Leading in real time An investigation of the impact of real-time business on strategy and management SURVEY FINDINGS Leading the real-time organisation Written by The Economist Intelligence Unit A new study by The Economist Intelligence Unit reveals how real-time data is reshaping businesses – and the challenges it presents to leaders I n 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 Cisco Technology Radar / 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 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 However, the extent and sophistication of realtime 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) 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 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 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 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 How would you describe the extent to which your organisation incorporates real-time information into its operations? % of the respondents We have successfully incorporated real-time information into over half of our business practices 19% We have successfully incorporated real-time information into up to half of our business practices 22% We have recently started to implement our real-time business strategy 18% 13% We are developing a real-time business strategy We make limited use of real-time information but we have no overarching strategy 20% 8% Not at all but we plan to so in future 0% Not at all and we have no plans to so % of the respondents 0% Cisco Technology Radar / 2% 4% 6% 8% 10% 12% More information at https://techradar.cisco.com 14% 16% 18% 20% 22% Which of the following are the biggest challenges your organisation faces in using real-time information % of the respondents Incorporating real-time information into existing business processes 37% Incorporating the analysis of real-time information in strategic decision-making 38% 36% Having the skills to analyse and interpret real-time information Designing new business processes around real-time information 35% 32% Collecting relevant real-time information Choosing which decisions based on real-time information should be automated and which should be taken by employees 31% 28% Responding rapidly to real-time information 25% Justifying the investment required % of the respondents 0% 5% 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 Cisco Technology Radar / 10% 15% 20% 25% 30% 35% 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 realtime 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 More information at https://techradar.cisco.com 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 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 Cisco Technology Radar / 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 realtime 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- More information at https://techradar.cisco.com What measures has your company taken as a result of its use of real-time information? % of the respondents Automate business processes in order to respond instantly to real-time information 50% 45% Invest substantially in the acquisition of real-time information Change your company’s strategy in light of real-time capabilities 41% Substantially change your company’s business model in order 39% Hire experts in real-time information 38% Launch products and / or services that are only made possible by the use of real-time information 38% 37% Form new partnerships in order to acquire real-time information Acquire one or more companies in order to boost your real-time capabilities 24% % of the respondents 0% 5% 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 Americas Headquarters Cisco Systems, Inc San Jose, CA 10% 15% 20% 25% 30% 35% 40% 45% 50% 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 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 Asia Pacific Headquarters Cisco Systems (USA) Pte Ltd Singapore Europe Headquarters Cisco Systems International BV Amsterdam The Netherlands Cisco has more than 200 offices worldwide Addresses, phone numbers, and fax numbers are listed on the Cisco Website at www.cisco.com/go/offices Cisco and the Cisco logo are trademarks or registered trademarks of Cisco and/or its affiliates in the U.S and other countries To view a list of Cisco trademarks go to this URL: www.cisco.com/go/trademarks Third party trademarks mentioned are the property of their respective owners The use of the word partner does not imply a partnership relationship between Cisco and any other company (1110R) CISCO TECHNOLOGY RADAR .. .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... implementing a real- time data strategy, and 41% have successfully incorporated real- time information into their business practices (see chart 1) monitoring their own stock in real- time, many are... respondents from the manufacturing sector have made it beyond the planning stages of their real- time information initiatives Its use is most widespread in the transport sector, where real- time monitoring