Leading the real time organisation

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22%% of the respondents We have successfully incorporated real-time information into over half of our business practices We have successfully incor

Leading in real time

An investigation of the impact of real-time business on strategy and management.

In the early 1970s, the Chilean government

established an ambitious project to run the country’s

economy by computer Dubbed ‘Project Cybersyn,’

the concept relied on real-time information sources

and a decision support system to act upon the data as

quickly as it came in

In the operations room, planners would review analysis

of real-time factory data and even measures of citizen

well-being Further screens presented simulations

of the future of the Chilean economy under various

conditions: tweak prices or production quotas and

you could simulate the results The hope was that the

country could largely run itself

The project turned out to be too ambitious for the

technological capabilities of the time But today,

for many businesses, this once-ambitious vision is

becoming reality

A new study by The Economist Intelligence Unit, sponsored by Cisco, investigates how companies are using real-time information, and how it affects the way in which they are managed and led Based on a survey of executives in the healthcare, manufacturing, retail, transport and energy sectors, the study reveals that real-time information is accelerating the pace

of business, boosting operations management and customer service, and giving rise to new products and services

But it is also forcing organisations to rethink their business models and confront difficult questions about how reliant they should be on automation Company leaders face some tough choices ahead

as they navigate the growing use of real-time data in business

A new study by The Economist Intelligence Unit reveals how real-time data is reshaping businesses – and the challenges it presents to leaders.

Written by The Economist Intelligence Unit

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22%

% of the respondents

We have successfully incorporated real-time information into

over half of our business practices

We have successfully incorporated real-time information into

up to half of our business practices

We have recently started to implement our real-time business

strategy

We are developing a real-time business strategy

We make limited use of real-time information but we have no

overarching strategy Not at all but we plan to do so in future Not at all and we have no plans to do so

19%

22% 18%

13%

20%

8%

0%

How would you describe the extent to which your organisation incorporates

real-time information into its operations?

% of the respondents

2 Cisco Technology Radar / More information at https://techradar.cisco.com

The growing breadth of real-time business

The vast majority of companies are using real-time information in some capacity today, the survey reveals Nine out of ten (92%) respondents say they make at least ‘limited’ use of such information

monitoring their own stock in real-time, many are now also tracing up to the minute consumer trends via social media Fashion e-commerce site Missguided, for example, updates its stock every single day in response to what customers are talking about online

By contrast, only 20% of respondents from the manufacturing sector

have made it beyond the planning stages of their real-time information initiatives

This may come as a surprise, given the ample opportunities for managing and monitoring manufacturing processes in real-time

But pioneers within the industry, such as BASF and Proctor & Gamble, are feeding up-to-the-minute information from the market, such as consumer opinion and macroeconomic data, back into their supply chain and production processes to ensure they are producing the right products at the right quality

However, the extent and sophistication of

real-time information usage varies drastically between

companies and industries While one in five (20%)

make only limited use today, 31% are developing or

implementing a real-time data strategy, and 41%

have successfully incorporated real-time information

into their business practices (see chart 1)

Its use is most widespread in the transport sector,

where real-time monitoring of vehicles is an

established practice Six out of ten (62%) transport

executives surveyed say they have successfully

incorporated it into some or all business practices

For transport companies, real-time information

and automation has long been a crucial part of

operations, and urban transit operators and logistics

companies alike continue to innovate The hotly

anticipated advent of driverless cars will only

intensify the use of real-time information in this

industry, as remote monitoring becomes increasingly

vital

The retail sector is also leading the way in its use of

real-time data; 50% of respondents from the sector

say they have incorporated it into up to half or more

of their business practices Not only are retailers

0% 5% 10% 15% 20% 25% 30% 35%

% of the respondents

Incorporating real-time information into existing business

processes Incorporating the analysis of real-time information in strategic

decision-making Having the skills to analyse and interpret real-time information

Designing new business processes around real-time

information Collecting relevant real-time information Choosing which decisions based on real-time information

should be automated and which should be taken by employees

Responding rapidly to real-time information Justifying the investment required

37% 38% 36% 35%

32%

31%

28%

25%

Which of the following are the biggest challenges your organisation faces in

using real-time information

% of the respondents

Most companies use real-time data to help

manage their operations: 62% of respondents

say that it already plays a major role in operations

management But it also plays a major role in

customer service for 50% of respondents Real-time

information access is an important component of an

engaging customer experience Currency exchange

provider Travelex, for example, has built real-time

account information into its customer app to enrich

the experience

And new applications are unfolding as digital

components and communications networks become

increasingly ubiquitous One quarter of respondents

expect to be using real-time data in product design

and development within the next three years,

reflecting the potential for sensors embedded into

products to reveal unprecedented insight into how

they are used and how well they perform GE’s wind

turbine manufacturing practice, for example, uses

real-time sensor data to build highly detailed virtual

models of its products, allowing it to optimise their

performance and future development

Of course, the use of real-time data is not without

its challenges (see chart 2) The survey reveals that

industries encounter different issues depending on

the extent and maturity of their real-time data use

In the manufacturing sector, which is in the early

stages of adoption, the most common challenge

is collecting relevant real-time information (44%)

