TIBCO CEO: How Real-Time Computing Will Change the Landscape

Vivek Ranadive is not only the chief executive officer of TIBCO Software, Inc., he’s a New York Times bestselling author (of works like The Power of Now, The Power to Predict and the recently released The Two-Second Advantage: How We Succeed by Anticipating the Future — Just Enough.) As you’d expect from such a literary type, this proponent of event-driven computing and herald of Enterprise 3.0 is handy with a well-turned phrase. He describes your relational database as a “phone that doesn’t ring” and his description of what happens when you open a certain software package from rival IBM is likely to stick in your mind. In this latest installment of the IDG Enterprise CEO Interview Series, Ranadive spoke with IDGE Chief Content Officer John Gallant about why your company needs to move to real-time computing and how TIBCO’s ‘two-second advantage’ can change your business.

Q: Let’s start by setting the table. Explain for folks what it is that TIBCO does for enterprise customers and what makes the company unique among enterprise software providers?

A: TIBCO provides the platform that allows companies to tie all their systems together and so that you can take advantage of real-time events. In the 20th century, people would react to things after they happened by looking at information in a database. With the TIBCO platform, not only do you save a lot of money because you’re able to connect everything through a software bus so you don’t have to have lots of back-and-forth interfaces, but you’re then able to find things out before they happen. I call this in my new book the ‘two-second advantage.’ If you have just a little bit of the right information, just a little bit beforehand, it’s more valuable than all the information in the world six months after. What’s the point of knowing you’ve lost a customer after the customer leaves or that you’ve had fraud committed after the money was lost, or that you have a power outage when it’s already dark?

Think of Oracle as the platform for transactions, for static data. In that world, data was static and the Oracle database was the building block, ERP was the killer app and business intelligence was the [tool for] business insight. In the TIBCO world, instead of dealing with static data, it’s dynamic or moving data. Instead of a database in the middle, you have a service bus that connects everything. And instead of a database-oriented architecture it’s a service-oriented architecture. Instead of having to continue buying siloed ERP apps, you do end-to-end business processes as part of BPM [business process management] capability. Instead of having reporting systems for business intelligence, where you’re grinding reports out months after things have happened, you have predictive systems that enable you to predict that, say, you’re about to lose a customer.

In the past world, the development tool was an app server and in this new world you have event-servers where you are dealing with events. An event is when something happens. It could be when a customer walks past the aisle of a store, it could be when you get on a plane and your bag doesn’t, it could be when a call is dropped on your network; all of those are events.

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Q: Give me an example of how a company is using this event information to improve their business.

A: A telco in India was adding 5 million customers a month and they were losing a million and a half. In the old world, people were going into a database six months after and trying to make sense out of what was happening. In the event-driven world, we saw that after six dropped calls, you switched. So after the fifth dropped call, we would make you an offer for free SMS minutes if you topped off your prepaid card. So the problem of customer loss was gone.

If you have a power outage, there is a string of events that you can anticipate and you can prevent that outage. Or if there’s a weather delay, that causes a forward chain of events that we’re able to pick up, connect the dots and adapt the value chain so that pilots aren’t showing up, planes aren’t sitting, crews aren’t waiting, food isn’t going to waste and customers are not being left stranded.

This is the future. Our business hit the proverbial tipping point in the last year and a half, where there isn’t a company, an industry or government that doesn’t need to become event driven. When you want to store transactions, put them in a database. But when you want to run your business, you do it in real time, on our bus, with our platform.

Q: You used the phrase “The Power of Now” as a book title and as a marketing positioning statement for TIBCO. What do you mean by that and how will real-time computing change the landscape?

A: What it means to be real-time is that you’re able to pick up billions – trillions – of events instantaneously anticipate what might happen next. By doing that, you can prevent the loss of a customer, you can do a customer up-sale, you can prevent fraud from taking place. You can optimize your supply chain so you get much more value from all the assets you have. That’s what it means to be real-time. Human beings are real-time. When you’re driving, you see a pothole and you avoid it. You look at that as an event: ‘I just saw a pothole.’ You connect it to a pattern in your brain that says ‘avoid potholes’ and you drive around it. If you drove using a database, then you would hit the pothole and then six months later try figure out what happened.

Q: A recent presentation that TIBCO delivered for the analyst community said the company is in the ‘pole position to capitalize on a tipping- point.’ You mentioned this tipping-point earlier, but what’s bringing more and more customers to this point?

