Creating a real-time enterprise.
With the velocity of change in business only increasing, organizations that position themselves to respond the fastest are the ones who usually win the marketplace. Thinking and managing like a "real-time" enterprise can provide substantial benefits. Becoming one is not necessarily as difficult as it might seem.
Your competitors continually challenge you on speed--speed to market, speed in the back office, speed in operations, speed in service. Chances are, they are considering new and even better ways to manage faster--to gain any kind of advantage possible.
If you are not exploring ways to make yours a real-time enterprise, you probably should be, because it's likely that your competitors are doing just that.
What is a real-time enterprise?
Most organizations manage with lagging indicators--reporting that relies on "batch" processing of data once a week, month, or perhaps quarter to produce reports needed for decision making or to complete critical business activities.
Real-time enterprises, on the other hand, monitor and manage these activities as they happen--working with information that is delivered in "real time."
While "real time" does mean "faster," it doesn't necessarily have to mean "instantaneous." Real-time enterprises deliver information or complete vital business processes in an expedited manner--be it hourly, daily, weekly, or some other interval--that results in significant business benefits.
Likewise, "real time" doesn't apply just to reporting and the delivery of information. It applies just as much to execution--the completion of certain processes that drive financial performance, customer satisfaction, product delivery, or a host of other metrics.
What can managing in "real time" do for you?
Real-time information and processes offer advantages for practically every type of business. In addition to delivering the data that can help you recognize market movements and trends more quickly, becoming a real-time enterprise can produce a variety of other business benefits. Consider these examples:
Improve financial performance. In banking and financial services, minutes literally can make a difference in the millions of dollars. Recognizing this, some banks have established processes to collect mailed-in deposits from drop boxes many times per day. Moreover, they have moved check-processing functions closer to these collection points, enabling them to process deposits--and begin gaining the financial benefit of doing so--almost immediately.
Manage risk. Loan or insurance companies can use real-time processes to mitigate risks associated with customers who may be more likely to default on their payments. Rather than requiring the customer to mail in a monthly premium payment, the company can establish weekly or bi-weekly payments by direct debit. This way, the company is able to detect issues sooner with the customer's ability to pay. In addition, because the payment amounts are smaller, the likelihood of a bounced check is smaller.
Innovate and bring new products to market. Many think of real-time reporting and processes as internal initiatives, but they also can help organizations capture, assess, and act on external data, as well. Consider the situation facing companies that make and market iPod accessories. Specifications for new models of iPods are closely guarded, typically not available to these organizations until new model actually hits the market. Success depends on being able to gather information in real time and to move immediately to align research and development, manufacturing, marketing, and sales and distribution channels.
Maximize revenue. A good example of real-time data processing and decision making is airline industry pricing. Carriers have long applied real-time information to adjust pricing strategies--now, they have the capability to adjust prices practically hourly based on availability of inventory, competitor activity, and demand. The same principle can be applied in residential real estate--for example, to the offering of a new condominium development where demand is expected to be high. The developer will set initial prices to attract interest, but to maximize revenue it will need to be able to make adjustments at just the right time--for example, increasing prices once a specific sales threshold has been achieved. The developer's ability to see sales information on a minute-by-minute basis enables it to maximize price and revenue in a fast-moving market.
Improve customer service and manage labor costs. Claims adjudication typically is a labor-intensive process--requiring agents to gather, and then analyze information in order to process claims. With the proper systems and processes in place, insurance companies can streamline this process significantly and enable processing in real time. By using technology to capture claim data and then analytical tools to ensure that the data is "good," a company can process certain claims immediately, without having to wait for human intervention. This improves customer service and reduces amount of staff required.
What does it take to become a real-time enterprise?
Establishing the capabilities to manage in real time is not necessarily difficult or expensive. But, it requires the ability to identify and then act on the opportunities that offer the biggest return for the investment.
There are reasons why most companies don't have real-time operating or reporting capabilities in place to drive critical parts of their operations. They lack the technology or processes to make it happen. For example, today's systems make it relatively easy to capture and analyze labor costs on a real-time basis. But systems, alone, will not deliver real-time information. If people don't report their hours accordingly--i.e., they "batch process" their time reporting by entering hours once a week on Friday rather doing so as they work--even the best system in the world can not produce the information on a real-time basis.
Managing in real time requires synchronizing processes, people, and technology. And, many times, it gets down to the simple concept of how organizations capture data.
Many companies operate under the theory that "batch mode" equals efficiency. Batch processing invoices or accounts receivable once a week, twice a month, or once a month may be more efficient from a labor standpoint. But in doing so, a company may be giving up potential gains or assuming risks in other areas: cash flow, customer service, or even a greater possibility of non-payment or bounced checks.
In addition to eliminating batch processing, where practical, these are some other steps that can help you move toward creating a real-time enterprise:
- Looking for opportunities to automate manual processes.
- Considering customer or employee self-service applications.
- Making new system decisions with real-time operations in mind.
If you don't think people care about real time data, just look around next time you are on the train or bus. Observe the number of people who are scrolling through email or messages on their phones or PDAs. Technology has enabled them real-time access to communication. More and more, they're expecting it in other aspects of their jobs and lives, as well.
West Monroe Partners helps companies analyze and improve key business processes, including developing the capabilities to operate as a real-time enterprise. For more information, please contact
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