This is most likely a reflection of the age and

heterogeneity of their production plant, and the fact

that they may not have direct access to customer

data Their second-most common challenge was developing the skills to analyse and interpret real-time information (41%) In other words, manufacturing companies are still building the technical and organisational resources that real-time business requires

In the transport sector, meanwhile, companies are wrestling with more sophisticated concerns, such

as the role of automation within the organisation Automation goes hand in hand with the use of real-time data If companies wish to react to split-second updates as they occur, some degree of automation will almost always feature

More than three quarters (76%) of companies in the transport sector say they have automated business processes in order to respond instantly to real-time data As a result, their most common challenge is choosing which decisions should be automated and which should be taken by employees, as identified by 48%

At Transport for London, the UK capital’s public transport operator, this question applies to how much railway signaling should be automated According

to Shashi Verma, the organisation’s director of customer experience, this is mostly a matter of complexity, with simpler signaling decisions being automated and more complex ones left up to human operators

Chemicals manufacturer BASF is increasingly using

real-time data from outside the organisation to

better understand its business environment and so

plan production more effectively This requires new

analytical capabilities not conventionally associated

with manufacturers “Translating a real-world

problem into a mathematical model, hypothesis

building, interactive exploration, and so on require

new skills and capabilities,” says Dr Robert

Blackburn, BASF’s president of information services

and supply chain operations

Meanwhile, real-time information will remove the need for some other workers Some 45% of respondents agree that certain job roles have been eliminated as a result of their use of real-time information In the transport sector, where the use of real-time data is most advanced, 63% of respondents agree

This upheaval will not be limited to the lower ranks

of the organisation, however As organisation’s become increasingly automated and driven by

real-The impact on workers and leaders

As this discussion reveals, the use of real-time information is sure to have

an impact on workers For one thing, it intensifies the need for analytical and data management skills – 38% of respondents have hired experts in real-time information (see chart 3) and 45% expect to within the next three years.

4 Cisco Technology Radar / More information at https://techradar.cisco.com

Americas Headquarters

Cisco Systems, Inc

San Jose, CA

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Asia Pacific Headquarters

Cisco Systems (USA) Pte Ltd

Singapore

Europe Headquarters

Cisco Systems International BV Amsterdam

The Netherlands

This article, written by The Economist Intelligence Unit and sponsored by Cisco, examines global organisations’ use of real-time information and its impact on strategy and management It is based on a global survey of 268 executives, just under one-third of whom hold positions

in the IT department, while 47% are members of the C-suite Respondents were drawn from companies in the healthcare, transport, retail, healthcare, manufacturing and energy sectors, 49% of which have annual revenue over US$500m.

time trends, they will require strategic leadership

that is responsive to real-time trends This is already

proving problematic: 38% of respondents identify

incorporating the analysis of real-time information

into strategic decision-making as one of the biggest

challenges associated with its use – more than any

other option

Company bosses who are used to setting strategy

on a quarterly or yearly cycle could soon become a

competitive disadvantage

The EIU survey shows that use of real-time data is

expanding across industries and business functions

As the use of real-time information grows, it forces

companies to be more agile and more automated

This influence will challenge conventional modes of

working, all the way from the shop floor to the board

room

Business leaders who wish to profit from this trend must ensure they have the capabilities – both organisationally and individually – to act at the speed

of real-time data

% of the respondents

Automate business processes in order to respond instantly to

real-time information Invest substantially in the acquisition of real-time information

Change your company’s strategy in light of real-time

capabilities Substantially change your company’s business model in order

Hire experts in real-time information Launch products and / or services that are only made possible

by the use of real-time information Form new partnerships in order to acquire real-time information

Acquire one or more companies in order to boost your

real-time capabilities

50% 45%

41%

39%

38%

38%

37%

24%

What measures has your company taken as a result of

its use of real-time information?

% of the respondents