MIT CISR study: Companies operating in “real-time-ness” had more than 62% higher revenue growth and 97% higher profit margins than their slower counterparts.
The real-time revolution is now in its third decade now, from its early days confirming e-commerce transactions and delivering fraud alerts to nowadays automatically rebooking travel reservations and streaming information on aircraft engine performance. Looking beyond narrow operational advantages, we are seeing full-fledged, end-to-end real-time businesses emerge that can turn on a dime — in sub-second time. There’s now hard data that shows that striving to become a real-time business delivers significant benefits in terms of revenues and ongoing innovation.
The rise of real-time businesses is real, and is the next step in digital evolution, says a study conducted by Peter Weill of the MIT Center for Information Systems Research (CISR) in conjunction with Insight Partners. These new, rapidly adaptable enterprises not only have the latest technology, but also tend to cast aside hierarchies and operate more democratically. “Operating increasingly in real-time helps companies sense and respond to changes in an increasingly volatile business environment. There is no longer time to pass decisions up and down the traditional business hierarchy,” the report states.
Weill defined a “real-time business” as one that employs “trusted real-time data to enable people and systems to make real-time decisions, and respond immediately to opportunities and challenges.”
The companies in the study operating in “real-time-ness” had more than 62% higher revenue growth and 97% higher profit margins than their slower counterparts, the study shows. These top-real-time companies “automated processes and enabled fast decisions by employees at all levels using trusted and easily accessible data,” Weill relates in an overview at MIT’s CSIR site. Real-time decision-making also means more superior customer experiences as well as greater business agility. They also were 22% better at operational efficiency, and 20% better at innovation.
See also: It’s the Right Time to Start a Real-time Data Business
The Real-time Impact on Business
Managers and professionals within real-time businesses “are able to sense a threat or opportunity, course correct, and change direction without getting multiple, sometimes redundant, approvals,” the report adds.
There are four ingredients needed to make up a successful real-time business, Weill and his colleagues report:
- Real-time data for decision-making: “Having easy access to trusted real-time data for use as inputs to automated decision-making and in decision-making by employees and systems, tracking company performance on key metrics, and real-time governance and risk management.”
- Integrated customer experience: “Supports customers in navigating their journeys, identifying multiple products from different parts of the company that customers can easily acquire and combine to fulfill their needs. Self-service, which requires real-time data on both products and customers to deliver, is another hallmark of a real-time business.”
- Business agility: “Real-time data enables employees to simplify, rationalize, and improve product offerings with streamlined approvals for key decisions. The access to real-time data and dashboards enables employees to identify trends that could inspire a change in business models.”
- High-quality employee experience: This could be the hardest aspect of real-time success to deliver, as it involves job transformation and widespread involvement. But automation helps, as it “allows people to spend far less time doing repetitive, often paper-intensive work and instead to focus on improving processes and innovating. Using real-time data in dashboards enables employees to better understand how the company is doing and how they contribute to the company’s performance.”
Weill and his team took a close look at United Airlines as an example of a company that has adopted real-time technology, customer service, and employee involvement and has seen an uplift.
The company “started by consolidating multiple data sources into one data hub, then served that data to customers and employees via digital channels,” Weill and his co-authors explain. In addition, an app is available to customers to help plan or modify trips. In the process, United has achieved one-year revenue growth of close to 20% and a net margin of 6% — versus an industry average of 4%.
“United uses this data to make better decisions about flight routes, diagnose reasons for delays, help passengers make their connections, suggest ways to use fuel more efficiently, and more,” the report states. For example, a tool called Connection Saver “monitors connections in real-time, calculates whether connecting passengers will make or miss their connections and identifies the solution that disrupts the least number of people. If holding a flight for five or ten minutes would help a good number of passengers get on board, the flight crew will wait.”
