Managing by Wire Architecting a Sense & Respond Enterprise

1. Managing by WireArchitecting a Sense & Respond Enterprise Welcome! Web Seminar: Managing by Wire Start Time: 1pm (EST) Conference Number: 1.800.214.0694

2. Your Speakers: Pioneers in Sense and Respond Stephan H. Haeckel President, Adaptive Business Designs™Author, Adaptive Enterprise (Harvard Business School Press) Former Director of Strategic Studies at IBM's Advanced Business Institute Mani Chandy, Ph.D. Co-founder & Chief Scientist, iSpheres® CorporationSimon Ramo Professor of Computer Science, California Institute of Technology Leader of Caltech’s “Infospheres Project” for Sense and Respond Computing Systems

3. Becoming a Sense and Respond Organization Presenter: Stephan H. Haeckel

4. Some Managerial Implications of Unpredictability • Strategy • Demise of the strategic plan OF action • Expressed as an adaptive design FOR action • Structure • Demise of the functional hierarchy • Dynamic and collaborative network of modular capabilities • Governance • Demise of traditional command and control • Context and coordination

5. Managerial Frameworks

6. Unnatural Acts in a Make and Sell Organization • Simple Rules • Empowerment • Real Options • Improvisation • Fast Prototype • Teams • Outsourcing • Negotiation / Renegotiation • Scenario Planning • Markets of One • Matrix Management

7. Unnatural Acts in Sense and Respond Organization • Strategic Planning • Hierarchies of Authority • Rewarding Utilization • Commands • Supervising • Demand Forecasting • Annual Budgets • Vertical Integration • “Line of Sight” Measurements • Value and Supply Chains • Matrix Management

8. Five New Core Competencies • Knowing earlier • Managing by Wire • Designing a business as a system • Dispatching capabilities from the customer request back • Context-giving leadership

9. Managing by Wire: The Generic Adaptive Loop

10. Managing by Wire at Aetna: Improvisation in Context Source: Glen Salow

11. CONTEXT: Designing an Adaptive Business as a System of Roles

12. The Function of Leadership: Provide an Unambiguous Context... • Purpose (Reason for Being) • Boundaries (Governing Principles) • Relationships (Role and Accountability Design) • How Progress is Measured

13. Capability Networks are Given Structure by a System Design of Accountable Roles An Adaptive Business Design Shows Who Owes What to Whom

14. COORDINATION: Dispatching Capabilities from the Customer Request Back

15. In an Adaptive Business, Roles are Dispatched in Response to the Specifics of a Current Customer Request

16. Every Customer Request Can Restructure the Organization

17. Metrics of Success • Demonstrating adaptive, on-demand behavior • Response cycle time reduction • Response quality (as evaluated by customer) • Scope and number of requests successfully addressed • Impact on business results • Organic growth in revenue and profits • Win rates, “auditability” • Employee morale

18. Summary • Adaptive business designs are required to leverage adaptive behaviors and technologies. • Inherited managerial framework systematically discourages adaptive behavior. • Design point is value TO customers, not firm’s internal objectives. • Know earlier, MBW, design business as a system, dispatch capabilities from customer back. • Leaders control Context; not operations. • Expect an order of magnitude improvement in cycle time, and a massive reduction in internal transaction costs.

19. Two Ways of Thinking About a Business

20. For More Information: The BookAdaptive Enterprise: Creating and Leading Sense-and-Respond OrganizationsHarvard Business School Press, 1999 IBM Advanced Business Institute CoursesSense & Respond MasterClassDiscovering Customer Value Classhttp://www.ibm.com/ibm/palisades/abi Steve Haeckel haeckel@optonline.net

21. Event Serversfor Sense and Respond Applications Presenter: Mani Chandy, PhD

22. Why do you need an event server? • World: fluid & constantly changing; managing by adapting • Information: scattered across applications & organizational boundaries; shared situational awareness • Business/human behavior: asynchronous/non-linear; • Speed: Faster response to environmental changes & critical events • Adaptation: Massively distributed rapid decision making; empowerment and local self-synchronization

23. Modules for The “Sense” Phase Monitoring key elements, conditions, and events as defined by each decision maker according to their role Receiving pushed data; complex mechanisms for polling passive systems Heterogeneous data: numerical, text, tables Variety of sources, formats: email, database, web services, signal, XML documents

24. Modules for the Interpret Phase Filtering events according to monitoring rules; complex event processing Correlating multiple isolates events as the environment changes to gain more meaningful awareness Deciding worthiness of event correlations Multiple methodologies: time-series analyses, parametric evaluation, text analysis Anomaly (event) detection

25. Support for the Decide Phase Dynamic routing of event data to decision support tools

26. Modules for the Act Phase Application invocation to generate alerts and orchestrate services Interact with Messaging systems Database operations Web services File operations Wireless devices Hardware systems Alert management

27. IT Platform to Support New Core Competencies: • Knowing earlier • Modules for sensing and interpretation • Managing by Wire • Applying technology to speed the entire SIDA loop • Operating a business as a system • Dynamic routing of relevant events to accountable parties as the state of the environment changes • Dispatching capabilities from the customer request (environment) back • Environment activity generates event streams that are fed through the system • Context-giving leadership • A heads-up display for the context-giver based on governing principles • The signals being received about the new state of the environment

28. SOA and EDA: Comparison – Flows and Relationships Source: Gartner Research (June 2003)

29. Sense and Respond IT Support: Implementation Challenges • Asynchronous Nature of Real-time Data • It is not a data-mining problem • Massive Flow of Changing Data and Events • Changing values in Real-time • Not all Data are Available as Events • Data changes are buried in databases, applications, across web services, or as fields in a browser • How to generate events out of continuum sources or purely reactive sources • Complex Relationships Amongst Events defines Significance • Distillation of calculations over time and across multiple events (“Composite events’) needed • Getting the events to the right place in time for Calculation • Requires low latency multi-point content based routing • Need for Redundant, Load Balanced, High Availability, Massive performance • Non trivial distributed computing problem

30. Event Applications as Multiple Emerging Opportunities Event Driven Architecture Event Programming Breakthroughs Events as BAM “Meta-Apps” Service Oriented Architecture • Event-Mainstream Apps: • C4I • Program Trading • Process Control Process Client/ Server • Event Meta-Apps: • Fraud • Management • Security • Alerts Traditional Application Logic Paradigm Transactions Procedural Legacy time now

31. iSpheres Event ServerNew Technology for Sense & Respond Systems

32. iSpheres Event Server – Logical View

33. Event Servers in Standard Enterprise Environments

34. iSpheres Event Server – Benefits • Architectural Integrity • Ensures applications will withstand the closest technical scrutiny performed by large scale enterprise and government buyers • Reduces Time to Market by sourcing standard components • Decreases Project Risk by using field-proven technology • Functional Standardization • Allows sense & respond applications to be created quickly by domain experts • Ensures applications scale from workgroup to multinational enterprise • Improves Reliability, Availability, & Serviceability • Increased flexibility enables rapid delivery of advanced/competitive features

35. Many uses. Many industries. One Platform. • Business Activity Monitoring • Corporate Risk Management • Budget Control • Regulatory Compliance • Financial Trading • Supply Chain Management/Logistics • Enterprise Risk Management Network & Systems Management Fraud Detection Homeland Security – First Response Suspicious Activity Tracking Self-healing Systems Command & Control Counter-Intelligence

36. Sensing earlier. Responding Faster.

37. Q&A Session For more informationwww.iSpheres.com