A: The perfect storm has come together to bring us to this tipping point. The first thing is the rise in mobility. You want to be able to do things where and when you want. The cloud is a driving factor, as well as the global nature of competition where people are fighting to hold on to their customers, let alone get new customers. Then the technology itself, where the cost of solid state memory has fallen even faster than the cost of disk drives.

Now you’re able to do things in memory, in real-time. If I had told you 10 years ago that you would be conducting most of your life off a cell phone, you would have been skeptical. Similarly, if 99 percent of a company’s business affairs today are conducted out of a database, in a decade we’ll have reached the point where most things will be done outside of the database and off a service bus, in real-time. So it’s all these big factors; the emergence of mobility, the emergence of cloud computing, the cost of solid-state memory plummeting, global competition, the emergence of social networking on the Web; that have pushed us to the tipping point. It’s also the bad economy of the past few years. Companies had to find ways to do more with less, they had to find ways they could upsell to their existing customers. They had to find some way to actually get some kind of an advantage so they were willing to try new things. When we normally do a beta launch, we have — say a half a dozen people sign on. When we announced our last beta, we had six hundred people wanting to be a part of it — it was a hundredfold increase in the number. When you look at the numbers of people our partners are training, you see a tenfold increase.

I was in a board meeting a few months ago and a sales person urgently summoned me. He said our head of sales, who is this amazing guy, had insulted a customer and would I please come and make good with the customer. So I walked down to the executive briefing center and there was a room full of people. The customer was an east coast grocery chain that sold milk and eggs. I said ‘what’s the problem?’ and my head of sales said that he had asked the customers why they were talking to us and not IBM. That was how he had insulted them. But I said that was actually a good question. ‘Shouldn’t you guys be at IBM?’ And they said no, no, this is where we need to be. We want to work in real-time. We want to have our master data product set tied in to the rest of our value chain. We want to make the customer an offer before they leave the aisle, not six months after they leave the store. For us to stay competitive and to make money, we have to be real time.

That is an example of how it’s not just banks or telcos or transportation companies, airlines. Now, it’s everyone. Everyone needs to be real-time. If John Gallant’s passport gets stolen and two days later somebody shows up at a border crossing with a passport that says John Gallant on it then it’s pretty likely that’s a bad guy. But, in fact, there’s no way to know, because the information is sitting somewhere in a database. With TIBCO, we change all that, we make it real-time. You have a few seconds in which to make that determination. You know, a database is like a phone that doesn’t ring. Something happens, there’s a weather delay, there’s a flight delay. It goes into the database, but if the phone doesn’t ring, nobody else knows that something happened, so they have to all keep asking: ‘What’s the latest status?’ In our world, when an event happens, like a delay, it propagates to everywhere it needs to be.

Q: Let me ask you about another concept that you’ve discussed in relation to TIBCO: Enterprise 3.0. What do you mean by that?

A: Enterprise 1.0 was the mainframe era. The mainframe was the building block; the software was tied to the hardware. A bank, to serve, say, 10 million customers might have a few thousand branches. You go into a branch every couple of weeks with a paycheck, deposit the paycheck, withdraw some cash, and then overnight, in batch, that information would be updated. Enterprise 2.0 began about 20, 25 years ago when you saw client-server computing emerging and the relational database became the building block. The software was tied to the database. Now you had the information accessible everywhere and the information was always available, it was online.

With enterprise 3.0, you have the same 10 million customers, but you’re dealing with them 10 times a month. Your service now could be a cell phone, an ATM machine, a branch, a Website, or simply you swiping your credit card at a store somewhere. So you have ten times 10 million — a hundred million events happening. And sitting at the back of the bank, accumulated over the years, are hundreds of terabytes, maybe petabytes of information. You have to be able to look at each of those events uniquely, discretely, and tie each back to that terabyte of storage to determine what just happened. Was this ATM card used in San Francisco and five minutes later it’s being used in L.A.? Maybe that’s fraud. Maybe it’s an up sale opportunity. Maybe it’s loss of a customer.

Enterprise 3.0 is the event-driven model where you’re going to be dealing with billions, trillions of events. It’s the age of big data, where the volumes of data are huge but the amount of time that data is useful is minute. It’s very, very small. Events are driving everything. Software is going to be completely decoupled and it’s going to be moving on a bus.

Q: Let’s walk through the four big product areas for TIBCO and explain how you help customers in each of those areas. First area, SOA. It’s a term we don’t hear about a lot these days from enterprise customers. What do you do with customers here and why is this still critical?

