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HIGHLIGHTS
70%
62%
of top-performing companies
improved analysis of costs and
benefits by integrating data, IT,
and business processes.
46%
of top-performing companies
provide just-in-time customer
information to employees.
Figure 1
Most global companies know their cash positions in real time, but fewer have other types of data at the ready.
Source: Transforming Business Services to Support the Globalization of Enterprise Operations,
The Hackett Group, 2013
57%
Cash positions/liquidity
43%
39%
Working capital
28%
24%
17%
The prospect of becoming a real-time enterprise may seem daunting due to the technological and organizational changes required. Legacy business processes and the decades-old IT systems that enshrine them
may thwart companies from making decisions faster. If it takes a lot of time and effort to get information out of your systems, it hampers your ability to make business decisions in a timely manner, says
Ron Grabyan, manager of business intelligence services for Southern California Edison. You cant always
predict what youre going to need or when youre going to need it, and oftentimes, by the time you get the
data together, the opportunity is lost.
New technologiesincluding cloud computing, in-memory technology, mobile devices and apps, social
networks, sensors, and embedded softwareenable companies to innovate faster and with less risk.
Retrofitting legacy systems and business processes to accommodate real-time processing might break
them, warns Chris Curran, chief technologist with PWCs advisory group. The modern tools that advance
real-time transformation are becoming widely deployed, although not all companies have yet been able
to take advantage of them fully. A recent study of global companies by The Hackett Group found that
among leading firmsthose with mature, tightly integrated operationsmore than 70 percent had access
to financial, customer, and supplier information in near real time or within one day. Most companies,
however, do not have such widely available access to real-time data. figure 1
Technology itself is one part of the solution. As business drivers become more dynamic, business management must make a cultural shift. The real-time environment demands an organizational capacity to
respond in ever-shorter time frames with information and insight, says Donald A. Marchand, professor of strategy, execution, and information management at the International Institute for Management
Development (IMD). That can be a disruptive opportunity or a risk, he says. Competitive advantage,
adds Rita Gunther McGrath, an associate professor of management at the Columbia Business School, is
finite. The extent to which you can innovate faster gives you longer to enjoy it before it erodes. Thats
real ROI, she says.
What executives need is a blueprint for the real-time enterprisean end-to-end framework covering
people, processes, data, and technologythat will enable them to rethink their products, services, and
operations. To succeed at the transition, companies must take several steps:
1. Define what it means for their organization to be a real-time enterprise.
2. Determine what business problems the organization is trying to solve.
3. Take a systematic, iterative, and long-term approach to introducing new technologies and
business processes.
4. Create a more responsive and open corporate culture, from the management ranks to the
front lines.
Those that do will be best poised to compete in the data-driven future.
Figure 2
Among top-performing companies, nearly half deliver key data to employees when they need it in the moment.
Source: High Performance in IT: Defined by Digital Accenture, 2013
Customer information
46%
Employee data
46%
42%
Product data
Supplier information
23%
Management consultant Geoffrey Moore says that to define their objectives, business leaders must focus
on such moments of engagementwhether they be with customers (as is the case for SCEs energy management tool), suppliers, partners, or people within the enterprise. And they must be moments that
matter. figure 3
Stanfords Tabrizi calls this initial step the pre-transformation. You need a vision of where you want to
go, what you want to achieve, he says. Comparing that future state to current operations enables leaders
to create a road map to real time.
There may be some easy wins from taking some existing business processes and speeding them up. But
smart leaders will innovate. Greenbaum suggests a brainstorming process taking several weeks, involving
a broad cross section of the company and banning all tech talk. For some, thats an entirely new approach.
Most companies are already doing the best that they think they can do, so they need to open their minds
beyond what they can easily imagine.
Moore advises creating a map of delays that are built into the value chain, in order to eliminate them.
The more your systems can adjust to change dynamically, the more real time you are, Moore says. But
you dont need to have a real-time travel expense system.Pick your spots.
For Mercedes-AMG, that spot was obvious. The Affalterbach, Germany, company specializes in highperformance vehicles; engineering is the beating heart of its operations and the engine the key component
Figure 3
Organizations have realized key operational benefits from large-scale integration of processes, information,
and technology.
Source: High Performance in IT: Defined by Digital, Accenture, 2013
High performers
Other organizations
62%
46%
46%
38%
7%
Improve the ability
to analyze costs and
benefits
2%
Embed real-time
decision-making
tools
3%
Develop and
capitalize on insights
about customer
behavior
6%
Provide access to
information across
devices
Figure 4
Culture change is among the top barriers to building analytical capabilities needed to become a
real-time enterprise.
Source: Organization Culture, Lack of Resources Impede Big Data, American Management Association, 2013
55%
Resources
49%
Culture
30%
Talent/Skills
Leadership
Data
Technology
27%
26%
21%
End user input continued throughout the proof of concept phase of the project and will kick off again
before it is approved for a wider rollout. We wanted to build something and let people tear it apart as part
of an iterative process to delivering the right final solution, adds Canty.
