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Wednesday, February 6, 2008

What is BAM and what does it have to do with Oracle?

I've heard the term tossed around quite a bit. BAM. I've heard it used in many different ways, some wrong, some VERY wrong, and a few right. So, with an audience reading, here is what I have gathered, read, researched, and know about BAM and what Oracle is doing with it:

“BAM defines the concept of providing real-time access to critical business performance indicators to improve the speed and effectiveness of business operations.”
-The Gartner Group

OK, so going off of that 'authoritative' quote, let us break this down.
  • BAM is largely born-of, and is reshaping, two previously distinct technology markets:
    • Analytics and decision making of Business intelligence market
    • Real-time and business process linkage of Enterprise Application Integration (EAI)
  • BAM focuses on what is happening, not what has, or might happen
  • BAM sits in-between the historical and analytical focus of BI and the forward business planning of Corporate Performance Management

BAM applications monitor day-to-day business processes such as customer orders, insurance claims and supply chain operations. BAM products are typically driven by process models. This is very different from data-driven ETL applications, which have little or no knowledge of business processes. (Aside: it is worth mentioning that strategic and tactical performance management is also likely to become business process driven in the future.)

As a BAM server tracks operational events, it maintains these events in a cache that is used by a reporting and analysis engine running under the control of the BAM server. The analysis engine can access existing business intelligence and data warehouse information to put the operational events being tracked into a business context and produces scorecards of operational business performance. The BAM environment, however, also provide the ability to do more detailed analysis and mining of information in the analytics engine.

The key benefit of a BAM environment is that operational processes can be monitored and exceptions acted on in close to real time.

Another recent trend in BI analysis tools has been to add a performance management capability that enables business users to compare the analytics produced during BI processing to actual business goals and forecasts (i.e., it puts BI into a business context). Performance management products extend the use of BI from measuring business performance to managing it. This is termed as Business Analytics. The actionable intelligence produced by these products is presented in the form of drillable scorecards that employ formal or informal methodologies to document business goals and initiatives. Some performance management products also provide rules-driven facilities to send alerts to business users when thresholds defined by the user are, for example, not achieved. Alerts reduce the amount of time business users spend in accessing and analyzing data, and reduce the reaction time required to identify and fix business problems.
BI and Business Analytics tools enable business users to react to business situations after they occur. Their predictive analytics tools component adds techniques such as data mining and forecasting to a business intelligence framework. These techniques help users to become more proactive in managing the business. In some cases, predictive tools are used to provide the business context (e.g., rules, forecasts) for the scorecards and alerts used by performance management tools.

  • üBAM adds real-time information to Business Intelligence
  • ü
  • üBusiness Intelligence adds information context to BAM
Both BI and BAM address the needs of monitoring business processes to enhance operations efficiency. The key differentiator relates to the how quickly the business needs to react to an event or process exception. Business problems that require near real-time information access and analytics can be best solved using BAM.

BAM furthers the BI cause by:
1. Embedding key analytics (computed in real-time) in day-to-day business processes
2. Correlating heterogeneous events and patterns to compute causalities, aggregates and thresholds, based on end-user preferences
3. Delivers the analyzed information and alerts in real-time to the users when and where the information matters
4. Providing a platform for structured and collaborative problem resolution
Using a loan as an example, BAM can send an alert to indicate a number of loans have been made in a specific area. This is very useful information, but becomes more useful when used with BI to see what the impact of these loans have on an organization's exposure in different markets. BI can put the results of BAM into a broader context and make the decision process a more informed one.

It may be that as an organization, analysis results show exposure is becoming too skewed toward a specific market. As a result of this analysis, the BAM thresholds for sending alerts can be adjusted. You make the rules, you set the thresholds, you learn real-time when these thresholds are at or near being hit.

Who uses BAM?? (click any picture to enlarge)

There will be a part 2 of this article shortly which will explore the technical and business challenges of implementing BAM. Stay tuned...

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