Business Activity Monitoring

Vinod Sadavarte, CIO, Patni, explains the BAM concept, an extension of traditional business intelligence that adds event monitoring to scheduled, batch-based reporting.

In today’s competitive environment, businesses must accelerate the flow of information, analysis and decision-making in order to become more responsive to fast-moving events. This requirement drives the direction of next-generation business intelligence (BI). It forces the augmentation of schedule-based technologies with event-based technologies i.e. event-based BI.

This is where relatively new concepts like BAM hold sway. The objective behind BAM is to capture and use event-based operational data online to create a nimble-footed ‘real-time enterprise’ capable of reacting almost instantly. BAM thus is an extension of traditional BI, adding event monitoring to scheduled, batch-based reporting.

BI vs BAM

BAM is a Gartner Dataquest term which has been defined as the concept of providing real-time access to critical business performance indicators to improve the speed and efficacy of business operations. At its broadest level, BAM is the convergence of operational BI and real-time application integration aimed at business goals but enabled through advances in IT. (Source: Gartner Dataquest)

Conventional BI systems are based on a data warehouse architecture, extracting, transforming and loading it into a data warehouse, having business analysts run reports and do the analysis, and having this presented in a suitable context for business users. It is more of an analysis of data, past (revenue, profits, attrition, etc) or future (sales funnel, budget, etc) for supporting meaningful decisions. This enables business users to react to business situations after they occur. To that extent, traditional BI is static and does not react to intermediate events, which could be dangerous. BAM takes cognisance of discrete events and sends signals to the appropriate stake-holders to take corrective actions.

Technically speaking, BAM eliminates intermediate events, takes transactions directly from the operational systems, correlates them with other information from data warehouses or planning systems, and then presents the result in the form of an operational dashboard.

Process models typically drive BAM. This is very different from data-driven ETL applications, which have little or no knowledge of business processes. BAM extends a BI system’s usage beyond strategic and tactical business decision-making to the management of day-to-day business operations.

Benefits of BAM

The key benefit of a BAM environment is that operational processes can be monitored and exceptions acted on in near real-time.

Event-based support for customer-related analytics enables companies to optimise live interactions with their customers and prospects. A retail-banking customer who suddenly makes an unusually large deposit may be a prospect for another financial instrument offered by the bank. On the other hand, multiple ATM transactions in a short period of time should be an input for a bank’s fraud management system.

Most CFOs and their teams are under pressure to deliver financial information in a timely manner. Sarbanes-Oxley has only added to the expectations from information management processes. Financial teams are no longer tied to lengthy period-end financial closing processes, or cumbersome, manually-intensive report preparation processes that precede actual performance reporting and analysis. The potential reporting of corporate exposure depends on events. Examples are requirements to notify shareholders when there is a material deviation anticipated from stated goals such as acquisition or loss of a major customer. Airlines can use BAM for taking dynamic decisions of pricing based on real-time demand.

When a product manufacturing company suddenly experiences a deviation (such as a sudden increase of cancellations of orders), the demand forecast goes for a toss and the contract manufacturer must be notified quickly. In such cases, traditional scheduled reporting proves inadequate, and BAM is useful.

In short, quick knowledge-based operational decision-making, reduced operational costs, improved process performance (and hence improved ROI) are the benefits expected from BAM.

Another recent trend in BI analysis tools has been to add a performance management capability that enables business users to compare the analytics produced during BI processing to actual business goals and forecasts (i.e., it puts BI into a business context). Performance management products extend the use of BI from measuring business performance to managing it.

BAM as a predictive tool provides real-time access to critical business performance indicators to improve the speed and efficiency of business operations. To that extent, BAM must converge seamlessly with business process management (BPM).

BAM brings the near real-time world of the BI operational data store together with network and systems management (NSM) monitoring and BPM through integration brokers and the shared message bus. (Gartner)

BAM in India

The investment in BAM depends on the business process being monitored and the cycle of decision-making and review. It further depends on the maturity of the organisation in adopting the same.

It will hence be difficult to justify investment in BAM for traditional annual budgeting processes. However, when the timing of decisions or potential reporting of corporate exposure (SOX) depends on events, BAM will turn out to be a necessity.

Although BAM initiatives still have low priority within most organisations today, we expect future adoption to increase at least in certain sectors. The finance and insurance sectors will be early adopters of BAM.

BAM is yet to find a strong foot-print in India. Companies are still struggling with disjointed applications. Their priorities today are consolidation, integration, conventional BI, BPM, etc. This will help them become mature to adopt BAM.

CIOs should be watchful before they decide on another tool for BAM. They must look at their overall IT strategy and look at the same in an integrated manner leveraging the investments in EAI, BPM, and NSM too.