The Right Time for Real TimeBy John McCormick | Posted 2004-07-01 Email Print
Real real-time data trackers don't just deal with problems, they prevent them.
Waiting in the Delta terminal at New York's John F. Kennedy International Airport, I stood along with a half-dozen fellow travelers studying the giant plasma display hung over the departure gate. The flight's departure time, boarding time, standby passenger status and other information were zapped to the screen via the Delta Nervous System, an instant information network that taps into some 30 or 40 customer and flight databases. I was heading to Los Angeles to moderate a panel on "real-time systems"—and I had come to think this was the apex of real-time information in action.
Then I got on the plane and started reading Heads Up, a new book by Gartner vice president Kenneth McGee. It may change the way you, too, think about real-time systems.
Delta uses its pulse-taking information systems for more than communicating with customers. The Delta Nervous System gives the airline's managers the ability to track changing business conditions and to react to events before they become major problems. If there's a flight delay, Delta managers know immediately and can allocate resources to speed a plane's turnaround or to rebook passengers. A Baseline study last year estimated that improved operational efficiencies were saving the carrier an estimated $700 million a year.
Impressive. But McGee says the real advantage of real-time systems is that they empower managers to be proactive, not reactive.
To some extent, Delta does this with late flights. But McGee isn't talking about the little blips that come up on any company's radar. He says real-time systems can, and should, be used to avoid major corporate surprises, including drastic economic or market changes.
In his book, McGee wonders why Delta and its competitors were unable to anticipate the post-September 11 airline slump. The economic downturn that began months before the terror attacks was the true causal factor that put most of the major carriers, including Delta, in or near bankruptcy protection. Yet, through the first half of 2001 the carriers were ordering planes and giving employees huge raises. In the spring of 2001, McGee reports, Delta agreed to a deal to boost pilot pay 63% by 2005.
But McGee says there were early signs the airline industry was heading for turbulence. A slowdown in technology spending following the Internet bubble-burst in 2000 contributed greatly to the downshift in the economy, which in turn led to a significant decrease in business travel. Delta and the others could have easily put their hands on much of the information they needed to predict a business backslide.
Because business travelers usually fly on short notice, the premiums they're charged add greatly to the carriers' revenue. So it's no surprise that airline computers extensively track business fliers. McGee says that if Delta had simply coded the business travelers in its database with Standard Industry Code, which identifies industry sectors, or U.S. Department of Labor occupational titles, and then kept an eye out for technology-related business travel dips, it could have anticipated a business slowdown. Yes, business fell dramatically after 9/11, but if the industry had aggressively used real-time systems, it "could have prevented the airlines from being as overextended as they were when the attacks happened," he writes.
McGee's point is there's a wealth of information available to companies. But too often they don't have the technology or processes—mostly, the wherewithal—to tap it.
Sure, there are challenges. Companies continue to work with flawed data, incompatible systems and faulty analysis. McGee says the key is to figure out what data is most relevant to a company's financial health, set up reporting systems to track and transmit the data, and then let managers fix problems when they arise. If a real-time system shows sales starting to slow, for instance, managers can proactively cut prices or boost marketing to make sure that quarterly numbers are met.
Think of real-time systems as right-time systems. Which means you might even fix a problem before it occurs.