I’m still catching up from the SAP BusinessObjects user conference a few weeks ago. One of the sessions I attended was David Huber’s overview of operational business intelligence and the soon-to-be-launched SAP BusinessObjects Event Insight product.

He started the session with the results of a recent CIO.com survey of Fortune 500 CIOs (CIO Technology Priorities July 2009), showing that “Business Process Management” and “Business Intelligence” are the #2 and #3 priorities for 2010.

Bring these two trends together and you get the need for “operational BI”: real-time, actionable BI directly within your operational systems. SAP has now combined event processing with business process management and dashboards to create new operational BI capabilities.

The key new element of this system is SAP Event Insight. The product originally started as a prototype from the SAP Imagineering Team called Live Enterprise, with links to dashboards from the SAP BusinessObjects Innovation Center, using complex event processing (CEP) technology from a small startup called Coral8. Coral8 was then acquired by Aleri, who was then acquired by Sybase, who was then acquired by SAP – all in less than 18 months! – and the product is now close to “ramp up”. For more information about BI 4.0, check out the SAP Analytics microsite.

The goal of Event Insight is to provide real-time monitoring of business events:

• Detect meaningful business events and new opportunities, such as customer buying behavior, through historical and current events
• Send alerts to business users, letting them detect and react to business changes before adverse events happen
• Easily set up the agents, on multiple data sources, monitoring both structured and unstructured data, without programming

Event Insight uses technology that was first developed for high-velocity, high-transaction trades on Wall Street, but has now been extended and adapted for use in BI. The biggest difference is in the nature of the processing: compared to previous “monolithic”  CEP implementations, business intelligence typically requires more data sources, with processing shared among nodes on the network.

The new technology is tightly integrated with the SAP BusinessObjects semantic layer, letting you create universes and queries on top of event streams, linking them to the BI 4.0 alerting framework, and letting them be accessed from standard front end tools such as Web Intelligence, Crystal Reports and Dashboards (formerly known as Xcelsius).

So when might you need this technology? Here’s David’s comparison of traditional and operational BI approaches: unsurprisingly, operational BI is operational processes, where you need to take action on information in a short time.

Operational BI is a very horizontal technology that could be used in lots of different industries and applications. Examples given included:

• A supply chain example. The instant that the system detects a problem with an order, an alert is sent to customer care, who can proactively warn the customer, and mitigate any delay
• Oil and gas. Real-time pressure, temperature, and vibration readings are gathered and sent to a central dashboard, and any readings outside of defined limits are sent as alerts.
• Location-based processing. The event trigger could be somebody or something arriving at a particular location (leveraging the Sybase mobility technology)
• Monitoring customer sentiment. Look for keywords in a stream of social media using text analytics, and send alerts.

Demonstrations

The SAP Community Network site has some great demonstrations available — here are links to some of them. First, a demonstration of how the technology could be used by an Oil and Gas company:

Here’s a description of how operational BI can used for improving the number of “perfect orders”:

And here’s an associated demonstration of the perfect order dashboard:

Operational BI can be used for tracking and tracing defective products, including collaborative decision-making with StreamWork and SAP’s business process modeling.

And here’s the associated product defect demo, with social media monitoring and drill-down to SAP systems:

David mentioned that an industrial poultry operation was even interested in the technology – but declined to explain further!

It’s claimed that each individual agent install is quick and easy, with both SAP and non-SAP systems. As with traditional BI, the trickiest part is deciding the business process issues and trigger conditions that you want to measure. There are three types of user profile who would maintain and use the system:

• IT – somebody to install the system, and collect, process, and manage data
• BI power user – to set up the event semantics, types of event, thresholds, etc.
• Business user – consumes the data and alerts

Since some of the examples overlap with what you can do with traditional BI today, I asked David for his honest assessment of how applicable and practical this technology will be for “average BI-using organizations”, including the cost of buying, installing, and maintaining it in addition to existing systems. He replied that he believes that operational BI won’t be confined to just a few niches (finance, etc.), but will become a standard part of most large-organization BI deployments.

Complementary information:

• Check out the excellent SAP analytics site
• some publicly-available slides from an AFSUG event earlier this year

“Mark Moorman, Advisor to the Office of the CTO at SAS… cites one government agency that was required to buy only low-grade lumber for construction projects. When a supplier offered to significantly discount a large stockpile of high-quality lumber in order to clear its warehouses, the agency had to turn him down, even though it meant paying more for an inferior product. It didn’t matter; that was the policy.”

The document implies the answer to this problem is “operational BI”. I think there are lots of great examples of where companies can provide information to front-line workers to improve decision making, but this is not one of them.

BI and transparency can, and should, replace policies in many cases — e.g. see “BI Instead of Expense Controls” — but this is independent of operational BI.

According to Gartner[2], business intelligence and enterprise applications are the #1 and #2 top priorities for CIOs in 2007.

2008 will see these two technologies come together, with Oracle+Hyperion and SAP+Business Objects (and to a certain extent IBM+Cognos). The result will be the first steps towards “performance excellence” systems that support business optimization, not just automation–and help organizations fix the gap between strategy and execution.

The last decade has been about automating business processes. The next decade will be about building business-centric applications. For the first time, organizations will have the opportunity to apply a systems approach to best-practice use of information across the organization as a whole, by synchronizing the two key components of corporate performance improvement: operational excellence and strategic change.

• Operational Excellence. By providing “ambient intelligence”–trusted data at the right time in the right format–organizations can make every person, process, and decision more intelligent.
  
  By making information actionable, front-line decisions can be automated and optimized. And IT can provide a systems approach to business process optimization, helping business users analyze information, collaborate around insights, and track progress towards goals.

• Strategic Change. Improving performance requires you to regularly take a step back and assess your overall strategy: are you producing the right products, for the right customers, in the right way?
  
  Today, most organizations have procedures for optimizing single processes, but few have a process for improving the organization as a whole. 2008 will see the rise of “information-centric applications” that fully integrate and synchronize strategic financial planning processes with day-to-day execution across the full range of company operations. By providing transparency at every level, and aligning the goals of the organization with the incentives of individuals, organizations will remove the biggest obstacles to strategic execution.

Performance excellence systems will support these two disciplines in a synchronized way: the operational information will be the same as the strategic information, but in more detail and delivered in real-time.

Surveys of CEOs, CFOs, and business leaders all agree–the problems of operational excellence and strategic change are at the top of their priorities.

So will performance excellence systems be the #1 priority for CIOs in 2008?

[1] Source: The Balanced Scorecard Dr Bob Kaplan and Dr David Norton

[2] Source: Gartner EXP CIO Survey (2007)