"It is not the strongest of the species that survive, nor the most intelligent, but
the one most responsive to change" - Charles Darwin
Two emerging trends can be seen clearly in the evolution of enterprises today. One is the need, in fact, an imperative to transform passive, reactive organizations and processes to become proactive and agile organizations that can "sense and respond" to real-time internal and external changes – a move towards the zero latency enterprise (ZLE). The second is a definitive trend toward a hybrid approach that can combine a top-down strategy translation to operational measures with a bottom-up replanning and restrategizing, based on events on the ground; in other words, establishing a dynamic link between strategy and operations. We can call such organizations "high performance organizations" (HPOs), borrowing and adapting the definition from AMR research. Some of the key characteristics of HPOs are:
- Singleness of purpose;
- Technology adventurism not just for reduced costs and efficiencies but to drive differentiation;
- Performance and goal-driven;
- Collaboration culture – internal and external;
- Focus on core competencies.
Most enterprises, Fortune 1000 companies as well as SMEs, have institutes transaction backbones in the form of ERP and other such integrated systems. If implemented well, these provide a robust and reliable "system of record" for most of the key transactions of the enterprise. Enterprises have derived huge administrative efficiencies and put in place good book keeping practices by implementing these systems. However, rarely have they been proven to result in real operational efficiencies, providing the flexibility to change plans and strategies based on market forces or in accelerating the velocities of key business processes that are the real factors in determining competitive advantage in the marketplace. Systems of record by themselves cannot drive operational excellence, which is, in fact, a major driver for both top-line growth and bottom-line improvement.
A framework that enables operational excellence, that links events on the ground with strategic initiatives, that links the system of record with the 30,000-foot view is what we believe is the missing gap today. Keeping an eye on the horizon and ears to the ground is probably a good way to describe this need.
Systems of Record are not Sufficient
Why systems of record are not sufficient in themselves:
- Rigidity of the data and logic models of key business objects, such as customers, orders, inquiries, products/items, shipments and receipts, and so on that make it difficult to customize and derive meaningful analysis. A famous customer quote – ERP is the most flexible system till you implement it!
- Transactions are typically entered into the system in almost batch mode, post facto, after related physical events have taken place, sometimes much after!
- Difficulty in personalizing the information to individual needs of specific roles and even specific individuals
- Information overload, to the extent that key executives and managers start relying on a parallel spreadsheet-type reporting and monitoring system for day-to-day needs. Executives and managers do not want to pore over reams of printed reports to dig out key pieces of information to make operational, tactical or strategic decisions
- Inability to correlate reporting and critical performance measures across multiple functions or departments, and even multiple enterprise sites/units participating in mission-critical business processes.
In recent times, business intelligence (BI) solutions have emerged to address some of these gaps. BI offers very strong in multidimensional slice-and-dice analysis. However there are a couple of major limitations:
- Lack of real-time orientation;
- Linkages and relationships between performance metrics and process-based events on the ground and providing context to the analysis,
- Lack of flexible enrichment of transaction data.
A comprehensive bridge system is required to link the system of record to more strategic analysis-based BI solutions, and organizations that fail to put this in place will have difficulties in acceleration and fulfillment of initiatives to improve operational excellence. A framework for agile operational excellence neither replaces nor obviates the need for either of the systems previously described; it rather provides the missing link.
The concept behind event-driven process and performance management is driven by:
- Purposeful information models – object models, activity models;
- Isolated business rules – flexible adaptive, logic definition and real-time logic execution
- Sophisticated business process management – tracking end- to-end process instances and continuously monitoring process metrics;
- Flexible aggregation and correlation of key measures and metrics;
- Correlation of events and metrics;
- Near zero latency in event capture and propagation;
- Intuitive end-user navigation;
- Exception-based management supported by a read-and-respond paradigm involving user-defined exceptions and filters.
The concept of "events" is key. Such events should support some key characteristics:
- Easily configurable – capture the context.
- Easily captured – easy data capture mechanisms for underlying data from existing "systems of record’ or via user portals with near zero latency.
- Allow complex relationships – i.e., allow relationships to be defined across multiple events and multiple underlying data.
- Push such events as they happen to end users with near zero latency.
- Span the continuum of operations and analysis in one holistic integrated framework:
- Operational events at instance level
- Analytic events at various aggregated levels.
This is an idea whose time has come not just for the Fortune 1000 companies, but for SMEs as well in an increasingly integrated global economy. For the simple reason that "time" is emerging as the single biggest factor of competitive advantage.
Dr. Ramakrishnan Ramdas is the chief marketing officer of Herald Logic Pvt. Ltd, a company based out of India, focusing on real-time intelligent information management technologies and solutions. Ramdas has several years of industry experience in technology and management solutions for business process measurement and improvements. He has worked in senior positions at one of India’s largest software and consulting firms as well as head of labs at the Indian subsidiary of a large European software house. He can be reached at ram.ramdas@heraldlogic.com or visit the Web site at http://www.heraldlogic.com.
