Putting Brakes on Real-Time Enterprise

Barton Goldenberg is founder and president of ISM, Inc., a customer relationship management consultancy headquartered in Bethesda, Md. He is the author of CRM Automation and the forthcoming Creating the Real-Time Enterprise.

CIO Insight: How do you define a real-time enterprise?

It’s the process of connecting a company’s entire operations through both internal and Internet applications, enabling all information to be shared in real time. This allows the company to function like a 24-hour nerve center, instantly alerting individuals—and I’m talking particularly about managers and executives, people who make decisions—to changes in customer demand, inventory, availability of supply, competitive analysis, profitability.

When a change happens in demand, one can automatically relate it to supply. Say there’s a huge increase in demand. That will work its way through the front office to the back office and out to the supply chain in such a way that all of a sudden a company can increase the amount of raw materials that are being purchased to address the demand. In theory, that’s what real time is all about.

Presumably all this happened before, but on paper. What does speed bring to the equation?

Let me give you a couple of examples. If you’re in the electricity generation business, real time is already, at many companies, optimizing how much electricity you generate at any one point in time.

So you have a certain capacity and you have certain buyers, and by being in real time, knowing the demand and the supply, you can say to a generation plant that you have this much amount of extra capacity. Somebody has just purchased it, so when the next person comes in, you say it’s not available. You can optimize the utilization of a generation plant.

Consider The Limited. Before that company’s West Coast stores open each morning, managers are able to look at what’s selling on the East Coast and adjust what they will sell in the West accordingly. Or in the case of General Electric, which has 1,600 technical personnel responsible for fixing MRIs—and those are very expensive machines and incredibly important. They save lives. GE is using wireless devices in the field to know what parts for MRI machines are in inventory or to get instructions on a repair, and they minimize downtime and maximize uptime.

There are two values of the real-time enterprise. It’s how efficiently you can execute a decision, and then there’s what I call structural efficiency, or reduced costs per transaction. If you are now able to know exactly what you should be requesting for raw materials inventory, you don’t have to keep extra stock. It arrives just in time, and the cost per transaction goes down. You’re not placing orders you don’t need to place. You’re optimizing your actual purchase. It also lowers stock levels, and stocks cost money.

You also get improved revenue per employee because you have less need for personnel to perform unnecessary work. So rather than saying to a customer, “Let me put you on hold, I’ll get back to you on that, I want to do a little research,” now the information’s right there. They answer the question, and they get onto the next person. So there are improved revenues per employee.

On the customer side, you don’t have to put somebody on hold when they phone you. You have the information. What that leads to is a higher level of customer intimacy and ultimately, customer loyalty.

Companies that can achieve real time have a market edge. Because they’re getting information in real time, because they can move stock around as deemed appropriate, because they can turn on and off inventory and supplies, because they have a temperature of what’s going on in the marketplace and can respond quickly, they are also able to sustain that competitive leadership against companies that are unable to do that. Therefore, they’re going to constantly maintain their leadership position. What company wouldn’t like to achieve that? But the truth is that very few companies are doing this.

Why so few, if it’s so desirable?

First of all, not everybody has this vision. Not everybody sees the need to integrate supply and demand. Not everybody sees this growth in the e-customer, which is growing at 20 percent a year. So they don’t understand this explosion coming on the e-customer side.

Some companies may not have the people and processes in place. This is not just a matter of buying software and slotting it in; that’s ridiculous. I’d guess that more than 90 percent of the success of a real-time enterprise has to do with people and processes: It’s 60 percent people, 30 percent processes and 10 percent technology.

CIO Insight Staff
CIO Insight Staff
CIO Insight offers thought leadership and best practices in the IT security and management industry while providing expert recommendations on software solutions for IT leaders. It is the trusted resource for security professionals who need network monitoring technology and solutions to maintain regulatory compliance for their teams and organizations.

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