitive analysis and profitability.

A company can commence its RTE initiative from the supply chain, the ERP, the CRM or the e-business angle. However, in his book, Goldenberg writes of CRM as the real driver behind the RTE. "Many companies have already implemented CRM systems that connect suppliers, internal customers, distribution channel partners and end users together," Goldenberg says. "Sales, marketing and customer service CRM applications interconnect. Data gets shared across company personnel that touch the customer.

"Also, the CRM industry has considerable integration experience under its belt. While not always done with excellence, the industry has successfully integrated disperse data sources and has learned many lessons along the way," he says.

"And many, if not most, CRM initiatives and supporting systems include the implementation of customer touching programs that cut across demand and supply chains, which is a critical success factor for realising RTEs. Perhaps most importantly, there is the emerging 'www' generation. These future leaders tend to be active e-customers, and when they come to an organisation's Web site, they expect to be able to get what they need from the organisation when and how they want it. They do not question the value of the RTE. Rather; they question why it is taking so long to get there."

Value Proposition

Goldenberg says the RTE value proposition comprises both execution efficiencies and structural efficiencies. On the execution efficiency side, according to Goldenberg RTEs can expect a number of benefits.

• Reduced costs: this includes significantly reduced IT infrastructure/integration costs, on average 20 per cent reduction in the cost per transaction, and on average 15 per cent reduction on inventory costs. For example, one customer of US Steel's Straightline Source subsidiary, which provides real-time, online information visibility to manage supply and to reduce inventory management costs aimed at optimising steel procurement, realised a 15 per cent decrease in inventory levels, 10 per cent decrease in procurement costs, and a 90 per cent cut in communications time.
• Operational excellence: this includes accepting orders in real time and ensuring product availability, optimising order management and fulfilment, and linking real-time activities with demand planning. For example, during the first year of DaimlerChrysler's Mopar Parts Group's RTE system it was able to increase its average four-day fill rate from 96.5 per cent to 98.5 per cent, resulting in $US20 million savings in reduced safety stock and $US10 million savings in excess transport charges.
• Enhanced productivity: an increase of 10 to 20 per cent per employee per annum (that is, four to eight hours per week for an average 40-hour work week) is the norm, since personnel no longer "run around like chickens with their heads cut off" tracking down needed information. With discipline and incentive, increased productivity leads to increased revenues. For example, within the first month of implementing its RTE system, Kentucky-based FranlinkTyco Adhesives realised greater than a 100 per cent productivity increase - from 2350 line items picked and shipped on a good day to today's average of 5800 line items. Inventory accuracy also increased from 98 per cent to greater than 99 per cent.
• Better decision-making: this results from having more timely information, and being able to act on this timely information to enhance decision-making. At PJM Interconnection, which manages the electric grid for the mid-Atlantic states in real time while coordinating supply from more than 650 power generation companies, customers purchasing electricity in Pennsylvania now pay prices 4.5 per cent below the national average. Moreover, there have been no rolling blackouts on the grid in the years since deregulation began.
• Customer delight/loyalty: Customers appreciate respon-siveness regarding order information, financial information, support issues and so on. Dell's real-time order and fulfilment system has resulted in customer satisfaction in excess of 97 per cent and has helped to propel Dell to the number one slot in their area of the computer industry.

With the average organisation having in excess of three dozen IT applications needing to be integrated, which together consume approximately one-third of the organisation's IT budget, anything that can help to bring costs down is desirable. Goldenberg says RTE investments directly address this issue with RTE infrastructure and integration costs having both come down significantly in the past years. In other words, part of "tightening their IT belts" means putting into place RTE integration and infrastructure costs that drive costs down today and help move the organisation towards the RTE value proposition.

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Barriers to Implementation

Achieving RTE is hardly rocket science, but organisations do face significant barriers, which Goldenberg says can best be understood in the light of his "10 steps for Creating The Real-Time Enterprise", along with overall time frames for becoming an RTE.

STEP 1: Analyse your current building blocks

Successful RTEs build off current investments in the area of CRM, SCM and ERP. "I'm a strong believer that CRM is the driver behind the RTE," Goldenberg says. "Why? Because CRM systems already connect suppliers, internal customers, distribution channel partners and end users; because CRM already shares processes and data across sales, marketing, customer service and executive functions; and because CRM already moves data between CRM, ERP and SCM applications.

