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December 6, 1999

Real -Time Reality
Businesses are finding that pretty fast is now too slow

s the Internet raises customer expectations and drives competition, companies are discovering that pretty fast is not fast enough. It's not OK to move quickly: Today's successful businesses must operate in real time. Companies are being pressed to generate ideas and make decisions faster, and to manage logistics and order fulfillment more efficiently. To do so, they have to move beyond the standard means of communication. Gone are the days companies could rely on batch processing, electronic data interchange, E-mail or-heaven forbid-the telephone.

"The speed of business has increased significantly. We used to say we'd overnight it to you, and now it has to be there that moment," says Karen Isaacson, director of human resources IT for Kraft Foods Inc. in Northfield, Ill. Kraft is adopting real-time collaboration technology from Centra Software Inc. to help employees communicate faster and react more quickly to change.

Companies such as Kraft are looking at real-time technology that lets employees collaborate instantly; alerts workers to critical changes in policy and customer status; passes product information immediately to partners, customers, and suppliers; and links internal enterprise systems so a change affecting one part of the business is immediately visible to all.

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Moving quickly is nothing new to many businesses, but a number of factors have converged to make real-time communications vital today. Looming over them all is the Internet. The Web makes it easier for customers to get instant responses to questions and buy what they need when they need it. And if customers have done something once, they expect to do it again. "Real-time is necessary because it's possible," says Chris Meyer, director of Ernst & Young's business innovation center.

As pressing as customer expectations is competitive pressure. Virtual companies, powered by the Internet's direct links to customers and suppliers, are changing business models and pushing into new markets. Established businesses must keep up or get swept away.

For some E-commerce companies, the urgency for real-time communications is built into their business model. "Very soon, real time will be the price of entry for E-business," says John Cagno, VP of IT for Streamline.com Inc., a Web company that delivers groceries and provides services such as dry cleaning through a network of third-party providers. It's a low-margin, labor-intensive business that requires the efficiency and speed of real-time connections to make money.

For Streamline.com, real-time communication is crucial because its inventory is constantly shifting-and half of that inventory is perishable. The company is integrating its Web storefront with its SAP back-office system so when customers ask for groceries, Streamline.com can immediately tell them whether the goods are available or steer them to appropriate substitutes.

Real-time technology has made it possible for Streamline.com competitor HomeGrocer.com Inc. to carry no more food than it needs on a daily basis. The company procures food daily, primarily based on orders it receives by morning. But it doesn't leave it at that. If a customer makes an order request on HomeGrocer.com's Web site before the next delivery but after the main order has already gone out, the site passes the update to a central system, which tells procurers to pick up more food. A data warehouse tracks customer interactions and helps HomeGrocer.com better meet its users' needs.

Real-time comes down in large measure to one thing: connectivity. Businesses must be able to pass information reliably and quickly among applications to help them make more-intelligent decisions, give more-accurate information to customers, better understand what's happening in their company, and react more quickly to change. That need is being met by enterprise application integration, a technology that analysts say is critical to the real-time enterprise. "There are lots of companies that are masquerading as E-businesses," says Kimberly Knickle, an analyst with AMR Research. "But if there's a delay between when your customer orders a product and you actually find out when the product has shipped, it's not really an E-business. You have to have all of that pulled together."

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