Shari would like to thank Henry Fleming and Antonio Almeida of Accenture Information Management Services for their contributions to this month's column.
Much of the information that companies use to make operational decisions is either fragmented or out of date by the time it becomes available to management. This issue persists despite major advances in process automation and computerized monitoring. The resulting lack of relevant, accurate and timely information prevents executives from making quick and well-informed decisions.
The challenges involved in tackling this problem vary depending on the area of the business. For example:
- In business operations, there is a challenge in tracking and monitoring business events to provide an integrated view from which to make decisions that will immediately impact the business.
- In business planning, there is a challenge in linking current results back to the business plan at any given point in time to set appropriate and achievable goals that executives can take action to meet.
- In IT, CIOs are constantly challenged to prove the value of IT to the business and set priorities. Requests are typically handled on a "first come, first served" basis rather than based on what is most important to the business.
Not Only What - But When?
The one thing that companies do not lack is data. But all too often, the information needed for effective decision-making is fragmented across multiple systems and reports. So, companies have created management dashboards to pull together the data and operational metrics that really matter.
However, with a data warehouse-based dashboard, the monthly cycle means the data may well be four-to-six-weeks old by the time it reaches management. So while management has access to a wealth of tools for monitoring and analyzing key metrics against the organization's strategic business objectives, it cannot perform this activity at the time when it is actually needed.
This inability to link operational execution to strategic objectives at the right time creates a permanent gap between intention and action. It has been estimated that as many as seven out of eight companies fail to achieve profitable growth due to the gap between strategy formulation and execution.
To close this gap, management needs to link today's specific business events to underlying business processes down to the transaction level in as near real time as possible. The solution is now at hand, with a new suite of technologies for extracting, integrating and delivering business information to a designated management dashboard on a daily or even faster basis called "event monitoring."
Essentially, event monitoring does four things. It:
- Collects information on complex business processes through the use of application and database probes.
- Correlates this information and enables root cause analysis to solve problems in the business process.
- Alerts business managers to issues early, before they become real problems and negatively impact the business.
- Monitors events and ongoing operations to ensure expectations are met.
Event Monitoring: One Solution, Three Key Benefits
These actions create three major benefits.
- The first is increased agility - problems can be fixed at the source, all at once.
- The second is improved operational efficiency, with more timely and proactive business decisions.
- The third is the ability to synchronize planning and execution by identifying and addressing problems now rather than next month.
Event monitoring can deliver these benefits without requiring automation of all the underlying processes, which can remain manually based if appropriate.
Event Monitoring in Action
An event monitoring implementation begins with clear objectives - generally, better management of performance and processes. Then the business's key business drivers are identified, followed by analysis and documentation of the underlying processes to determine the right key performance indicators (KPIs) to monitor. Once the KPIs are fully understood, adapters are placed within each process to extract the relevant performance and event information.
The information from all the processes is integrated into a user-friendly visual management dashboard - complete with heat mapping to highlight potential problems, automated alerts for particular combinations of events and links to key external metrics. The refresh time is determined by the organization's needs and the timeliness of its process information, and it is usually as near real time as possible.
The Benefits Across Industries
A wide diversity of businesses can reap major benefits from event monitoring. Consider a manufacturing business, which gains near real-time visibility of its overall supply chain and granular monitoring of elements including forecasts, demand, inventory and supplier reliability. For example, the president of a major PC manufacturer received an email from its CEO, querying a decline in shipments from a plant in the Far East. It turned out that faulty parts delivered to the plant a week earlier had delayed a major shipment. Event monitoring would have given automatic visibility of the revenue stream and enabled immediate action to meet revenue goals.
Working with a client in mortgage processing, six key drivers affecting its performance were identified by discovering the key metrics in each process, extracting relevant performance information and integrating it into a near real-time dashboard. This helped transform the company's ability to respond to market changes, coordinate actions ranging from marketing to recruitment and hit monthly performance targets.
Event monitoring is also applicable to many areas and processes within each organization. For example, in revenue management it can enable services for companies to understand their license and service revenue at any given point rather than after quarter end; in inventory management, it can enable suppliers to manage the delivery of complex products to large clients through RFID-enabled monitoring. For companies struggling to manage the operational execution of customer retention, event monitoring will integrate disparate customer touchpoints - both direct and indirect - to enable customer value to be addressed in relation to churn and margin optimization. Other high-potential areas include managing service level agreements, customer cross-sell, customer acquisition, optimization of the quote-to-cash cycle and mortgage performance management.
Real Management Intelligence
For businesses striving to apply real management intelligence from a mishmash of corporate information and systems, event monitoring provides the answer. As a flexible, scalable solution that can grow and evolve with the business and its processes, it also provides executives with the quantifiable right-time operational information to monitor and diagnose ongoing operational activities impacting both the top and bottom lines and to address organizational effectiveness, process efficiencies and data quality with quantifiable, timely information.
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