Technology has brought real-time data capture into the enterprise, but most companies use the information in a reactive way by keeping tabs on inventory levels, tracking rolling stock, or monitoring remote sensors. The true power of real-time information is not recording what has happened, but rather predicting what is to come, writes Vivek Ranadivé, CEO of TIBCO Software, a pioneer in developing real-time data software.
Ranadivé calls this concept “predictive business.” The idea is to marry real-time information with historical data to anticipate problems and opportunities in advance of the competition. The book outlines not only the technology needed to accomplish this task, but also the required organizational mindset.
In one example, winemaker Gallo discusses using predictive technology to analyze when a bottling machine will run out of labels. When that happens, the line has to be shut down for up to thirty minutes, setting off a chain reaction across multiple departments. Predicting when a line will be offline would allow Gallo to provide drivers two hours advance warning to change their schedule.
Casino operator Harrah's and its sophisticated customer loyalty program is a vivid example of how technology can be used, if not to predict behavior, then at least to influence it. Customers who use the Total Rewards Card in the casino are constantly monitored: Harrah's knows how often they gamble and whether they win or lose, their dining and drinking preferences, and so on. Harrah's then marries that information with historical records to come up with targeted promotions and special offers. The payoff, at least for Harrah's, is that some 75 percent of its revenue came from loyalty programs in 2004.
Ranadivé, who also wrote The Power of Now, writes that banks and other financial institutions could improve customer loyalty by carefully analyzing real-time data. Has a customer inquired about paying off a home equity loan? Time to ask if they are considering going to a competitor and if so, make a counteroffer. The author describes similar opportunities in a variety of industries including telecommunications, transportation, retail, healthcare, and energy.
Are Ranadivé's insights credible given his TIBCO heritage? He manages a thorough overview of the coming world of real-time business management without too much company coloring, although we would have traded some of the numerous case studies for more insights on nuts-and-bolts implementation issues.
- Sean Silverthorne