Too Much of a Good Thing?

The need to speed up business decision-making to keep from falling behind the competition is driving companies to use real-time analytical tools. With them, they hope to more quickly exploit key corporate transaction data housed in databases, enterprise data warehouses and other data stores.

But the move to instant analytic insights comes with big trade-offs and incremental costs, say analysts and users.

Glib executive orders to provide real-time data feeds everywhere in the company can be counterproductive if the data quality is low or the company doesn't have the processes in place to actually analyze and act on the data. Besides, real-time data analysis may be a high-payoff pursuit in only a few mission-critical areas of the company.

Those negatives don't appear to be quelling interest, however. In a December 2002 survey of 700 IT executives by Evans Data Corp. in Santa Cruz, Calif., 48% of respondents said they were already analyzing data in or near real time, and another 25% reported plans to add real-time analytics this year.

A key issue is how the term real-time analytics is defined, because there's confusion about what constitutes real time vs. near-real time vs. not real time. Joe McKendrick, an analyst at Evans Data, says a strict definition of real-time analytics is dynamic analysis and reporting based on data entered into an operational system less than one minute earlier. At most businesses, however, analytics is considered real time if it's conducted on data collected within the past hour, and near-real time is analytics conducted on data collected within the past 24 hours, McKendrick says.

Absorbing the Data

McKendrick says the growing interest in real-time analytics can be attributed to the pressures on businesses to make faster decisions, keep smaller inventories, operate more nimbly and track performance more carefully.

Trouble is, there may be no reason to use real-time analytics if a company can absorb its transaction information only on an hourly, daily or weekly basis. For example, at MBIA Insurance Corp. in Armonk, N.Y., overnight updates work best to feed the OLAP engine used to help the company decipher risk related to mortgages, insurance policies and other services.

"What we've found is that overnight updates are plenty, as long as users can gain immediate access to the information they need to make business decisions quickly during the day," says Lynn Jacobs, associate vice president for IT applications at MBIA. Using the Essbase OLAP tool from Sunnyvale, Calif.-based Hyperion Solutions Corp., business users at the insurer can quickly analyze financial information in order to assess risks and make fast business decisions. The number of financial analysis applications supported by the Essbase tool will be expanded this year from the current 10.

Too Many Iterations

In many traditional business environments, real-time analytics can be overkill. Barton Goldenberg, president of ISM Inc., a CRM consultancy in Bethesda, Md., offers the following example: Three managers meet to discuss business development issues, each armed with sales, market or target information they captured from the system at different times of the day. Each manager has created a snapshot to present an accurate picture, but the numbers won't match. "This situation will hardly help speed decision-making," Goldenberg says.

In other cases, real-time analytics may make it easier to make bad decisions fast, because of faulty data.

Managers at Greeneville, Tenn.-based Forward Air Corp. now can get their hands on real-time information via the company's intranet. Using specialized reporting and analytical tools from Appfluent Technology Inc. in Arlington, Va., they can track things like the amount of freight shipped by various customers. The next goal, says Glenn Adelaar, vice president and CIO at the trucking company that serves the airfreight industry, is to enable department managers to analyze more of the transaction data that's accessible via the real-time analytics tool.

But a manager who wants to track his salespeople's daily contribution will find that timing is a big issue. Right now, about 90% of sales transactions are entered within 20 minutes of completion, Adelaar says. "But that 10% will get some poor salesperson clobbered," he says. Adelaar says that although it's critical to get accurate data to business managers quickly, the business processes that support those data feeds must be made bulletproof to attain high-quality insights.

Common Pitfalls

So, what do organizations need to understand about real-time analytics before they invest in anything designed to help them speed decision-making?

Although there may be pressure to make everything real time, companies need to be selective and identify which business activities will benefit from real-time data feeds and which won't. Although real-time data feeds may cause problems like the one Adelaar described, they can help many kinds of workers, such as air traffic controllers, stock traders and emergency services providers, make better decisions faster.

Some experts say real-time analytics are most valuable at the point of customer contact so call center personnel can use the data to make personalized offers, upsell or cross-sell. Bell Mobility Inc., Canada's largest wireless carrier, operates two customer service centers staffed by 550 representatives. The company uses San Mateo, Calif.-based E.piphany Inc.'s Real-Time tool to ensure that employees make the right offers at the right time without relying on guesswork, says Derek Pollitt, associate director of CRM strategy and deployment at Bell Mobility in Mississauga, Ontario.

Since the Real-Time tool was implemented in September, sales per hour have increased 18%, and total inbound marketing revenue increased by 16% in the first month. Bell Mobility has also been able to speed the time it takes to create new marketing campaigns by 75%.

Tools and Troubles

The real-time analytical tools now available are primarily from new, small suppliers such as Aleri Inc. in New York or a few more-established providers such as Teradata Corp., Sybase Inc., InterSystems Corp. or E.piphany. These vendors offer tools meant to help companies in specific areas such as customer relations, rapid application development or the need for nonstop operations, says Alex Veystel, an analyst at Aberdeen Group Inc. in Boston.

Meanwhile, larger companies are having trouble finding off-the-shelf tools to extract pertinent information from various systems and transactional databases. So they have to create their own enterprise application integration middleware to extract the data and send it to analyst desktops, Goldenberg says.

For now, the cost to gain instant intelligence via real-time analytics is high. But in the future, analysts say, a faster return on investment for real-time analytics is possible—if companies can change processes and migrate to newer technologies such as XML, J2EE and Microsoft Corp.'s .Net.

As hardware costs plummet, bandwidth expands and storage is increasingly commoditized, it will become far easier and less costly to access and analyze operational data in real time than in any current relational database environment, says Veystel.

Ultimately, analysts say, it's up to each business to seek insights delivered at the right moment to help speed crucial business decisions. Whether that information is updated once an hour, once a day, once a week or once a month will depend on each company's needs.

DePompa is a writer and editor in Germantown, Md. Contact her at bdepompa@comcast.net.

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Real-Time Tips

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Stick to analyzing performance metrics backed by bulletproof business processes. Poor data quality can kill a real-time analytics project.
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Prioritize applications that require analytics, and be sure to solve specific time-sensitive problems.
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Take time to carefully set up the application to be analyzed in real time. If not properly planned and executed, the analytics tool wonÕt catch big problems, which could impact corporate supply and demand.
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Seek out cutting-edge analytical tools. Many real-time analytics products are so new, it pays to carefully investigate vendorsÕ viability plans.

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