October 6, 2011 § Leave a comment
The past few weeks has been a whirlwind of activity; taking me to DC, Philadelphia, Silicon Valley and Las Vegas. As I work primarily with Pharmaceutical, Life Sciences and Fast Moving Consumer Goods (FMCG) organizations, there has been tremendous interest in improving compliance, quality and an overall uptick in investment aimed at mitigating risk. Now, working as part of TIBCO, I’m involved in a number of initiatives that pull process improvement into the world of real-time execution. What the heck does that mean? Consider this scenario that’s not in my sector, but clearly defines the power of real-time execution: You’re a retailer who’s main objective is to optimize value to customers and maximize sales opportunities through targeted promotion. Now, consider all the ways there are to accomplish that. There are many ways information is gathered by your customers. They gain awareness of products and retail stores through traditional channels such as TV, newspaper, magazines and radio. Increasingly, information awareness is achieved through the internet channel that is delivered through a growing variety of devices such as laptops, desktops, tablets, and smart phones.
Customer Understanding and Vast Amounts of Data
With the volume of channels and devices growing, so is the amount of data needing to be designed, managed and pushed to these different sources. Given the variety of touch points with customers, the task of managing communications (specifically promotions) is not easy, so how can retailers be as effective as possible? Let’s start with the retailer’s objective of maximizing sales opportunities through targeted promotion. There are many ways to promote. There’s the old school carpet bombing method of devising an advertising campaign and simply pushing a variety of ads through each channel or a chosen subset. Those methods are extremely expensive and targeting tends to be poor at best. While some web sites and some cable networks help make targeting a bit more accurate, there is still quite of bit of dilution. And perhaps the biggest issue with this traditional ad campaign push is that it relies on some action in the future when the message about a sale or coupon may be easily forgotten or lost. One of the important developments with event pattern matching technology is it enables retailers the ability to know what customers are doing in real time. Imagine this: A person goes into a retailer to purchase a pair of shoes. The retailer’s system knows the frequency of purchase by the customer as well as preferred brands and the retailer also knows that 85% of shoe buyers are interested in deals for accessories such as socks. Imagine the person who’s in the shoe department also getting a text coupon sent to their phone alerting them of a 25% discount coupon offer for socks. This is the power of event based processing and its impact is immense.
The Need for a New Architecture
The last twenty years has seen companies operating on the premise that all information needed to be stored, analyzed, and reported to enable effective decision making. What TIBCO is doing is nothing short of revolutionary. Given the fact that we have seen 10X growth in data being generated by organizations in just the last two years, we can no longer expect traditional database storage and analysis architectures to support this growth and need for real time responsiveness. Data flows in real time and responsiveness to customers must also be executed in real time. Threats to systems and resources happen in real time and again, responsiveness must be instantaneous. Far too many organizations are still relying on massive storage requirements, old business intelligence methods for data warehousing, creation of data-marts, massive libraries of metrics and performance measures and an abundance of continuously evolving report generation. To what end? How well are organizations able to respond in virtual real time to meet customers, partners, and risk/compliance requirements? Not very well if they do not adapt to this tidal wave of data growth.
The Advantage of Statistical Insight
This weekend, I took my 12-year old son to see the recent film release, “Moneyball”. The movie is based on a book by Michael Lewis entitled, “Moneyball: The Art of Winning an Unfair Game”. I won’t diverge into writing a review (it is good, go see it), but what’s most interesting to me about the subject of Mr. Lewis’ book is the idea that the game is won and lost based on probability and not the conventional wisdom of aged scouts who see the romantic and timeless qualities in each ballplayer. The success that the General Manager of the Oakland A’s, Billy Beane, has with inexpensive players out of necessity, brings to light a truth about the value of understanding probability and having the tools to make decisions ahead of your competitors. Through the use of the analytical principals of sabermetrics and the brilliance of his assistant, Paul DePodesta, Beane is able to achieve as much with his paltry budget as teams with four times more to spend. Unfortunately, that advantage does diminish fairly rapidly and the rest of Major League Baseball catches on in successive years, but the point is not lost. If you can gain key insight to your customers, competitors, fraudulent attackers, supply chain partners, etc, you can greatly improve how you interact and respond to create distinct advantage. As I’ve discussed in other posts on Business Agility, the key to operational effectiveness and risk management is agility and responsiveness. Given the vast volume of data that is now being thrust upon organizations because of the constant stream of connectivity, organizations have a pressing choice to make. Utilize real time capabilities and analytics to create an agile business operation or risk being overwhelmed and unresponsive in the marketplace.
As I continue to work with organizations that innovate around these real time technologies, I am seeing a growing gap in performance and capability from those that are laggards. The growth of mobility, social networks and connectivity are fueling a step-change in how we manage marketing, production, quality, compliance, governance and virtually all related services (internal and external). The organizations that lead the way with investments in these technologies will be best positioned to innovate and adapt within their respective industries.