Business Activity Monitoring - Watching The Store For You

  • Written By: Olin Thompson
  • Published: January 3 2004

What Is Business Activity Monitoring?

The concept of Business Activity Monitoring (BAM) is simple. It watches business applications, detects things that need to be acted upon and takes the appropriate action, perhaps alerting us or taking action within the system. Since most applications have been accused of creating "too much data", Business Activity Monitoring can prevent things from slipping through the cracks.

Systems are continuously generating a variety of information that typically goes unnoticed until some later time, often when it is too late or has lost some of it's value. Often in real time, BAM software captures information, evaluates it and alerts us or takes some preplanned action if it meets the appropriate conditions.


Identifies critical, time-sensitive data from applications, files (including multiple data sources), E-mail, web sites, operating system, etc.

For example, when an inventory item is issued, the new balance on hand is captured. Alternatively, when a supplier updates their customer service portal with information on your open orders, BAM can capture the new shipping dates


Compares information to preset rules including using the data required for the rule from the same or other systems.

For example, has the new balance on hand fallen below the reorder point? Alternatively, do the new ship dates match your requested dates?


Notifies employees, partners, and customers via e-mail, fax, pager, PDA, and the web.

For example, the planner and buyer for that item receive an e-mail alerting of the situation.


Updates applications, delivers reports, and takes corrective actions

For example, a requisition for that item is automatically created in the purchasing system.

BAM Is About Business

Vendors and IT often discuss BAM as a technology, the reality is that BAM is about "Business". The users of BAM are business people. BAM monitors business data and help make business decisions. BAM is about business. BAM can bring significant business value in the world of technical data, but its justification must be derived from business management improvements.

BAM has turned into a marketing term and therefore the definition is far from standard. The most important claim for BAM is that it can fundamentally alter the way businesses understand and act to threats and opportunities.

For decades, systems have incorporated the concept of "exception reporting". In many ways, BAM is an updating and extension of exception reporting. With exception reporting, the definition of an exception was defined within an application or, later a reporting or business intelligence system. In most cases, the identification of the exception was done periodically, running a stock status report, and MRP, etc.

BAM definition of an exception is not limited to the logic or information within a single application or program. With most BAM products, the definition of an exception is defined outside the business application and can include external sources of information needed to determine if an exception condition exists. The definition can be something happening (out-of-stock condition) or something not happening (an incoming shipment did not arrive on time). Therefore, BAM logic, external to applications can identify a low stock situation in inventory, look at open customer orders and open purchase orders in different applications and determine if an expedite e-mail should be sent to the vendor or a simple alert sent to the buyer. Likewise, BAM logic can detect that an "A Customer" has not ordered within the last 10 days, sending e-mail to the sales rep to make a call.

Many vendors tout that their products are "Real Time". Is real time good? Yes. Can it be justified? Maybe. The value of BAM is not dependent on being a real time system. A BAM solution that periodically analyses the business can also create significant value. The value of real time, versus frequent (hourly) versus periodic (daily) should be considered. For many situations, a system running in other than real time can be just as valuable and operate at a lower cost.

Many vendors are not adequately explaining their products or the value to the business users. Telling the average business executive that they are "Capturing an intranet transaction" is not very meaningful. These vendors need to focus on the business value and define their products more in terms of what it does and the value created, not the "how it does it".

Sample Vendors

A search of the internet and vendor briefings has identified many vendors who claim their products fit into the definition of BAM. Here is a sample, but not inclusive list:

BAM Vendor
Sample Customers
Commerce Events Department of Defense
InnovaLink NASA, Bristol-Myers Squibb, Princeton University
Knowledge Sync American Express, Palm, Sony
Presence MK Diamond, Senior Aerospace, Bibby Sterlin
Proxima Technology Commonwealth Bank of Australia, Qualcomm, T-Mobile
Quantive American Airlines
Savvion United Technologies, Raytheon, Lockheed Martin
Tibco General Motors, Telecom Italia, Henry Ford Health Center
Vistera MassMutual


Users — Business Activity Monitoring holds significant potential for end user organizations. It can accelerate the velocity of the business and deal with the details of everyday needs. Users should determine if BAM has a role in their business and if so, develop a plan to learn about the concept and launch a pilot operation. They are urged to use a pilot to more fully understand the benefits and limitations of the concepts.

Vendors — BAM vendors need to communicate their value proposition in business terms, using realistic examples to communicate both what BAM is and how it generates business value. Application vendors should look at BAM as an extension to their existing products in order to deliver greater value to their customers and generate additional revenue. Vendors with mature application products with large install bases can be especially well served with BAM.

About the Author

Olin Thompson is a principal of Process ERP Partners. He has over 25 years experience as an executive in the software industry. Olin has been called "the Father of Process ERP." He is a frequent author and an award-winning speaker on topics of gaining value from ERP, SCP, e-commerce and the impact of technology on industry.

He can be reached at

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