The Real Time Revolution
In 1987, I delivered a keynote speech to the Institute for Internal Auditors in which I stated: “As I look to the year 2000, I predict computers will be powerful enough and connections will be fast enough that we will be able to perform functions such as accounting and auditing in real time. That means that data and information will be available at any time to anyone who has permission, including management, employees, suppliers, partners and customers.
“One outcome will be that as we move into the early 21st century we will need far fewer auditors and accountants performing tasks that are similar to what we do today. If we don’t want to be replaced by computer networks operating in real time, we will need to find new ways to add consultative value.”
The Real Time Enterprise
Today’s computers and networks are ready for real time data communications, and the advantages are nothing short of revolutionary. Some industries, including telecommunications, finance and manufacturing are already using real time data in parts of their operations.
Some are extending this capability throughout their operations and outside to their business partners. Cisco, Dell, Wal-Mart, eBay, Fed Ex and UPS are early real time pioneers who have already gained a significant advantage by extending real time capabilities outside of their organizations. As we enter this new year, the enabling technology is getting to the price/performance point where even much smaller organizations can afford to become real time.
What if you could track products from warehouse to store shelves in real time, provide targeted offers the moment a customer calls, and give executives up-to-the-minute reports on critical operations data? You will when you integrate existing technologies to become a real time organization.
Organizations operating in real time can deliver better customer service, turn around inventory faster, respond quicker to changes in the marketplace and better anticipate them before they impact the business.
Being PreActive
I’m sure you have used the word proactive; it means taking positive action now. I have never liked this word because, how do you know the actions you’re taking will be positive when you will have to wait and see? I don’t like those odds. Instead, I want to be preactive to future known events.
If my real time data indicates that there was a run on Levi blue jeans, size 32 waist and 34 inseam, in store number 53 and there is only one pair left, it is predictable that tomorrow there will be one or more customers who will not find what they want. This problem can be solved before it is a problem. Everyone involved with keeping the shelves stocked will be informed instantly and the supply chain wheels will turn to make sure no customer is unable to find what they want.
Information On Demand
Today we have information on demand but, with the exception of a few leading-edge companies, the information we’re looking at is not up-to-the-minute. The real time revolution changes all that. Here is a simple yet powerful example of how real time data can change even the most routine of chores.
Remember when you were in college and needed to use the school laundromat to wash your clothes? All too often, everyone else had the same idea you did and all the washers and dryers were taken.
The son of a friend of mine is going to a university that is using real time data to change the Laundromat problem and much more! At his school, students can use their computers from their dorm rooms to see which washers and dryers are in use and which are out of service. They don’t have to worry about how much exact change they have or if the coin machine is broken because they don’t need coins anymore. They use smart cards that deduct money from their accounts whenever they use the machines. The smart Laundromat system can even e-mail or send a text message to a cell phone to let the users know that the machines are finished.
Event-based Marketing
The best time to market to people is when they demonstrate a need. Good sales people do event-based marketing all the time. If you show an interest in something, they grab the opportunity to show you something else they feel you might also be interest in.
With real time data, it is now possible to do event-based marketing without human intervention. Amazon does this now. If you click on a book about the Lewis and Clark expedition, you will get a list of other top selling Lewis and Clark books on the same page. Does it work? It’s one of the reasons that Amazon’s stock was the best performing Nasdaq stock in 2002.
Another great example is UBN; they recently obtained a 60% conversion rate running event-based marketing ads.
The Real-time Enterprise
The basic concept of real time is that when something happens, you want to react to it the moment it happens – not an hour, day, week or month later. As the speed at which a company can intelligently respond to change increases, the cost of all their business processes decreases. Hearing this, you might think real time is all about speed, but that’s only part of the equation. If we don’t know where we want to go, then faster won’t help!
In order to gain the largest ROI for real-time initiatives, they need to be tied to overall business goals and objectives. Just as there is a difference between strategy and tactics, there is a difference between real-time computing and real-time business.
Teal-time processing can be seen as event-driven computing. Real-time business, on the other hand, takes business agility – the ability to rapidly respond to changing conditions as they happen – to the next level. Operating in real time puts up-to-the-minute information directly into the hands of all the key participants in the business process who need it.
A real-time enterprise is defined by its ability to access information across all boundaries of the organization. By integrating people, strategy, technology and processes, real-time organizations are able to recognize shifts in customer demand as they happen and respond accordingly with customer-focused solutions. This enables them to use their higher level of business agility as a competitive weapon, grabbing market share form less agile competitors.
There is a clear competitive advantage to having high value, market-based information available almost instantly to the right people, both inside and outside of your company, and using that information to make quicker, more informed decisions.
Real-time Realities
It is important to understand that real time is an evolutionary process. An ancient Chinese proverb states that a journey of a thousand miles begins with a single step. Select a place to start and build out from there. For example, Amberwood Homes, a residential homebuilder, has cut three weeks form the five months it takes to build an average 3,000 square foot home by sharing information with plumbers, roofers, masons and other subcontractors via hand-held devices in real time. That does not mean that all of Amberwood’s business processes and partners are operating in real time; it means they picked a profitable place to start and will build off that success.
Insurance companies are also venturing into real time. If you think of it, insurance products are all information based and this enables them to use real-time capabilities to literally “manufacture” a custom policy at the point of customer contact by an agent or by customers who are serving themselves by plugging into the company’s Web site.
In today’s difficult business climate, spending on any technology initiative is under close scrutiny and a ROI has to be stated clearly and proven quickly.
Telecommunication companies are facing increasing customer churn – customers switching from one company to another. A real-time initiative has helped Bell South Corp. reduce churn by 30%. The company accomplished this by delivering real-time recommendations to its call center reps who field calls from their small business customers. Thanks to a database covering 100 data variables on its 1.2 million customers, when a customer calls the reps have instant access to that customer’s data profile, allowing them to offer a service, discount or incentive based on the customer’s propensity to switch to another phone company.
Federal Express is another good example of a company that has reached the goal of being a real-time business because it has connected nearly all of its business processes online. For example, from the time a package is picked up tot the time it is delivered, customers can track its every move. FedEx can monitor the entire process in real time, including accounts payable, accounts receivable and customer support processes, and make adjustments as needed. The company has scaled this to cover its entire operation, which now reaches 229 countries and includes 1.5 million packages shipped on a daily basis.
The Real-time Advantage
Real-time business is about leveraging all of your relationships through optimized business processes that can take advantage of nearly instantaneous communications across all the components of a true collaborative network. Delivering timely data with proper context makes all the difference between information and actionable knowledge.
The real-time trend is very real and its impact will be felt by every industry, whether they choose to buy into the concept or not. In today’s hypercompetitive marketplace, there is a great advantage to extending your business processes via the Internet to your customers, partners, suppliers and employees in real-time.
Those who ignore the reality of real-time business will face strong competitive pressures and will increasingly find it difficult to successfully compete.
Daniel Burrus, one of the world's leading technology forecasters, business strategists, and author of six books
Copyright 2003 Author retains copyright. All Rights Reserved.
