It was a just few years ago that we first heard of business activity monitoring, BAM for short. Initially presented as more of an idea than a product, BAM promised to be the backstop of the event-driven enterprise, catching aberrant data on the fly and suggesting or automating some course of action in the blink of an eye.In certain high-transaction volume industries such as financial services and telecom, BAM is growing legs. Gartner Inc.'s new report, "Hype Cycle for Investment Services, 2006," points to the steady demand for faster innovation and predicts - in investment services at least - that BAM is the most significant technology for achieving this goal and providing significant improvements on the revenue and cost fronts. Gartner also believes the industry is capable of achieving maturity in the next two years.
Anyone who follows financial markets or trades stocks might stop and appreciate just how fast things happen on the electronic trading floor. The same person might consider that as fast as he or she might be able to close a transaction, that same data must be moving several times faster in the background. What BAM seeks to do in various ways is tap fleeting information and measure it in some particular way. "It is really about high-volume automated flows that surpass the human ability to notice or recognize things," says Gartner research director Mary Knox. While early BAM efforts were aimed at alerting system monitors to issues such as credit card fraud - which might escalate very quickly - Knox says today's BAM is more business process-oriented.
"In algorithmic trading there is new ability to generate alerts to exceptions that may have to do with things such as a change in intra-day positions or areas of increasing risk," Knox says. "It might show up on someone's dashboard. It may also trigger a work process in a business process management solution that then takes it through various workflow and also optimizes the processes behind that." This makes possible algorithmic trading, the kind of automated arbitrage we'd expect occurs for a hedge fund. In any case, today's BAM comes with its own nomenclature and daunting phrases such as "ultra-low latency complex event processing."
As is so often the case in business intelligence-related issues, BAM has received a boost from advances in both the process technology and integration infrastructure, both traditional enterprise application integration and newer enterprise service buses based on Web services and service-oriented architectures. Gartner analysts are looking deeper into the convergence of all these effects. "Some of it has been enabled by BAM technology itself, but also by infrastructure investment, consolidation, and robust messaging infrastructure that gives BAM systems the raw data they need to feed on," Knox says. "In investment services the move to electronic trading and other business drivers are moving from underlying systems to the business process layer. There are capabilities that were not there before."
In her focus area of investment services, BAM is definitely becoming a business requirement for proactive identification of risks and opportunities, Knox says. She will present her findings at Gartner's Financial Services Technology Summit August 28-30 at the Marriott Boston Copley Place, along with some telling data points already in hand. "Almost one-quarter of our survey base of asset managers and brokers have at least one BAM project in production and an equal percentage are planning or piloting BAM. And the majority of [companies] with BAM in production are planning at least one additional BAM application." Areas of highest investment applications include exception detection in processing, followed by system monitoring, service quality, intra-day positions, algo-trading and fraud identification.
The promise of BAM appears to be quite true, but won't find much immediate business relevance in industries that don't experience steady high-volume transaction loads. BAM in the system-monitoring sense will be of future interest in IT environments where events tend to back up quickly. To draw on the old analogy, a Ferrari presents a variety of options in terms of rapid response but isn't especially useful for hauling kids or gravel. New applications will arise, but for the foreseeable future BAM will be an answer looking for a question at many brick-and-mortar companies.
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