Intelligent Enterprise

Executives are buzzing about the notion of the real-time enterprise. It's not the latest "killer application," but a management strategy that calls for squeezing time and associated costs out of processes, transforming how companies operate and even the very businesses they're in.

General Electric, JetBlue, Virgin Group, Progressive Insurance and others are harnessing the universal, real-time connectivity of the Internet for business process innovation. While the concept of time-based competition isn't new, the ability to execute on this management ideal with computer-assisted process support is.

Some enterprises look to new technology architectures and composite applications as the route to the real-time enterprise, but this article explains why time-based competition demands a business process management approach. By giving business analysts software to build and manipulate end-to-end processes, companies are dramatically improving response times to routine customer transactions and emerging market demands by bypassing lengthy software development cycles.

Faster Time to Products and Services

Executive Summary

Determined to push the time envelope, businesses have been on a quest to become "real-time" enterprises: that is, better able to reduce delays found in the wider spectrum of business processes so that they can achieve greater savings and competitive value. Software applications have always been integral to reducing time delays through, for example, automating transaction management and reinventing paper-based processes as digital operations. However, as they push the envelope, organizations are confronting the silo problem. Focused inwardly on specific business functions and carefully defined data, most applications are proprietary jungles that require sophisticated enterprise application integration (EAI) solutions. While incorporating open standards solves some of the problems, organizations are finding that just creating more software is not getting them closer to achieving real-time goals. A real-time enterprise is agile; it executes new business strategies when they can deliver the greatest benefit. Analysts and enterprise architects must start with this sort of business-oriented vision of real time and consider how best to make it happen. Business process management (BPM) systems and methods hold promise as the means of reaching the next threshold — but only if BPM is viewed as something more than just an extension of current software development strategies. Living closer to the development of business strategy, BPM can offer a global perspective on how to integrate cross-functional processes for dynamic execution.

Time-based competition doesn't apply only to the manufacture and distribution of physical goods. Progressive Insurance began its journey more than a decade ago, when it introduced a fleet of 2,600 "immediate response" vehicles fitted with laptop computers, claims submission software and wireless access to the company's databases. Instead of adjusters responding to claims in seven to 10 days — the standard of the 9-to-5 insurance companies — Progressive was soon completing the process in as few as nine hours.

But Progressive didn't stop there. In 1996, the company gave customers the ability to compare rates online, and a year later to buy policies. In 1998, a new site let customers make payments, track claim status and modify policy information. In 2001, Progressive was the first insurance company to receive wireless payments from customers using Web-enabled personal digital assistants and mobile phones.

By setting the pace of innovation, Progressive grew from a $1.3 billion company in 1991 to a $13.4 billion company in 2004. Just as price elasticity measures the limits of customer demand, Progressive learned that the limits of time elasticity helped it steal customers from slower competitors in what was otherwise a mature market. By saving customers time, Progressive also builds on and reinforces another competitive variable: trust, the foundation for building valuable relationships.

Put Process on a Fourth Tier

Becoming a real-time enterprise demands more than fast technology. It's also about how fast a company can transform or add end-to-end processes to execute new strategies — think of this as restructuring time. It's also about how business events can be shared in real time across multiple applications to deliver compelling value to customers — think of this as response time. A customer order is significant to many business processes. Thus, the faster related processes can be triggered, according to embedded business rules, the more real time an organization becomes. For example, an order might alert a CRM system to instantly bring forward cross-sell or up-sell opportunities.

The real-time enterprise isn't just about speedily handling routine transactions. Restructuring time and response time can only be substantially reduced if business processes can be quickly and easily changed. That's why BPM is the real-time trend's cornerstone.

Let's look at a conceptual architecture of process-oriented systems. As shown in the diagram on the next page, companies already have a tremendous investment in legacy enterprise systems (ERP, supply chain management and so forth). These systems handle routine transaction processing and keep the official corporate records. Most are built on three-tier, client/server architectures. Process-oriented systems are emerging in a "fourth tier": They embody not so much official records but actual real-time operations — the outward-facing business processes such as managing insurance claims and loan or account applications.

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