"So start out by analysing what CRM systems and initiatives you currently have in place. What you are looking for is an understanding of how best to exploit these efforts to become an RTE. For example, how can you leverage or expand your current CRM processes? How can you leverage or expand on the people changes that you already have put into place? How can you leverage and expand the technologies currently in place? Run similar analyses for your SCM and ERP building blocks."

STEP 2: Create your RTE road map

This includes creating a clear vision regarding how your company will function as an RTE, along with a road map that will include people, process and technology components. Your road map will lay out: the RTE processes that need to be in place and how to accomplish them, your RTE people issues and how to overcome them, and the required RTE technologies and ways to implement these technologies over time. Your road map also will describe how you intend to reach out to your suppliers and customers, usually in the form of focus groups, to validate your emerging RTE vision.

STEP 3: Prioritise processes and functions to automate

Next you want to prioritise the RTE processes and the RTE business functions to automate. For example, assume your RTE vision suggests you have three major business processes that require enhancements to become a RTE. You will need to agree on which of these three business processes you will implement first, second and third. "In other words, whereas the RTE road map (Step 2) leaves you with the total picture of the RTE elephant, in this step you are deciding on which pieces of the elephant you should be biting off and in which order," Goldenberg says.

STEP 4: Secure strong supplier, partner and customer buy-in

To secure buy-in on the supplier, partner and customer side, you have to determine and communicate what is in it for each of them - in other words, why they should be interested in participating in your RTE. "You will want to meet with them to allay their fears, to talk through their value proposition and to discuss key benefits to participating in your RTE," Goldenberg says. "One of the most effective tools in this step will be your RTE Communications Plan."

STEP 5: Demonstrate RTE value and gain top management support

To accomplish this, you will need to build a value proposition based upon both execution (lower costs per transaction, higher revenues/employee) and structural efficiencies (securing sustainable, competitive advantage). You can also include soft efficiencies (higher customer delight or intimacy), but the RTE value proposition has to have enough meat on the bone so top management overwhelmingly concludes that the value far outweighs the cost. A hint: wrap your RTE value proposition within your RTE business case, Goldenberg advises. "This is a critical step in that it is a potential stop point, a point where management can say: 'I'm just not convinced', and drop it, postpone it or send your RTE efforts back to the drawing board," he says.

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STEP 6: Launch change, training and communications programs early on

In an RTE, people work differently; they are very visible. "They cannot dust things under the rug, there are no private C drives, and such," says Goldenberg. "So you have to start to talk to people about what this is going to mean for their day-to-day jobs, and describe to them what a day in the life of the RTE is going to be like. You will need to determine whether they need to be retrained on emerging RTE processes and on the use of RTE technologies to support these processes. You will also want to launch your RTE communication program hot and heavy at that point in time."

STEP 7: Utilise new, real-time technical architectures and applications

There is an explosion in new real-time technical architectures and applications, and you will need to begin to understand them. They include impressive advances in integration and messaging environments, new network capabilities, new supply chain applications, entitlement capabilities, and the like. There are new, efficient ways to trigger RTE processes and workflow that allow one RTE software application to impact multiple other RTE software applications, all in real time. There are smart browsers that know who you are when you come in, that know what processes to evoke and how to optimise your customer experience each and every time you access the RTE.

STEP 8: Execute your RTE road map in small, accomplishable steps

"We have all learned from our ERP, CRM and SCM experiences that tackling too large a technology project dooms its success from the outset," Goldenberg says. "If you are going to implement a winning RTE, remember small bites and lots of successful quick wins. In today's climate where questions immediately get raised regardless of the investment type, let alone a large investment and commitment like creating an RTE, what executives are looking for is lots of measurable quick wins and the one thing that will kill your RTE is biting off too much too quickly, and not being able to show the value of what you have bitten off. Small, accomplishable steps will also help you to secure continued buy-in from upper management."

STEP 9: Deliver strong RTE analytics/operational excellence

You now have to make sure that at each step of your RTE road map implementation, you provide analytical feedback that reinforces the business value of your RTE to your top management team. At each stage of implementing your road map, you must deliver comprehensive analytics, including documenting your quick wins. On the operations side you must document operational excellence, which means writing down RTE procedures, policies and job description changes so that they can be repeated throughout your RTE implementation. Driving operational excellence throughout implementation of your RTE road map cannot be underestimated.

