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July 18, 2003

The Big BAM

Business activity monitoring (BAM) is a key technology concept behind today's "real-time enterprise" sizzle. Will BAM enable you to increase the value of your enterprise resource application investments?

by Stewart McKie

The promise of ERP suites is simple: Get as many business activities automated and integrated within as few systems as possible, and you should be able to run your business more effectively. Roughly speaking, the activities encompassed by most ERP suites now include many of those within the domains of employee, financial, customer, partner, and supplier relationship management. That's a lot of activities.

Automating and integrating all these activities delivers some significant return on investment (ROI) of its own. But given all these activities and all the data inherent in them, other ways must exist to squeeze more ROI out of ERP systems. And there is: business activity monitoring (BAM).

What's the relationship between BAM and ERP? That's the subject of this article. I'll begin with a little background on BAM and outline how BAM might function. I will also discuss BAM's technology profile and consider how far the big three ERP vendors (Oracle, PeopleSoft, and SAP — if we still have a distinct three by the time you read this article) are supporting BAM in their application suites.

From Zero to BAM

BAM is the Gartner term of the "noughties," which is appropriate given that Gartner also invented and evangelized the term "ERP" in the nineties. The BAM concept is one outcome of Gartner's interest in promoting the real-time or "zero latency" enterprise concept. Here, latency means the gap between when data is recorded (in an IT system, that is) and when decisions can be made — often a gap of surprisingly long duration in some complex or distributed organizations. Zero latency implies that once data is recorded, it's immediately available for decision-making and thus helps the organization operate in a proactive rather than retroactive manner.

Of course, real-time decision-making isn't always necessary or appropriate in every situation. Sometimes a pattern of activity must be established over a period of time in order to make an informed decision, for example, identifying credit card fraud, money laundering, or even a concerted attack to hack into a Web site. Often there simply isn't enough computing power available to enable real-time data querying and information delivery. However, given the choice, most managers would prefer the option of real-time information delivery to get the chance to make a decision before — rather than after — an order is lost, a manufacturing process is held up, or a key component price rises or falls.

Five R's of BAM

One simple way to conceptualize a type of BAM is in terms of five "r-words." BAM depends on (data) repositories and a process of recognition, response, resolution, and review to function and deliver its ROI. Here we are focused on an ERP system as a data repository: but BAM is equally applicable to the efficient management of a computer network infrastructure, an email system, or a "vertical" business system, such as call center management.

Monitoring an activity depends on the ability to recognize significant events that occur within the activity and to respond appropriately to these events based on the application of business rules. These rules may be either predetermined or, in a more sophisticated BAM system, learned over time by the system itself. The real ROI value of BAM comes from the ability not just to recognize and respond to events, but to also help managers resolve the event occurrences quickly and review their impact on the business in order to make more timely and informed decisions.