Applications of CEP

Any application that processes events and must make decisions based on patterns and time can apply event processing technology.  Some of the most common include:

Algorithmic Trading

In capital markets, the use of algorithmic trading trading techniques has increased from less than 5% to over 20% in the last 4 years, and is estimated to rise to over 50% by 2010. Most of the world’s top-tier capital markets firms apply CEP to algorithmic trading.  Algorithmic trading applies CEP by calculating complex algorithms on the fly that indicate when to buy or sell stock, such as: “When the price of IBM is .5% higher than its average price in the last 30 seconds, buy 10,000 shares of Microsoft every 3 seconds unless the average price drops back below the same threshold.”

 

Compliance - RegNMS and MiFID

Compliance is an issue in every industry. But in the capital markets, the speed of automated trading requires CEP to provide instantaneous analysis trading activity to ensure compliance. Regulatory initiatives like MiFID (Markets in Financial Instruments Directive) and RegNMS (Regulation National Market System) demand firms ensure the provide the best available price to clients.  Unfortunately, because the markets change so rapidly, just calculating best price is challenging software engineering challenge.

 

Traditional compliance was done in the back office, at the end of the day, using historical reporting. Reporting fundamentally depends on a “static” computing architecture that involves storing data, followed by querying the data for compliance constraints. In slow moving organizations, end-of-day compliance might be satisfactory, but in fast moving markets like capital markets, the risk is too great to wait for the end of the day, or the end of the week;  firms are beginning to ensure compliance before they trade by applying CEP technologies to their trading operations to avoid mistakes before they occur.  Event processing turns that reactive compliance model on it head, acting on events as they happen. CEP can monitor and analyze their MiFID compliance as trades are executing, monitoring (or enforcing) best trade execution. DSM provides reporting, reference data and trade history capture functionality, as well.

 

Business Activity Monitoring

Business Activity Monitoring has been described by Gartner as technology that "allows business users real-time access to, and analysis of, important business indicators."  One example of a BAM application is shown here, where a traditional business process flow that manages mortgages is shown.  CEP allows this application to monitor, analyze, and act on this flow and ask questions like: "when the time between the "assign coordinator" and "acknowledge" phase of the business process is greater than 10 minutes, then alert the coordination manager with an alert."  CEP provides a flexible model to express these rules on top of a business process flow.

 

Supply Chain & Retail Operations Automation

In the retail and logistics industries, technologies like radio frequency identification (RFID) is creating an opportunity to automate supply chain operations by tracking, tracing, and moving items wherever they is, at any time, in real-time.

CEP helps answer basic supply chain questions like (shown at right) “When a truck arrives, and all the items that were expected aren’t received within 60 seconds, then send an alert to the operations manager.” Once the supply chain is automated and this kind of basic decision making is in place, then advanced questions may be asked and answered in real-time, such as: “When the stock levels for the book “The Da Vinci Code” is within 10% of the minimum stock level given the last 10 hours of buying behavior; send an event to begin the re-stocking process to the distribution center.”  A detailed study on a CEP-powered supply chain is Boekhandels Groep Nederlands (BGN), a Dutch bookseller and the first retail company to implement a complex event processing-based, item-level RFID (Radio Frequency Identification) tagging across its entire inventory.

Airline_bam

 

Airlines Operations Monitoring

The recent "JetBlue disaster" in the United States has motivated many airlines to expand their usage of event processing to more effectively monitor and control their flight operations in real-time, and to apply intelligence with complex event processing (CEP) as part of an event driven architecture (EDA).  A public example of this trend is TIBCO's recent  announcement that Air France / KLM, who have chosen TIBCO BusinessEvents, their CEP product, for this kind of application as part of their SOA middleware infrastructure.

 

Other CEP Applications

Other applications include:

Financial Services

  • algorithmic trading in many asset classes

  • MIFID and RegNMS compliance,

  • Surveillance

  • Fraud detection

  • SWIFT money transfers

  • Real-time risk management

  • Smart order routing

  • Market making

  • Market aggregation

  • Treasury centralization

  • International funds transfers

  • ATM monitoring and control

  • Clearing

  • Cash and securities payments with interbanking compensation

Health Care

  • Patient monitoring

  • Fraud detection

Public Sector / Government

  • Electronic battlefield

  • Surveillance

  • Emergency response

  • War fighter monitoring

  • Security

  • Net centric applications

Travel

Telecomunications

  • Network management

  • SLA management

  • OSS/BSS systems

  • Location-based services

Retail / Supply Chain

  • Automated supply chain

  • Smart shelves

  • Real-time point-of-sales analysis and one-to-one marketing

Energy

  • Energy trading

  • Pipeline monitoring

  • Power grid monitoring and control

Web

  • Click-stream analysis

  • Real-time web page analysis

  • On-line fraud detection

Entertainment

  • Casino fraud detection

  • Dynamic customer loyalty programs

  • On-line gambling and gaming.

 

Subscribe to and read the comprehensive repository of CEP application use cases in the use case directory of the event processing blog.
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