STEP 10: Measure, record and communicate success

This really closes the loop with Step 5, where you have demonstrated RTE value and gained top management support. The way to sustain continued support is by measuring your quick wins throughout implementation of your RTE road map, and then recording and communicating these wins on a monthly or quarterly basis to your top management team and your internal RTE users, as well as out to your suppliers, partners and customers. Ongoing measurement, recording and communicating must occur throughout your RTE lifetime.

Goldenberg says his experience suggests to create their RTE, organisations should plan on two to four months to accomplish Steps 1-5 (three to six months for a more bureaucratic company), and an additional six to 12 months for accomplishing Steps 6-10, with the understanding that Steps 6-10 get done in two-month deliverables.

"Whatever you end up with for an overall time frame, one piece of advice: do not expect or promise too much too quickly as this will serve as your own real-time exit," Goldenberg says. "Speaking pragmatically, I think that quick wins within four to five months is reasonable, but if you want to achieve sustainable, competitive leadership - like Cisco, Dell, Wal-Mart and other RTEs have demonstrated - think eight to 16 months forward."

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SIDEBAR: From Green to Keen

Aon, a leading provider of broking and consulting services for risk management, insurance transactions, reinsurance, employee benefits and superannuation, is implementing CRM as part of its push to become a real-time enterprise. CEO Peter Harmer says Aon is currently rolling out PeopleSoft CRM 8.0 across its Australian business. The system will be used by staff managing customer calls from complaints to general enquiries. It has essentially taken Aon from a green-screen system, which staff refused to use in preference for filing cabinets, to a flexible, intuitive browser-based system. Pilots of the new system have resulted in an 87 per cent increase in efficiency (from 15 minutes to two minutes per customer).

"From our perspective we didn't start necessarily with a decision that said: 'We needed to be a real-time enterprise'; we started from the position that said: 'Where are we at as a business and why aren't we fulfilling what we think intuitively is our potential?'," Harmer says. "And part of the answer was very simple. It was because we, like the rest of the insurance industry, has been far too product focused. I think generally our industry has had a tendency to try and squeeze client need into a product bucket, of one form or another."

To rectify that, Aon decided to invert the way it thought about the business and its clients, and to ensure that it properly understood the client need prior to choosing a product.

"One of the early realisations that we had was that Aon had come together through the mid-90s as a product of a series of mergers and acquisitions, and we had something like eight different transaction processing systems. If we were going to think about our clients and understand the totality of their needs, and then start to think about how we could mirror and match with products, services, solutions, we actually didn't have any place where we could go and see what our total relationship with our client was. We had to potentially go to eight different sources of information."

And with no visibility of trends in customer complaints and enquiries, it was impossible to create a feedback loop back to business stakeholders.

"Now four or five of our major business processes are captured by the CRM system and our productivity gains so far have been quite astounding. At a macro level we've grown the business in revenue terms in three years by 60 per cent, in a market that was pretty static, so we've taken our revenues from $150 million to over $250 million," Harmer says.

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Real-Time Data: Too Much of a Good Thing?

How real-time data feeds can be counterproductive

by Barbara Depompa Reimers

The need to speed up business decision-making to keep from falling behind the competition is driving companies to use real-time analytical tools. With them, they hope to more quickly exploit key corporate transaction data housed in databases, enterprise data warehouses and other data stores. But the move to instant analytic insights comes with big trade-offs and incremental costs, say analysts and users.

Glib executive orders to provide real-time data feeds everywhere in the company can be counterproductive if the data quality is low or the company doesn't have the processes in place to actually analyse and act on the data. Besides, real-time data analysis may be a high-payoff pursuit in only a few mission-critical areas of the company.

Those negatives don't appear to be quelling interest, however. In a December 2002 survey of 700 IT executives by US-based Evans Data Corporation, 48 per cent of respondents said they were already analysing data in or near real time, and another 25 per cent reported plans to add real-time analytics this year.

A key issue is how the term real-time analytics is defined, because there's confusion about what constitutes real time versus near-real time versus not real time. Joe McKendrick, an analyst at Evans Data, says a strict definition of real-time analytics is dynamic analysis and reporting based on data entered into an operational system less than one minute earlier. At most businesses, however, analytics is considered real time if it's conducted on data collected within the past hour, and near-real time is analytics conducted on data collected within the past 24 hours, McKendrick says.

