Envisioning the Intelligent Enterprise

Ramesh Narasimhan writes that the market demands that businesses optimize decisions, take action based on good information and use advanced predictive capabilities—all with speed and efficiency

Organizations must tap into the intelligence of the entire value chain, correlating insights and anticipating opportunities and threats.

Today, almost anything in the world can be instrumented, interconnected and made intelligent—the systems, processes and devices that enable physical goods to be developed, manufactured, bought and sold; services to be delivered; and billions of people to both work and live. This is possible, in large part, because the innovation is originating and proliferating from more varied sources than before.

No doubt, these are challenging times and companies are under immense pressure to act quickly in response to economic uncertainty and are under more pressure than ever to maximize the returns on their investments while improving service to customers, at lower risk and reduced budgets. Yet, the current economic challenge is honing and shaping how organizations will run for years to come.

By 2011, there will be two billion people and one trillion connected objects on the Web. When you look at all the new opportunities emerging, you might think that they only apply to larger enterprises. But, in reality, mid-sized companies have been the engines driving economic growth and fueling a smarter planet for some time now. These companies, even more so than larger competitors, have the DNA to quickly seize new opportunity and leverage the competitive advantages of a smarter planet.

Soon, the codified information base of the world is expected to double every 11 hours. For sure, data is exploding, and its nature is changing to machine-generated—from sensors, RFID, meters, GPS systems and more. With the expansion of information the industry is witnessing large variances in the complexion of the available data—very noisy with lots of errors and no time to cleanse in a world of real-time decision making.

Indeed, our modern information environment is unlike any preceding it. Information is voluminous, its velocity is extreme and its formats are widely varied. Information can be structured and unstructured—in GPS logs, blogs, videos, podcasts and tweets. From within and from outside the enterprise, information arrives on a daily, hourly and real-time basis. Sources include the Internet, automated processes and sensor-equipped objects. This combination of volume, speed and diversity makes using information well (or even using it at all) an increasingly daunting task.

As if volume, velocity and variety weren’t enough, greater granularity makes information even harder to fathom. For example, individuals can now be identified by GPS position and genotype. And in the world of intelligent objects, it’s not only containers and pallets that are tagged for traceability—medicine bottles, poultry, melons, gas cylinders, and wine bottles are adding deeper levels of detail to the information ecosystem. That’s a lot of information coming into to your marketing and supply chain operations. Are businesses prepared to help integrate, standardize and analyze all the new sets of information flooding the enterprise?

Business leaders who learn how to get through today’s challenges by cutting costs and conserving cash, are certainly gaining valuable experience. However, will the intuition grounded in today’s economy help them lead their companies through future business cycles, when unforeseen challenges arise, in an era when ‘ecosystem’ refers to both rain forests and business partnerships?

In today’s world of information overload, business decision-making is already challenging. In a recent IBM survey of more than 225 business leaders, we found significant gaps in applying information to business: more than one-third said they have significant challenges in extracting relevant information, using it predictively and using it to understand risk. One in two business leaders indicated they do not have sufficient information from across their organization to do their jobs.

In a business environment that has little resemblance to the past, old ways of decision making and management are breaking down. Business leaders sense an inflection point, an opportunity to revisit their use of information, or analytics, and fundamentally alter the way in which they conduct business. While analytic methods have been available for some time, today’s tools and techniques provide superior insight and predictability to support management decision -making and actions. Statistical methods, including complex algorithms, previously the domain of academics, are now being used to solve formerly intractable, or overlooked, business challenges.

The market demands that businesses optimize decisions, take action based on good information and use advanced predictive capabilities—all with speed and efficiency. Organizations must tap into the intelligence of the entire value chain, correlating insights and anticipating opportunities and threats. Regardless of the state of the economy, clients and business partners must plan, invest, manage and eventually retire their IT solutions if they want to compete and survive over the long-haul.

As trusted information becomes increasingly available to decision-makers in all areas of the business, and as analytic capabilities proliferate, the business of making decisions shifts from intuitive and experiential to fact-based. The proliferation of unstructured data and real-time information creates new challenges in creating common definitions and efficient, replicable processes for integrating them.

For the intelligent enterprise, personal experience and insight are no longer sufficient. New capabilities are needed for better decisions. Innovative solutions, in various stages of pilot or deployment, are providing just that. For example, finance leaders have a key role in bringing financial and performance information together in unprecedented ways like these:

Workforce optimization: Staffing objectives are being set on the basis of strategic business plan, historical trends and future scenarios. Analytically based decisions are put into action to achieve these goals.

Risk assessment: The operational risks of IT infrastructure are being quantified and evaluated based on potential impact to the underlying business processes. Decision makers then objectively select appropriate actions to mitigate this risk.

Customer service: Unstructured data such as customer e-mails and phone calls are being analyzed to identify trends, improve customer care and provide more targeted marketing based on new insights culled from previously unmanageable information.

Marketing: Significant correlations have been established between customer loyalty; specific products and channels; and the bottom line. Based on mathematical modeling and simulations, business leaders develop and prioritize new programs to improve customer experience.

Besides, business leaders need to articulate a vision of where new capabilities lead for their organizations. By embracing advanced analytics across the enterprise, intelligent enterprises will optimize three interdependent business dimensions:

Intelligent profitable growth: more opportunities for growing customers, improving relationships, identifying new markets and developing new products and services.

Cost take-out and efficiency: ability to optimize the allocation and deployment of resources and capital to create more efficiency and manage costs in a way that aligns to their business strategies and objectives.

Proactive risk management: less vulnerability and greater certainty in outcomes as a result of their enhanced ability to predict and identify risk events, coupled with their ability to prepare and respond to them.

Each of these dimensions is a critical part of optimization—the impact of a decision or action along any one of them will have repercussions for the others. Expertise in the strategic use of analytics can provide a solid foundation for bringing information from extended ecosystems—physical, economic and social—into strategic and operational business decisions. With the right alignment of analytic strategy, processes and operations across the enterprise, analytics will create businesses optimized for today’s economic climate and future ones as well.

The author is Director, General Business, IBM India/South Asia