A: I look at each of these four areas in terms of the human body. SOA allows you to tie everything together. If you had N systems in your company you would require N times N-minus-one or, basically, N squared interfaces to make them work together. With SOA and our information bus, that goes down to N. You have one interface and it plugs into the bus, and once you plug into the bus then it can talk to everything else. In terms of the human body, you can think of that as the nervous system. By the way, 70 – 80 percent of a company’s IT budget is spent on just maintaining interfaces, so this is a big deal for a lot of people. They want to have this backbone, have it all work together, and then be able to reuse services and software, and not have to keep reinventing every time something new happens. You create a risk management module, you just plug it on the bus and now that capability is available to everybody to use.

Q: Alright, now talk about the business process management portion of the business.

A: So now you’ve got the connections to everything, you’ve got the nervous system. BPM is kind of like the muscles. It’s what makes things happen. Once everything is connected on the bus then you can use the BPM module to create an end-to-end business process. A business process is an end-to-end unit of work. It’s auditing cash flow; it’s provisioning somebody for a service. Those are business processes. In order to accomplish that, you have to touch seven, eight, 10, 100 different systems. It’s about allowing people to come in on a Friday and decide that they want to do a new kind of offer, and have it be looked at, modeled, analyzed and then put into production in days, not years or months. That’s what BPM allows you to do.

Q: The next area is business optimization.

A: I think of business optimization as the brain. You connect everything through the nervous system and you’re picking up events, and then you put those events into the brain and you start finding patterns. You can find those patterns in a visual fashion, using, say, Spotfire, or you can find them using rules. For example, you know that if a guy buys garden seed then there’s a 90 percent chance he’s going to buy fertilizer and there’s a 40% chance that he’s going to buy garden furniture. There’s no point in making him an offer on the fertilizer because he’ll probably buy it anyway, but let’s make him an offer on the furniture before he leaves the store, because maybe he’ll buy it. That’s business optimization. It’s finding patterns, looking at rules; so you’ve got the nervous system, you’ve got the muscles that move things, and then you’ve got the brain that does the analysis.

Q: Would you equate business optimization with BI? Are they similar?

A: It’s 21st century BI. BI is looking at things after the fact, six months after something happens. We’re creating predictive capabilities. For example, we were working with a retail store in the U.K. and we found that if somebody buys champagne and razors and diapers, then there’s a high likelihood that the person has a stolen credit card. So, you do something about it before they use the credit card. That’s twenty first century BI.

Q: The final area is cloud. Talk specifically about how you make private cloud or public cloud better. Also, do you offer these capabilities in the cloud?

A: We offer all our services in the cloud, but we also allow our customers to build their own clouds. What we’re finding is that our large customers want to construct what I call an enterprise cloud, or a hybrid cloud, which will be making use of their own infrastructure and services and also making use of the public infrastructure. We provide the middleware so you can create that hybrid cloud. Our customers don’t so much want software as a service, what they want is software as self-service. If you get SaaS, you’re still getting somebody extorting from you. Once you start consuming software as a service and putting more and more of your data on, say, a salseforce.com, then you’re pretty much locked into that. What our customers want is more like Facebook where you can do your own thing. A lot of our customers want to create software as a self-service where their own services can be offered with the same ease of use as a cloud service.

Q: Let’s talk about that, the social or collaboration angle. Explain Tibbr. It seems like a very cool social tool. What does it help companies do and how do you differentiate it from things like Yammer or Chatter or all the other strangely named social products.

A: Tibbr is something I was personally involved in conceiving. It takes the best elements of social networking — the ease of use, the virality, the user-generated content — and combines that with what TIBCO is all about, which is enterprise class capability, reliability, security, real-time [functionality]. It ends up being the universal inbox, or the universal outbox, but really the universal desktop. With Tibbr you can follow people just like you can with the social tools like Twitter, but you can also follow subjects. What makes that unique is that we already have the backbone and the adaptors into every platform in the world. We already have an adaptor factory with hundreds of adaptors into SAP, Oracle, salesforce.com, databases; every known system. With Tibbr on your mobile device or your desktop device, your iPad, you can decide which subjects to follow and the information comes to you on that. With Chatter, you only get salesforce.com data. With Tibbr, you can get every kind of data. The second thing is this whole concept of subjects. You can have a very fine level of granularity on what you want to follow. You might want to follow a person, but only what [they do] that pertains to a specific topic. The third difference is that we offer it either in the cloud or on premise. That’s a huge factor, because a lot of industries are regulated and they don’t want to put their customer data in the cloud. The fourth thing is we are thing kings of real-time, so we can relay the information more easily in real-time than anyone else can. Tibbr’s taken off like a rocket. We launched it a few months ago and we have close to a million users on it. It’s like catching fish in a barrel right now.

