TORONTO — In deciding whether to make the jump to a real-time organization, firms need to consider the reasons pushing them in this direction, an executive at one of Canada’s largest banks said during an event held Thursday by the Conference Board of Canada.
Frank Erschen, vice-president of
technology and solutions at BMO Financial Group, said drivers for moving to a real-time enterprise may include skill gaps, problems facing dominant technology vendors or competitive pressures.
Tapping information, wherever and whenever, is thought to be a key in an enterprise’s agility — a trait that will no doubt go far in a competitive environment, Erschen said. Experts say companies across North America are moving away from the tradition of batch-processing and embracing real-time processes. But is it a move for everyone?
The idea behind a real-time enterprise is that up-to-date information stored in a central hub can be acted upon at any time, eliminating delays in making critical business decisions.
But getting a real-time enterprise up and running is no easy feat, Erschen said. Even if senior staff realize the value of a real-time approach, the plan will go nowhere without the blessing of the boss. “”When you look at some of these large projects, like CRM, like real-time, it’s really about changing the nature of the business,”” explained Erschen. “”You can’t transform a business from the bottom up. It needs to have top-down leadership”” deciding an organization’s goals, strategy and investments, he said.
Another obstacle is management’s fear of relying on well-known methodologies. Erschen noted the myriad unimplementable reports that collect dust on shelves, prompting companies “”to get gun-shy about going down that route again . . . You have to take a balanced view. It’s not about the methodology. It’s not about being strict in terms of the strategy. It’s about delivering something at the end of the day that is meaningful.””
A balanced approach should also be taken in choosing team members. Companies run a huge risk if they focus on the technology side over the business side, or vice versa, he cautioned. A business-driven strategy, he explained, will neglect managing technology dependencies and operational implications; whereas the company will appear too absorbed in technology if the pendulum swings too sharply the other way.
Ending the list of caveats, Erschen said companies should carefully name their real-time projects. A few years ago, BMO embarked on a customer value management project that the industry widely described as a customer relationship management project.
At that time, CRM was seen as a big, expensive, time-consuming, technological endeavour that was garnering bad press. “”If you don’t do something about it, it’s going to come back and bite you,”” Erschen said of dubiously-named real-time initiatives. “”People read airline magazines. They read newspapers. They read magazines. And it’s much more fun, and it gets more readership, to read about failure than success.””
Switching to a real-time enterprise, meanwhile, certainly has its costs. Greg Battas, director of real-time architecture at HP in Minneapolis. Battas said he knew of a credit-card services company that paid US$3 million for the hardware, software and consulting related to its real-time project, while retailers have spent US$8 million to US$9 million.
But some say the advantages far outweigh any expensive investments. HP itself, which created an up-to-the-minute cache of its entire supply chain, expects several annual benefits, including IT savings of more than US$6 million, operational savings of more than US$1 million, strategic savings of more than US$2 million and an order cycle time that’s improved by 15 per cent, said Battas. In total, HP is betting on $38 million in payback over four or five years.