The iterative approach can make the business case for real-time transformation easier to argue than for
a traditional enterprise system. You can lay out your whole journey and what you want to go after and
turn this into a set of granular projects under a big program, suggests Accenture Analytics Mulani. Each
one delivers specific value. You can be much more surgical in your approach on this data-driven journey.
With each smaller project or experiment, there are clear before and after metrics. Those results then fuel
further real-time efforts. You have to be bold in your vision, says Mulani. But you can be very pragmatic and systematic in your execution. There will be limits to the extent to which real-time projects
pervade the organization. Some processes dont need it, he says.
But the willingness to keep perfecting what it means to be real time should not end. The hallmark of a
real-time company, says Greenbaum, is that its constantly refining itself.
Figure 5
Global companies are at work to create enterprise standards for the majority of their reports and key
performance indicators.
Source: Transforming Business Services to Support the Globalization of Enterprise Operations,
The Hackett Group, 2013
Currently have enterprise standards for most KPIs
40%
78%
Conclusion
The window for competitive differentiation in all sectors of the economy continues to get smaller, declares
Mulani. Companies must take advantage of time as a differentiator and ensure they are organized to
operate as data-driven competitors, he says.
The true real-time enterprise will accelerate the transformation of data into information that can be
used to make decisions about the most vital functions of the company, whether thats manufacturing
and logistics, marketing and sales, or customer service and product life cycle management. With realtime information, business leaders will be better able to manage their core objectives, whether they are
focused on the bottom line or business growth, and make better predictions.
The real-time enterprise is able to sense and respond to stimuli in a way thats coordinated across the
enterprise, suggests McGrath. As a result, real-time players will become adept not simply at reacting to
the shifts in the environment or responding to changes as they occur but also at anticipating them before
they happen. Theyll know when a product or part is going to fail, sense whether a customer is ready to
buy, predict when to make a capital investment, understand when demand might spike or dip. The biggest benefit for large enterprises is the ability to dynamically alter a process in flightreroute a shipment,
change a bill of materials, reprice in the face of a competitive threat, says Moore. The result? Organizations that are far more customer- and market-oriented, says Marchand.
And those enterprises that invest in true transformationdefining what it means for their organization,
targeting crucial business challenges, creating a more responsive culture, and investing in an iterative
approachwill see their real time returns compound over time through differentiating innovation. When
you make a decision to go down this path, the real benefits will come two, four, five years in the future,
when you get all of your systems and data together, concludes Grabyan. Thats when the exponential
changes will come and youll be able to do things you never would have dreamed of doing.
10
Sponsors Perspective
Real-Time Companies Make Decisions in the Moment
Harvard Business Review Analytic Services interviewed Steve Lucas, president
of Platform Solutions with SAP AG, about transforming business operations with
real-time insight.
What does it mean to be a real-time business?
Being a real-time business means being aware of the key factors that will impact your
decision and being able to make a decision in the moment that it matters. In most
STEVE LUCAS
President, Platform Solutions
companies today, decision makers have to wait for batch processes to run. If you enter
SAP AG
a store, for example, most often you dont get personalized offersyou get a generic
25 percent off. What if something personal and relevant for you could be delivered to you in the moment? There
will be a time when we walk into a store and our experience will be radically different. Thats why the SAP HANA
platform exists: to enable companies to do business in the moment.
Where do you see the most value for large companies?
The value comes from three main drivers. First, we reduce the complexity of the systems required to produce
your existing results. This was one of the key motivations in designing SAP HANA: massive IT simplification. You
can use the platform to feed data from all different sources into one system. Second, we enable agility by giving
customers the ability to get real-time insight for decision making. Third, were unlocking the true potential for
innovation through new business processes and models: the real-time business innovation.
Companies began to deploy SAP HANA three years ago, and since then, the SAP Business Suite powered by
HANA. In that time, how far have customers progressed in their transformation to real-time businesses?
We have more than 3,000 SAP HANA customers. So far, they have been transforming their businesses process
by process. A lot of processes are built around the time it takes to get data and analyze it. When you eliminate
the latency, you have to think through how you want to work differently.
Our clients are unequivocally seeing the benefit of real-time. For example, one of our customers sees real-time
planning as its game changer. With HANA it has reduced the processing time of one financial report from 40
hours to 20 secondsa 7,000 times improvement.
As you look ahead, what new ways of doing business do you envision?
Our SAP HANA platform not only can enable customers to make decisions for today but also provides a powerful
predictive engine. Most companies make decisions by looking in the rearview mirror. But the rearview mirror is
tiny compared to the windshield looking forward. Companies will start to build forward-looking decisions into
their operating models.
What is your best advice to companies that want to start their real-time transformation?
It is not just about the technology. SAP HANA is extraordinarily innovative, but the first thing we do is look at
where the opportunities are to transform business processes. Then we spend time with customers rethinking
how those processes are designed and how to remodel them. You have to start at zero: what would you do if you
didnt have to wait for information? If you dont have to wait, theres an opportunity for massive reinvention and
value creation across industries.
saphana.com
hbr.org/hbr-analytic-services