Q: I wanted to get in a couple of company- and market-specific questions. In 2010 you acquired six companies. Why the acceleration on the M&A front? What’s the strategy there?

A: Our strategy is that we like to acquire technology, we don’t like to buy revenue. A lot of companies, like Oracle, buy a lot of revenue. Those, in my mind, are mature companies. You know, they’re buying maintenance, basically, they’re buying revenue. We like to buy technology. For example, we paid $11 million for a company called Netrics and I got $50 million or $60 million of R&D for that $11 million. They fit into my eventing platform and my master data management platform and allow you to look at data just like a human being, using what we call a bipartite algorithm. When the Detroit Christmas Eve bomber struck a year ago, two years ago; his name was on the terror watch list, everyone knew he was a bad guy, and his data said he was a bad guy. But the reason that he wasn’t stopped was because one letter in his name was misspelled. This Netrics technology, which augments our master data and BPM capabilities, thinks like the human brain and it cross references, whether your name is spelled with two ‘l’s’ or one ‘l’, it knows you’re the same guy. Those are the kind of deals that we like, when we see great technology that fits into our stack we like to buy it.

Q: Looking back at 2010 and this year, you’ve had terrific financial growth. What’s driving that growth, and what’s the catalyst that makes somebody it’s time to make the move to TIBCO?

A: We’ve actually had outstanding growth and, as I’ve said, we believe we hit that proverbial tipping point. Becoming event driven or real-time, has now become not a nice-to-have but a must have — being able to do customer upsell, cross sell, being able to do fraud detection, improve cybersecurity. The old model was try to build a better and bigger lock, but no matter how good the lock, there’s a guy who picks the lock. So we make it event driven. We basically look at events and we do like a neighborhood watch. We look for suspicious activity and we see patterns and then cut off all access when it happens.

The catalysts are the explosion in mobility, the explosion in social networking, the cloud, as well as global competition where companies are being forced to do more with their existing assets, where companies need to get a bigger wallet share from their existing customers.

Q: Who within the IT organization is the person who typically makes the buying decisions involving TIBCO?

A: Historically it has been something that the CIO gets involved with. But increasingly we’re seeing that the business side of the equation, the head of sales, the head of marketing, head of customer service, those kinds of people are now driving the process as well. When we were selling just the SOA part of it, it was more of a technology, infrastructure decision, but now, we’re creating these event-driven applications like customer upsell, cross sell, fraud detection, it’s increasingly becoming a sales, marketing, customer service, even CFO buy in.

Q: Which companies do you directly compete with?

A: It’s simple; it’s IBM, in one word. Take IBM’s whole Smarter Planet campaign. I joke that I did an ‘Inception’ on IBM and had them spend their ad budget to describe what TIBCO does. There are other companies, like Oracle and SAP, now that try to do some of this, but the big gorilla for us is IBM.

Q: And what product or capability within IBM?

A: Their arrowhead is WebSphere and around that they wrap everything and the kitchen sink. And then you get the WebSphere and open the box a hundred [IBM] Global Services people jump out of it.

Oracle kind of is nipping at it a little bit. SAP tried to get in to it with NetWeaver and now SAP is talking a lot about it and they learned a lot about it from us. But it’s kind of like buying a TV set. If you’re going to buy a TV set you’re not going to buy it from ABC or from CBS; you want a TV set that runs everything. It has to connect to all the applications that you have and all the systems and all the hardware and all the databases. In addition to having this platform uniquely, we also are able to connect to everyone which turns out to be a benefit, so we’ll give you the ultimate choice; whether you want to use salesforce.com or Siebel.

Q: What’s ahead for TIBCO? What will the next year bring and how would the company be different if we were to have this conversation in 2012?

A: Tibbr will become a desktop for much of the corporate world. That’s one thing that we think will accelerate in 2012. We’ll have millions of desktops, cell phones, iPads, Androids, iPhones using TIBCO. The second thing is that you will see very widespread usage of eventing technology through TIBCO. Not just in a few verticals, but you’ll see it in retail and healthcare. You’ll see it in small government; you’ll see it in big government. You’ll see it on a global basis. Also, everyone will need a bus, that will be like a given. You need a database, you need a bus.

Q: This is your elevator pitch moment. In one or two sentences, what is the absolutely key thing you want IT executives to understand about TIBCO?

A: TIBCO gives you a platform to allow your business to connect together in real time and, by doing so, delivers the two-second advantage. My mission has been that if you get the right information to the right place at the right time, and you put it in the right context, then you can make the world a better place. And I believe that that applies to all my customers.