Shifting Paradigms is about the practical use of modern information technology to improve how business gets done; for improving enterprise performance by enabling better decision making by highly productive knowledge workers.
The Real Real-Time Business Environment
I frequently hear business leaders say they wish they could get more value from their enterprise systems. Sometimes they feel strongly that their systems require the collection of massive amounts of data but offer little in terms of information needed to run their daily business. Perhaps the problem isn’t the software but is instead how the software was implemented.
“The biggest obstacle to operating a true, real-time enterprise application is most likely in the attitudes and mindsets of management.”
Many companies select a particular software package based upon the great things it can do – things better than what their old system could do. Unfortunately, they then implement the new application to replicate the system they wanted to replace and wonder why the expected benefits are not realized.
Due to hardware and software limitations of the past, many older business processes were not built to be real-time processes producing real-time information, and therefore minimized the usefulness of the system. A new enterprise system set up with 20 year old business processes will not likely provide the value the company was looking for.
The Traditional System-of-Record
Perhaps they have implemented their new enterprise system as a “system of record”; a system that is designed to collect financially-relevant transactions and produce required financial reports. Many companies continue to have their IT organization included in their financial organization with CIO’s reporting to CFO’s. In these situations, companies minimize the amount of data collection required by only capturing data required for financial reporting. Latent batch processing of records is also a characteristic of a system-of-record. Batch input of supplier receipts, material issues, and production transactions are sometimes completed long after the transaction actually occurs.
Why is this an issue? While the financial reports are produced as required, almost no one else in the company can rely on the enterprise system for current information. Information workers in sales, procurement, manufacturing, service, claims processing, and so on cannot rely on their system for current, real-time information. In many cases, needed data is either not captured at all or is not processed as it happens. Information workers will frequently resort to emails, phone calls, and other methods for getting the information they need to make decisions and take action.
The old paradigm is that an enterprise system is only a “system of record” and not intended to be a real-time source of decision-support information. If an information worker needs information, they won’t be able to trust the system for the accurate and complete information they need.
A New Paradigm – The Operational Digital Twin
Two major advancements have occurred over the past few years that enable an enterprise system that accurately reflects current reality with the details required for decision making:
- In-Memory Processing – Exponentially faster processing; both in terms of transaction processing and access to data stored in memory, and
- Reliable Data Capture – Data collection technology which makes it possible to accurately and reliably capture data as it is happens
These two advancements enable a company to create and maintain an “operational digital twin”; an enterprise system that accurately reflects what is actually happening as it happens, and with the level of granularity that satisfies the needs of information workers across all functional areas.
Having accurate real-time information at each person’s fingertips means less time searching for information and fewer decisions made with partial data. Customer Service Reps will be able to respond immediately to customer inquiries. Inventory analysts will be able to see that a badly-needed material shipment has been received. Sales Management will have visibility of a new customer order, and likewise, have visibility of order cancellations. Quality Supervisors will be able to visualize current quality issues and see the results of their corrective actions. Everyone will spend less time searching and waiting for information required to do their jobs.
How to Become a Real, Real-Time Enterprise
The good news is that the technology is and has been available. The SAP HANA database and data management technologies provide the power to handle massive volumes of data input and processing as events occur. This is a huge improvement over disk-based memory where IO time hindered real-time processing and frequently required batch updates in “background” processes. Data collection methods with barcode, RFID, sensors, and WIFI/Bluetooth locationing systems provide visibility of current activities, events, and situations.
The biggest obstacle to operating a true, real-time enterprise application is most likely in the attitudes and mindsets of management. The old paradigm is hard to break away from. Many managers have only ever worked in an environment of the “system of record” that does not have reliable, high-quality, real-time information, and therefore, fails to give information workers what they need to do their jobs effectively and efficiently.
The Need for a Paradigm Shift
The symptoms of the old paradigm are easy to spot; people continuously on the phone as they work to get information, people with clipboards walking quickly through the manufacturing plant, people in general in a chaotic environment of fire-fighting in their efforts to “keep the lights on”. Continuous improvement is extremely difficult in this environment. Employee productivity is challenged.
Business leaders need a paradigm shift. Too many companies implement new, powerful computer systems using the same business processes they used 20 years ago. Most companies are overdue for stepping back and rethinking what their business processes should look like.
For those stuck in the old paradigm, it is time to rethink how your company runs and how you take advantage of the powerful technologies available today. Your company depends on this rethinking and your team members will thank you.
Where Do We Go from Here?
This blog is titled, “Part 1 – The Real Real-Time Business Environment”. That obviously implies there will be a “Part 2”. In Part 2, I will explain how to break away from old paradigms even further once the enterprise has a true, real-time information system as the foundation of the real-time enterprise. Stay tuned!
Also see my previous blogs related to this topic:
Chet Harter is a member of SAP’s Business Process Intelligence team and can be reached at firstname.lastname@example.org.