Decision Support: Is RTE right for you?
Published on February 16, 2004
on CNET's TechRepublic.com
The tech industry is abuzz with real-time enterprise solutions for RFID (Radio Frequency Identification), Supply Chain Management, Sales Force Automation, Business Intelligence, and the like. The allure is completely understandable.
CIOs look with envy on successful real-time innovators such as FedEx, which, largely because of real-time enterprise solutions, can ship 1.5 million packages daily to 229 countries and track their whereabouts, accounts payables, and receivables in any given moment via customer service reps or the Internet.
But most companies aren't as large as FedEx, nor do they necessarily need true real-time enterprise solutions to be able to benefit from real-time or near-real-time computing, say experts. In fact, what business executives should do is think through their need for RTE, consider how ready their company is for real-time computing, and evaluate which business processes could benefit immediately from smaller real-time initiatives. Otherwise, technology leaders risk overpromising, overspending, and underdelivering.
Defining real time
The term real time itself is so broad that it is widely misunderstood. A real-time enterprise, for instance, could be described as one that leverages "all of the relationships through optimized business processes that can take advantage of nearly instantaneous communications across all of the components of a true collaborative network, delivering timely data with proper connections," according to Daniel Burrus, CEO of Milwaukee-based Burrus Research Associates, Inc., and the author of Technotrends: How to Use Technology to Go Beyond Your Competition (HarperCollins, 1993).
It's this instantaneity of real time that gets businesses excited. But researchers such as Burrus argue that true real-time enterprise computing is overkill for most organizations. Instead, what technology leaders should be thinking about is real-time computing. Real-time computing is equivalent to streamlining particular business processes for competitive advantage.
Analysts at the Boston-based Aberdeen Group take the thinking of real time even further.
"Real time gets talked about as if real time is just generically good," says Guy Creese, research director, Knowledge Management and Analytics, at Aberdeen. "But it's a waste of time and resources if, as an enterprise, you get more updated information but your processes are still batch oriented."
Instead, Aberdeen prefers to talk about real time in terms of degrees or proportional real time. How quickly a corporation can react to information may determine to what degree of "real time" a company really needs.
Technology leaders need to probe business unit heads to learn what percentage of improvement would be acceptable and useful. For instance, if the sales department is currently getting sales data weekly, but, with a real-time initiative it could get the sales data hourly, could the sales department truly react to hourly data? Instead, receiving the sales metrics daily might be good enough.
After determining a meaningful definition of real time for the company, technology executives must assess if the organization is ready for real-time computing projects or proportional real-time improvements. Many factors have to be considered, among them cultural, administrative, managerial, and technological.
If there's a general atmosphere of noncooperation with technology initiatives, a push for real-time computing won't go very far. Additionally, if the business leaders ascribe to the "if it ain't broke, don't fix it" school of management, there won't be a perceived value to real time.
Inversely, in organizations where IT is recognized as a tool for competitive advantage and information is a prized business asset, real-time initiatives may thrive.
Data may or may not be a prerequisite
That brings us to an additional point regarding a company's readiness for real time. Availability of rich data and data warehouses may or may not be a prerequisite for success in real-time ventures, notes Burrus.
Simply using devices to communicate the status of a process may be sufficient to provide real-time advancement. Take, for example, the success of residential home builder Amberwood Homes, which cut three weeks from a five-month building cycle by enabling contractors to communicate the progress of their work via handhelds. Or, consider the example of a university dormitory where technology allows students to monitor availability of washers or dryers in the student laundry room. Neither of these examples of real-time technology involves data warehousing whatsoever.
In other initiatives, a nimble data architecture policy, the ability to change the data architecture on the fly, and interoperability with other applications may be a prerequisite for real-time project success, says Vijay Ramakrishnan, senior director of Strategic Communications for San Francisco-based Actuate Corp, a software manufacture of business intelligence products and XML-based data integration applications.
Companies already using Web services-based technologies and standardized ways of data formatting may be well ahead of the pack, as their ability to communicate data across various applications is likely to be greatly enhanced.
Prioritize according to strategic importance
In order to prioritize areas of importance to the enterprise, technology leaders must be tuned into their company's key strategic priorities, which may be internally driven or externally driven through regulatory requirements. The Sarbanes-Oxley Act of 2002, which has mandates around the amount of time a public company has to file financials, among other things, is pushing many aspects of real-time computing.
As technology leaders dream up all kinds of wonderful real-time initiatives, they must consider how they're going to show rapid payback or they won't get a CFO to approve project funds. Unruly, expensive real-time enterprise projects will have increased hurdles for approval than incremental, real-time computing projects that focus on improving one aspect of one business process.
"I think people should try to come up with a metric that will show progress in a quarter," says Creece. "If you can't show progress in a quarter, you're somewhat doomed."
Real time or really blind
Even after technology leaders have evaluated and planned a course for real-time initiatives, experts advise caution.
An overeagerness to move to real time could bring about an overinvestment in order to make things happen quickly, says Creece. Such enthusiasm may end up harming future real-time initiatives, especially if the projects are overly complex and fail to deliver results, come in late, or over budget. An unsuccessful real-time project may leave an erroneous impression in the minds of non-technical executives that all real-time projects are a waste, scuttling any future prospects for real time.
End users also have to be considered, lest projects role out with such a confusing user interface that end users refuse to adopt a system at all.
Additionally, the sheer velocity of data movement in real-time computing makes it tempting to ignore data quality, says Ramakrishnan. An online retailer may forego rigorous data-cleansing processes that it would have otherwise done in a non-real-time environment. Web services technologies are now making data cleaning in a real-time environment easier, however.
Lastly, the flash and glamour of real time may cause a business to ignore other less sexy technology projects. Therefore, as technology leaders eye the future, experts caution them to maintain a level head when pursuing real time. "You might end up ignoring something that is real and crucial to the business," says Creece.