Research Brief Managers Begin to Apply Business Activity Monitoring Abstract: Managers are not fully using real-time capabilities for decision making; they implement BAM with basic analytic methods instead of more sophisticated tools to obtain alerts of impending process problems. By Lewis Clark and Martin Lee Recommendations Root cause analysis is foremost among design requirements for business activity monitoring systems as a diagnostic element for corrective action and to fine-tune realtime decision processes. An incremental approach to implementing BAM should begin with basic analytic methods to understand the status of the business, then progress to more sophisticated tools that provide alerts about possible system or process failure. Vendors must involve different stakeholders in the user organization to overcome various obstacles to BAM, which can be either organizational or technical issues. Publication Date: September 24, 2002
2 Managers Begin to Apply Business Activity Monitoring Criteria for Actionable Information From Business Activity Monitoring To investigate how business activity monitoring (BAM) offers some early steps for managers to become comfortable with real-time capabilities, Gartner Dataquest conducted a survey of 307 user organizations on earlystage initiatives. The full study will be published in an upcoming Focus report. Gartner Dataquest asked IS and business managers to rate the importance of different design requirements for BAM systems on a scale of 1 to 7, with 1 being least important and 7 being most important. Survey results are shown in Figure 1. The highest rated requirement was the ability to conduct root cause analysis. This result highlights the importance of diagnostics for corrective action as well as for providing feedback for design advances of a real-time system. Figure 1 Criteria for Providing Clear and Actionable Information From BAM Conduct Root Cause Analysis Include Metrics That Report on Changes Over Time, Not Just Status Values Define Multiple Metrics to Describe Business Activities Identify How Alerts Affect the Decision-Making Process Use Metrics That Describe the Interrelationships Among Processes or Activities Use Cross-Checks, Such as Outlier Analysis, to Confirm That a Problem Exists Use Metrics That Have Some Time Delay and Some Memory 1 2 3 4 5 6 7 Rating 110050-00-01 Source: Gartner Dataquest (September 2002) Reporting on changes over time, instead of just status values, scored nearly as high. This criterion indicates an important feature of real-time monitoring. Even if the status values are up-to-date, a human operator must be able to apprehend how important system parameters are changing. 2002 Gartner, Inc. September 24, 2002
Two criteria that were secondary, though still with fairly high ratings, are defining multiple metrics that describe business activities and describing the interrelationships among processes or activities. These responses suggest that users would like to have a more complete picture of operations, even at the expense of using a greater number of metrics in a more complex relationship. Functions or Data Feeds To gain deeper insight into how and what users were measuring, Gartner Dataquest asked managers about functions or data feeds for business activities that could be part of a BAM initiative. Figure 2 shows the percentage of survey respondents that use or plan to use various data feeds. Figure 2 Functions or Data Feeds for Business Activities 3 Status Reports About Infrastructure Alerts About Actual Component Failures Alerts Generated Through Application Programming Interfaces Warnings About Likely Future Component Failures Logistics Systems, Such as Delivery Vehicle Breakdown 0 10 20 30 40 50 60 70 80 Percentage of Respondents 110050-00-02 Source: Gartner Dataquest (September 2002) The results indicate that managers take an approach of constant monitoring, together with immediate action if process failures occur. About four-fifths of respondents said their systems included status reports about issues such as volume and throughput, as well as performance indicators such as quality measures, cross-sell rates, or call duration, depending on the activity. Fewer respondents checked off alerts about actual problems or warnings about future problems, though these may be more difficult to implement for business activities because of prerequisite changes to the IT infrastructure. 2002 Gartner, Inc. September 24, 2002
4 Managers Begin to Apply Business Activity Monitoring The systems that are in place in most user organizations typically are rudimentary technology precursors to BAM systems that apply to a discrete process or a single key performance indicator (KPI). The status reports that these precursors generate, for the most part, do not collect or display data about interactions among related processes. The missing piece of these early-stage BAM initiatives is a portal environment that depicts related information in a meaningful and salient way for decision makers. Gartner Dataquest Perspective In their plans for BAM systems, users place more emphasis on status reports or performance indicators than on alerts or warnings about system failures or process problems. Even though status reports are a fundamental part of a BAM initiative, underemphasizing alerts and warnings contradicts the common sense notion that problems are less expensive to prevent than to fix. This flaw may reflect users' greater familiarity with information portals than with more complex BAM systems. The most important criteria to users in providing clear and actionable information from BAM systems were root cause analysis and metrics that report changes over time. Users rely more on these basic elements than more sophisticated functions such as outlier analysis or metrics that describe interrelationships. The ranking of various criteria suggests that users are sensitive to potential information overload that could impede decision making. These survey results suggest that managers are still early in the progression toward the type of decision making that is attainable in a realtime enterprise. A fully realized BAM implementation would minimize latency and present the key status and event information that guides decisions about business processes. For a detailed description of Gartner's three-tiered model, see "Turning the Theory of BAM Into a Working Reality," COM-14-9785. The promise of BAM is that better real-time information will lead to better decisions. Managers are likely to realize only limited benefits from the information they receive from their early-stage BAM systems. They must gain confidence in the system's ability to produce the most pertinent information and in their own ability to absorb it and act on it. The next step is to build more advanced capabilities that predict conditions about business processes. If these capabilities enable enterprises to prepare for decisions based on future event triggers, BAM will finally move from the operational to the strategic level. Key Issue How will the increasing demand for insight affect business intelligence implementations within enterprises? 2002 Gartner, Inc. September 24, 2002
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6 Managers Begin to Apply Business Activity Monitoring This document has been published to the following Marketplace codes: ITSV-WW-DP-0381 For More Information... In North America and Latin America: +1-203-316-1111 In Europe, the Middle East and Africa: +44-1784-268819 In Asia/Pacific: +61-7-3405-2582 In Japan: +81-3-3481-3670 Worldwide via gartner.com: www.gartner.com Entire contents 2002 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice. 110050