The real value of real-time analytics

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 per cent of respondents said they were already analyzing data in or near real time, and another 25 per cent 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.

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.

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 managers who want s to track their salespeoples’ daily contribution will find that timing is a big issue. Right now, about 90 per cent of sales transactions are entered within 20 minutes of completion, Adelaar says. “But that 10 per cent 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 bullet proof to attain high-quality insights.

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

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 centre 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 centres 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, Ont.

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

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.

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.

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Jim Love, Chief Content Officer, IT World Canada

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