The information backbone of your company is hardly as efficient as it could be. W. Roy Schulte, Gartner Research vice president and research fellow, Application Integration and Emerging Technologies, tells CIO Insight how to design enterprise architectures around events as they happen, for savings in time and money.
CIO Insight: What is your definition of a real-time enterprise?
Schulte: It’s not something that’s a slogan, it’s not something that you can do just by telling people to work fast. If you want a real-time enterprise, change your business systems, change your organization chart, change your business processes and also implement a computer system that’s driven by events.
All enterprises are partially event-driven, but there’s no such thing as an enterprise that should be 100 percent event-driven. Every enterprise should be a proper mix. What you want to do is make sure that you’re using the mix that’s optimum to get the business results you want.
You’re saying that most businesses need to be rewired to keep pace with the accelerating speed of business today?
The pace of business is accelerating. It’s a plain fact of life. Something that might take 20 minutes to trickle across the company in the past is now done in a matter of seconds. Consider building a PC, which used to take an average of six weeks. At Dell Computer, they now take the PC order, they build it, they ship it, and they deduct the money from your credit-card account—all in 24 hours. All of this has to do with increasing the velocity of the business processes.
Now, to get this kind of speed, we have to rethink how we design computer systems. One of the most powerful ways that we can do this is to apply a so-called “concept of events.” Concept of events goes back to understanding what data looks like in general.
We would say that there are three kinds of data in the world—reference data, state data and event data. Reference data is stuff that doesn’t change very much, such as my name, my address, how many kids I have, the number of seats on an airplane.
State data is different. It changes in the course of business. My name doesn’t change every day, but I go through many states. I go through sleeping, the state of sleep and the state of being awake, the state of being hungry, the state of being full. A lot of different states. The location of an airplane, the balance of my bank account, all of these things change, and what you’re doing if you’re in the information systems business, you’re in the business of maintaining reference data for some purposes, but mostly what your systems are doing is changing the state data.
Event data influence the big changes. An event means that something has happened. A business event is a meaningful change in the state of a business. Although events can change the nature of state data and can change reference data, it’s usually state data that gets most influenced by events. Examples of business events include opening a new account, submitting an order, changing an address, making a payment, delivering a shipment to a loading dock and so forth. Those are all business events.
Now, for those of you who are programmers, you know that within a program you also use the concept of events. If you click a mouse on an icon, an event goes to a programming side, and then the program will react to it and do something. These are not business events. These are technical events. Technical events in software help you implement business events. So there’s a strategy side of events and there’s a technology side of events.
The business events that I’m talking about—such as submitting an order, changing an address, making a payment and so forth—these business events are handled by every business everywhere, even if they don’t have computers.
However, when you say an enterprise is event-driven, you mean something else. You mean that the systems internally are also built on an event basis. So the business event, like submitting an order, is going to be handled technically on a design basis and maybe even on a software basis as an event, as something that is captured by an action that is coming in from the outside.
Think business strategy. Traditional business strategy is all about building to a plan. In an event-driven enterprise, you build to order. So if you have a traditional enterprise, you’re building to plan. You’re saying, “I’m going to build 50 cars today, and the cars are going to be the following.” If you’re building to order, you’re saying, “I’m not going to build anything today unless an order comes in, and if the order comes in, then I’m going to build that specific car.” So you’re not building ahead. Now, build-to-order takes a lot more agility. Your computer systems have to be running differently than if you’re building to plan.
Another example would be just-in-time inventory. Traditional inventory systems a long time ago would have not been just-in-time, they would have been planned. You’d know, for example, that every day you’ve got to order 100 tons of steel to be delivered, and that it’s all supposed to come here. Just-in-time says, “I’m going to change the orders and probably am not going to order until I get down to a very low amount. I’m going to have very small inventories, and have them in various locations, and maybe very small inventory carrying costs. But I can only do that if I’m monitoring what’s happening on a real-time basis or close to a real-time basis, and I’ve got very good information collection and very good information dissemination.”
Another example of event-driven business at the business level is to fix-as-it-fails instead of doing preventative maintenance. Common sense says you do preventative maintenance. You send a person in to change the light bulbs at a given time period because you know that statistically you can predict that light bulbs are going to start to burn out after X number of hours. You think that by doing this, you’re saving money because you’re saving people’s time, and the people’s time you’re saving outweighs the cost of the extra light bulbs. So you’re throwing away working light bulbs, but it’s worth it to you because that way you don’t have to reschedule the people and you don’t have to send people in on demand.
Well, we’re changing that today. Many businesses now are switching over to a fix-it-as-it-fails mode. If you have something that’s big enough and worth it, now you monitor the device, whether it’s a piece of equipment or a financial system, for example. You’re monitoring it for signs of failure. If you have sensors on something, you can tell when something is starting to fail.
Now, you don’t have to do preventative maintenance. You can get every ounce of economic life out of something, and if you see it start to fail, if you have a good enough information collection system, you can go in and fix it—but not before you have to.
So here’s a case where you’re changing the entire way you organize maintenance activities, just like you changed the way you build-to-order instead of building-to-plan. Why can you change the way you do things? Now you have information correlated in ways you didn’t have in the past. You can be smarter now about things because you know more.
Future businesses will be doing a little less planning and forecasting and a lot more acting based on actually knowing when events will occur. Now, we can measure it and track it, we can see what’s happening and respond to what’s actually there instead of what we think statistically might be there.