Dawn of the real-time enterprise

New technologies leverage straight-through processing and the Internet to deliver competitive advantage

IN THE BEGINNING, there was batch processing: ERP and supply chain systems and data warehouses. Geared for monthly planning and analysis, these systems talked to one another, if at all, using proprietary interfaces and query-based messaging architectures. Often, managers couldn't see what was going on in their businesses until it was too late to react.

For many organizations little has changed, and executives are still making key decisions based on batches of sales, manufacturing, and other critical data that is days, weeks, or even months old. In an information-driven economy, where competitors are acting on what's happening now and not what happened last month, the batch approach just isn't good enough.

But a brighter day is breaking as a slew of technologies are making "straight-through processing" and real-time applications more affordable and pervasive. Going forward, Web services promise to have a dramatic impact by easing application integration and delivering real-time information to places that batch data couldn't reach. In the meantime, technologies for connecting applications, data, and users -- and technologies for monitoring, analyzing, and optimizing real-time business processes -- have already made major strides.

Real-time connectivity

The first steps toward real-time data integration were taken by EAI (enterprise application integration) vendors such as Tibco, webMethods, and Vitria, who came along with publish-and-subscribe messaging architectures, libraries of adapters to help enterprise applications talk to one another, and a hub-and-spoke model to make sure those conversations were orderly.

Today, application integration inside the firewall -- a crucial building block for the real-time enterprise -- is becoming easier thanks to standards-based protocols such as JMS (Java Messaging Service), JCA (Java Connector Architecture), and J2EE (Java 2 Enterprise Edition) application servers, which are increasingly acting as integration platforms.

Now the battle for real-time integration -- although far from over inside the firewall -- is shifting not only higher in the stack, to software for managing event-driven business processes and workflows, but also outside the firewall, to technologies for providing cheaper and lighter-weight alternatives to EDI (electronic data interchange) and private networks for connecting the "extended enterprise," or multiple business partners.

"What we're talking about here is real-time distributed logic, and transport is the huge missing piece," says John Blair, CEO of San Francisco-based Kenamea, one of a handful of startups working to build more reliable and secure event-driven messaging environments outside the firewall using enhancements to HTTP. Kenamea and companies such as KnowNow and Bang Networks, while each focusing on discrete pieces of the puzzle, are working toward building a Web-enabled infrastructure for real-time business processes.

"The essence of it is event-driven," Blair says. "When something happens, the people who care about it get notified." A utility might give its energy traders real-time information about current generator capacity so they can alter their bids on the fly, for example, by linking the generators' output meters to the traders' desktops. Or a financial services firm might tie together its far-flung CRM and transactional database systems to generate an outbound thank-you call when an important customer uses a self-service channel to make a big trade.

"A lot of the information you need is somewhere else," says Rick Caccia, director of product management at KnowNow, based in Mountain View, Calif. "You may not own it, and it's all in different formats." KnowNow's solution includes an HTTP-based messaging layer enabled by a small client-side JavaScript "microserver," plus a Web server-based "event router" that manages the flow of messages and can also perform data transformation or apply business logic. "The whole thing is going to come about incrementally," Caccia says. "The idea is to tie together external interfaces in lightweight ways."

Real-time process management

Meanwhile, the incumbent EAI and application server players, in addition to extending their own messaging and integration platforms (such as IBM's MQ Series or Tibco's Rendezvous) across the Web, are leveraging their customer bases to move upmarket with full stacks of software for business-process automation and workflow management. Their goal is to move beyond the "on-the-glass" portal model of integration, where information from different systems is presented side-by-side on the same screen to a manager who must decide what action to take and must close the loop manually.

"Controlling the interaction between processes is where the value is," says Larry Colabro, a principal in Deloitte Consulting's eTechnology Integration practice, who believes that EAI suites will become more important as "destination processing becomes a commodity." Such suites typically include tools for data transformation (between systems that have different data models and vocabularies and don't always agree on, for example, the definition of an "order"), rapid development, monitoring, visualization, and analysis of business rules, events, and workflows.

At least in theory, these tools enable managers not only to go beyond simply monitoring key data in real time ("our supplier's product X inventory has dropped below Y level"), but also to understand the process implications ("the supplier is not meeting its service-level agreement") and be able to respond proactively ("start ordering more from another supplier"), in some cases automatically.

"You need a set of technologies that allows you to manage the state of the process," says Stefan Van Overtveldt, IBM program director for WebSphere technology marketing in White Plains, N.Y. If a customer changes an order while the product is being built on the factory floor, for example, a set of pre-established processes based on business rules can respond (such as "redirect other inventory to this customer based on customer priority"). Those processes can be designed and modified graphically, Overtveldt says, and the process model can be kept separate from the underlying IT implementation.

Furthermore, a host of companies focused on specific industry verticals are developing specialized implementations of business-process automation tools. Traditionally, financial services and other trading-related applications, such as energy, have been the early adopters of real-time technologies. Today, supply-chain and product development applications are coming on strong, with demand-chain applications such as real-time CRM, pricing, and yield management also beginning to emerge.

In the supply chain, a host of SCEM (supply-chain event management) startups, such as Vigilance and Powermarket, and incumbents, including i2 and Manugistics, are working to bring real-time visibility and process automation to heavily outsourced supply chains such as those in the technology manufacturing area.

"If the production line shuts down today because of a shortage that occurred yesterday, it could cost you a lot of money [needlessly]," says Ken Rudin, vice president of product management at Belmont, Calif.-based Powermarket, which develops software to provide early warning of problems based on data gleaned from internal ERP and SCM (supply-chain management) systems plus external suppliers and b-to-b marketplace exchanges.

"It's not just a SQL query against a database that says your inventory's low," says Bob Sturim, vice president at Santa Clara, Calif.-based WorldChain, another SCEM company. "Just visibility is too limited." Sturim argues that real-time supply-chain apps require a combination of measurement and reporting capabilities, allowing users to view the data from OLAP (online analytical processing)-style apps, to configure custom business rules for each supply chain, to consider in-transit shipments as well as current inventory, and most importantly, to automatically execute effective responses to changing business events using a so-called "manage-by-exception" system. "Being able to execute is what's going to get you the next round of ROI," he says.

Similar to that of most SCEM players, WorldChain's software is architected for a supply-chain world still heavily reliant on faxes and phone calls: It can deal with data manually entered into a browser, a flat file, or spreadsheet sent by FTP or HTTP, a tightly coupled EAI system, or a direct application-to-application connection via a T1 line or VPN.

"If you're a multibillion-dollar company, you can go with a heavyweight RosettaNet-style implementation," says Sturim, referring to the trade group that has defined a message and process format increasingly popular with high-tech OEMs and their contract manufacturers. "If you're a small company, spreadsheets are fine."

Together with other enabling technologies, such as satellites and RFID (radio frequency ID) tags fom tracking in-transit inventory, SCEM software can help make sure that a company serves its customers in as real-time a fashion as possible -- dealing with service requests, order changes, part shortages, and a host of other events in hours, not days or weeks. "People who are trying to make everything 100 percent real time are trying to climb [Mt.] Everest," Powermarket's Rudin says. But if people can find out about and respond to situations a lot faster, he adds, "that's the big win."