Absorbing the Data McKendrick says the growing interest in real-time analytics can be attributed to the pressures on businesses to make faster decisions, keep smaller inventories, operate more nimbly and track performance more carefully.

Trouble is, there may be no reason to use real-time analytics if a company can absorb its transaction information only on an hourly, daily or weekly basis. For example, at New York-based MBIA Insurance Corporation, overnight updates work best to feed the OLAP engine used to help the company decipher risk related to mortgages, insurance policies and other services.

"What we've found is that overnight updates are plenty, as long as users can gain immediate access to the information they need to make business decisions quickly during the day," says Lynn Jacobs, associate vice president for IT applications at MBIA. Using the Essbase OLAP tool from Hyperion Solutions, business users at the insurer can quickly analyse financial information in order to assess risks and make fast business decisions. The number of financial analysis applications supported by the Essbase tool will be expanded this year from the current 10.

Too Many Iterations In many traditional business environments, real-time analytics can be overkill. Barton Goldenberg, president of CRM consultancy ISM Incorporated, offers the following example: Three managers meet to discuss business development issues, each armed with sales, market or target information they captured from the system at different times of the day. Each manager has created a snapshot to present an accurate picture, but the numbers won't match. "This situation will hardly help speed decision-making," Goldenberg says.

In other cases, real-time analytics may make it easier to make bad decisions fast, because of faulty data.

Managers at Tennessee-based Forward Air Corporation now can get their hands on real-time information via the company's intranet. Using specialised reporting and analytical tools from Appfluent Technology, they can track things like the amount of freight shipped by various customers. The next goal, says Glenn Adelaar, vice president and CIO at the trucking company that serves the airfreight industry, is to enable department managers to analyse more of the transaction data that's accessible via the real-time analytics tool.

But a manager who wants to track his salespeople's daily contribution will find that timing is a big issue. Right now, about 90 per cent of sales transactions are entered within 20 minutes of completion, Adelaar says. "But that 10 per cent will get some poor salesperson clobbered," he says. Adelaar says that although it's critical to get accurate data to business managers quickly, the business processes that support those data feeds must be made bulletproof to attain high-quality insights.

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Common Pitfalls So, what do organisations need to understand about real-time analytics before they invest in anything designed to help them speed decision-making?

Although there may be pressure to make everything real time, companies need to be selective and identify which business activities will benefit from real-time data feeds and which won't. Although real-time data feeds may cause problems like the one Adelaar described, they can help many kinds of workers, such as air traffic controllers, stock traders and emergency services providers, make better decisions faster.

Some experts say real-time analytics are most valuable at the point of customer contact so call centre personnel can use the data to make personalised offers, upsell or cross-sell. Bell Mobility, Canada's largest wireless carrier, operates two customer service centres staffed by 550 representatives. The company uses E.piphany's Real-Time tool to ensure that employees make the right offers at the right time without relying on guesswork, says Derek Pollitt, associate director of CRM strategy and deployment at Bell Mobility in Mississauga, Ontario.

Since the Real-Time tool was implemented last September, sales per hour have increased 18 per cent, and total inbound marketing revenue increased by 16 per cent in the first month. Bell Mobility has also been able to speed the time it takes to create new marketing campaigns by 75 per cent.

Tools and Troubles The real-time analytical tools now available are primarily from new, small suppliers such as Aleri or a few more-established providers such as Teradata, Sybase, InterSystems or E.piphany. These vendors offer tools meant to help companies in specific areas such as customer relations, rapid application development or the need for nonstop operations, says Alex Veystel, an analyst at Aberdeen Group (US).

Meanwhile, larger companies are having trouble finding off-the-shelf tools to extract pertinent information from various systems and transactional databases. So they have to create their own enterprise application integration middleware to extract the data and send it to analyst desktops, Goldenberg says.

For now, the cost to gain instant intelligence via real-time analytics is high. But in the future, analysts say, a faster return on investment for real-time analytics is possible - if companies can change processes and migrate to newer technologies such as XML, J2EE and Microsoft's .Net.

As hardware costs plummet, bandwidth expands and storage is increasingly commoditised, it will become far easier and less costly to access and analyse operational data in real time than in any current relational database environment, says Veystel.

Ultimately, analysts say, it's up to each business to seek insights delivered at the right moment to help speed crucial business decisions. Whether that information is updated once an hour, once a day, once a week or once a month will depend on each company's needs.