BAM: A Business Reality
By CXOtoday Staff
Jul 6, 2007

Just the other day, I was sitting in my friend John's office, watching him go through a heap of paper work, figuring out his work day. It was then that I mentioned to him, that he should deploy a BAM solution to help him sort out his life.

John was completely flustered by what I was telling him. He turned around and said "What is this BAM? Yet another tech term that promises to revolutionize the way business is conducted?"

I stopped right there, turned around and said, "Huh? You don't know what BAM is? You really don't know what Business Activity Monitoring (BAM) is?"

I informed John that BAM is something which has application areas in all spheres of business. It's a relatively new concept. The objective behind BAM is to catch and use event-based operational data on line to create nimble footed "real-time enterprise" capable of reacting instantly.

I explained further, in today's competitive environment; businesses must accelerate the flow of information, analysis, and decision making to be more responsive to fast-moving events. This requirement drives the direction of next-generation Business Intelligence. It forces augmentation of schedule-based technologies with event-based technologies i.e. event-based Business Intelligence (BI). BAM, thus, is an extension of traditional business intelligence, adding event monitoring to scheduled batch-based reporting.

So John turned and asked, "Then what is the difference between BI and BAM?"

I said that 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 effectiveness 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.

Conventional BI systems are based on a data warehouse architecture designed to get the information: 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's more of an analysis of data - past (such as revenue, profits, attrition, etc.) or future (sales funnel, budget, etc.) for taking meaningful decisions. This enables business users to react to business situations after they occur. To that extend, traditional BI is static and it doesn't react to the intermediate events, which could be dangerous. BAM takes cognizance of these discrete events and sends signals to the appropriate stake holders to take corrective actions.

Technically speaking, BAM eliminates these intermediate events and takes transactions directly from the operational systems, correlates it with other information from data warehouses or planning systems, and then presents that 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 business intelligence system usage beyond strategic and tactical business decision making to the management of day-to-day business operations.

John asked me if people really use BAM. I said that we have used the BAM concept for a large vehicle leasing company in US, the KPIs for the fleet management process were associated with the metrics to generate the exceptions and alerts for taking proactive actions. This resulted in better fleet performance and lower cost of operations.

So, John joked and said "It's a sophisticated watchdog, that's it". Amused by his cynicism, I clarified that the key benefit of a BAM environment is that operational processes can be monitored and exceptions acted on in close to real time.

For example, any event-based support for customer-related analytics enables companies to optimize live interactions with their customers and prospects. 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 to an effective fraud management of the same Bank.

Even in your job profile, most CFOs and their teams feel pressure to deliver financial information on a timely basis. Sarbanes-Oxley has added further expectations from the information management processes. The CFO teams can no longer be tied to lengthy period-end financial closing processes or cumbersome, manually intensive report preparation processes that precede actual performance reporting and analysis. Now, the potential reporting of corporate exposure depends on events. The best example is the requirements to notify shareholders when there's a material deviation anticipated from stated goals such as acquisition or loss of a major customer.

Even, airlines can use BAM for taking dynamic decisions of pricing based on the real-time demand for its services. In short, quick knowledge-based operational decision making, reduced operational costs, improved process performance, and hence improved ROI are the benefits expected from BAM.

However, BAM yet to find a strong foothold 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. But, companies 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 the EAI, BPM, and NSM areas tool.

By Vinod Sadavarte, CIO of Patni.